Are you stoked about today’s unveiling of the new iMacs from Apple (NASDAQ:AAPL)? If you are, you’re not alone. Apple fans have been anxiously awaiting the arrival of the new-and-improved machine, which is smaller in size but more potent in terms of performance.
The new iMac ‘Fusion’ Drive combines flash storage with a conventional disc drive to give Apple’s latest iteration the best of both worlds: speed and capacity. Spec-wise, the smaller-screened (21.5 inch) standard iMac comes with a 2.7 GHz quad-core Intel Core i5 processor, and a 1-terabyte drive. Sticker price? $1299.
The bigger 27-inch-screened standard version sells for $1799, and comes with 2.9 GHz Intel i5 quad-core processor powering the same-sized disc drive as the lower-priced version.
That’s all well and good; there’s little doubt that investors are loving “yet another Apple triumph.” Before anyone starts to entertain the notion that the new iMac is going to create a fiscal impact like the ones we’ve seen from launches of updated iPhones, though, you may want to crunch the numbers.
Not a Computer Company Anymore
Apple started as a computer company, but actual desktop (or laptop) computers aren’t even close to being its core business now. The introduction of the iPod in 2001, the iPhone in 2007 and the iPad in 2010 have all made computers — in the traditional sense of the word — of minimal importance to the company.
How minimal? As of the most recently reported quarter, Mac sales only made up 9.5% of Apple’s total unit sales — and the trend is pointing towards less and less relevance for the company’s desktop division.
Granted, Mac computers tend to cost about twice as much as the company’s other key products. But 9.5% of unit sales still only translates into about one-fifth of the company’s revenue (and presumably the same amount of the company’s profits).
Given the trend, it’s pretty clear Apple’s no longer expecting computers to be a cash cow. Indeed, Macs haven’t been the centerpiece for several years.*
The One Path to Glory
To be fair, there may be one way for Apple to make a meaningful dent with the launch of the new iMac (though it’s a long shot). If this Mac is remarkably superior to previous iterations, then there’s a chance Apple could sell more than the 4.9 million Macs it sold last quarter.
I wouldn’t hold your breath though, as the perceived difference between the so-far-unlaunched Mac and the previous version is considerably weaker than the difference between the iPhone 5 (unveiled in October) and the iPhone 4s. Put differently, it’s unlikely anyone will be camping out in front of the consumer technology store in order to snag the new Mac like they did to get their hands on Apple’s latest smartphone.
One of the chief grumbles so far has been that Apple didn’t bother to add an optical drive with this release, even though it may have been the perfect opportunity to do so; the drive and processor are pretty much the same as what was used with prior iMac machines (the new ones are a tad faster, though they do have twice the storage capacity). Other disappointments have been voiced too, but like the optical drive letdown, may just be nitpicky complaints. The full specs are here.
Either way, the odds of the new iMac being a so-called smash hit are low. It’s a winner, but not apt to be a game-changer. Investors buying solely on the news of Friday’s unveiling Apple’s new desktop machine may want to find another reason.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
*Author’s note: Just to head off any enraged counterattacks regarding my comments on the waning importance of Macintosh computers to Apple as a corporation, this isn’t a judgment call on the quality of the company’s machines. Macs have been — and likely will continue to be — more reliable and better-functioning than the average PC (IBM/Microsoft-based). But, given the average price and use of Windows-based PCs, there’s no way of denying that Apple is only catering to a very small sliver of the consumer computer market. The company only controls about 12% of the U.S. market, and only about 7% on a global basis.