Report: Mac Sales Dip Nearly 17 Percent

Apple Inc.'s retail sales, which fell by more than 5% in January, plummeted nearly 17% in February compared with the same month in 2008 as the company's high prices continued to take a toll, research company The NPD Group Inc. said Tuesday.

"They had a pretty crummy month," said NPD analyst Stephen Baker. "Some have noted that they had some tough year-to-year comparisons, but this is a little more concerning than just comparisons."

During February, Apple sold 16.7% fewer Macs than in February 2008, while PC sales, which account for the bulk of the computer market, were up a dramatic 22% year over year.

As he did last month, Baker blamed Apple's higher prices for its continuing sales slide. "I am concerned about their pricing. The $999 MacBook doesn't seem to have generated better numbers for Apple in the under-$1,500 part of the market. It hasn't really done what they were looking for it to do."

In October, when Apple launched its new all-aluminum "unibody" laptops, it also lowered the price of the older plastic-cased MacBook by $100 to $999.

"That means one of two things," said Baker. "Either the $999 price isn't cheap enough, or Apple buyers are simply deferring their purchases."

The drop in Apple's sales was largely the result of a turnaround in the fortunes of its MacBook and MacBook Pro notebooks, which had until last month continued to post year-over-year gains. As recently as December 2008, Apple had sold over 20% more laptops than the year before. But in February, Apple's laptop sales fell by 7.5% compared with the year before, according to NPD's data. "This is the first time that we've seen some negative on the notebook side," said Baker.

Apple's desktop sales, meanwhile, remained in a slump, with that slice of its market showing a 36.4% year-over-year decrease, an even poorer showing than January's downturn of 31.3%.

And although Apple just revamped its iMac, Mac mini and Mac Pro lines, Baker doesn't think the move will do much for the company's desktop business. "That probably won't help," he said. "It's hard to know if people aren't buying because they cost too much or because of the age of the platform," he noted, referring to the slow pace of iMac sales prior to the this month's refresh. "But my gut tells me people weren't passing because of the platform."

The combination of continued weakness in desktops and a new slide in laptops has put Apple's numbers in the negative. "Revenues were down pretty dramatically for the Mac," said Baker, noting that revenue fell even more year-over-year than did unit sales.

While Apple's high prices have hurt sales -- where the off-the-cliff decline in PC prices has boosted sales overall -- Baker said it would be a mistake for Apple to slash prices on its existing lines. Instead, he said a smart strategy would be to introduce a new, lower-cost system, something other analysts have urged Apple to do when they've talked up the idea of the company entering the netbook market.

"If you start cutting prices, it's hard to go back," Baker said. "If you bring in something new, then that's also a risk, but only on a temporary basis. You can always drop that SKU later."

Nor did Baker think Apple is in grave danger, even after sporting such low sales numbers for the month. "This probably isn't a permanent collapse in Apple's sales, but more a temporary evaporation of demand," he said.

"Apple is a niche -- high-margin, high-price and limited distribution. And because of that, they have more room for error than everybody else," he concluded.