Will Apple launch a netbook? And other burning questions

Will Apple launch a netbook? And other burning questions

Summary: Apple has said "it doesn't do cheap," but one analyst reckons that Steve Jobs & Co. will address the netbook market at some point--either with an 11-inch MacBook Air priced between $800 and $1,000 in 2009 or a tablet Mac in 2010.

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Apple has said "it doesn't do cheap," but one analyst reckons that Steve Jobs & Co. will address the netbook market at some point--either with an 11-inch MacBook Air priced between $800 and $1,000 in 2009 or a tablet Mac in 2010.

That's one of the more notable takeaways from a research note by Piper Jaffray's Gene Munster. He examines 12 questions surrounding Apple's quarter. On the netbook issue, Munster notes that "Apple could find success with a product in its lineup between the iPhone and the MacBook." He did note that the iPhone accomplishes much of what a netbook is used for--Web browsing--but could use another multi-touch device. Jason Perlow has noted the same thing and as a netbook novice I'd vote for the Mac tablet.

Among Munster's other questions:

How's Apple's business? Munster says he believes that the current quarter is in line with Wall Street estimates. MacBooks and Macs appear to be selling well. He is predicting Mac units between 2.5 million and 2.7 million units. However, iPod growth is slowing and that offsets Mac momentum.

How's Apple managing the downturn? Munster says Apple is most likely working component costs based on daily sales reports from its retail stores and channel partners. That approach means that Apple is tightly managing inventory since it has little visibility. A separate question from Munster focused on gross margins--the analyst is predicting 31 percent gross margins in fiscal 2009, up from Apple's guidance of 30 percent.

How are MacBooks selling? Munster says:

We believe the new aluminum MacBooks ($1,299) are selling well. While we do not believe sales are exceeding Apple's own internal estimates, as the stores have had ample supply throughout the launch, we now believe the Mac unit number for the Dec. quarter may exceed our and Street expectations of 2.6m. We note that the new product will likely lift Mac ASP's (average selling prices); during our in-store checks we found that the new aluminum models (priced $200 higher at the entry point than the previous white plastic MacBook model) are vastly more popular than the newly priced white plastic model ($999). We caution that our in-store checks do not reflect the direct sales to the Education market where the $999 model is likely finding more success.

What's Apple's iPhone gross margin? Munster reckons that the average selling price of the iPhone from Apple to carriers is $630, but the company should be able to lower that price by about $150 over the next six months, but maintain margins. Bottom line: iPhone gross margins are in the high 30 percent to low 40 percent range.

And how's the iPhone international rollout going? Munster says the iPhone international rollout is in the early stages. Munster writes:

According to our checks on the iPhone international website, availability will grow from a subscriber base of about 660m subs in 44 countries in late Aug. to about 989m subs in 73 countries by the end of the year. This represents 50% growth in addressable subscribers ahead of or during the holiday quarter.

The other wild card for the iPhone is China. Munster predicts that Apple will launch the iPhone with two China carriers in 2009--most likely China Mobile and China Unicom.

Will the iPhone be a gift this year? Munster writes:

Due to changes in the activation process (in-store instead of at home), the iPhone 3G is more difficult to purchase as a gift. AT&T offers gift cards for the iPhone 3G and voice and data plans, but a simple gift card is not as exciting as the phone itself. To solve this, it would make sense if Apple follows AT&T footsteps and offers an iPhone 3G gift cards this holiday season. If this is successful, we see it as a positive for shares of Apple given most investors are not expecting a strong holiday period for the iPhone.

Will there be a new iPhone? Most likely. Munster says it's likely that Apple will launch a cheaper iPhone at $199 or so and then keep a premium model that tops the $299 16GB iPhone. Munster notes: "Apple could lower the price by removing features like 3G and GPS; alternatively, Apple could make a premium SKU with a sleeker design using higher-end materials, more processing power, better graphics and more storage."

Is iPod growth over? Munster says growth in the iPod business "is clearly under pressure" and in fiscal 2009 units will decline 12 percent.

How many retail stores will Apple open? Apple opened 50 in fiscal 2008, but Munster reckons there will be 20 to 30 stores opened in fiscal 2009. Why? The economy and Apple is saturating top tier malls already.

Topics: Apple, Hardware, iPhone, Laptops, Mobility

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23 comments
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  • Apple's Proprietary Ways

    will keep them in their ongoing 'elite' niche market unless they open up 'just a little' and OEM OS X.
    no_zd_user_name
    • Maybe if they created a secondary brand they could

      But as it is Apple sells solely in the elitist niche market.

      Maybe they should make a brand called Acorn that sells netbooks to poor (read: lower middle class) people.
      T1Oracle
    • That 'elite niche' spot seemed to be working

      I always wondered why some view this as a problem. If Apple wanted to be like a DELL don't you think they would have open up eons ago?
      dave95.
  • 11" for $800?

    In a tough economic downturn? Heck, with huge spending deficits and bailout city happening, I can see a full on depression. It will be a tough sell. Time will tell.

    TripleII
    TripleII-21189418044173169409978279405827
    • You never know...

      If over 2 million people were willing to spend $1300
      on a non-upgradable, full-of-shit parts macbook in
      [i]one quarter[/i], im guessing they would spend twice
      as much for the same components as a $400 netbook as
      well
      joebishpie
    • Why not?

      If Apple does launch one at that price point, it's clear that they're not really competing with what we currently call a netbook, especially when the launch estimate is more than a year a way.
      '
      And speaking of 2010, who knows what the economy will look like a year from now.
      notsofast
  • RE: Will Apple launch a netbook? And other burning questions

    The problem with netbooks is that they were designed for
    third world countries and the needs of a low tech
    populous. They suck here. If you want to do anything other
    than check eMail and web browse they are really nasty at
    it.
    If Apple came out with a really neat unit at around $699.
    they would own this market. The thing about Apple is
    whatever it comes out with will have the features most
    people want and some that we didn't know we wanted but
    find out quickly that we do and it will be much cooler than
    anything else on the market. Having switched 2 years ago
    from windows to Macintosh I will be holding off on a
    netbook purchase until Apple does something in this
    arena. I don't mind paying for quality and right now the
    only laptops worth my look are priced above $1000. You
    get what you pay for and the current shark feeding of
    netbooks are seriously lacking.
    aplman
    • No, Netbooks Are For Non-Techie Road Warriors, Living Room Web Surfers,

      truckers, classroom&library computer for students, and so on. Just b/c it's not powerful enough for you doesn't mean that plenty of First World consumers couldn't use a modestly-priced (12 and 20
      GB EEE PC 901s are selling for about $350 on Amazon.com, and the Acer Aspire w/Win XP Home is selling at OfficeDepot today for $349), small&lightweight, wifi-enabled device as a second computer that can be easily taken everywhere, and is solid-state so you're not forever fretting hard disk failure if you happen to drop it on the table too hard or your knapsack slips off your back.

      So what if it can't do more than e-mail, basic Web surfing and word processing or simple spreadsheets? That's all most people [b][i]need[/b][/i], most of the time. When you need more, that's what your main computer's for - that's also why it costs two-three times as much as a Netbook.
      drprodny
      • Exactly.....

        It's a second computer for light work (if any). There is a market for these netbooks obviously. I won't be surprised if Apple have one cooking based off their iPhone multi-touch OS. These will see more demand/sales than the UMPC and Tablet PC. Not everyone want's to carry around a full blown power-horse Tablet PC or UMPC on the road.
        dave95.
  • RE: Will Apple launch a netbook? And other burning questions

    I believe Apple would (and will) introduce a netbook form factor if and when they can fit such a product into the Apple "ecosystem."

    That would be the paramount question to answer. So far, everything Apple comes up with in gadgets tends to push the sales of their computers; if you get an iPod, you eventually will want a laptop or desktop.

    So I'm not sure how a netbook would work into the mix. It would have to be useful enough to sell easily, yet be crippled enough for someone to start to yearn for a full Mac. So what would you leave out? Video editing capability? Windows emulation? Port access (the Air is already getting low on that functionality)? Apple TV compatability?

    Any of these cuts might make for a cheaper, easier to handle computer. I would think that a Mac netbook would at least offer email, iPod/iPhone access and some video viewing capability (as well as an office suite) for children, grandparents and third-world clients. But any reduction in utility would reduce the desirability of a netbook (and make it less competitive in comparison to the other product available). That would also go against the Jobsian ethic of empowering the user.

    So I don't see where the niche settles here; how can Apple make an introductory product that doesn't compromise the characteristics that make the Mac such a compelling buy?
    smith930@...
  • If you "Don't do cheap", you "Don't do market share" either

    Doomed to be the "other OS", I suppose.

    Funny though, the Nano seems to me to be the cheap version of the iPod
    CEDeaton
    • Strange you should say that...

      ... since Apple's market share is still growing even during
      this economic downturn. Even the review quoted that
      Apple looke to sell over 2.3 million new aluminum
      MacBooks during this quarter as well as an unknown
      number of the older white models--demonstrating
      staying power despite the perceived market crash.
      Vulpinemac
  • Don't do cheap but do over-priced and buggy

    Apple=great marketing, over priced PC's running on an OS that's as buggy as Vista.
    johnnydoe1894
    • Re: Don't do cheap but do over-priced and buggy

      "overpriced PC's running on an OS that's as buggy as
      Vista"

      Johnnydoe1894 is clearly someone who has never
      properly used either operating system. OS X is built
      on BSD *nix - only a fool would even consider
      comparing it with Vista.
      indrasarkar
      • Here, here

        It's a heap load more stable. Mine goes months without crashing once and I'm using some pretty powerful and demanding software!

        To do price reduction means equipment reduction which means performance and functionality loss and THAT is why Apple won't do cheap. What, seriously, can you do on a Notebook? Play high demand games? Run Photoshop? Run Maya or Max etc. You can on a MacAir - but with substantial loss of power.

        iPhone - a Mac with reduced performance and power and functionality. And less than $700 - There you go!
        seaniepie
  • RE: Will Apple launch a netbook? And other burning questions

    I agree, HP have one for less than 200GBP now. People 'need' to look for cheaper options. Apple, no doubt, will say this 'is' the cheaper option - for a mac! Which I suppose is true in someways. But will the specs be up to and over that of the HPs? Maybe... We'll have to see.

    Yesterday saw the posting about the cut backs in production for Apple. But this just makes sense. The markets not long flooded with a heap of people doing the switch. But that influx was bound to slow a little. The swapsies retailers are doing also makes sense for those who have the old and want to go to the new. And it's a brilliant offer (if you can find it!).

    So perhaps apple are ding the right thing and sending the right messages. You can't expect to buy Ferrari's at Ford prices. I know that will rile a lot f zealots out there but it's NOT about power, speed or performance - not even sales or style - but it's about status. It's a symbol. You buy what you can afford. Some buy the keyfob - others the car!

    All the best guys.

    Mr Pi
    seaniepie
  • RE: Will Apple launch a netbook? And other burning questions

    They already have two pocket sized netbooks, the
    iPhone and iTouch. Both are computers, albeit with a
    small screen and keyboard. What will a netbook do
    that these pocketable computers will not? Maybe
    Apple could modify both to work with a standard
    keyboard and monitor also.
    arminw
  • RE: Will Apple launch a netbook? And other burning questions

    YEAH! Maybe even $1,000
    pcolajack@...
  • RE: Will Apple launch a netbook? And other burning questions

    Who is going to be the first to recognize the Pandora's Box
    that Apple opened with the iPhone? The Net-Information-
    Access-Appliance is a new breed of cat. Not meant for
    extensive typing sessions in creative writing or holding to
    your ear like an old Ma-Bell phone; but larger than an
    iPhone, and smaller than an EEE-PC. Phone with a Bluetooth,
    type with thumbs, Nuvi sized screen, WIFI access (sorry
    Storm - you lose!) Keyboard docking station with USB printer
    port. HELLO?
    pcolajack@...
  • Analyst = fanboy

    Analyst = fanboy.

    Analysis = wish list.

    Hence it is hard to believe.
    magallanes