Why Apple doesn't make a netbook
Summary
Topics
That's despite both Steve Jobs and interim CEO Tim Cook categorically denying that Apple is about to enter what has been described as a 'nascent' market.
Jobs has also suggested that the iPod Touch and iPhone is in essence a kind of netbook, based on what they are commonly used for. He's not fooling anyone though.
Starting from essentially zero market penetration in late 2007, by the end of last year, roughly 10 million netbooks have shipped, according to IDC. They now account for seven per cent of all portable PCs, an extraordinary growth rate in a short time.
See also: Installing Mac OS X on a Dell Mini 9 netbook
New iMac and Mac Minis on the lab bench
Battle for best high-end Mac OS X netbook
So what defines a netbook?
Jobs may have a point in that the Touch is great for web browsing and email, is lightweight, has wireless and is relatively cheap.
It's not ideal for office or productivity tasks. I'm a fan of the soft keyboard and will happily 'tap' out a hundred words or so of an email but a longer document is painful.
But at what cost? It's a loaded question.
Firstly, as Jobs claimed late last year, Apple doesn't know how to make a $500 Mac that 'isn't a piece of junk', as it's not in the company's DNA. Consider the current Mac Mini. A mere $100 above the $500 price point and it looks overpriced, probably because it is.
Secondly, Apple would undoubtedly sell bucket loads of shiny units if it did release a sub $500 OS X-powered netbook.
However, given the company would be competing in an aggressive and increasingly populated market with price being the key differentiating factor, its margins would be cut and its profits would suffer. An anathema to the Apple board.
Furthermore, sales of netbooks would cannibalize sales of higher margin, higher specification MacBooks, again resulting in more loss of profit.
Lest we forget, Apple has somewhere in the order of $28bn in cash thanks to its aforementioned high profit margin strategy and is well placed to sit out tough economic times and come out smiling the other side without compromising the same strategy.
Appealing to a customer who focused solely on price makes no sense to Apple. Someone who cares solely about price has a casual interest in quality and that is another anathema to the Apple brand.
Perhaps the very best reason to explain why Apple isn't bothering with netbooks for the time being was illustrated in a report from retail analysts Channel Checkers.
The firm surveyed Apple stores to track sales of iPod and Macs along with business trends at Apple stores in the US. According to their survey, 73 per cent of respondents said the top-selling computer was the MacBook Pro.
The top selling Mac in most Apple Stores surveyed was the high end MacBook Pro. The highest specification notebook Apple produces. In the US it retails between $2,000 and $2,800. Hardly low-cost netbook territory.
As we stand there are two reasons Apple isn't selling netbooks.
Firstly, Apple doesn't make netbooks because it can't work out how to make a notebook that can compete in that $500 space.
Secondly and more importantly, Apple doesn't make a netbook because, right now, it doesn't need to.
This article was originally published on silicon.com.
Talkback Most Recent of 89 Talkback(s)
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Netbook = cheap Apple = Overpriced
A simple equation.
anthony_hunt5th Mar 2009 -
Again, Apple would NEVER compete on price in the netbook category.
They can be a lot more expensive.
DonnieBoy5th Mar 2009 -
Apple already has a netbook...
And you are correct on price, it is called the MacBook AIR
mrlinux5th Mar 2009 -
True! Very thin, but a bit bigger screen. I think that Apple will come out
with a 10-12 inch model based on Arm, and an 8 hour battery life.DonnieBoy5th Mar 2009 -
Apple does not equate overpriced
Anthony,
Although I am aware this is still believed by most
people, Apple products are not overpriced. Just
yesterday I was reading a price comparison on the
iMac and competing al in one computers from
Dell and HP. For equal products, the iMac was
cheaper than the competition.
spotvin5th Mar 2009 -
RE:Apple does not equate overpriced
Over the expected life of the product, 3-5 yrs, apple is way overpriced if you want to keep it current. Simple arithmetic. But that is not the real disadvantage.
richdave5th Mar 2009 -
I still run a G3...at $50
A G3 DV iMac running at 400MHz with 10.3 worth $50AU is still a very
useful tool to the person who wants to run email, MS Office, Safari,
Photos, simple video editing, et al. Purchased years ago it's well worth
it's price.
Does anyone have data on how long a Mac really hangs around before
being replaced?
I reckon Apple look at it this way. Make a profit on the sale because
the customer won't think about renewing the product within 5 years.
Does the corporate sector do the same? Probably not. They roll over
computers at least every three years? I'm not sure of the logic behind
that. But if I were a school and budgeted for new PCs I'd try and keep
then working longer than three years even though the warranty may
expire.
marcomar7th Mar 2009 -
Dunno about Macs
But I've got a 10 year-old Dell running XP and still doing (a little) production work.
Most of the non-Vista machines in our company are coming up on 5 years old.
Tisn't just Macs that hang around...
wolf_z7th Mar 2009 -
A foolish thought.
I sold cars for around 20 years. People buy a Toyota or Honda because they think they will last forever. Because it will last (forever) they take very good care of it. When it comes to Ford or Chevy, the thought pattern is that they won't last, therefor why take care of it.
My son is in education and research, therefor he has a Mac Pro. When he 1st started college, we got him an older low mile Chevy Nova, the car lasted 2 years. He asked me to help him find another car. I got him a Chevy Prizm, 11,000 on it. He blew the engine in it within 3 years.
He wanted to get a different car, I told him it didn't matter what he got because it wouldn't last. He claimed if he had bought a Toyota that would never have happened. I had to explain to him that both of his cars had been Toyota Corollas. He didn't change oil or check anything out on it.
The moral is, he bought an import engine for that 99 Prizm, learned how to take care of it. It is now 10 years old, with over a 100,000 miles on the engine and no problems.
Macs last longer because people take care of their fine machine. If people would take care of their PC it would last as long.
mjolnar@...7th May 2009 -
the other side
Yes, Apple has the money to wait out the economy.
But should it?
What percentage do netbooks have to take to make Apple
take notice? They're at 7% now, maybe 10% by the
fall, 15% by next year? At what point does Apple
completely lose a mature netbook market by not
participating?
Keep a higher-specced macbook at $1199 and drop a
netbook at $799. I think they could do it, and I
think they will if netbooks continue to grow market
share.
coffeeshark5th Mar 2009 -
Actually, Apple could make VERY good money at 599, and that is double the
competition at 299. And, Apples ace in the hole is that they can use Arm, which costs them lest to manufacture, and gives better battery life. Look for them to tap Nvidia and have the best graphics at the same time.DonnieBoy5th Mar 2009 -
How do you know they could make "VERY good money"?
are you privy to the manufacturing and engineering costs?
Part of the argument from the Apple community is that the extra cost of Apple products is a direct result of the superior engineering and manufacturing of Apple products, which is reflected in the overall price.
Maybe Apple CANNOT make very good money below a certain point, and an ARM processor would not lower the overall cost in any significant way.
GuidingLight5th Mar 2009 -
not their margin
Not that many netbooks are going for $299, most
are more like $400. An Apple netbook at $599
isn't going to maintain their desired profit
margin, in my opinion.
Since they rethink most of the niches they go
into, they'll do the same for netbooks, and
that won't come cheap.
Even at $699-799, they'd still have a price
point that is substantially below the macbook
but still sets them above the cheap netbook
crowd. Which would seem to be Apple's spot.coffeeshark5th Mar 2009 -
Money to finance itself
The netbook appeal is to use x86 and the low price.
Apple needs cash to keep OS X and R&D advancing. So they will never try to compete on price.
setatakahashi@...5th Mar 2009 -
Poor margins on netbooks.
Apple learned its margin lessons in the 90's. If they ship a netbook it will be as a premium product. There's not a lot of useful features that Apple can add to enhance the surfing experience though.
Programmer10285th Mar 2009
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