Jason Schwarz's  Instablog

Microsoft CEO Steve Ballmer gave us a glimpse into Apple’s future with a statement he made at the Windows 7 release.  When asked by CNBC’s Jim Goldman to respond to the threat of competition from Apple, Ballmer remarked,(www.cnbc.com/id/33419795)  “It's amazing: people say Apple sells 10 million PCs. There will be 300 million Windows PCs sold in the same time frame. So it is interesting to me that people spend so much time talking about the 3 percent of the market in that case...I wouldn't trade our 300 million new users a year for their 10 million. I just wouldn't do it. I kind of like what we're doing and the way we're serving the market.”

 The trend of the 2010 decade appears to be one of Apple gaining market share and Microsoft losing market share.  There is no question that Microsoft is king of the hill but investors are never concerned with the current king, we are always trying to forecast who’s next.   Broadpoint AmTech analyst Brian Marshall actually thinks the Windows 7 launch will boost Mac sales.  He wrote, “We have concluded that no negative correlation exists on Apple’s hardware sales when Microsoft launches a new OS.  Ironically, we believe new OS launches from Microsoft may have even acted as a ‘delayed accelerant’ to Apple’s computing sales.”   

 When looking at Apple’s future you need to comprehend what kind of market share numbers we’re talking about.  The global PC market is so large that if Apple were to control only 10% of it, the earnings could drive the stock up significantly.  According to IDC, Apple now claims 9.4% of the U.S. computer market (http://www.macobserver.com/tmo/article/idc_puts_u.s._apples_mac_market_share_at_9.4_for_september_quarter/) in the US, and NPD reports that Mac revenue market share of the premium price segment over $1000 is at an astonishing 91% (www.betanews.com/joewilcox/article/Apple...; To give you some perspective on how quickly Apple is gaining, back in January of 2008 Mac’s revenue share was only 66%.  It takes years to create a trend in the PC market because of the rigid barriers to entry and Apple has clearly done so with the Mac lineup.   

 On Apples most recent quarterly conference call they reported that Mac revenue in Europe was up 45% year over year in the region, Apple Japan was up 36%, and the Asia Pacific was up 39%.  It looks like they are well on their way to 10% global market share.  If they were to sell 30 million Macs in 2011 (which could include the Tablet released sometime in 2010) this stock will eclipse $500 based on the fundamentals.  It's about as far fetched as Bank of America to $20 sounded back in March 2009 and oil to $30 sounded back in August 2008. Most impressive for Apple is that computers only make up one tier of their business.  Hence, this article is merely part one of a series mapping out Apple's market share rise by 2011.    

 One of my readers, Mikesan,  made the following comment: ‘I once read that at product design sessions Steve Jobs encourages people to start sentences with ‘wouldn’t it be great if...’ and they go on from there.  Compare this to Microsoft which is more like ‘isn’t it great we can still do this’.  Two companies headed in different directions.  Ballmer might want to be careful next time he touts Windows 7 on 300 million computers.  The trend is not his friend.  

 disclosure: long aapl