Does Apple Need a Cheaper Laptop?

10/29/09

The average price of a 15” 2ghz Core 2 Duo Laptop is roughly $550.  Apple’s entry level laptop is still selling for $999.  How much of the market is Apple missing out on during an admittedly difficult economy? 

Apple recently announced record 4th quarter profits surging 46% over last year’s quarter.  Apple sold 3.05M Macs during the quarter, with their MacBook/Pro line clearly dominating the product lineup in terms of sales.  In 4th Q 2008, Apple sold 2.61M macs and 2.09M Macs during 4th Q 2007.  Let’s look at Acer - a company that tends to cater to a lower-end crowd.  During the same quarter they sold 8.6M laptops, more than double Apple’s sales. 

While the firms are certainly very different, you can’t help but admire Acer’s ability to churn out units and drive profit.  With a newly pronounced presence in Best Buy, Apple has an angle to sweep up the netbook (or netbook priced) market with an innovative solution.  In the past few months, it’s clear that the presumed Mac Tablet will be an eBook reader with iPhone OS-like capability. 

I’m forced to take a step back and question their decision.  A $499 or $599 priced 12” laptop (a la 12” powerbook sized but thinner) would hit the sweet spot for the holidays, and attract clientele previously untapped.  Price-driven consumers who just need computers to “go online and check their email,” believe that they have no need for a Mac.  Apple still has a “pricey” image, but they have many things going for them that can easily transfer over to the “cheaper” market including:

Bundled Software:  Right out of the box users have an email application (take that, Windows 7!), iPhoto, GarageBand, iTunes preloaded, Safari preloaded, iCal, etc.  This is a huge selling point when you compare it to bargain basement PC’s loaded with bloatware and requiring additional spending on antivirus and anti-spyware programs immediately. 

Customer Service:  With retail stores in the hundreds across the US and internationally, and top-notch phone support, Apple is there to stand behind their product.  Try dealing with a company like Asus who shipped a friend of mine a netbook with a defective battery.  The process took months to be resolved, and no actual person was around to help.  With retail stores, problems can be fixed quickly and efficiently, usually same day. 

User Interface:  Some potential buyers are scared away by Apple’s different OS, and won’t even look at it because of the price tag.  Retailers will have a much easier time pushing the UI at a lower price point, and OS X will undoubtedly run better and faster on a slower machine than memory hogs such as Windows 7 or Vista would.

Upsell Potential:  Simply put, users that buy lower end Macs with lower end features will want to upgrade, and will become Apple users for life.  Whereas an HP buyer could easily buy a Dell for his next computer, Apple users tend to be loyal.

Sure, there are problems with the idea, and the economics have undoubtedly been reviewed by Apple financiers, but the question must still be poised:  during this record breaking profit quarter, could Apple have done better?