The launch of Apple’s Mac Pro based on its M2 Ultra processor formally marked the completion of the company’s transition from Intel’s CPUs to its own system-on-chips, which took about three years. The transition spurred users of Macs to upgrade and encouraged users of Windows to switch to Macs. Roughly half of Apple’s PCs bought in Q2 were purchased by new users.
“This past quarter, we were pleased to complete the transition to Apple Silicon for the entire lineup,” said Tim Cook, Apple’s chief executive, at the company’s conference call with analysts and investors (via SeekingAlpha). “This transition has driven both strong upgrade activity and a high number of new customers. In fact, almost half of Mac buyers during the quarter were new to the product. We also saw reported customer satisfaction of 96% for Mac in the U.S.”
Indeed, the transition to Apple Silicon helped Apple to boost sales of its Mac computers and gain market share. The company controlled 6.3% of the PC market, with 4.077 million Macs sold in Q2 2019. During Q2 2023, the company commanded 8.6% of the PC market, with 5.3 million units sold. Meanwhile, in Q1 2022, the firm owned 9.3% of the desktop and laptop market as it supplied 7.342 million PCs during the quarter, many of which were sold to first-time users, and many were upgrades.
Controlling the hardware and software enables Apple to integrate various special-purpose accelerators into its SoCs and maximize performance in select applications. In addition, it allows it to precisely tailor its software for these SoCs, which promises to reduce the number of glitches and offer decent performance. Finally, it allows the company to maximize its profit margins now that it does not have to pay for CPUs to Intel. Unfortunately, with the transition to its Apple Silicon, Apple no longer supports third-party GPUs with its Mac Pro PCs, which will frustrate users who need high-performance GPUs.
Since the PC market in Q2 2023 was down 13.4% year-over-year in terms of unit shipments, it is not surprising that Macs generated $6.8 billion in revenue for Apple during the quarter, down 7% year-over-year. It is also noteworthy that Apple sold more PC units than it did in Q2 2022, according to IDC. A reason why Apple’s Mac revenue was down amid unit sales growth was probably because many first-time users bought inexpensive PCs. In contrast, in Q2 2022, the company finally ramped up sales of its premium M2 Pro and M2 Max-based MacBook Pros.
Also, it is evident that in Q2 2023, Apple’s PC business performed better than the PC businesses of Lenovo, Dell, and Acer, at least regarding unit sales growth. Meanwhile, the company expects Mac and iPad revenue to decline in the ongoing quarter.
“We expect the revenue for both Mac and iPad to decline by double digits year-over-year due to difficult compares, particularly on the Mac,” said Cook. “For both products, we experienced supply disruptions from factory shutdowns in the June quarter a year ago and were able to fulfill significant pent-up demand in the year-ago September quarter.”