The Wintel blue light special

Attention MSmart shoppers. Wintel's results are in the toilet and Apple's surpassed estimates.

Attention MSmart shoppers. Wintel's results are in the toilet and Apple's surpassed estimates. Despite Microsoft's sassy Laptop Hunter ads, Apple sold more Macs than anyone expected. Want to know why?

Win on price, lose on price Behind the engaging little customer stories in the Microsoft ads there is one simple message: "Windows notebooks are cheaper than Apple notebooks." Cheaper, not better.

No wins in speed, security, quality, weight, comfort, coolness, or whatever. They just cost less. That's it.

Which is wonderful. But it gives Apple a simple response: cut prices.

In June they did. And sales soared.

How much? Wall Street's consensus estimate was 200,000 Macs below the actual sales. Since the price cuts came in the last 3 weeks of the quarter - and sales were presumably lagging - the cuts up'd Mac sales by ≈300,000.

If the economy stays steady - and I doubt we've seen the worst of it - Apple could ship a record-breaking 3.5 million Macs this quarter. And if they release a $799 MacBook, even more.

Not big cuts either. It didn't take much. The cuts ranged from $100 to $800 - plus some added features.

For the entry level 13" MacBook Pro they added features - FireWire, 9400M graphics and 7 hour battery - and dropped the price almost 8% or $100. On the entry-level 15" they dropped the price $300, or 15%.

Those prices are still way higher than the average Wintel notebook. Even with the cuts Apple's gross margin - the difference between product cost and sale price - jumped to 36.3%, or more than 3 percentage points higher than they'd forecast.

Translation: Apple can cut prices further. Expect the next move to be an $899, or even $799 machine. The long-rumored tablet or a cost-reduced MacBook? Either would work.

The Storage Bits take Microsoft seems to have forgotten why it is in business: to build great software. Not video games, cellphones, advertising or music players.

They spend $10 billion a year on R&D. Many of world's top computer scientists and software engineers work there. There's almost nothing they can't do in software.

And yet. We get the Vista fiasco and Zunes. A security soap-opera starring you as the victim. Billions poured into business distractions like online advertising. MSN. MSNBC. Anti-trust violations. Patent infringements.

And the only thing they can say is "notebooks running our software are cheaper?" Sad.

Update: Some commenters are confused. I'm not saying that Wintel can't claim anything beyond cheaper. But that is all the ads claim. Stay tuned for an upcoming post on the subject. End update.

Comments welcome, of course.

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