Apple's Pricey Notebooks: Time For a Change

Posted by: Stephen Wildstrom on May 7, 2009

The birth of a new class of inexpensive thin-and-light notebooks, described in my current Tech & You column, is a good-news, bad-news story for most laptop manufacturers. To the extent that these new sub-$1,000 notebooks cannibalize sales of high-end executive thin-and-lights, among the most profitable products in the portfolio, the manufacturers will face downward pressure on already-battered margins. But to the extent that customers can be persuaded to move up from netbooks, which manufacturers have been able to sell at volume but with little or no profit, these somewhat fancier notebooks could boost the bottom line.

Apple, however, faces a different challenge. The company does not play in the low end of the laptop market. It only offers two models for less than $1,500: A 13-in. aluminum MacBook starting at $1,299 and the $999 white MacBook, a product that is growing tired despite a recent refresh of its processor and graphics. The rest of the line ranges from the $1,799 MacBook Air to the $2,799-and-up 17-in. MacBook Pro.

This lineup helps Apple be by far the most profitable company in the PC business. According to market researcher NPD Group, the average selling price for Apple laptops in February was $1,512 while that for Windows-based laptops, including netbooks, was $560. That comparison is somewhat misleading because NPD tracks retail data and excludes most corporate sales, which are typically higher priced.
But there’s no hiding the fact that the gap is huge and growing.

The problem for Apple is that the company’s position in notebooks seems unsustainable if it wants to maintain or grow its market share and stay a significant player in the mainstream market. Yes, Macs are very well designed and well made, using top-of-the-line components. Yes, I think Mac OS X is superior to Windows Vista, although I think that gap will narrow significantly with the release of Windows 7 this fall. And yes, the suite of applications included with every Mac is exceptional and in some cases the programs are better than anything you can buy for Windows. In recent years, Apple has seemed to want to be the BMW of the computer business, occupying a broad range in the upper part of the market. Right now, however, it is in danger of becoming Bentley.

I think Apple is absolutely correct in its determination to stay out of the netbook market. These little notebooks have their uses, but they lack the horsepower to do a satisfactory job running OS X or the applications that make Macs distinctive. If all a Mac netbook could do is run a browser as well—or as badly—as a Windows or Linux netbook, what’s the point? It’s just a chance for Apple to get into a commoditized, no-margin business, exactly what Apple has always avoided.

The new sub-$1,000 thinbooks pose a far greater challenge. I’d be surprised if Apple came out with a product that, like Hewlett-Packard’s new Pavillion dv2, uses AMD’s Turion Neo platform. Since switching from PowerPCs to Intel processors four years ago, Apple has forged an extraordinarily close relationship with both Intel and graphics specialist Nvidia that it is unlikely to jeopardize with a dalliance with AMD and its graphics subsidiary, ATI. A much stronger possibility would be a MacBook based on Intel’s forthcoming Consumer Ultra-low Voltage processor, probably paired with Nvidia’s GM9400 graphics. The result could be a 12- or 13-in. MacBook, significantly thinner and lighter than current offerings and priced at perhaps $800. That would be a product that could renew Apple’s assault on Windows’ market share without compromising the Mac brand.

I have no more clue than anyone else about what Apple is actually doing, and the rumors will grow steadily more intense in the month leading up to Apple’s Worldwide Developers’ Conference, when major product announcements are expected. But I think the logic of the thin, cheaper MacBook is overwhelming, and I’ll be surprised if such a product is not in Apple’s back-to-school lineup.

Reader Comments

Pats

May 7, 2009 11:31 PM

I also think we will see a consumer version of the Macbook Air. Assuming Apple moves to the mobile version of the I7 when it is released this fall by Intel, it makes little sense to put this kind of horsepower in a consumer PC so I see the Macbook staying with a Core Dou and the Pro adopting the four core I7. This would leave the low end open for the CULV processor teamed with the Nvidia graphics. Should be an interesting back to school lineup

John

May 8, 2009 1:40 AM

Apple notebooks may appear pricey to some, but I think they offer good value for the money spent. I support my family very nicely based on the work I do with my 17" MacBook Pro. The current one is about three years old. I look forward to replacing it with a new version later this year.

When Apple laptop sales fall during an up economy then I'll worry about Apple's laptop pricing strategy.

Doug Petrosky

May 8, 2009 2:17 AM

Apple has hardly shunned ATI but still I think any low cost system will use the 9400 integrated graphics card. That said, I think maybe we need to look at Apple's current line before we start re-inventing the wheel. Remember that the new design process apple uses on the Al Macbook is intended to ultimately lower prices. If this is the case, the old white macbook is probably not long for this world and the entry level Al macbook could easily be moved to that $899 price point with out compromise.

And although a cheap netbook is probably not in the cards, an expensive iPod tablet might very well be. This would not be a general purpose laptop but a $500 7" ipod tablet. Such a device would put the new kindle to shame and leave most of the netbook market standing flat footed.

At least that's how I see it.

tekno_boy

May 8, 2009 8:30 AM

The value of MAC's means most of their customers are willing to pay more, but with the radical reduction in PC laptop prices, MAC's will need an adjustment sooner or later.

The real question will be, are Apple ever going to make a more entry level machine, their typical lower cost machine is always still a bit pricey for some making the Apple brand less accessible to those with less.

http://www.youtukan.com

Bill D.

May 8, 2009 8:55 AM

Welcome to the Apple design team, Stephen. You've joined the horde of thousands who are helping Apple come up with that elusive "cheap" MacBook. You can expect to see one of those sometime after Apple stops having record revenue and earnings in the middle of a recession.

Brian Hawthorne

May 8, 2009 8:56 AM

"It’s just a chance for Apple to get into a commoditized, no-margin business, exactly what Apple has always avoided."

At the other extreme, with the iPod market in danger of degenerating into a commoditized, no-margin business, it would make perfect sense to move up from the iPod Touch. I think a larger screen iPod Touch would compete well against netbooks both on price and on features.

Honestly, the current iPod Touch is a pretty good competitor to most netbooks, and only costs $229. Apple still markets as a fun, mp3/video/game player, but with built-in WiFi browsing and e-mail, as well as all the busines apps available on the AppStore, all it needs is a larger screen to cater to those of use old enough to need near vision glasses, and it would beat the pants off any Windows or Linux netbook.

Michael McDonald

May 8, 2009 9:13 AM

I'd like to see Apple laptops split to two lines based on screen size. Some people (older eyes) might prefer a larger screen, but don't need the professional components of the MacBook Pro.

The low-end could start at $799 for 13". They don't need to play the cheapest game, but they do need to be in the ballpark.

peter roush

May 8, 2009 9:29 AM

i still don't understand why apple latops are 'pricy', they're just upper end. personally, that's what we buy. cheapening the brand, what for? i'm increasingly convinced that journalists can't buy an apple on expenses account and therefore keep pushing for cheaper apple gear so they can get one too. otherwise, wtfc?

pds6

May 8, 2009 9:55 AM

I am an Apple Fan Boy and out of the box an Apple Computer has many more standard features. Having said that ...

I like competition and I do not find Microsoft aids to be "shameless" (The operating system may be shameless).

Apple has 28 billion in the bank and has profit margins that are far above industry standards.

Its time the Apple Fan Boys got a break!

Ron

May 8, 2009 10:26 AM

I do not believe netbook like laptops pose any serious threat to Apple, as you have to trade in too much usability elements to work on one (main one: screen and keyboard size).
A serious threat wpuld have to adress the core values Apple is known for:
integrated design (HW & SW & tosome extent content, cfr. iPod music), cool looking, high functional usability factor.
Something like PlasticLogic with pen as well as voice interface coul pose a serious threat in the coming years, but certainly not netbooks, which have only 1 real selling point: price (like any commodity article).

atlantaguy

May 8, 2009 10:50 AM

I have owned/used both Macs and WinPCs in the past. I am not "loyal" to either side, but as a practical person I will say that no, Macs are not worth the price.

Years ago, perhaps. But today, many Macs and PCs share the EXACT same hardware inside. My current machine (a Dell XPS) has every internal component that the higher dollar Macs have, at just barely over one-third the cost. So today, you are paying the premium price simply for the operating system and "style" of the Apple machines, not the hardware or reliability of that hardware.

While I agree that OSX is superior to Vista, I had to ask myself if OSX were worth not hundreds, but over a THOUSAND dollars more to get? The answer - no.

patrick

May 8, 2009 10:59 AM

Is the typical Apple customer even interested in cost effective computing? Apple's core demographic has always been young upwardly mobile style concious young men who's primary computing focus is displaying the Apple logo for social status and anonymous hookups.

I doubt that Apple wants to jeopardize the marvelous profit margins that this highly successful targetted marketting machine allows just to gain entry into the overly commoditized and highly competitive market occupied by designers too often focused on function and utility over the more profitable style and icon focused buyer.

J

May 8, 2009 11:19 AM

Perhaps commenters should look at Apple's stated purpose and success, then try Apple's products to gain accurate perspective (read: not pushing buttons in the store) before passing the only for "style concious young men who's primary computing focus is displaying the Apple logo for social status" judgement. It's just ignorant, uninformed, and irresponsible.

Jon T

May 8, 2009 1:20 PM


What a lot of sill stereotyping of Apple users. Really.

I think the assault is coming. It already started with the iPhone and iPod touch. The next products will fill the gap between those handhelds and the laptops.

Then all the brilliance of the Apple OSX operating system will be available across the whole range...

Pats

May 8, 2009 3:16 PM

@ Atlantaguy

Which particular model of Dell are you comparing to which Apple model. You come out and make an unsubstantiated statement like it is fact. The price difference for the same quality model is not that different. If you are comparing a low end Dell with low end Intel components to Apples high end Intel components you can probably save alot of money buying Dell, but then it depends on what you need your computer to do.

Mrs.Jane

May 8, 2009 3:33 PM

If you can't afford it, don't buy it.

jkimball

May 8, 2009 3:49 PM

a Pc with 'all the same components' does not mean it has the same engineering. I can build a whitebox pc with the same stuff as Dell XPS for half the dell xps price. It would be junk, but it would have all the same checkboxes on the side of the shipping box filled in. It's about the whole package and how it works together, and Apple does it best. They make money, lots of it. That's not a 'problem' that can be addressed by selling *cheaper* stuff...

JW

May 8, 2009 3:52 PM

Apple isn't just for geeks anymore, they offer products that contain real value. And eventually you are going to have to determine if you want to live in a disposable, low quality world that is based on low prices, or a value, high quality one that we pay for. I for one am willing to pay for the high quality, have less hassles, and have a product that will last for years. Apple offers this in all of their products and I buy the ones they sell, from Apple. I don't shop Wal-Mart, GM, or Microsoft and I am proud of it. If they made products that were of good quality and stood behind it, then maybe I would.

Roland

May 8, 2009 4:08 PM

Apple shouldn't bother with netbooks. Neither should most notebook makers. The current netbook market is about to get run over by low-cost, long-battery-life, ARM-based 2nd-generation netbooks. They will be game-changers.

Russ

May 8, 2009 4:24 PM

I bided my time and bought a refurb apple macbook when the new aluminum models came out. I started out as an apple hater (a decade ago), then a disbeliever, then curious, now an owner. I am a musician and purchased the mac for recording music and editing video - both activities on the pc had morphed from frustration to downright anger. I've been able to do more in the last few weeks on the mac than I did in months or years on the PC, and reliably.

I think the best way to think about Apple's marketing strategy is this: Toyota vs Chevy. Toyota had the first quarter in the red this past quarter, for 60 years! Their products cost more than Chevy's and cannot be found in as many form factors, but who is almost bankrupt and who is not?

A quality product usually costs more. I believe price is no longer the obstacle for buying a Mac, it's simply whether or not the consumer is an educated one.

Trish Dubois

May 8, 2009 5:15 PM

I am still cruising along nicely with my iBook clam shell of 7 or 8 years. Better than any windows PC I have used. For me it is the OS X, can not live without it.
I bought a $399 linex 'net book' (Ecc??) for radio and email at work. It is just O.K., very limited. A much better deal is the used G4 iBook I just bought for $377, loaded!
I think between an iTouch, used iBooks and the $999 special Apple has it covered.

rob

May 8, 2009 8:34 PM

Good on you Russ! ... "I started out as an apple hater (a decade ago), then a disbeliever, then curious, now an owner"...
This is the sort of open minded and educated approach that all mac users wish consumers would apply to considering buying a mac. You challenged your curiosity and disbelief and came to your own conclusions, based on an educated approach.

Too many years of negative propaganda from IT professionals, and Microsoft themselves, has made people wary of even considering Macs in the past. These predjudices need to be worn down, as the consumer and end user should ultimately be educated with as little bias as possible.

Then, the buyer can try before they buy and make up their own mind on whether the mac offers the value they are after despite it's initial higher price. Without being scared off by MS ads claiming Apple taxes, and IT staff threats of no support if you go down the mac path. Don't scare the buyer, educate them. If they still choose Windows or Linux, then that is fine. At least their decision was more informed.

patrick russo

May 8, 2009 9:21 PM

apple are just great computers. when you have a nice car, you do not think about its price,just its performance.

Jerry

May 8, 2009 9:49 PM

If you really like windows, you can have windows on the Mac. Just use Parallels Desktop or Fusion. It's like having a Porsche and now and then changing it into a (fill in some cheap car.)

Bob

May 8, 2009 11:22 PM

I started with Macs, switched to a windows PC, tried another Mac, and am now back in the windows PC world. I've decided I simply don't like Macs. For some people they work great, but for me, it was always just a path to frustration. To each their own.

Robert

May 8, 2009 11:41 PM

My first PC was a Kaypro way back in the late 80's, and I've never owned a MAC. One reason being that as much as I hate Microsoft - for the non- technos amongst us Windows is easy to just boot up. The other is the price differential! Recently, I've searched for a new laptop and found a well designed Toshiba Satellite for $750 or a fully loaded HP Pavilion for $1200. I've been aware for years that MAC owners are fanatical about their computers but that extra premium of $500-$1000 over the PC seems unjustifiable. I suppose if I were an artiste a MAC might make sense.

Earleene

May 9, 2009 8:25 AM

I have been a Mac user for well over a decade. My main experience is if you go for the top end machine, it becomes less expensive as time goes on. The upper end tends to be powerful enough that it will carry you a lot longer than a lower end PC will. You do not have to replace every other year as programs tend to take more "bytes" out of your hard drive.
Besides that, no one has mentioned the fact that you can actually call tech support and speak to some one that you can understand what they are saying and if you can't get it done over the phone, you can get good, fast trackable service by sending it in or you can make aa appointment in the store and have some one help you on the spot. That alone is worth a lot to me.

Nick

May 9, 2009 9:31 AM

"the average selling price for Apple laptops in February was $1,512 while that for Windows-based laptops, including netbooks, was $560."

Point missed. It is all OpSys when making a living with a computer. I saved 8 hours a week in PC support and waiting when I switched. My Macbook ROI was less than a week.

David

May 9, 2009 3:14 PM

Pricey, pricey... well it's funny but there is one variable that always seem to escape journalists: downtime. I've been a PC user since the beginning of the 80's, and have switched over to Mac in the past 6 months. For me, that represented a big investment, as my company changes with me, but I still went with buying a Mac Pro for calculations, a Mac book pro and two Mac books. All high end, and together with a few software, footing the bill was not too pleasant - compared to "equivalent" PC systems. "Equivalent" is not really available from manufacturers, you really need to up all "standard" configurations, and generally end up paying twice the asking price of the standard configuration.
Now, downtime is where I really got my money. See, I changed after spending two full days trying to solve FlexLM problems on Vista, and then running ANSYS CFX while kicking away safety restrictions of each DLLs one by one: a nightmare. After a while, I was so utterly pissed that I decided to put all my DELL & HP hardware on the car park, and get myself something stable that I could work with. Face it: each upgrade, whether it's hardware or software, costed me 0.5 to 2 days, which is a lot of my money wasted. For the last 6 months, owning only recent Macs, my downtime has been.... 0, zero, zilch, nada, rien!!! I had to restart my Mac Pro once in 6 months! Once!!! Compared with my 1.5days a month with Windows systems, this should make about 15days at the end of the year (I'm planning to upgrade to Snow Leopard...), which in the end represent more than what I spent on both Apple hardware and Software.
Considering that online and phone support has been excellent as well, I also ended up buying some Apple stock.

Ken

May 10, 2009 2:41 AM

A lot of Macs are sold because of customer service misery from a PC manufacturer. That was my situation.

I had used one popular PC brand for years and only bought a Mac PowerBook for business travel. It was at the height of malware issues and I didn't want to be stuck with a problem half way around then world.

Then the PC company moved customer support to India and I had a week of misery trying to get help. After installing Windows umpteen times in one week I bought an accounting package for the PB as well as a 23" display and converted. The PC is still gathering dust somewhere.

John

May 10, 2009 2:22 PM

The thing is that Macs are no longer the BMW of the industry. I think only withing "Apple-fans" they believe that themselves, but the larger market as come to appreciate higher end, and stylish HP's and Dells ... are these the Lexus of the industry, I think so.
Apple needs to come up with something really different, as it used to be in the past, now they all look the same... sorry to say, but I do agree, Steve Balmer recently said "computers with a logo" referring to Apple. That logo is no longer expensive, and anyway, if anything as a society we need to learn from this crisis, is that we should go for value and not "show off", that extra money is better in our savings account.

Harry Baldwin

May 10, 2009 11:12 PM

I've recently switched to Mac, or I should say complemented by adding a Mac. I still use Windows (Dell) a lot, but for video editing (at least for a video newbie) Mac is simply far easier and has more functionality built in.

Pricey? Yes. Worth it? For some things
Harry Baldwin

MIS

May 11, 2009 3:05 PM

"I have no more clue than anyone else about what Apple is actually doing". Maybe you could have started your article with this? That's 3 minutes of my life I can't get back!

Steven Trudell

May 11, 2009 7:45 PM

Atlantaguy writes the following fantasy...
May 8, 2009 10:50 AM
I have owned/used both Macs and WinPCs in the past. I am not "loyal" to either side, but as a practical person I will say that no, Macs are not worth the price.

Years ago, perhaps. But today, many Macs and PCs share the EXACT same hardware inside. My current machine (a Dell XPS) has every internal component that the higher dollar Macs have, at just barely over one-third the cost. So today, you are paying the premium price simply for the operating system and "style" of the Apple machines, not the hardware or reliability of that hardware.

First, what Apple have you ever owned, and what operating system? I really don't believe you have ever used a mac, but once you tell me what you claim you owned, I'll have some further questions.

Second, please send the exact specs in your Dell, AND what you paid for the entire system, including virus software, and any other software costs for programs trying to mimic the iApps. Your price claim is ridiculous, and don't try to snow everyone with lower than actual prices.

Steven Trudell

May 11, 2009 7:59 PM

All mac people have, at one time or another, been forced to endure Windows. That is why we choose Apple, because we are making an INFORMED choice. Not like...

Robert
May 8, 2009 11:41 PM
My first PC was a Kaypro way back in the late 80's, and I've never owned a MAC.

Poor Robert, and all the other Windows droids, are suffering from Stockholm Syndrome. They hate Microsoft, but they won't leave it, no matter what you say. Unless they actually try it, cold turkey, for a couple weeks, they will always be Bill Gates' hostages!

Andrew

May 12, 2009 10:09 AM

Apple computers are expensive for the technical specs they offer. Of course, technical specs are only one part of the ownership experience, and in most other regards Apple is at the top.

Most, not all. Apple isn't perfect and there are applications for which Apple products just aren't ideal. Take a mobile worker. Yes, Apple's new laptops are wonderful, but what if long battery life is your primary goal? The 17" MBP runs all day, but that thing is huge, clearly not a road-warrior machine. The Air only runs for 5 hours, as do the MacBook and 15" MacBook Pro.

Compare to the PC side, where you have small and light laptops (not netbooks) that offer various battery options. My ThinkPad T400 fitted with the 9 cell battery and the ultrabay batter in place of the optical drive runs for THIRTEEN HOURS before I have to plug it in, and even with all that juice only weighs 5.9 lbs. With the 4 cell battery and a weight-saver in place of the drive it will run for 4 hours, and weighs 4.5 lbs. Yes, a 13" MacBook is the same weight and runs longer, but it lacks the flexibility.

THere are other examples. Docking stations anyone?

Don't get me wrong, I love my unibody MacBook Pro, but I don't pretend that it is "better" than the PC competition. It is better at some things, but left behind in others.

Frank Nelson

May 13, 2009 6:10 PM

Steve Trudell wrote:

"Second, please send the exact specs in your Dell, AND what you paid for the entire system, including virus software, and any other software costs for programs trying to mimic the iApps. Your price claim is ridiculous, and don't try to snow everyone with lower than actual prices."

Why don't you spec out a $700 Apple laptop and let me know when you are done.

HP laptop spec (including 30% coupon NB3857):
HP Pavilion dv5t
15.4" WSXGA+ (1680x1050)
2.2GHz Core 2 Duo
4GB RAM
320GB HDD
Webcam
LightScribe DVD+/-R/RW
Bluetooth

$699.99 free ship.

Since you brought up AV, there are plenty of great AV like AVG and Avast. Also there are plenty of free IMs, plety of free movie makers, free office...

AD

June 10, 2009 6:31 AM

With HP and Dell if you buy Business laptops then you do get US based support. Even Windows based business laptops and significantly cheaper compared to Apple laptops. Consumer laptops more so.

That said US is a rich nation and $500-1000 extra over 2-3 years is something that people can easily afford.

Sam

June 21, 2009 4:02 PM

The U.S. is a rich nation? How so? By what measure? Oh yeah, since here we overpay for our computers with credit cards and refinancing we must be rich. That's it.

MACs are for a particular power-user like designers, musicians, and developers.

If you spend $1000 or more to read email, surf the web, and play solitaire on a 15" display or less, you're an idiot.

And if you think modern dual-core PC's running XP or Vista need to be updated every other year, you're deluded.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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