Apple shows market share gains

Apple Computer's fortunes are looking up in 1998.

Not only has the Mac maker posted its second profitable quarter in a row, but also it has reversed a downward slide in its market share, according to new data from International Data Corporation. The good news comes in a quarter when Apple typically does not do so well.

The company grew its market share in the United States to 4 percent in the first quarter of 1998, up from 3.4 percent in the fourth quarter of 1997. It was the first sign of sequential growth since the second quarter of 1997.

The gains are based on continuing strong sales of the Power Macintosh G3 systems in conjunction with a slowing rate of growth seen by vendors such as Compaq Computer. The first calendar quarter is not normally a strong one for Apple.

More importantly, the flat growth on a year-to-year basis was actually a victory of sorts, as Apple has lost market share each quarter on an annualized basis since the third quarter of 1994. Year-on-year growth is generally considered the most important measure of sales since seasonal effects on sales are accounted for.

"They've shown stability from a sales aspect as well as financial stability," said Kevin Hause, an analyst with IDC. "The focus is less on simply surviving and more on long-term directions and strategies. This was a long time in coming," he noted.

The upturn in Apple's fortunes, although modest, halts a long string of market share losses. As of January, the company's own numbers showed that in the fiscal fourth quarter of 1997, its share in the U.S. market fell to 4.3 percent from 6.6 percent the year before, according to filings with the Securities and Exchange Commission. At about the same time last year, Apple was knocked off the list of top-five worldwide PC vendors for the first time in several years, according to marker research firm Dataquest.

Analysts caution that the company still has to regain the attention of developers now that it has shown it can regain customers. The recent decision by Intuit to drop development of a new version of its popular Quicken financial planning software typifies the issues Apple must strive to rectify.

"Whatever the reasoning behind it, the Intuit [announcement] was not taken well by Apple watchers and the Mac community. Just the perception that a company like that would drop Mac support was a major issue," Hause said. "Unless the Mac community as whole is a growing and robust market, then software developers are going to be offering less and less support for that community."

Sustained market share increases and profitable quarters would go a long way in convincing developers to increase their development efforts.