Charlie Wolf: Apple’s Mac is a river that flows upstream

April 2, 2014, 3:17 AM UTC

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FORTUNE — Apple’s (AAPL) computers cost more than its competitors’ — an average of $700, according to Needham’s Charlie Wolf. Yet its market share, as indicated by Figure 1, has grown in 10 out of the last 11 years.

iPhones also cost more than the competition. Yet Apple’s worldwide smartphone market share peaked at 23.8% in December 2011 and has been bouncing around at lower levels ever since. (See Figure 6.)

Why the difference? Wolf has a different theory for each device.

The Mac, he says, “seems to defy the laws of economics.”

“The only explanation that we see,” he writes, “is the now-mythical halo effect. Beginning with the iPod in the middle of the past decade and then extending to the iPhone and iPad, a meaningful number of Windows users who bought these products seem to have switched from a PC to a Mac… What should be underscored is how unique the Mac phenomenon is. Indeed, it’s the only situation we’ve encountered where shifts in the demand curve completely swamped movements along the curve itself.

“In the face of rising relative prices, we view the Mac’s success as the rare instance where sales increased in the face of rising prices.”

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The iPhone is not so fortunate. But its loss of market share, Wolf believes, has more to do with geography and carrier business models than, say, the prevailing theory: screen size.

“The iPhone’s loss of worldwide market share,” he writes, “chiefly reflects the shift in smartphone market share from developed, postpaid markets to emerging, prepaid markets. This shift was not driven by a change in consumer behavior but rather by rapidly falling prices of smartphones, especially in Asia Pacific, which induced feature phone users to switch to smartphones. We calculate that the iPhone’s share of the smartphone market would be over ten percentage points higher were it not for the migration of smartphone sales from developed to emerging regions.”

Is that good news for Apple or bad? That depends, I suppose, on what the iPhone demand curve does as the developed world’s markets mature.