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What's the Mac mean to Apple, the Surface to Microsoft?

What's the Mac mean to Apple, the Surface to Microsoft?

Revenue isn't everything, or even much, says analyst

The Mac's contribution to Apple's revenue has shrunk in the last two years, while the Surface's share of Microsoft's revenue has increased during the same time, data provided by each company shows.

Declines in the percentage that the Mac contributed to total revenue reinforced the complaints of some that Apple had ignored the personal computer in favor of the iPhone, by far the firm's biggest money maker.

Those complaints climbed in number and volume following Apple's introduction of new MacBook Pro laptops on Oct. 27. Since then, some long-time customers, particularly content creators in fields such as photography, design and software development, have lambasted Apple, charging that the new machines will not be powerful enough for their needs, and thus that Apple has deserted them.

To some, the Mac's shrinking share of Apple's revenue hints at a more general lack of interest in the company's top offices.

The Mac's 12-month share of all revenue was 10.8% in the September quarter, down from 10.9% the year prior and off from 13.2% two years ago. Compared to the September quarter of 2014, this year's third quarter Mac share was down nearly a fifth.

(Computerworld calculated Mac and Surface shares using 12-month rolling totals to eliminate the seasonal spikes in both lines. Mac revenue as a portion of all Apple revenue usually peaks in the September quarter, while Surface hits its highest percentage in the December quarter.)

Meanwhile, the percentage of Microsoft's revenue attributed to the Surface hardware line has been increasing. In the September quarter, Surface's 12-month share of all revenue was a record high 5.1%, up from 2015's 3.7% and 2014's 3%.

microsoft surface book Gordon Mah Ung

But the numbers do not necessarily describe each company's interest in, or intent for, their home-grown personal computers, argued Jan Dawson, principal analyst at Jackdaw Research.

"The overall trajectory is of Surface growing, Mac declining," Dawson acknowledged the numbers show. Yet Microsoft has gone most of its history sans hardware, while Apple's foundation was hardware from the beginning, almost a decade before the Mac.

The irony is that although Surface revenue has grown as a percentage of the whole, Microsoft could dump the line without much, if any, harm. Apple could not do the same, even though the Mac's declining share of revenue seemed to point toward that as an option.

"Microsoft could abandon the Surface tomorrow and there would be no huge hit on its revenue," said Dawson. "But if Apple literally walked away from the Mac, it would be a huge change, culturally as well as in revenue."

Dawson pointed to the statement that ends every Apple press release as an example of the Mac's importance to the Cupertino, Calif. company. "Apple revolutionized personal technology with the introduction of the Macintosh in 1984," the statement begins.

"Apple's identity is tied to the Mac," said Dawson. "It's been an important part of the identity in a way that the Surface isn't [for Microsoft]."

Dawson's conclusion: Because of the Mac's importance, Apple must please those creative professionals, enough, anyway, to keep them in the fold. "[The new MacBook Pros] didn't satisfy every need," Dawson agreed. "That left a vacuum which neither the MacBook Pro or the desktop Macs filled. Apple needs to put something into that vacuum."

Dawson believes that Apple has a plan. "They will update the desktop Macs, maybe starting with the Mac Pro, in the next few months," he said.

surface mac rev share Data: Apple, Microsoft

Microsoft's Surface hardware contributed much less -- as a percentage of total revenue -- that did Apple's Mac portfolio. But while Surface's portion has steadily increased, the Mac's has fallen in the last two years.

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