35 Comments

Summary:

Writing in the Huffington Post, Larry Magid raises the point that PC netbooks are hot sellers for very good reasons — namely that these small laptops, which typically cost between $300 and $400, can do most things a large portion of users want to do with […]

Writing in the Huffington Post, Larry Magid raises the point that PC netbooks are hot sellers for very good reasons — namely that these small laptops, which typically cost between $300 and $400, can do most things a large portion of users want to do with a laptop computer, and do them much more cheaply, as well as being handily smaller and lighter than traditional laptops.

Small Laptop Price Premium Dynamic Turned On Its Head

I agree, and along with Magid note the irony of a changing dynamic where, reversing erstwhile conventional wisdom that computer consumers would be obliged to pay extra for the required engineering of miniaturization, with smaller laptops often costing more than larger siblings of the same brand (think PowerBook Duo vs. PowerBook or MacBook Air and MacBook), netbooks have turned the cost/weight equation on its head.

Mainstream netbooks, particularly ones equipped with the latest Intel Atom N270 processors running at 1.60 GHz, with a GB of RAM and a 160GB hard drive, are perfectly adequate for most common tasks people use computers for such as Web surfing and e-mail, and even for watching web video. At least for non-touch typists, their usually undersized keyboards are also considered tolerable.

Downward Pressure On All Laptop Pricing

Then there’s the netbook phenomenon’s collateral effect of exerting strong downward pressure on standard sized notebook computer prices, to which even Apple has not been immune, as exemplified by the 13″ MacBook Pro being cheaper than its aluminum unibody MacBook predecessor, and the debut of a lower entry level 15″ MacBook Pro stripped of its ExpressCard Slot and discrete graphics processor/VRAM.

A prima facie topical example is Lenovo’s new ThinkPad Edge, which has a 13-inch display, a typically excellent Lenovo full-size keyboard, an AMD Athlon dual-core processor, 2GB of RAM, a 320GB 5400 RPM hard drive, three USB ports, runs Windows 7, offers five-hour real world battery runtime, and is priced starting at an easy-on-the-wallet $599. Move up to a 1.3GHz Core Duo Intel processor and 4GB of memory and you’re still at $799.

That’s of course only $200 less than Apple’s entry-level MacBook, which at $999 has a much more powerful 2.26GHz Core 2 Duo processor and Nvidia 9600M 9400M integrated graphics, but only 2GB of RAM, a measly two USB ports, and a 250GB hard drive. To get the same 4GB of memory and 320GB of storage specs as the $799 Lenovo or even a $399 Dell Inspiron 15, you’re up to $1,149, while a comparable spec MacBook Pro will set you back a whopping (by comparison) $1,399 — a thousand dollars greater than your typical netbook.

Mac Still Greater Value, But Gap Narrowing

Now personally, I still think greater value is found in the Macs, especially due to their OS X-clusivity, and projected durability over the longer haul, or if you need the extra processing and graphics power they offer. But, with PC competition stiffening, and consensus building that Windows 7 is actually a pretty decent operating system, the OS X advantage is diminishing. That base AMD-powered Lenovo ThinkPad Edge for $600 bucks looks particularly enticing for cash-strapped or value-oriented users whose computing power needs are typically modest, especially in this challenging economy

That’s why I continue to stubbornly contend that the forthcoming iPad notwithstanding, Apple still needs a conventional clamshell notebook contender in the $600 – $700 price category.

Related GigaOM Pro Research: Report: The Future of Netbooks!

  1. Apple obviously does not “need’ any such thing considering their sales figures and profits margins. Your want does not make a need for them.

    1. As someone who obsessively watches the sales numbers, I have to agree. Mac portable sales are going up, not down. A better argument could be made for a mid-size desktop replacement based upon dwindling sales of the Mac Pro meaning, as there is increasingly little to lose.

    2. Ah Charles Moore, the netbook guy… It’s getting old. You aren’t going to convince anyone that Apple should make a netbook, even if you write a piece every 2 weeks erroneously making your point.

      As Darwin points out as well as the majority of the soon to come comments, Apple doesn’t “need” to sell a cheap notebook.

  2. Brian Moseley Tuesday, March 2, 2010

    I strongly disagree. Apple notebooks are the top-of-the-line when it comes to laptops. People think “MacBook” and they think quality, durability, easy-of-use and high-price. People distinguish product quality by the highest price point, therefore having all Apple laptops start at $1,000 is a strategic price point which no laptop should dip below.

  3. Brian Moseley Tuesday, March 2, 2010

    @darwin just to clarify I don’t strongly disagree with your comment, I am referring to the article :)

  4. Isn’t the Lenovo ThinkPad a product of a Chinese company now since IBM sold it off? Where do dollars the end up???

  5. We don’t see people hassling Maybach to make more affordable Maybachs akin to Fords.

    Why-o-why, then, do you deem it necessary for Apple to make netbooks? Not only would it be overkill with the iPhone and iPad, but it contradicts Apple’s overall business model: they want to make higher end products, and successfully do. Lower end products will always sell better by default because clearly, the majority of people go for what gets the job done. In this case, most who use computers just want it to turn on and take them to the internet.

  6. When a 16GB iPhone debuts at $699? That’s silly, there’s no way they could make the kind of profit on a netbook they make on a $700 phone.

  7. The “in this economy” argument gets disproved every time Apple releases their quarterly earnings. MacBook sales continue to grow, despite the higher price of entry compared to PCs.

    The question to ask yourself is how does a $600 – $700 netbook help Apple make more money? The answer is that it doesn’t. It would likely cannibalize sales from other MacBooks, reducing Apple’s revenues. Apple just isn’t interested in selling notebooks to “cash-strapped” consumers.

  8. Perhaps some Apple execs should visit campus libraries. I’m doing some writing at the University of Washington, and netbooks are now about as common there as MacBooks. For commuting students who need to carry textbooks into campus, the weight savings are more than enough to counter the small screen and keyboard.

    It is possible that the iPad will counter this trend, but I suspect that will only happen if:

    1. Apple comes up with an even more compact Bluetooth keyboard for it, perhaps even a thumb keypad the size of an iPod touch. Students and those in business have gotten used to Blackberry-sized keyboards. Give them one of the iPad touch, the iPhone, and the iPod touch.

    2. Textbooks become available in sufficient quantities to let students save money and weight. And for that, we need an enhanced ePub standard that can intelligently deal with graphics and tables, as well as allowing highlighting and note-making. Students won’t go for textbooks they can’t mark up.

    Do both of the above, and Apple can make a big dent in the netbook market without selling a netbook.

    1. That’s interesting – I’m a librarian at the University of Michigan, and I’m seeing exactly the opposite. Student laptop usage appears to be evenly split between Mac and Windows platforms here, and only 10-20% of the Windows users have netbooks.

  9. why? so the retards who cry “but i can run windows just fine on my $300 dell” can’t get a mac? no thanks.

    1. You’re not helping.

  10. It’s a failed argument. What you *want* is not what Apple *needs* to do, no matter how much you may think you want it. Apple seems to be doing exactly what apple needs to be doing. This is proven by numbers, not anecdote.

    1. Yes, which is why OSX has seen a decline in market share overall lately. A lower cost/high quality notebook from Apple could help it gain market share.

    2. No such thing as lower cost and higher quality.

    3. Weird so when Apple lowered the cost of say the iphone they made it lower quality? Or moving away from Apple when Sony/Nintendo lower the price of their consoles and include better hardware inside they are actually making it lower quality?

      Either way, I was saying Apple could make a lower cost laptop that is high quality not higher quality.

  11. Charles W. Moore Tuesday, March 2, 2010

    Thanks for the discussion, whether you agree or disagree.

    Lenovo, a Chinese company, did indeed purchase IBM’s PC division for $1.75 billion back in 2005, and have done a pretty creditable job of maintaining the ThinkPad brand’s quality standards and design motif since then.

    Trivia note: Steve Jobs was personally using a ThinkPad when he returned to Apple in 1997.

    Also, I’m surprised no one picked up on this yet, but the MacBook has a Nvidia GeForce 9400M graphics chipset, and not a 9600 as I typoed in the column.

    CM

  12. Apple should absolutely NOT do this. They are a premium electronics company and they would sully that brand by selling cheap laptops. It’s that simple. It’s one of the first rules of branding. Cheap backpacks might be all the rage, but that doesn’t mean that Gucci and Prada should get into the cheap backpack business, because that is not THEIR business.

  13. Howie Isaacks Tuesday, March 2, 2010

    I stopped at “Huffington Post”. I don’t consider anything that they say to be relevant.

  14. This is like saying Ferrari NEED to make a $20,000 compact, because that is what I would like to buy.
    There are several pressures on Apple that keep their price high.
    1: Worldwide assembly and distribution and maintaining the same model specs for a really long time. I bet you cant but the same model Lenovo or Dell today you could 6 months ago, or from anywhere in the world. In NZ, eg I cant get the Dell Mini 9 with Linux, it just isn’t sold here.
    2: Industrial Design – What is it that makes a macbook better than most of the competition – Ultra fast sleep and wake times, really long battery life, back lit keyboard, the best laptop screen I’ve seen, the huge glass trackpad, etc. All thes esmall things add cost to the build.
    3: Perceved Value – Hunt around, you really have to hunt for a brand new Mac at much cheaper than Apples RRP. You dont get cash-back deals, & here in NZ you can’t even get interest free deals from the retailers that you can on other PC gear as the margins are too thin for them to do it. This is tightly controlled, and even why a second hand mac is still able to be sold for good money.
    I have an HP TC4400 tablet, that was purchased for over NZ$3000. 1.8GHz dualcore with only 1GB RAM and 80GB HDD at the time. I have taken it to 4GB RAM and 260GB HDD and replaced the battery, but if sold I would be lucky to get NZ$500 (Similar spec to mine listed here – http://www.trademe.co.nz/Computers/Laptops/Laptops/HP/auction-275250011.htm) for it now. Macbook Air of similar vintage and original purchase price but lower spec CPU and no tablet features (Same intel GPU though) – http://www.trademe.co.nz/Computers/Apple/Laptops/auction-274520689.htm asking NZ$1600 start price for the auction. I expect this will actually go for closer to NZ$1800. 2Ghz Minis still sell second hand for NZ$800-$900. I bought mine for $950 but I have upped the drive to 500GB 7200RPM since then. A new 2.5 GHz mini with 2GB RAM is NZ$1700.

    All a reace to tegh bottom has produced in laptops is crappy laptops that probably wont last 2 years before they die. A well looked after Mac will last 3 or 4 years, and you will still be able to get parts from Apple for it during it’s life. The only parts I could get for my HP was the battery, but even then had to be from a suppliers spares stock, not new. I cant buy the screen now, nor the mainboard or any other parts of it’s case or keyboard. You can still get these parts for a three year old macbook.

    I’m happy for my company to buy a cheap PC, but if I’m spending my money, it will be on a macbook – 13″ pro for me.

  15. I would love be able to get an Apple netbook for my mom. She doesn’t need the power that even the low-end MacBook has and the price is a bit high too but she does need something with a full OS and with access to the FULL internet (i.e. Flash). Been thinking about doing a Hackintosh Dell Mini 10v for her.

    1. that’s what the Ipad is for. My mother is on the preorder list.

  16. I still agree with you Charles.

    What I don’t get is the multitude of comments about people not wanting Apple to make a cheap machine. For a laptop to not be cheap then apparently it must weigh over 4 pounds, pack a processor greater than 2GHZ, have at least 2 GB RAM, and have an advanced graphics card. Seriously? Are you saying Apple cannot produce a reliable laptop with lower specs and a lower cost?

  17. Charles, please let us know how profit margins and stock prices of netbook manufacturers were impacted after the introduction of their cash-strapped, value-oriented mini clamshell computers.

  18. I have to disagree as well. I feel, and this is my opinion of course, that Apple has an amazing product. Making a net book or selling at rockbottom prices would cheapen the brand. Even if they did offer a cheap notebook, I would not invest my money in it. Apple has a strong following and a strong bast that they play to, and they seem to be doing just fine. They provide many options (especially with the iPad) for those consumers on the go that are affordable and made to compliment not only Mac OSX, but Windows as well.
    Why cheapen the brand when you already have a strong profits?
    Why do something that you do not need to do?

  19. Netbooks? No, thanks. Apple definitely should NOT make a netbook.
    Why? Firstly, because of the price. It will either be very cheap because of cheap hardware, or very expensive (for a netbook) because of awesome hardware. Secondly, think of the repairs. ASUS lost its #1 in computer durability or something because of their well selling yet poor quality netbooks which kept, and keep, breaking. Finally, not everybody wants a netbook. There are many cases of people being dissatisfied with them. For example, read this story (http://www.notebooks.com/2009/07/18/macbook-pro-review/) of how a PC guy sold all of his many netbooks (which ALL had disappointed him) and other PCs to buy a MacBook Pro – and was satisfied with his new laptop. Apple doesn’t need a netbook. The iPad does what a netbook can just fine. It might not have a physical keyboard, but you can attach one when at home or work. And AFAIK a netbook’s keyboard is hardly convenient to type on.
    One more thing – the iPad is beautiful. Netbooks are not. They look cheap, they feel cheap, they are cheap. Even if they sell well, the customer satisfaction rate is low (not linking to any article, but you can find several ones which support my statement here on The Apple Blog or using Google).

  20. Charles W. Moore Tuesday, March 2, 2010

    Hi again;

    Please take note that I didn’t and don’t advocate Apple making a low-end netbook to compete directly with the $300 (or less) – $400 PC machines.

    What I am suggesting is that if they can make a profit off the current MacBook at $999, offering power virtually equivalent to the 13″ MacBook Pro, then they should be able to make a decent buck off a more modestly endowed and featured and physically smaller clamshell form factor design selling for a couple of hundred bucks less that would still be able to run the standard Mac OS rather than an iPhone OS, and would still have more than enough power to satisfy a large proportion of non power user laptop fans.

    The iPad just doesn’t cut it as a substitute for a real computer running the real Mac OS X, supporting real Mac production software and with a real keyboard and pointing device.

    It wouldn’t have to be designated a “netbook” – “MacBook mini” would be just fine, and it would need no more “cheapen” or “dilute” the Mac brand than the desktop Mac mini does.

    There would be a strong market for such a machine, evidenced by the number of articles extolling the virtues of netbooks on Mac enthusiast Websites and dyed-in-the-wool longtime Mac enthusiasts buying them. Here’s a couple of topical examples:

    http://lowendmac.com/mac2win/10m2w/hackintosh-dell-mini-9.html

    http://lowendmac.com/thomas/10tt/lenovo-s10-2-review.html

    CM

    1. I own a Dell Mini 9 as cited in one of the articles. Instead of OS X, mine runs Ubuntu 9.10. It’s great for what it is but it I don’t see it as a good form factor for OS X. Too cramped, too slow. After less than an hour of use, I appreciate more and more the full size keyboard on my 13″ MBP.

      For casual Web surfing, I use the iPhone more than the Mini 9. There are definitely times I wish the iPhone was bigger, so I’m probably a good candidate to purchase an iPad 3G.

      My experience with the Mini 9 goes towards your contention that the mini version of the MacBook should run “real Mac production software and with a real keyboard and pointing device.” That describes the MacBook Air, other than the price of course. But if Apple were to produce a mini version of the MacBook, it would cannibalize the MBA.

  21. Charles, I think the articles you site prove the point many of the commenters have made. Low End Mac is a site dedicated to keeping old Macs alive and using the least-expensive Mac hardware available. Those aren’t the customers Apple is trying to serve.

    There are many articles on Low End Mac about users who love their G3 and G4 machines and buy them to replace their old computers. Does that mean that Apple should start building G3s and G4s? Of course not. Apple doesn’t have to serve every market niche. I would argue that their focus on specific niches is one of the keys to their success.

  22. I’m not sure Apple needs a sub-Macbook laptop either. Using lower spec’ed hardware won’t drop the price much…. the only thing they can really drop is quality, which they’re not willing to do.

    There isn’t much profit in a $400 netbook, or a $500 laptop. Dell, HP, and Asus can have those sales, and the razor thin margins that go along with them.

    Though I hate to pay more than I have to, I know that Apple currently has a sustainable business model, so their products will be around for years to come, in a form I will recognize.

    The only solution I can possibly see is an “iBook”. If the iPad is successful, then perhaps a notebook style device with the iPad OS. That gives you built-in full-size keyboard for typing, but with none of the fluff of a full desktop OS. Although the price would have to be awfully close to Macbook…. so I’m not sure how feasible this is.

    Overall I really like Apple’s current lineup. There are a few holes, but a sub-Macbook laptop isnt’ one, IMHO.

  23. And Tata is missing out by not building an SUV…

  24. I hope one day to see the end of these moronic articles. Is that what a writer turns to whenever he has nothing to write about? Anyone that has followed apple can give several solid reasons a netbook will not happen at this time.

    That someone who writes ABOUT apple, supposedly somewhat of an expert, it’s amazing you trot out this drivel.

  25. Nope. Netbooks suck, that is not Apple’s world. Nanobooks (hackintoshes) fill the gap for whoever feels strongly enough (anyone smart enough), and still make money for Apple.

    Tbh.. another ill-thought-out post on this blog. Too many.

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