Saving up for a new PowerBook, are you?
The rumor mills are frenzied, of course. The first wave of gossip offered up the code name Brick, given that the new laptops are supposedly encased in a single brick of lightweight aluminum.
Yep. I yawned too. However, several more tantalizing nuggets -- all hearsay until Tuesday, of course -- have started to emerge. Some of the chatter is wishful thinking. It's probably too soon for Apple to follow the lead of its successful iPhone and iPod touch and go with a touchscreen monitor. However, most analysts and dedicated bloggers seem to believe that the entry-level machines will be priced at far less than the $1099 starting point for the current laptops.
How does $799 or $899 strike you? Apple hasn't dipped into the triple figures for its laptops since the 2002 rollout of its $999 iBook, and next week's PowerBooks may be priced even lower.
Rip. Mix. Learn.
This probably isn't how Apple wants to win this game. Unfortunately, Dell (Nasdaq: DELL ) , Hewlett-Packard (NYSE: HPQ ) , and Lenovo (OTC BB: LNVGY.PK) all have cheaper entry-level laptops on the market. Dell is aggressively pushing its Mini solutions, starting at less than half of what even potentially cheaper MacBooks will set you back.
Who cares, you say? Apple can get away with its premium given the unique products and superior style and functionality, you say? I hear you, but let's get real.
When Apple was a niche player -- pandering to just 2% to 3% of the computer users -- it reserved the right to be pricey. Now, just as its iPhone has gone through several price cuts since its introduction in the summer of 2007, it's time for Apple to price its products for the masses. It's no coincidence that you can find Apple products -- including the iPhone -- at Best Buy (NYSE: BBY ) these days. Next stop: Wal-Mart (NYSE: WMT ) ?
The rub, of course, is that it had a willing partner in AT&T (NYSE: T ) to absorb the hit of subsidizing the marked-down 3G iPhones in exchange for exclusivity. It will have to eat the PowerBook markdowns itself. It will be worth it, if greater market share creates an uptick in higher margin software sales. For now, the game is all about quantity.
Yield margins for market share
Aggressive pricing is clearly why Apple warned that its gross margins would be taking a hit in fiscal 2009, clocking in at 30% after coming in at 34.8% in its latest reported quarter.
As we head into an unsure holiday season, with the economy clearly dragging its knuckles on the floor, Apple wants to make sure that it's not just iPods and iPhones making the cut as stocking stuffers. Macs are still a big deal to Apple, and it's pricing itself for Main Street U.S.A. now.
This doesn't mean that Apple is out of the woods just yet. Price too low and investors will be concerned that the Apple premium is eroding away. Price too high and investors will worry about the PowerBooks collecting dust. Try the Goldilocks outfit on for size, Steve Jobs. Let's hope you come back on Tuesday with everything just right.
Other bricks in the oven: