Two cents on the latest and greatest from Cupertino

Two cents on the latest and greatest from Cupertino

Summary: Bob Snow emailed me his thoughts on the new MacBooks, and the economy in general.This week, Apple made a great industrial design statement while going somewhat off-track into a recessionary economy.

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Bob Snow emailed me his thoughts on the new MacBooks, and the economy in general.

This week, Apple made a great industrial design statement while going somewhat off-track into a recessionary economy.   Let me clarify. The high margin MacBook Pro computers are great.  Super industrial design and superior graphics capabilities make these machines a home run.  If you dwell among the higher echelons of mobile users, this was nothing but good news.  The glass screen and glass clickable trackpad are wonder designs.  Unibody is just too cool.  For the price, this may be the best mobile Mac since the TiBook.

Now, if you are just a regular old MacBook person or a student with little prospect of a job at graduation, this is more of a mixed bag.  Ante up a bit more cash and an all aluminum MacBook with much of the panache of the Pro machine's is yours.  I think the new MacBooks may be the best deal around.  BUT, the problem is this.  We are in a serious economic situation which will probably lead people to buy the most horrendous US$500 laptop imaginable, simply because it costs US$500, period, end of story.

Apple has pretty much dedicated one legacy machine to this exploding market.  Leftover white, plastic MacBooks can be purchased for US$999 for the low end. An orphan for just under a thousand. I see a big divide between a loss leader based on old technology and an upgraded, up-priced machine that is wonderful, but just too expensive for this distressed market.  This is what happens when the folks in charge just don't get it.

There is a nightmare scenario brewing with a mix of credit distress and retail plunge.  The next shoe is about to drop in the world of banking catastrophes.  The banks left standing are now the consumer debt powerhouses in the wake of the real estate meltdown.  Look at the banks of record on your credit card stash.  These are the next to fall.

I agree with Bob that Apple is completely ignoring the current economic strife. The problem is that notebooks like the new MacBook are designed years in advance. There's almost no chance that Apple could have predicted our current economic meltdown, but they could have planned a little better.

I was overjoyed at the prospect of a US$800 MacBook when that rumor surfaced and it would have been exactly what the market needed – and it would have sold by the bushel. Instead Apple (once again) ignored the low-end and released a premium-priced notebook, when an economy-priced notebook is needed. Sure, some people will buck up for the shiny, new MacBooks but I have a feeling like most people will pass.

Topics: Laptops, Apple, Hardware, Mobility

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10 comments
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  • Planned long before downturn

    You don't cook up new machines
    overnight. It takes time, a lot of time.
    These things were in the works long
    before the economic problems surfaced.

    If they had been introduced a few
    months earlier, there would have been
    no discussion about introducing rather
    expensive items in a downturn.

    The auto market faced a similar
    problem when the price of gas shot up
    in the spring. It has effected 2009
    models of SUVs and other gas guzzlers.
    Those vehicles were also planned before
    the gas price bomb hit.
    j.m.galvin
    • Good Point

      I'm in general agreement, except the gas-guzzler analogy
      may not quite be appropriate. As gasoline is bought
      frequently, it's a cost that gets noticed.

      Apple is gambling, but I don't see as how they are making
      a foolish bet. They are confident in the quality and user
      satisfaction for their product. They are pleased with their
      profitability. Lower price products are achieved via a
      combination of the following: 1) lower margin, 2) lower
      quality, 3) less research and development. All three tactics
      have an impact on current or future profits.

      If Apple sales decline it will be because the entire market
      sector is declining. Remaining profitable and preserving
      brand good will feels to me like a wise way to ride out a
      temporary down cycle. Apple's commitment to quality may
      mean that their fall-off is less than the others in the
      sector. Meanwhile, let's say one made $1 profit on a $500
      budget machine and $2 profit on the entry $1000 system.
      Margins are the same, but clearly, one needs at least two
      buyers for the $500 system for each buyer lost for the
      more expensive. That means market share is doubled by
      entering into an already competitive sector. What happens
      when the upcycle returns? Kill the budget line?

      Which is to argue that the budget line thing is not an
      obvious choice. Now, if this recession is the catalyst which
      promotes a disruption (such as Linux and small
      notebooks), then Apple loses the gamble.
      DannyO_0x98
  • I am REALLY sick of these ^?)*%*)*^% Apple rumors!

    As a long-time Apple shareholder, I've had it up to here with all the pre-product-announcement hooha that has been going on for years. The scenario is always the same: The rumor mill starts cranking out what everyone THINKS Apple should do for weeks before the announcement. The latest madness is no exception. Everyone dreams of a MacBookPro for $800. Who came up with this $800 figure anyway? And, of course, there won't be any corners cut! Oh, no!!! This $800 wonder will be able to do everything that the top-of-the-line machines will do. No wonder everyone says it would sell like crazy!

    So the crowd gets all spun up about the $800 whiz-bang, and what happens? The price of the bottom-of-the-line machine turns out to be $999, not $800, and it's PLASTIC--not even a sexy metal unibody! Everyone is bummed because the highly-hyped, cheap, do-it-all machine doesn't appear. Apple gets mean-mouthed for NOT making it happen, and, of course, the stock takes a big hit because all the anal-ists, who have helped "design" this fictional new product, are "disappointed".

    In case anyone hasn't noticed, Apple has been doing extremely well financially. That doesn't magically happen because your product design and pricing strategies aren't working. With the crazy financial stuff that's happening, who knows what the future will bring? I'm sure Apple will take some sales hits along with everyone else. But even their high-end products are not in the category of major expenditures, like housing and automotive, so I'm betting their pain will be less than that in other sectors.

    In the meantime, why don't all you bloggers, journalists, anal-ists and others who like to design and price Apple's products for them just go to work for Apple and make it happen?
    Userama
    • Overpriced

      I think what you are seeing is everyone realizing some of Apple's products are overpriced. By your own admission, this bottom of the line, PLASTIC, notebook is still $1000. When you can get 2x the PC notebook (hard drive, memory, etc) for $600, then it looks like things are out of whack. By only lopping off a $100 is Apple really trying to provide a quality product? Or are they just trying to squeeze every dollar out of a left-over, has-been product whose hardware has been passed up by the competition.
      jshaw4343
  • Missed Opportunity

    I think Apple missed an opportunity here. If I were Apple I
    would have made this new MacBook the 13" MacBookPro,
    dropped one usb port for a firewire 400 and you've got a
    small pro machine, if you want better graphics, card slot
    you need to move up to the 15".
    I don't know what the big cost factors are in the new
    machine, the unibody process or the Nvidia chipset, but
    the MacBook line needs to be less expensive. The Intel
    chips are not getting faster, my 2 1/2 year old MacBook
    Pro is a 2.16 GHz CoreDuo and serves my needs in a
    portable machine. So I don't think you need to put the
    fastest processor ($$$) in the low end portable, improved
    graphics are always nice (especially with the 10.6 GPU
    features coming soon) but the primary use of these
    machines is word processing, email, internet, that doesn't
    require a lot of graphics power.
    The $999 MacBook is a good machine, but should have
    had 2GB of RAM for that price. This is an 8 month old
    system design, it's hard to believe that component pricing
    couldn't have been squeezed to make this a more
    affordable machine. My guess is that they really had no
    plans to keep the old models around, but saw the economy
    declining and knew they couldn't replace $1100 machines
    with $1300 machines and keep increasing their
    marketshare.
    alexwt
  • RE: Two cents on the latest and greatest from Cupertino

    Apple is not going destroy is's upmarket brand image just because of the economic crisis... this brand has been built on many years of superior product (and price) development... it would be a bad move, those who think macs cost too much are not apple's target market. Yes even those who are in the target market and who have the cash may be giving second thought to some of their purchases, but no company or product is able to escape some of this during this kind of an economic crisis... apple has the cash to wait it out and their brand will continue to be one of the worlds most respected.
    ThisBlogSucks
  • RE: Two cents on the latest and greatest from Cupertino

    "I was overjoyed at the prospect of a US$800 MacBook
    when that rumor surfaced and it would have been exactly
    what the market needed ? and it would have sold by the
    bushel."

    I doubt it. To make it for $800, it would be lacking in
    performance or features and you and all the rest of the
    Microsoft controlled blogosphere would be trashing it for
    that. Whatever Apple does will be trashed and discredited
    all over the internet, so it might as well do the excellent
    products that Steve and Jon Ive want to make.
    zato_3@...
  • The crunch will bite the low en market!

    Soon the so called analysts (probably the same people who
    did the credit rating for all those fallen banks) will get the
    picture. It is better to be in the top and medium segment
    of the market than the low end. You might sell like crazy
    in the low end, but you have to spit out 20 times more
    notebooks in order to make the same profit in dollar terms
    as selling one high end notebook. on top of that you
    cannot provide a decent service to your customers, so
    customers become angry and thus will damage your
    brandname. Apple might take some hits, but I dare to say
    that the discretionary income of people who buy lifestyle
    products will suffer less than that of the non existing Joe
    the Plumber. Have a look in the industry and see who are
    hardest hit. What apple does, makes sense, never mind the
    vinegar pissers.
    rhon@...
    • Excellent point!

      Sounds like you and I share a common--shall we say-- skepticism about anal-ists. :P
      Userama
  • RE: Two cents on the latest and greatest from Cupertino

    Apple has never tried to appeal to the low end market or
    compete on price. Even if just one in ten buyers purchases a
    Macbook or MBP their market share will continue to increase.

    Apple has always considered itself a premium brand, it's not
    going to degrade it's image or reputation by competing with
    Dell, HP, Toshiba, Sony etc in the low price segment.
    Masari.Jones