November 22, 1999 6:05 PM PST

Apple's iBook tops notebook sales

Despite earlier shortages, the iBook laptop is turning into a winner for Apple Computer and helping the company expand its retail presence.

CNET TV: iBook demo
CNET TV: iBook demo
For the month of October, the iBook was the single best-selling notebook at the retail, online and mail-order sales outlets, according to PC Data, besting offerings from the likes of notebook stalwarts Compaq Computer, Toshiba and IBM. The figures do not count sales from "direct" PC makers such as Dell Computer.

Apple last month nearly doubled its overall market share to 11 percent, up from 6.5 percent in the previous month. The total includes sales of its PowerBook line of computers. Nonetheless, Apple's growth surmounted severe product shortages resulting from a lack of screens and a disruption in production due to the Taiwan earthquake in September.

The Cupertino, Calif., company still has a long way to go in the notebook market before it overtakes Compaq or Toshiba in terms of overall market share, said Stephen Baker, senior hardware analyst for PC Data, but the company is clearly making headway.

"There's a definite opportunity in this [notebook] market," Baker said. "Apple had a long run with the original iMacs and found niches they could exploit. That's what this product is going to do, not [help them] pass Compaq or Toshiba in the near future."

Overall, Compaq remained at the top of the notebook heap with 27.5 percent market share, followed closely by Toshiba with 26 percent. IBM was third with 15 percent.

The preliminary results seem to show that Apple's renewed emphasis on design has made the same kind of impact in the notebook market that the original iMac did in the desktop market. That model stayed at or near the top of the sales charts for months after its initial introduction in August of 1998.

"Customer response has been incredible, and we are working hard to meet the tremendous demand," Steve Jobs, Apple's interim CEO, said in a statement today.

Notebooks have always been hard to display in stores because they have to be locked down, Baker said. An interesting or colorful design helps the product stand out from the competition in this situation. The iBook takes its design cues from the iMac and comes in two colors--blueberry or tangerine. It comes with a clamshell lid, a carrying handle, and built-in antennae for wireless networking, among other features, for $1,599.

Sony first struck gold with a formula of mixing panache with the notebook to win market share. Last year, Sony was a scrawny player with less than 1 percent of the market, but the company is now the fourth-largest notebook maker in the retail market with 13.9 percent, a surge it owes to the success of its slim Vaio notebooks. Meanwhile, Big Blue has tried to shed its conservative image--and boost sales--in the retail market by offering notebooks with snap-on colored covers.

Unfortunately for Sony and Apple, the U.S. retail notebook market accounts for a smallish portion of the overall PC market. Retail sales account for about 30 percent of the total U.S. PC notebook and desktop market, and about 10 percent of total worldwide market, according to various industry figures. The main part of the market is in sales to corporations, where the duo still lag.

Apple fans pre-ordered hundreds of thousands of iBooks before the first units ever shipped. Many of those fans found themselves getting antsy as notebook and even desktop computer supply problems persisted.

Until recently, Apple was lagging in shipments to the retail market because of a number of issues that led to lower-than-anticipated earnings last quarter. Availability of iBooks was mostly affected by component shortages and natural disasters that resulted in an unusually severe shortage of iBooks, a situation partly shared by all major notebook makers.

Component shortages have caused companies such as Dell and Apple to strike strategic agreements to ensure a steady supply of notebook screens, one of the main sticking points so far. Dell is investing $200 million in Samsung Electronics to ensure it will get about $8.5 billion in displays over the next five years. Apple made a similar investment in July. Analysts think most other companies will follow suit soon if screen supply doesn't improve.

It is not known how many of the pre-orders for the iBook were eventually posted to retailer's sales tallies during October, but Baker thinks that most of October's orders were "real sales," meaning that a customer got to take the product home.

 

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