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March 30th, 2007
"When it comes to really big things, it's hard to beat really big numbers."
-Anon
One of my favorite TV shows is Numb3rs. Charlie Eppes, Ph.D., is a mathematics professor, skilled in all kinds of advanced mathematical analysis. He's a consultant to the FBI in Los Angeles, and he uses mathematics to help solve crimes.
There are a lot of cool things about this TV show, but the basic idea is that quantitative mathematical analysis can provide insight when mere conjecture is insufficient.
This week, I ran across two charts in my reading on the Internet, very numbers oriented, that were in great contrast to something that we've all been talking about lately.
Namely, the Apple buzz.
I've written about this buzz briefly in recent articles. The first was about a paradigm shift, and the second was about the success Apple has had in creating a buzz about their products. We can talk about shifts and buzz, write deep into the night, but there's nothing like a few numbers to put it all in perspective.
The World According to Apple
If one were to analyze the growth of Apple in numbers, we see fairly steady growth. While Apple is still subject to setbacks due to seasonal buying habits and the specter of Macworld each January, the year over year growth appears to be pretty good. Switchers and some organizations are beginning to embrace the Mac, and finally Apple has enough visibility and momentum, thanks to the iPod, that consumers are taking notice of the company in all its offerings.
Instead of Apple being perceived as a very small computer company, it's now seen as a $20B company that sells a lot of very nice electronics. And oh, by the way, they make very nice computers.
In this sense they've become the Sony of the U.S. Sony, recall, also makes a very nice line of computers called the Vaio, but they're not Sony's bread and butter.
If we take the glass is half full approach, and do some extrapolation, we can size up Apple in terms of its unit shipments for various products. Daniel Dilger at Roughly Drafted Magazine recently published a chart extrapolating Apple's sales of Macs, Apple TV, and iPhone over the next few years.
 Source: RoughlyDrafted.com |
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The really cool part is that the total unit shipments of these devices is rising rapidly, and to Apple's great satisfaction, the Macintosh will soon no longer have to do all the heavy lifting for the corporation.
But look at the absolute numbers. In 2008, Apple might sell 8 million Macs. Write that on an envelope.
The World According to Microsoft
In another article I ran across recently, IDC data for the unit shipments of Vista and the previous Windows OSes was published. (The chart says "unit shipments", but I believe they omitted the 'x 1,000' scale factor.)
 Source: IDC |
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The chart says that Micrsoft will issue about 90 million new Vista licenses in 2007. In 2008, to contrast to the Apple numbers above, the Vista shipments jumps to about 150 million. Write that number down too.
150 million vs 8 million. Apple remains at 5.3 percent through 2008.
I should point out that if IDC did their homework, they looked at Vista sales to date, included economic conditions, large organization statements about their planned rollouts, and previous data for the penetration of Windows XP back when it was released. Clearly, the chart doesn't account for massive economic disruption. Nor does the Apple estimate.
Looking at the Numbers
These numbers tell a story that we'd rather not dwell on. They say that while Apple is growing and branching out, and while it's not a zero sum game, there is no massive trend to indicate that the Apple buzz is doing much to turn the tables on Microsoft.
What the buzz is doing is something else. It's insuring that Apple products will be widely accepted and become successful. Given Apple's gross margins, that will make a lot of money for Apple. Secondly, the buzz helps keep the enthusiasm going for a superior OS, Mac OS X, until Apple has had a chance to embarrass Microsoft's Vista. Finally, it keeps the stock growing so that the stock holders remain happy and all those (legal) options for employees are actually worth something.
But when it comes to the hard cold reality of the numbers, Apple isn't going to make a dent in the body armor of Microsoft in the next half decade.
Depending on how you look at it, that's okay. You've probably read a million words about all the reasons you want to be in the Apple camp. I've been writing passionately about Apple for nine years now. We know what we want, and it doesn't hurt to kick a little dirt in Microsoft's face now and then. So long as it's tempered, responsible, and good natured.
Even so, one can look at the numbers and see why Microsoft shouldn't really be very worried. When financial analysts, driven by the buzz, ask Steve Ballmer for an interview, and then start by asking questions about the iPhone, it's all part of the buzz. Mr. Ballmer should calmly respond by stating that he rather talk about his own products and eagerly move forward -- dismissing the bait, er, the buzz. But it just seems outside the capabilities of Mr. Ballmer's personality. So be it. It makes for good stories, but it doesn't change the numbers.
Beyond the Numbers
Right now, you're thinking that extrapolations never tell the whole story, and you're right. For a hundred years, scientists and economists have made projections that never came to pass because an unseen, disruptive force changed the equation. We were supposed to run out of oil, then the estimates of reserves changed. The hole in the ozone layer was going to kill us all. But we fixed it with worldwide cooperation. The Soviet Union was going to colonize the moon and dominate all of Europe. Now the U.S.S.R. is gone. These days, global warming threatens us, and we're really cooked unless we do something soon. But we will. Forty years before the effects become of grave concern, we're furiously working on alternative energy sources for cars.
I'm not trying to incite a discussion about global warming. But I do want to point out that projections are seldom very reliable over long periods. Historically, something breaks. And so we have to look beyond the numbers for long term insights -- to the extent we can.
There are things that could go wrong with the projection that the Vista successor will repeat Vista's success.
- The Internet has changed everything. The changes could get out of control.
- International thieves and the failure of banks to institute sound security practices could lead to Vista becoming untenable in the home.
- A leadership vacuum at Microsoft could lead to critical mistakes.
- A massive cyber assault, brought on by unforeseen international tensions, could unravel Vista and lead to massive defection.
- A new, unexpected technology or invention could make current operating systems obsolete. Even Mac OS X.
- An ugly incident in which lives are lost, something that cannot be covered up or blamed on a "commputer glitch," could sour millions, even if it's an irrational response.
We live in an age that is contradictory. We generally embrace our digital cameras, TiVos, mobile phones, and notebook computers. But we're also a fickle society, driven by the Borg-like spread of consensus in the blogosphere. Once an idea or technology is discredited, it's hard to reverse.
What's the bottom line, Dr. Eppes?
Right now, the numbers say that Apple has no chance of turning the tables on Microsoft. In numbers. But sometimes the numbers are irrelevant. All a company can do is lay the very best foundation it can, be excellent in everything it does, and then roll the dice.
Right now, everything Microsoft rolls comes up craps. Apple continues to roll naturals. One has to wonder how long that trend can continue before some disruptive force blindsides the cozy extrapolations.
That's our only hope Obi-Wan, because right now the numbers, the really big numbers, look awfully imposing. That's not to say we stop going to the church of Apple. That's not to say we don't enjoy the buzz. It just says that when we daily enter the hallowed ground, we do it with some modesty and humility.
The buzz is fun. Talk is cheap. The numbers tell all.
Until the big disruption comes.
John Martellaro is a senior scientist and author. A former U.S. Air Force officer,he has worked for NASA, White Sands Missile Range, Lockheed Martin Astronautics, the Oak Ridge National Laboratory and Apple Computer. During his five years at Apple, he worked as a Senior Marketing Manager for science and technology, Federal Account Executive, and High Performance Computing Manager. His interests include alpine skiing, SciFi, astronomy, and Perl. John lives in Denver, Colorado.
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Observer Comments
I'm not sure there needs to be one disruption, but several smallish ones could do. If a large company goes mac such as Wilkes University did, for instance, this could set things rolling.
Apple never had more than 20% if the market, even when it was supposed to have been in its prime. That's an amazing number, especially if looking at the size of today's computer base. Overall, though, I think we need to stop talking in market share numbers-- at least as a singular, important measure. These market share numbers include a number of markets Apple doesn't even attempt to serve. Seen a Mac cash register anywhere except a boutique of some kind? iMac ATM? It doesn't make sense to include all these computers in the mix, but they're there all the same.
As long as Apple is healthy and growing, it doesn't matter. It doesn't matter, because considering the type of computer world we live in now, continued growth means that Apple software continues to play nice in a Windows world. That means sustainability. That's all we need.
First of all; I've seen Linux cash registers in Brazil:)
Which leads me to the next point; Dell is going to sell computers with Linux installed.
If we then take a look at the statistics showing browser use, we see that Firefox (opne source) is the one making a dent in IE's numbers. Right now I think that Linux (open source) makes up for more or less the same market share as Apple does, but wouldn't it be right to assume that this step by Dell may increase it? It wouldn't be a big surprise if others are to follow Dell here.
So, in my view, that might be an important factor - which of course doesn't change the numbers on Apple's part, but to me, that isn't important, as long as Apple keeps healthy like Guest also points out. What is important is that the monopoly will be broken. When the levee breaks, hopefully new phenomenons like new OSes will appear. Maybe Sun, maybe something totally new.
And all will have to adhere to standards - and by that; not what Microsoft like to see as such!
I read here:
http://richcoffeebrown.blogspot.com/2007/03/mac-barbie-v-vista-bruce.html
about how well macs are doing in the UK and quote:
"I shall come to my feelings and opinions in a minute, but the first thing I have got to say is this: if the Mac store in Southampton is in any way typical of what is happening in the UK and worldwide, then Microsoft is in a leaking bucket, heading for a mighty-high waterfall, and without a paddle. To say the store was heaving, would be an understatement. You had to push - quite literally - your way through the people and then stand several deep to even get a view of someone else thumping away at a computer or an iPod. This wasn't a mere frisson of excitement, it was full-on, pant-wetting devotion and hysteria. I've been to a lot of IT stores over the years and I haven't seen anything like this before. It was like the first day of the January sales, or like people queueing up at midnight to get the latest Harry Potter instalment. If Apple can turn this much enthusiasm into sales, then the PC world in 5 years from now is going to look a lot different to how it looks today. By contrast, the department store in the same mall that was selling Vista PCs was as quiet and subdued as an accountant's waiting room."
This resonates with my own experiences. Our company, PC users for the last 15 years, is thinking of switching to Mac lock, stock and two smoking barrels.
"In 2008, Apple might sell 8 million Macs. Write that on an envelope…In 2008, to contrast to the Apple numbers above, the Vista shipments jumps to about 150 million…150 million vs 8 million. Apple remains at 5.3 percent through 2008."
8,000,000/(150,000,000+8,000,000)=0.056+
5.1%, not 5.3%. you divided 8 million by 150 million.
It's interesting to look at where things were just two years ago. In 2005, Mac OS X shipments look to be 4.5 million, versus about 140 million PC shipments. That's about 3.1% marketshare. If that goes to 5.1%, that's no small feat! It also implies a US market share that may well be close to 10%...
Most of the copies of Vista that will be sold will be bundled into the cost of new computers. I don't know about Vista, but the OEM cost of XP is about $30 a copy. The average cost of a Mac is $1500 of which Apple makes about $450. Yes, 150 million is bigger than 8 million, but the story that these numbers tell changes when you multiply them by other numbers.
Not counted in your equation is that Apple sells 3 million iPods a month and has been successful in expanding into other markets, while Microsoft's efforts to do this have failed. Then consider that Microsoft depends on hardware makers to sell its operating systems. HP just dropped MCE and Dell is talking about shipping Linux instead of Vista.
If your saying that Microsoft makes more money than Apple, then that is true. If your point is that Apple can't "turn the tables on Microsoft" that is just a game journalists made up to have something to write about. Apple is very happy with its very profitable and secure portion of the market. The "buzz" comes from investors who think that business isn't a matter of rolling dice and hoping to get lucky. People are talking about Apple because their performance lately has been worth talking about.
Just read this:
http://goukblog.blogspot.com/2007/03/dear-bill-gates-where-are-20m-vista.html
Where are the Vista users?
This is an example of number worship at its worst. Take some estimates of future sales of OS X/Vista and then treat what they say as gospel truth just because they give quantified results. The projections are only as good as the assumptions underlying them and we are told absolutely nothing about those assumptions. The author even states, "if IDC did their homework, they looked at Vista sales to date, included economic conditions, large organization statements about their planned rollouts, and previous data for the penetration of Windows XP back when it was released." That's a pretty big IF. Without knowing anything about the assumptions underlying the projections, the numbers that result are meaningless. Even if IDC did all the homework the author lays out, the projections remain pretty uncertain.
With regard to the OS X sales projections, it looks like the numbers are based on simple extrapolation of past sales trends. For all I know, that's exactly how things will go, but trying to prove that things will continue in the future following the same patterns that they have in the past by simply assuming that they will is a pretty poor form of argument. And adding numbers to the argument doesn't improve the situation at all, although it might give the illusion of scientific reasoning.
I don't necessarily expect any great increases in OS X market share myself, but we certainly aren't given any convincing evidence in favour of that here.
Warren
Fri Mar 30, 2007 1:08 pm Subject: Apple Retail Stores ...
are a breath of fresh air ... just like Mac OS X, Mac computers, iPod, and iPhone. But, I failed to see their influence given due credit in the article.
In my opinion, the increase in Mac computer sales is both positive and significant. It's an increase we're just now beginning to appreciate in terms of improved market share. But WHY are we seeing this growth?
In my opinion, the increase in computer sales appears to relate to the increase in the number of Apple Retail Stores! I don't see the increase being due to the older, independent Mac stores. They may have saved Apple from total extinction ... but they certainly didn't contribute much to Apple's growth over the last ten years. In my opinion, that credit goes to the companies biggest risk of their existence: the new Apple Retail Store!
I think the article missed the boat ... it underplayed the important increase in Mac computer sales ... overplayed Microsoft's numbers ... and missed the important Apple Retail Store influence.
QuoteGuest wrote:
Please, please, please stop using the number 3 as a frickin' letter!
Um.... That's the name of the TV show? So, if he was playing at being the TV show, doesn't it stand to reason that he would stick with the title?
BTW, last year, I spent some time in the States--and watched very little TV, but this was the one show I enjoyed watching. Very well done, I thought--at least for modern US TV...
-Jon
Fri Mar 30, 2007 3:31 pm Subject: Apple is not a commodity dealer
Back in 2004, I wrote the following why Apple should be nothing like Dell:
http://www.cmug.org/pulpit/Dell3.html
I believe it still holds true today, and I believe that Apple is also keeping to their guns on this. They don't need market share to make money. They don't need to "own it all" like Microsoft. Everybody can get rich with what they have, and gaining a bit of market share will certainly help, but I don't believe Apple is after market share. They need enough users to attract the best programmers, and enough of it all to go around, build mind share, and grow their market. Market saturation, as Microsoft is discovering, isn't always necessarily a good thing. Apple is fine, doing fine, and will do fine, I believe. So such articles don't set me off or worry me at all.
-Jon
Fri Mar 30, 2007 3:40 pm Subject: The quality of numbers, not just their quantity.
Although it has been said that "quantity has a quality all its own"
[Winston Churchill?], there are differences in business models which
make it difficult to compare Apples and Microsofts.
Microsoft takes a bulk quantity approach in both its components
and marekts - which has led to increasing commoditization and
decreasing margins in a downward spiral.
Apple has been cherry picking for higher margin markets and moving
upscale - leading to greater cash flow from smaller market segments.
So there is a different quality to the Apples's segment of the market -
It does make a difference whether you are selling Yugos or BMWs.
Whereas MS needs world domination for a successful business model,
[resistance is futile] - Apple succeeds with product performance.
There is more to business than mere cash flow -
sometimes quality still matters.
Fri Mar 30, 2007 3:46 pm Subject: Technically not OT
Fri Mar 30, 2007 4:14 pm Subject: Why buzz about the tired paradigm of "MS vs Apple"
Jobs, shortly after returning to Apple, inroduced the idea of "digital life" and re-focused their business on the consumer. He well appreciated that the corporate or enterprise systems were Microsoft's to lose and that Apple responded best to human needs.
While "OS Wars" continue to be press fodder, Apple is really moving on. I believe it will become more significant to OSX users that Apple is successful with iPod, ITV and iPhone and brings those experiences back to their computers.
QuoteGuest wrote:
Most of the copies of Vista that will be sold will be bundled into the cost of new computers. I don't know about Vista, but the OEM cost of XP is about $30 a copy. The average cost of a Mac is $1500 of which Apple makes about $450. Yes, 150 million is bigger than 8 million, but the story that these numbers tell changes when you multiply them by other numbers.
Not counted in your equation is that Apple sells 3 million iPods a month and has been successful in expanding into other markets, while Microsoft's efforts to do this have failed. Then consider that Microsoft depends on hardware makers to sell its operating systems. HP just dropped MCE and Dell is talking about shipping Linux instead of Vista.
If your saying that Microsoft makes more money than Apple, then that is true. If your point is that Apple can't "turn the tables on Microsoft" that is just a game journalists made up to have something to write about. Apple is very happy with its very profitable and secure portion of the market. The "buzz" comes from investors who think that business isn't a matter of rolling dice and hoping to get lucky. People are talking about Apple because their performance lately has been worth talking about.
Your primary point is that Apple makes a lot more $$$ per Mac sold than Microsoft makes for every copy of OEM Windows sold and Apple sells iPods, so that means they'll always be more profitable than Microsoft? This is myopic at best. What about:
Office (very profitable)
Windows Server OSes
Windows Mobile devices/smartphones (sales growth is very good)
SQL 2005 (growing in market share and not exactly inexpensive for the Enterprise Edition)
Exchange (owns at least 30% of corporate e-mail systems)
Management Tools (SMS, MOM, etc.)
Integration Tools (BizTalk, Sharepoint, etc.)
Development Tools
Consulting Services
Video Games
Are you simply unaware that these markets exist? You may think everything is consumer driven and that desktops are music players are all that matter, but that's simply not the case. Microsoft is already deeply entrenched in many profitable markets where Apple doesn't even play in today and may never -- they shown a reuctance to even attempt entering the enterprise market again.
Apple's sales volume has obviously gone up, but their gross margins are eroding rapidly. Apple is becoming Sony: they will have to sell more and more devices for less and less money as time goes on, so they'll become more like Dell and Sony and less like the Apple of yore. This does not spell automatic profitability for the long run. Of course their current success may continue, but it's by no means guaranteed.
All these comparisons of OS X vs. Vista are so simplistic. They make for fun reading, but they're blown out of proportion. When you consider the broad range of technology solutions reuqired to please consumers and businesses today, you see that MS and Apple are very different companies that appear to be more in competition than they really are.
Fri Mar 30, 2007 5:00 pm Subject: Surely some mistake...
'The hole in the ozone layer was going to kill us all. But we fixed it with worldwide cooperation.'
I must have missed that one. The 'hole' is now bigger than North America and will continue to get even bigger for 20 years or so before slowly reducing in size. Meanwhile the solution to CFCs is helping to generate even more global warming...
Some fix.
Where are the iPod and Xbox totals ? Really if your going to compare Apples & Oranges include the whole fruit basket at least !
"Once an idea or technology is discredited, it's hard to reverse."
That's nothing new really, just human behavior.
"there is no massive trend to indicate that the Apple buzz is doing much to turn the tables on Microsoft"
The massive trend is the iPod, the Apple buzz IS turning the tables on Microsoft in this segment.
"The numbers tell all."
Unless they don't
Fri Mar 30, 2007 9:14 pm Subject: Good discussion
Thanks, John, for getting it going. I'd like to make a few discrete observations, all connected to the discussion at hand.
Firstly, I agree that one cannot write about market share without an understanding of what the "market" is. Steve Ballmer defines it as worldwide shipments of general purpose PC operating systems, measured in units. Clearly that is not Apple's market. We would be closer to it, if we defined it as worldwide sales of PC operating systems to individuals measured in gross margin dollars. Perhaps going forward it should be even narrower, by limiting it to sales for entertainment uses (broadly defined).
Secondly, let's remember the difference between market share and installed base. You can buy Leopard and run it on your 6 or 7 year-old Mac. Try doing that with Vista on your 3 year-old Dell or HP.
Thirdly, regarding disruptions. I see several possible: 1) today's 12-16 year-old wants a Mac, not a PC when he/she buys a computer in a few years. 2) OS-X fits in appx. 3GB; Vista requires 30GB; which one lends itself to flash memory devices? 3) Digital photography is exploding and nowhere more quickly than among the baby boomers. When they retire, they no longer must be wedded to the OS that they used at work.
Fourthly, (touched upon earlier), Apple controls hardware, software, and now has a successful retail presence. This business model is well understood at Cupertino and they are becoming adept at using it as a strategic advantage. When a shopper walks into Best Buy, etc. to buy an MP3 player what are the odds the salesman will demo an HP laptop to them?
Finnally, there are a lot of millions of people who have owned and used Windows for many years, not becasue they wanted to, but because they had to. In increasing numbers these people are now free for the first time to choose. Not that many love Windows. Monopolies are like that. Nobody loves the Post Office or the Electric Utility, and almost nobody loves Redmond.
This started out a discussion or numbers. The short term number I am focued on is 2Q Mac sales. If it is 1.5m or more, this is very bullish. The longer term number I think we all need to keep our eye on is OS-X shipments that include Mac, iTV, iPhone (even though not an Intel chip, etc.), and whatever new OS-X products are introduced. OS-X is an enormous stategic advantage against our chief competitor, which of course is Sony.
Fri Mar 30, 2007 10:05 pm Subject: Re: An Unabashed Look at the Apple Numb3rs
QuoteJohn Martellaro wrote:
But look at the absolute numbers. In 2008, Apple might sell 8 million Macs. Write that on an envelope. […] The chart says that Micrsoft will issue about 90 million new Vista licenses in 2007. In 2008, to contrast to the Apple numbers above, the Vista shipments jumps to about 150 million. Write that number down too. 150 million vs 8 million. Apple remains at 5.3 percent through 2008.
The figures are taken from an IDC study about the impact of Vista in IT. Not surprisingly, the chart showing the number of Vista licenses issued by Microsoft is almost similar to PC sales figures in the commercial segment (enterprise sales), as you can see in the latest IDC press release. To get a more accurate picture you should add PC sales to consumers. As you said, "look at the absolute numbers."
Worldwide PC sales according to IDC, commercial | consumer:
2005: 129 million | 78 million
2006: 138 million | 89 million
2007: 152 million | 100 million (forecast data)
2008: 168 million | 113 million (forecast data)
2009: 182 million | 123 million (forecast data)
If both forecasts are somewhat accurate the Mac will continue to gain a bit of worldwide market share every year, in 2008 Apple will be at 8/281 = 2.85% (up from 5.655/228.5 = 2.47% in 2006). We can assume that, as usual, market share gains will be faster in the United States. In 2006 Apple's share was 4.7% in the U.S. for the whole year (up from 4.0% in 2005).
Apple's market share numbers may not sound impressive, but the company is gaining share while maintaining the Mac average selling price, and its margins. To gain market share, other manufacturers are aggressively slashing prices, the PC average selling price goes down and their margins are thinner. Apple doesn't need to slash prices to grow faster than the overall PC market.
Apple F1Q07 Earnings Call Transcript:
David Bailey - Goldman Sachs: "Just a question on the Mac side. You saw a pretty good sequential up-tick in the ASP, and I was wondering if you were starting to think about maybe pricing a little more aggressively to accelerate Mac growth even more going forward?"
Apple's CFO: "As Peter said, we grew at three times the market. […] I believe we have very, very competitive product offerings that are delivering substantially above market growth. We have no reason to change."
QuoteGuest wrote:
Apple's sales volume has obviously gone up, but their gross margins are eroding rapidly.
Hmmm, no.
Quarter ended Dec. 27, 2003: Apple gross margin 26.7%. Mac ASP: $1,530.
Quarter ended Mar. 27, 2004: Apple gross margin 27.8%. Mac ASP: $1,548.
Quarter ended June 26, 2004: Apple gross margin 27.8%. Mac ASP: $1,441.
uarter ended Sept. 25, 2004: Apple gross margin 27.0%. Mac ASP: $1,472.
Quarter ended Dec. 25, 2004: Apple gross margin 28.5%. Mac ASP: $1,534.
Quarter ended March 26, 2005: Apple gross margin 29.8%. Mac ASP: $1,396.
Quarter ended June 25, 2005: Apple gross margin 29.7%. Mac ASP: $1,324.
Quarter ended Sept. 24, 2005: Apple gross margin 28.1%. Mac ASP: $1,303.
Quarter ended Dec. 31, 2005: Apple gross margin 27.2%. Mac ASP: $1,374.
Quarter ended April 1, 2006: Apple gross margin 29.8%. Mac ASP: $1,413.
Quarter ended July 1, 2006: Apple gross margin 30.3%. Mac ASP: $1,406.
Quarter ended Sep. 30, 2006: Apple gross margin 29.2%. Mac ASP: $1,374.
Quarter ended Dec. 30, 2006: Apple gross margin 31.2%. Mac ASP: $1,500.
You're correct. I should have clarified my comment regarding gross margins -- I meant to say margins on a per productsold /per transactionbasis. The ASP of each MAC may be steady, but the ASP of all products Apple sells is undoubtedly going down.
From Apple's January, 2007 release: "Apple shipped 1,606,000 Macintosh computers and 21,066,000 iPods during the quarter, representing 28 percent growth in Macs and 50 percent growth in iPods over the year-ago quarter."
The growth of Mac sales is great for them, but from everything I've read, the growth in iPod sales is mostly on the low end (Nanos, etc.) and the ASP for these devices is going down. At some point in the not too distant future, market saturation for music players will start to kick in and I don't think the loss of revenue in this segment will be offset by Mac sales and iTunes sales alone.
My point is that Apple will need Apple TV or something else to be a hit and a profitable one at that to keep the growth trend alive -- I don't doubt they'll find something to fill the revenue gap. While Microsoft is also in the consumer space with the XBox, Media PCs, etc., Apple's expansion into the consumer space contrasts with Microsoft's strong performance in the enterprise space -- that's why I view them as competitors on a minor level and complementary comanies on a major level. The perceived "desktop OS wars" are much less valuable to Apple and MS' respective businesses than they seem from the consumer perspective.
Projections are just more or less informed guesswork, based on a limited number of assumptions.
In a simple system the number of variables is small, so the number of assumptions can be small, so your chances of making reasonably accurate projections are quite good. The computer industry is not, by any stretch of the imagination, a simple system.
Complex systems have a latge number of variables, so any forecasts involve a large number of assumptions, any one of which may prove to be wrong. For this reason