Apple's new Macbooks: flop or fiasco?

Apple's new Macbooks: flop or fiasco?

Summary: The news that Apple has cut Macbook production by 20-30% may not be surprising given the world economy. But when HP reports that their Q3 notebook revenue grew 26% and Mac resellers are offering rebates on the new 'books things have gone very wrong in Cupertino.

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The news that Apple has cut Macbook production by 20-30% may not be surprising given the world economy. But when HP reports that their Q3 notebook revenue grew 26% and Mac resellers are offering rebates on the new 'books things have gone very wrong in Cupertino.

Looking, but not buying When Apple's CFO commented in July that Apple's margins would drop due to a "product transition" speculation ran high -- and I gladly joined in -- that Apple was bringing some exciting but still costly technology to the new Mac box.

Blue ray? Nope. Wi-Max? Nope. Standard solid-state drives? Nope.

We did get some costlier, lower volume technology: LED backlighting; fancier graphics; and a touch sensitive trackpad. All good.

But we also got another costly addition that no one was asking for: the machined-from-a-single-block-of-aluminum unibody structure. When was the last time you picked up your notebook and thought "I wish it weren't so flimsy!"

Steve geeks out Steve Jobs is a design geek, which is usually a Good Thing. But he over reaches regularly and the results hurt.

The NeXTCube's magnesium case, while lightweight, was costly and added nothing to the computer's appeal - until you burn it. NeXT got out of the hardware business after selling only 50,000 systems.

The later Apple G4 Cube was a commercial flop as well despite achieving cult status and a showing at the Museum of Modern Art. The Cube cost more than the more expandable Power Mac G4 due to its low-volume design.

The iMac G4's innovative swing arm monitor mount looked very cool, but its cost, added to the digital LCD monitor's cost, made the product less competitive. After less than 3 years the design was replaced by the current iMac slab design that, with revisions, is over 5 years old.

Flop or fiasco? Steve's history of putting form before function - or price - comes at a particularly bad time. The worldwide economic crunch - heckuva job, Greenspan! - is moving everyone down market.

Netbooks are moving prices into iPod Touch territory. And with Moore's Law pushing performance up more people will buy them instead of standard notebooks.

But Apple's biggest problem is that it is building extra cost into a product category that is moving down in average selling price. Windows notebook prices have dropped 20% in the last 2 years - while Macbook prices have stayed steady.

With the crash in disk, DRAM and display costs the latest generation of MacBooks could have changed that. As Apple's largest selling product line their continued rapid growth would have overcome the revenue shrinkage of a lower price with higher volume. But that won't happen now.

The Storage Bits take Macs are good systems, but Apple's made mistakes before with design and pricing. The unibody design, like the iMac swing arm, will be a 1-generation aberration.

Great industrial design is more than ergonomics and esthetics. It also responds to market realities - in this case a crashing world economy and dropping sale prices - by careful attention to priorities.

By investing in a costly feature no one asked for Apple is stalling its rapid growth in notebook marketshare. Whether it is a flop or a fiasco depends on how bad and how long the global recession is.

Comments welcome, of course.

Topics: Apple, Hardware, Laptops, Mobility

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209 comments
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  • Wonder how the white one is selling?

    It would probably be interesting
    to see what the percentage of
    units sold is for the $999 white
    one.

    In general, the macbook target
    market should be those who are
    simply looking for a reliable
    notebook at a reasonable price
    (as opposed to the Macbook pro
    market). The $999 one should
    satisfy 95% of that market.

    My guess is that the author is
    correct about the single block
    aluminum enclosure. Probably
    about 6 people in the entire
    world actually care about it. If it
    adds to the cost, it's silly.

    One caveat: There are always rumors about what Apple is
    doing so the cut in production
    might be true or not.
    j.m.galvin
    • I dunno, $599 laptops are pretty compelling.

      While I think it is good that Apple is selling their laptops at more of a discount I don't think it is enough. You can generally get a fairly comparable (performance wise) Compaq laptop for around $599. Sure it doesn't have all the bells and whistles but it can meet the same needs for the next 2-5 years.
      mikefarinha
      • Different market

        The 599 PC notebook vs the Apple 999 notebook is not the completely valid because the mac comes with something different than any PC notebook - the OS. Likewise, most PC notebook sales are not in the 599 dollar range. They are at a significantly higher price point.

        There is a significant minority of computer buyers who prefer OSX to Windows. The reputation of Vista, whether deserved or not, has not helped.

        The author points out the growth of HP notebook sales. However it is not known how much of that growth is at the expense of other PC notebook sellers, like Dell.
        j.m.galvin
        • Does it matter?

          [i]However it is not known how much of that growth is at the expense of other PC notebook sellers, like Dell[/i]

          It may very well be at the expense of all laptop seller, Apple included.

          The bottom line is that while people are not purchasing MacBooks, they [i]are[/i] purchasing HP. There must be some reason behind it, could it be that Apple took a chance with concentrating too much on style over substance, and lost?
          GuidingLight
          • Can't compare past to present

            The cited growth of HP was from their latest quarterly report. Apple's last quarterly report also showed enormous growth of notebook sales. In other words, they both cite the past.

            The report about Apple slowing manufacture represents the present, and even future.

            As this article mentions, Apple does make goofs. I do think that adding unnecessary expense to a product, if that aluminum block thing does add coast, is not the best move.
            j.m.galvin
          • Agreed. Aluminum is nice

            but not necessarily for a laptop. The intake manifold on my classic car, yes, but not laptops

            For laptops, and in today's market, focusing on a few features people would be willing to pay a little extra for wouldn't hurt. but I don't think Apple had any idea that the markets would have turned as they did, and given manufacturing lead times, probally not much they could have doen.

            Things will level out, a few minor design changes, they'll be on their way to decent growth in that field.
            AllKnowingAllSeeing
        • The Resession Will Change the Market Dynamics

          I'd normally agree with you that they are different markets, however due to the slowing economy I think the market won't be so rigid with their choices.
          mikefarinha
          • maybe yes, maybe no

            Consumer actions in a recession are unpredictable. That is because many are not effected by loss of job, some are, others are fearful of job or income loss.

            One would think that dirt cheap cars would be selling right now, but they're not. Toyota has had to offer a higher rebate on Corolla than on Camry, while both Yaris models come nowhere close to the volume of Camry and Corolla. Hyundai and Kia market share have not increased recently, despite a generally lower cost and better warranty.

            The most common consumer behavior in recession is to hold off on discretionary items. So someone who WANTS a new computer, but does not NEED one, might just decide to keep what has. This is more true of expensive items, like computers, major appliances, etc. than cheaper things, like clothing.
            j.m.galvin
        • Oh Please...

          It's not about the OS, otherwise this "significant minority"
          would be running Debian, Ubuntu or Suse Linux on a quad-
          core intel processor.
          FirefighterDan
          • Please - GIVE IT A REST!

            You Linux geeks seem to think you have the answer to world hunger and a few other small problems. If I wanted a geeky system, I'd be happy to use Linux. But...I want a clean, smooth-running, 99+% trouble-free OS, so...I use OSX on my Mac. Don't tell me that the "significant minority", of which I'm a part, would be better off playing with command lines and 4,392 varieties of the "same" OS. We're Mac users for a reason - most of us could certainly afford Linux, but - you won't see me jumping ship in this century.
            macbill
          • Nice Red Herring...

            and Ad Hominem attack. I'm going to beat you to the Appeal to Ridicule fallacy before you hit the trifecta.

            I'm not a Linux "geek"
            A. I own and use an ibook.
            B. I use Windows at work.
            C. I own a Linux box.

            "Don't tell me that the "significant minority", of which I'm a part, would be better off playing with command lines and 4,392 varieties of the "same" OS"

            Dude, relax, you won't have to play with command lines. Repeat your Mac mantra "I'm special" and you'll feel much better.

            No worries, Mac will always be around. I hear they're up for a federal bailout, right after the US automakers.
            FirefighterDan
          • Wow...

            FFDan said: "No worries, Mac will always be around. I hear they're up for a federal bailout, right after the US automakers. "

            This is... probably the stupidest thing i've heard in a long time. i usually stay out of these arguments, but after reading THAT, i had to comment.

            at the end of Q4 '08, apple had $24B - yes BILLION in cash. That's enough to BAILOUT the automakers.

            Seriously, don't be stupid.

            http://apple20.blogs.fortune.cnn.com/2008/10/23/apple-could-buy-dell-with-cash/
            /A\V/
          • LOL

            He bought it :)
            sackbut
          • Bailout

            If the car companies had amassed cash at the same percentage vs cost as Apple they would be OK, but no they blew their money.
            nrkmann@...
          • I'm a Mac user and I...

            love to play with the UBUNTU Flavor of Linux running
            in a VM on my Mac. I also run Windows XP and
            VISTA that way. For real work though, I use the OSX.
            The Mac is the only computer that can run all
            software written for OSX, Windows and Linux ALL AT
            ONCE!
            arminw
        • BLAH

          Dont tell me OSX is worth the extra 400-600 dollars extra in the notebook... you can get 2 notebooks for the price of 1 mac now.. or like 3 netbooks.....
          dave@...
          • "Don't tell me"

            Every time somebody buys a mac and pays $xxx dollars more than "equivalent" functionality, they ARE telling you that something is worth more TO THEM. When a MAC OWNER tells you they purchased the product BECAUSE of the OS, why can you not simply accept the fact that what is important to them is apparently not important to you? The whole argument -- mac versus pc, XP versus Vista, Windows versus OS/X versus LInux ... it's stupid! Have what you want and be happy...you don't have to convince everybody else that you're right.
            ejb78923
          • Don't Tell Me

            Absolutely right on!!!
            pbovis
          • BLAH

            Obviously you are a dedicated PC user and that is certainly a predominant
            position so. other than having a poor attitude and apparently very juvenile
            thinking why are you interested in putting down people who prefer a Mac.

            Many of us drive cars that others consider "unnecessary" and buy them NEW
            which is obviously a waste of money. We live in larger than neessary homes
            and travel to unnecessary places.

            Maybe we are different from you. That's why a lot of us have been in service
            during times of war, founded companies, served our communities, donated
            to charities, provided jobs for others, raised good families of worthwhile
            people.

            And spent 20+ years with Mainframe, MS DOS and Windows before being
            able to make the change.

            In fact, sport, THAT IS AMERICA!

            Enjoy abd have a happy Thanksgiving,

            e.

            ed
            781lc
        • It all depends on what you need it for.

          For many people, a laptop is something to browse the web, work on a few documents, and store media files (pictures, music, vids, etc...).

          OS X is good at those things on a $999 MacBook
          Vista is good at those things on a $599 laptop
          XP is good at those things on a $349 Netbook
          and Linux is good at those things on a $249 Netbook.

          So, now the consumer weighs the facts. Firfox installs on all these devices and has basically the same experience. OpenOffice, ditto.

          Times are tough, so unless OS X itself brings something to the table that is not met by one of the other options, I can see where a consumer would choose the lower cost option.

          Now, you can't argue software experience, because that is preference based. User "A" may love iTunes and user "B" may be a loyal follower of Media Monkey, Jet Audio, SongBird, etc.

          The final choice is can I get a relatively similar experience out of the cheaper units, and when the answer is no, move up a level. There will always be those who feel that they need the higher end product, but that number is dwindling every day. I think if Apple could hit that $599 mark, things would swing their way in an amazing fashion.
          EdNetman