Apple notebooks still pricey
Posted
Oct 14 2008, 12:55 PM
by
Kim Peterson
Rating:
There's no recession in Mac land. Apple introduced its new line of notebooks today, and the bottom price point is disappointing. The cheapest MacBook will cost $999. So much for the company getting into the sub-$1,000 notebook market.
Apple shares are slumping today in response.
We heard a lot of talk about Apple introducing an $800 or $900 laptop, and analysts crunched the numbers and found the company would dramatically increase its potential market by doing so. Slashing prices would eat into Apple's margins, but Apple prepared us for this by saying its gross margin would fall by nearly 5% to 30% in the next fiscal year.
Apple seemed like it was ready to make the jump from premium Macs and offer a gorgeous, well-built machine that would compete on price with the Dell Inspirons and HP Pavilions of the world. The average selling price for a Windows-based notebook is $700.
I wanted Apple to storm into the lower-priced notebook category, taking advantage of both the slumping economy and the consumer confusion around Microsoft's Vista operating system.
Instead, Apple cut the price of its cheapest MacBook by just a hundred dollars to $999. A 15-inch 13.3-inch MacBook sells for $1,599 and $1,299. The high-performing MacBook Pro line costs $1,999 or $2,499.
To be sure, Apple's sales strategy has served the company well. Macs now have a 17.6% share of the U.S. retail market, the company says, and half of the computers selling at Apple stores go to first-time Mac users.
But selling a premium product in a recession is tough. And even at $999, the MacBook is still a premium product.
Apple shares were down 5% after today's announcement, but are creeping up in the afternoon.
Here's what others are saying about the news:
Forbes: "Steve Jobs would make a terrible politician. Democrat Barack Obama is promising a 90-day moratorium on foreclosures. Republican John McCain is promising to refinance your mortgage. Apple Chief Executive Steve Jobs, however, refuses to pander."
Cnet's Crave blog: "It may not be $800, but reducing the entry-level price for the regular 13-inch MacBook to $999 is a smart move, and crosses an important psychological barrier."
The Business Sheet: "Apparently Apple isn't worried about a recession affecting people's desire to spend."
Apple 2.0: "What this means is that Apple is not — with one exception — lowering prices in order to grow its market share. Rather, it is sticking with the strategy that has worked for the company since Jobs came back to Apple in 1997: building high-end, high-margin computers and selling them at a premium to discriminating users."
Inquisitr: "Given the prices that they announced today I think that the price spread is enough that Cult of Mac can be assured that their legion won’t be invaded by those horrible Windows noobs anytime soon."
Disclosures: I don't own shares of any companies mentioned in this post, but I do own three Macs. And while Microsoft owns this blog, Microsoft does not control, censor or otherwise have any editorial influence over what I write.
Related reading:
Does Apple need to cut Mac prices?
Apple downgrade was correct, co-founder says
Are Apple shares in danger?
