Apple stands for quality: no cheap MacBook on the horizon

[This article is intended to be read within the context of my other post: Apple's NetBook release stategy | Redefining "netbook"]

Last Friday, AppleInsider posted an article about Apple releasing a netbook – I disagree with this as the term is currently defined.  AppleInsider then goes on to say that it’s believed by some that Apple is going to release its “own take” on netbooks.  I agree with this statement.  “Netbook” is currently just a marketing term, and it needs to be clarified what this really means – it’s unnecessarily sparking up lots of controversy.  I’ve clarified the term here.

The rest of the AppleInsider article goes to display that Apple will release a cheap laptop.  I completely disagree that Apple will make a cheap laptop – but I do think they will create an offering in the netbook segment, so keep reading, but be sure to hit up my other post so that we’re all on the same page.

AppleInsider reports:

Analyst Ezra Gottheil from Technology Business Research (TBR) cautions that Apple may no longer have the luxury of keeping its notebook pricing high when many buyers are much more concerned about price than they were even a few months ago.

Apple doesn’t sell technology based on the budgetary concerns of customers outside their target market.  You don’t buy a Mac because it’s cheap – never have, never will (I believe Macs ARE cost effective, but they’re definitely not cheap).  So why should Apple change this now?  They have more business than ever before.  Did they get to where they are today by breaking down and selling cheap computers?  Nope.

The company has until now insisted on keeping its prices largely unchanged and instead has upgraded the specifications of its systems to maintain that price. That has kept its average selling price high but has also all but locked the company out of the entry-level and developing-world markets

Since when has the entry-level and developing-world market been Apple’s target market?  Oh right, never.

At $999, the least expensive MacBook is twice or more the cost of the most frugal Windows alternatives, Gottheil says.

Great observation, you’re comparing apples to oranges (pardon the pun).  Apple doesn’t make frugal notebooks.  It’s a MacBook.  Along with the Apple brand comes certain standards that are above the industry standard.  This is called “brand image” and is important to making sales today and in the future.

“It is too much to ask consumers to pay more than twice as much for a PC in these times,” the analyst says.

Apple isn’t part of the entry-level market, Gottheil says so himself.  As such, Apple is not asking the entry level market to pay twice as much, rather, they’re telling them that twice as much is what it costs to get a quality computer.  Apple simply doesn’t sell “cheap”.  I’ve bought plenty “frugal Windows alternatives” in the past, and they all become a waste of money.  They break within a year and need constant service and repair from terrible customer service centers.  I bought a Mac to SAVE MONEY.  I’m dead serious.  I was fed up with all the time and money I wasted on other machines.  In these times it is too much to ask consumers to pay for a crappy laptop once a year.  Just buy one quality computer and call it quits.

Crucially, he also takes to heart Jobs’ assertion that $500 systems are typically “junk” and believes that Apple will price the system at $599. The figure would be just low enough to draw customers who would pass over the plastic MacBook but high enough to avoid the risk Apple’s co-founder perceives in dropping the price particularly low.

If he acknowledges the fact that Jobs’ thinks a $500 system is “junk,” where does he think Jobs’ is going to place a $599 system?  Practically junk?  This analysis doesn’t make sense to me.  I do believe Apple may come out with a system that could be priced around $599, but it’s not going to be a cheap laptop.

As with most Windows PC makers, Apple would reportedly have to accept the risk of cannibalizing sales for some of its more lucrative notebook models but could theoretically maintain its profit margins and continue to grow its Mac shipments ahead of the industry curve.

Specifically, I believe that creating a low budget, ultra-portable machine will completely dominate the sales of the MacBook Air.  I’m sure Apple thought of this before they created the Air as well.  When they release their version of a netbook they will not cannibalize the sales of their other product offerings – it will be that different.

I see a trend here…  Analysts continue to make short term analysis of Apple’s company strategy: sell computers like the rest of the industry – cheap – and the company will sell sell sell.  Nevermind the fact that Apple is still expanding its customer base, and is growing faster than the rest of the industry.

In summary, selling computers that have been built above the standard is Apple’s entire identity.  Apple doesn’t make dirt cheap craptops.  Period.  Just like Ferrari shouldn’t sell economy cars and BlackBerry shouldn’t make phones without keyboards.

Analysts think that Apple has to make as much money as possible as soon as possible to be successful.  Think long term though: If Apple starts lowering its standards it may very well sell TONS of laptops during a recession, but where does that put Apple two years from now?  Five years from now?  It puts them in exactly the same category as every other manufacturer – competing wildly for the cheapest craptop money can buy, fighting for market share in a market that doesn’t even exist for Apple today.  They will have lost their status as an above standard computer manufacturer.

I think that Apple would sooner suck up the effects of the economy with all that money they have saved up before they ruin their brand and what it stands for.

[Be sure to read the complimentary article: Apple's NetBook release stategy | Redefining "netbook"]