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Lack of Netbook, Price Hurting Apple in This Year’s Back-to-School Market

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imacnetbookThere’s more evidence that Apple (s aapl) is missing the boat on a substantial market opportunity due to its stubborn stonewall of the small, inexpensive netbook phenomenon. Steve Jobs may have expressed his dismissal of the device category last fall, and acting Apple CEO Tim Cook took the same line by contending that the netbook experience suffers due to “cramped keyboards, terrible software, junky hardware, [and] very small screens,” but millions of consumers worldwide disagree — with their wallets.

There are elements of truth in Cook’s critique, but it’s nowhere near as cut-and-dried as he implies. Some netbooks are hopelessly mediocre, but the category also includes very nice machines with “chiclet”-type keyboards (inspired by the MacBook), respectably sized 11″ and 12″ displays, decent hardware quality, and better I/O connectivity than some Apple notebooks. Linux builds (especially Ubuntu) are getting better all the time, to say nothing of the forthcoming netbook version of Windows 7.

In a commentary last April, Computerworld’s Scot Finnie questioned whether any computer maker, even 900-pound gorilla Apple, can afford to ignore the netbook trend. Confirmation seems to be growing that it can’t.

Earlier this week, Sunnyvale, Calif.-based Retrevo, a consumer electronics search engine/portal, released a new “Gadgetology” study indicating that 34 percent of students buying laptops are planning to purchase small, lightweight netbooks. Another 49 percent will buy full-sized PC notebooks, but the majority of student laptop shoppers will not consider buying a Mac.

With the rumored Apple iTablet looking more and more like it won’t materialize until the first quarter of 2010, at the earliest, Apple has already missed out on the 2009 back-to-school buying surge, and probably the holiday sales season, too, at least as far as the low-cost market is concerned. Of course, it continues to do very well in the premium, $1,000-and-up laptop category, having just recorded the best non-holiday quarter in its history, selling 2.6 million Macs — most of them laptops.

“While Apple has done well historically in the education market, 2009 marks the dawn of the netbook,” commented Retrevo CEO Vipin Jain. “Students told us they wanted longer battery life, smaller size, and a lighter laptop. Fifty-eight percent of them plan on spending less than $750. All but 18 percent have a budget under $1,000. Netbooks are affordable — some costing only $170. In contrast, Apple laptops start at $949. At a time when many people are experiencing economic hardship, having a new Apple laptop isn’t a necessity.”

Personally, I think the iTablet will have a shot at competing with the netbooks and cheap PC laptops only if it:

a) Includes support for using a real keyboard and mouse (e.g., via Bluetooth or USB) in addition to its built-in touchscreen.

b) Runs the full-featured version of OS X 10.6 Snow Leopard and not just the stripped-down iPhone OS, and by extension, serious productivity applications.

c) Sells for significantly less than $800. A price of $679 being speculatively floated this week sounds promising.

What do you think? Has Apple missed the boat on this year’s back-to-school laptop-buying surge?

56 Responses to “Lack of Netbook, Price Hurting Apple in This Year’s Back-to-School Market”

  1. Wouldn’t it be more accurate to say that netbook chiclet style keyboards got their inspiration from the orginal IBM PC Jr. keyboard that had…you know…chiclets (20+ years before the MacBooks)?

    Just asking – not trying to upset the fanboys.

  2. Look, you only need to look at other consumer products to see examples of where the big boys do and do not play (televisions, gaming systems and software, cars, appliances). Apple knows the profit margins are razor thin on certain products and won’t play in those sandboxes.

  3. In my opinion, the best thing Apple can do is drop the price of the white MacBook to around $699-$799. It is a great laptop. That would make it more tempting. The aluminum MB still has several features that will lure customers to it. So I don’t think the big difference in price would hurt the high-end as much as some might argue.

    The other argument for netbooks is the small form-factor and the weight. Nothing Apple has now will truly compete with that, even the Air. The Air, while nice for a very specific niche market, is still too bulky and pricey for the average college student. But there are some major points that people forget about netbooks. For one, surveys show that a large number (majority?) of users are unhappy with their netbooks because they think they’re getting a robust machine in a small footprint…not true. You get what you pay for. In this case, a notebook that is using old technology and meant for playing well with cloud computing. And what you end up with is a netbook that is just a supplement to the real computer you have at home. Nothing wrong with that. And if you truly use ‘the cloud’ for your storage and some apps, then you’ll probably be happy. But my guess is that most people will yearn for a real notebook.

    As for the Apple tablet, I think a lot of people are going to be disappointed. Apple will make a great product if the rumors are to be believed about them building a tablet. But it won’t be cheap. In fact, if it is less than $700, I’ll be amazed.

  4. I don’t know if Apple’s developing a “netbook” or not, but I think there’s two responses to your question:

    1) Yes, they’ve missed an opportunity.
    2) No, they don’t care.

    It’s nice that some “netbooks” now have an 11-12″ display, but having a larger display doesn’t keep them from being pieces of crap. On the other hand, if having an 11-12″ display is now grounds for the “netbook” moniker, then Apple had netbooks, years ago: both the PowerBook 12″ and the iBook 12″ fit into that category.

    I honestly have no idea what Apple is working on, these days, but I can tell you this much: Apple is about perception, about getting people to *want* a Mac. I doubt they care about making a lousy computer with a 1-2% profit margin, the users of which will never want another Mac.

    My 2¢.

  5. Gordon Morris

    Apple make beautiful products, but they’re fragile. Stick an iPhone in your back pocket and sit down and the screen will crack. An HTC Hero gets through the sit-down test just fine. I myself own a MacBook, from 16 months ago. Frankly, the build quality is not what I expect of a premium product. The front left edge of the keyboard area developed a small split, in exactly the same spot as both my sisters’ Macs. It’s caused by the small ridge above the screen when you close the device.

    Given the fragility, I would never, ever buy a Mac for a student. Kids are careless and their devices end up with all sorts of fluid spilled on them, getting dropped into bags, thrown and lurched around, inevitably dropped off desks… It’s a tough life being a teenager’s notebook, and lovely as Apple devices are, they’re simply not robust enough.

    If you want to spend the money, though, I would pick up a Panasonic Toughbook every time. Much lighter than anything on the market and way more robust. Plus they last forever.

  6. maybe the 10-inch screens that Apple has ordered aren’t for a tablet at all, but for a netbook-style MacBook MINI.

    They’ve ordered 6 inch screens for their new large-size iPods to make their debut on Sept. 9th……

  7. don duck

    Buy a MSI VR420 for $399 ( Tigerdirect etc) its 14 inch screen runs VISTA ,WIN 7 ,Linux & MAC OSX triple boot 2gb RAM 160GB HD intel GMA 3100 graphics, soundblaster compat sound
    Intel dual Core weighs 5 lbs

    let the rich unsophisticated people buy MACS for triple the price because they cant do a bit of hacking and want to give their money to Apple

    the Smart people will pay less than $500 for a better laptop with a REMOVEABLE battery
    Don Duck

    • You may personally prefer that; but I can’t believe someone could be naive enough to call all Mac users rich and unsophisticated. The truth is that we appreciate what the whole Mac experience is about and you just want in on the Macs OS.

      Having worked as an engineer on both Macs and PCs for many different vendors I can tell you there is a world of difference between them–it’s just not something you happen to appreciate.

  8. I work for an Apple Reseller and we sell a lot to the local education market. We have sold more notebooks than ever this year and we haven’t seen any requirement for netbooks.

    The rich private school here haven’t purchased a single MBA because the MBPs are so good. The only question seems to be how quick can you get 13″ MBP?

    It seems to me that Apple and Macs simply aren’t about cheap and cheerful; if you want that then you won’t demand quality and you won’t be an Apple customer (for long anyway). Macs are about getting something that’s quality in every way, and as such the MBA is as stripped down as Apple can get something (smaller displays are a step backwards etc.).

  9. Literally for *decades*, pundits have been saying that Apple needs to compete in some 0% margin market segment and try to ‘make it up on volume’. No they don’t. Sure, people would love to buy a cheap Mac, but that’s what they want, not what Apple needs. Apple, like any company, needs to make a profit, and they’re not going to do that by jumping into cheap, lowest-common-denominator, 0%-margin markets like everyone else. You are confusing what you want with what Apple needs.

  10. July data shows Apple doing just fine, and may be on their way to 2.8M Macs this quarter. Even if they fall short it’s still going to be a good quarter, and ahead of the industry.

    The people buying netbooks are buying a very cheap Windows system. Without netbooks they would have bought a cheap laptop, not a Mac. There is little evidence to suggest a netbook has ever taken a sale away from Apple.

  11. pListOFF

    Just because something sells a million units it doesn’t make it good. (Just look at the crap music people listen to nowadays!)

    Netbooks are too big to be as portable as a phone and too underpowered to be as useful as a real computer. That puts it smack dab in the land of mediocrity – a land that Apple has never been to.

  12. I fully agree with doug here, who seems to have the most sense of all the fanboys posting so far.

    I love OSX, work on it every day, and needed a light laptop with OSX for conference presentations. Dishing out over $1000 was a sh!tty option. If there was a cheap light-weight Apple notebook/netbook, I would’ve had it by now. Alas, Apple thinks there is no market there, so hakint0sh was the solution.

    Granted, the Dell Mini 9 is a little too small, but it is the perfect product for my needs (and probably many students out there): tweak a presentation in Keynote, work on an article in a coffee shop, write some quick code or analysis, listen to music. All for roughly $400. Could’ve had an iPod for the price of some of the netbooks these days that are fully OSX compatible.

    So ya, IF there were an Apple netbook on the cheap, most people owning netbooks would have bought THAT. Too bad for Apple.

  13. PhantomPlugger

    Man, this is the same old story that gets trotted out every time there is a new fad in computing and yet, shocker!, Apple continues to exist AND increase profits year after year. A “netbook” consumer is not in Apple’s target demographic, so I think Steve Jobs is exactly right to blow it off.

    What Mr. Moore, and so many others, fails to properly acknowledge is that Apple makes its business on creating trends, not reacting to them. Apple has always waited until it has refined a product so well that it changes the landscape of computing. I have no concerns that Apple will continue to lead the way into innovating performance and convenience.

    Furthermore, this article mentions that less than half have considered purchasing a Mac, and only 18% plan to spend over $1000. When you consider the fact that Apple’s notebook market share was less than 18% in its best years and is currently under 10%, combined with the recent news that Apple now commands a staggering 91% of the “premium” computer market, i.e. those over $1000, it would stand to reason that Apple will continue to experience gains in notebook sales, even without reduced prices. This doesn’t even take into consideration the often large price reductions shoppers can realize in student or educational discounts and refurbished products, further extending below the $1000 threshold.

  14. I am using a MSI Wind Hackintosh that I have about $400 invested in and it fits nicely between my iphone and my 17″ MacBook Pro. I also have an iMac I use with my work. The mac software runs great on the netbook and could not be more happy with its performance.

    I do not see a netbook as a replacement machine, but it is a great complimentary device for all the things that make netbooks convenient: size, weight, battery life, etc. It allows me to lighten my load and leave my MBP behind when I am going out and leave it hooked up to my 24″ display.

    Since I have it running OSX, I can run applications I need access to without carrying a full size machine around. While the iphone works great, and a tablet based on the iphone OS would be cool, it does not replace the netbook because it does not run real application, just apps. I personally think Apple should release two products. A newton size or larger tablet running the iphone OS and a mini Macbook running full OSX. I think there are two different market opportunities there.

    While I love my Wind, I only bought it because Apple does not offer something in this size. I would be willing to pay twice what I paid for the Wind for a similar Apple product that would have superior build quality to the Wind. So $799-899 would be where they would have to be for me. Anything more than that and might as well get the 13″ MacBook Pro, and that is the way someone should go if they want full-powered machine and small footprint.

    The comparison of netbooks by some here to full-powered macs is misplaced. Certainly, the Wind is no replacement for my MBP 17. But that is where Apple is missing the boat on this. There are a ton of Mac users like me that will buy an Apple netbook in addition to their other Macs and Apple portable devices, so it just seems dumb to cede that ground.

  15. There’s a lot of could-be, would-be speculation in this article, which relies on one extremely obscure source… and it doesn’t pan out with what I see on campus, or read elsewhere – eg Mac sales are rising, contradicting the assertions in this article. And not one mention of Apple’s widely reported answer to the netbook, the coming tablet? So, what exactly is the point of this article, Charles?

  16. Adam Jackson

    I paid a premium for a MacBook Air a few weeks ago and I’m glad I did. It was a course of 7 months of researching Netbook vs. MacBook Air and once the price drops happened on the MBA I jumped for it.

    Why? Because netbook owners generally weren’t happy. there was always something to complain about whether it be a low resolution, cramped keyboard, too slow to watch HD movies or having to install Ubuntu or Windows XP.

    With MBA, I can watch HD movies, have OSX and enjoy all of the apps I’ve already bought. no need to switch OSes. Granted I paid $1800 w/ tax for it, I’m still happy

    • Howie Isaacks

      You did it right. A lot of shoppers focus on price, and do so with very little research. It’s amazing how some people throw their actual needs under the bus just to save money.

    • Matt Rix

      I really don’t understand how the Air compares. It’s huge(in comparison to a netbook) and it’s in a completely different price range. Sorry to be a jerk, but it seems like you basically bought a regular macbook with way less ports+functionality for double the price… and it’s a bit thinner. Or am I crazy?

    • This is mostly in response to Matt Rix’s comments:

      I guess it really depends what you want from a netbook. Some people buy them because they are worth peanuts (for many sub-reasons if you will, but because of price), some for portability, some for weight, some because they seem cool and some because they do what they need and nothing else.

      Until you have owned a MacBook Air you can’t really appreciate how beautifully they fold all the benefits of a netbook (barring price perhaps), with most of the benefits of a full-size notebook and that special Apple polish.

    • Matt Rix

      Oh believe me, I’ve used the Air :) We have a spare one at my work because nobody wants to use it. I’ve tried to like it, and I even took it home a couple times, but it was just so impractical. It’s too big to comfortably sit on my lap, and despite how thin it is, it still took up a good chunk of the room in the large pocket of my backpack. In comparison, my Aspire One can fit in the small pocket of my backpack(leaving the main one free to carry other stuff), and is a perfect size to fit right on my lap in a bouncy bus.

      Another huge problem with the Air is the lack of flexibility. There’s only one usb port, no ethernet, and no card slots. My A1 which costs a quarter of the price has 3 usb ports, ethernet, and two SD slots. What’s up with that?

      Anyway, to get back on topic, I think that netbooks are really defined by having a low price and a small size. An Air may be thin, but it’s not small.

    • Adam Jackson

      Thanks Matt. Yeah that’s how I feel. most people that hate the air haven’t tried the latest revision w/ SSD. It’s a completely different experience than the original Intel GMA version with HDD.

  17. Howie Isaacks

    Eh… Screw those cheap bastards. When you buy cheap, you get cheap. Netbooks are fine for very basic tasks, but they’re crap for real productivity and Apple knows that. If all these people care about is price, I say that Apple doesn’t need them anyway. These same people won’t be very long term, and loyal customers if price is their only concern.

  18. What this discussion of netbooks left out is that they are running an operating system (xp) that is functional but primitive by mac os standards – I still use xp every day, but its age shows both in aesthetics and functionality. But it does allow netbooks to use cheap processrs – I thought I saw some new models actually using pentium m chips.

    I don’t think I would want an apple netbook if it meant running os 9 on a power pc chip…..ok, that is not fair, but the point is that what makes mac a mac is the OS. It boots faster and does everything I need it to better than xp, but I believe it needs more RAM and dual core chips to pull that off – not the components of a netbook.

  19. The price of the MacBook air concept is dropping. Apple might release a 10 to 11 inch MacBook air with the same specs as the currently cheapest 13 inch MacBook air and a price point well below the $1000 barrier.

  20. I do think that Apple is missing an opportunity. I have a Macbook and we also have an iMac. Our son is starting JHS and if there was a reasonably priced Netbook running OS we would buy it for him in a second. We are still contemplating my getting a new Macbook and giving him my older one, but we are definitely on the fence about it. We may end up buying one, but if we don’t, the price will be the reason.

  21. I’m not entirely sure that Apple have missed any opportunities when it comes to students.

    As an apple student rep I know that a lot of students are switching to macs as they look for reliability and power, most don’t know what makes a computer “fast” but know that a mac is built to a high standard so what they’re getting is an investment that will have enough power to last through their studies and beyond.

    Programs have always gotten exponentially cpu hungry and if you aren’t buying mid to top of the line in the PC department your machine will not only be restricted in the programs it can run, but also obsolete in a year or so as opposed to 5+ otherwise. My sister still uses an iBook and my dad an old Powerbook, they can both still handle most tasks at speed.

    A netbook is just a patch on a longer term problem, in WiFi coverage the iPhone can do many of the things a student would use a netbook for (and more), furthermore Apple are releasing their tablet soon which should address any potential gap in the market anyway.

    A large part of the back to school market simply wait and fall into the christmas one, so i’m holding my breath and waiting for more news on this proposed tablet.

  22. Brad Newton

    My brother bought a netbook for school, an MSI something or other. He uses it for taking notes, writing reports, social networking and some very light graphic work. He loves the computer for numerous reasons and it fits his needs. I think his computer needs are very typical of the average joe, student or not.

    Having a powerful computer capable of running the latest video game, graphic software or other intensive task is simply not something most people need. We can all sit around in denial and claim that people who purchase netbooks will be disappointed with their purchase but the kind of people who come to blogs like this to comment on such are not the kind of people who would use a netbook as their main computer. The majority’s computer needs rarely extend beyond the browser. The days of selling the masses $700+ computers are nearly over.

    That said, I’d go out of my mind using a netbook. But then again I, like most of you, am a poweruser. $2.5k and beyond!

  23. Scott Finnie’s comments reminds me of the early days when Microsoft thought the “browser” was the Edsel of the computing world. Seems it took them about 9 months to do a 180 and Internet Exploder was born. MAYBE Apple will surprise us all with a netbook hit like the ipod–not likely but we can dream. I remember decades ago when Sculley was seen holding a futuristic “book” but I can’t remember the name Apple gave to it. I’d love to be surprised again!

  24. I think a LOT of people buying netbooks this year are going to be extremely disappointed with their purchase in the long run. I’ve tried several and all are lacking in more than one area. I was going to buy one, but ultimately chose to go with another Mac (I now have 3). I got the new 13″ MacBook Pro. It seems much lighter than the 4.5 pounds it actually is, has a spacious 13″ screen (unlike the 10-12″ ones netbooks have), and with 4GB of RAM, 250GB HD and a full SuperDrive; it’s powerful enough to replace a low-to-mid-range desktop computer.

    Though I purchased this particular MacBook specifically for light-weight portability for my writing and Internet duties, I often do graphics work in InDesign and Photoshop with no problem at all. Doing the same work on the few netbooks I was able to play with was excruciatingly slow and a miserable experience on such small screens.

    • I have a Dell Mini 12 with Ubuntu Linux, and love it for what it does. $500, 5 hour battery, nice OS, 3 pounds. It is not as refined as my 17″ Macbook, but it is much more compact and serves as a great system for lightweight computing and travel.

    • I fully agree. I have an Eee that I use when I’m in the hospital for surgery (I’ve had 5 in the past couple years) and it’s perfect for that. It’s really great for those occasions that a full laptop just isn’t that feasible. However, as a laptop, it’s also just as unfeasible. I would have failed college if I were forced to use the mini keyboards. I failed out because of beer instead, but that’s another matter.

    • Matt Rix

      I’ve got a 13″ Macbook 2.4ghz, and I’ve got a hackintoshed Dell Mini 9, and a 9″ Windows XP Acer Aspire One.

      I take public transit(train+bus) to work every day, and I always just use the Aspire One. I can type faster on it than the Macbook(!), and it’s the perfect size for pulling out and putting away quickly. The small screen really isn’t that bad. What’re you doing with your screen that you absolutely need more space? Having lots of room is nice, but it’s really not necessary when I’m on the move.

  25. I firmly believe you pay for what you get and that is extremely true with Apple verses the competition. I have had my MacBook Pro for a little over a year now and I can honestly say I’ll never own anything but a Mac from now on. You might can find cheaper solutions, but in the end the cheapest solution isn’t the solution at all.

    • That’s easy–oneupmanship! They have to have the latest “whatever” even is it’s a POS. I used to work with a bunch of prop heads and tech wannabes who would talk up a “soon to be released” product weeks in advance and then stand in line for hours before it goes on sale just to be the first to own one. Remember Country Joe and the Fish? “be the first one on your block…”

    • wow, talk about a bunch of fanboy losers and haters. I am a student, bike every day and bought the dell mini 9 SPECIFICALLY because it’s easily hackint0shable and weighs less than air (pun intended). I don’t need to break my back or my wallet and in case of a fall or theft, the mini 9 is easily replaceable (in fact it will probably survive the fall because it’s an SSD, so my data will be safe).

      you obviously fall in the spoiled brat category acting snobby toward a solid product. are you blind? look at the stats! most students DON’T want a mac book. get over urselves.

    • Not sure how someone can call it a “Netbook” when it has a 12 inch screen.

      The problem now is that people want a “Netbook” because they have heard how cheap they are, but they want a big screen. They are idiots! But, like you say, they are spending money.

      I keep looking at a Netbook to turn in to a Hackingtosh, but I cannot bring myself to spend $500 on a machine that offers so much less than my Black Macbook. This is partly because I am not 100% sure where I would use it and therefore I assume I just want it because.

      I cannot imagine that companies have very good profit margins on those things either, so the chances are that Apple makes more of one Macbook Pro than ASUS makes of 10 netbooks.

      I think the saying “Buy the best you can afford” holds true in this case as well.