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With the next iPad model at least a year away and the next iPhone a few months off, the Apple rumor mill is pondering a new Apple product line: the MacBook Air. On Monday, Digitimes reports that Apple is considering selling a MacBook Air for $799, which would be $200 cheaper than the least expensive model available now.
Predictably, many are running with this. An Apple computer starting at $799 would be a big deal — the cheapest traditional laptop the company has ever made. The Digitimes report had few details, but the theme that’s emerging in the flash analysis around the idea of a $799 Air is that Apple wouldn’t do it by choice, but would be “forced to” out of some sort of response to the threat of Intel-based ultrabook notebooks — which, mind you, are direct rip-offs of the Air.
It’s not impossible Apple would make a $799 Air. They could, but if they do, it wouldn’t be for the reasons many think.
Apple is not scared of ultrabooks. Intel’s(s INTC) thin-and-light, optical drive-less laptop concept with a solid-state drive and all-day battery life isn’t a monolith. As Dan Ackerman wrote for CNET in March, the term “ultrabook” has been clouded as a marketing term thanks to its overuse by mainstream laptop makers, and there’s not even an accepted definition anymore — it’s essentially the catch-all term for new mid-priced laptops. Apple has never been worried about competing with mid-priced laptops from HP(s HPQ), Dell(s DELL), Acer or Samsung.
Today, you can buy an “ultrabook” that’s thicker than an inch, is heavier than 4 pounds, has a 14-inch screen, a traditional spinning hard drive, and decent battery life. They’re also priced between $700 and $900, or slightly below the $999 entry level 11.6-inch MacBook Air. In other words — nothing has changed. PC makers have been making laptops for years that could beat Apple on specs and often price and still Apple has done its own thing and continued to rake in profits.
Ultrabooks aren’t actually selling very well. It’s old news that Intel’s $300 million initiative intended to jumpstart this category is having a rough go of it. Holiday sales of the devices were described as “ugly.” And why not, when some consumers are putting off new computer purchases as they migrate some computing experiences to mobile devices such as iPhone and iPads?
People are already buying the $999 Air. The Air is doing fine on its own after beginning life in 2008 as a niche concept and very expensive design. Once Apple redesigned it and lowered the price two years later, it’s apparently done decent business for the company. Apple has never said how many Airs it typically sells each quarter, though analysts pegged the Air as responsible for a little more than a quarter of MacBook sales back in October. It’s also the company’s entry-level computer, so it’s not unreasonable that the cheapest computer would also be one of its best-selling computers.
Apple doesn’t typically do price cuts as a response to competitors. The idea that Intel aiming for $699 ultrabooks would suddenly “force” Apple to move down in price on its successful MacBook Air doesn’t match up with Apple’s practices. Apple has indeed lowered pricing on its most successful products over the last few years. But the way in which it’s cut prices isn’t with a new model — it’s been by lowering the price of older devices.
Apple’s most important product, the iPhone, has remained priced between $199 and $399 (with two-year wireless contract) since 2008 for new models. In 2009 Apple first discounted its popular device for older models. While simultaneously introducing the typically priced new iPhone 3GS, it kept the older model iPhone 3G for sale for the discounted price of $99. The same happened with the introduction of a new phone in 2010 — the 3GS stayed around for $99 — and in 2011, the two-year old iPhone 3GS became free with contract, while the iPhone 4 went down to $99. It has followed a similar pattern with the iPad — with the introduction of the third-generation iPad in January, Apple began offering the year-old iPad 2 for $399 instead of the normal $499 entry price.
So if Apple does decide to price a MacBook Air at $799, it likely won’t be to replace the $999 11.6-inch model that’s selling just fine, but perhaps as last year’s model simply discounted. But in general, this is a Digitimes report we’re talking about — I wouldn’t hold your breath for a cheaper MacBook.
Note: This was updated to clarify that a $799 MacBook Air would be Apple’s cheapest laptop ever, not cheapest computer, and that the first iPhone discount was in 2009.