Apple Drops In PC Vendor Rankings

Based on shipments, Apple fell a notch in the fourth quarter to fifth place in the latest U.S. PC vendor rankings, but the computer maker likely outpaced rivals in profitability.

PC shipments overall in the United States, Apple's largest market, rose 24% year-over-year in the quarter, IDC reported Wednesday. Rival Gartner pegged the increase at 26.5%.

While a double-digit increase is usually seen as good news, the driving force was low-cost systems ranging from as low as $300 to less than $800. That means Windows PC manufacturers were shipping more systems that carry the least amount of profit.

Apple, however, is different. The company's Macs start at $1,000, which places the vendor in the higher end of the PC market. Despite the higher prices, Apple shipped 31% more Macs in the fourth quarter year-to-year, according to IDC. Gartner said Apple shipments grew by 23.3%.

Despite Apple's solid growth, it was far behind Toshiba, which increased shipments by around 71% to replace Apple in the number-four slot. Nevertheless, Apple's profit per machine was probably much higher.

"Apple is in the best position in terms of their profit margin," Gartner analyst Mika Kitagawa told InformationWeek Thursday. "You can 't imagine how much money they're making compared to Toshiba and the other PC vendors. They don't have to lower their price points."

In addition, Apple typically does better against other vendors in the third quarter because of the back-to-school season, when Apple gets a boost through higher sales in university student bookstores. In the third quarter, Apple was number four, while Toshiba ranked fifth, according to Gartner and IDC.

Long term, however, all PC makers, including Apple, may find it difficult to convince consumers to pay more. The success of low-cost systems during the global recession has gotten people used to "good-enough" computing. Consumers are less willing to pay more when sub-$700 systems are perfectly capable of playing DVDs and handling all other popular computing tasks.

"There's definitely a tilt toward the bottom here," IDC analyst Jay Chou said.