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How a 12-Inch MacBook Air Could Help Apple, Inc. Keep Its Mac Momentum

By Evan Niu, CFA - Jan 9, 2015 at 9:17AM

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Apple has been gaining traction in the global PC market, and a redesigned 12-inch Retina MacBook Air could help it maintain its growth trajectory.

Investors have been hearing rumors for quite some time that Apple (AAPL -1.34%) is working on a redesigned 12-inch MacBook Air. Well, as the speculation intensifies and the leaks continue unabated, the prospect of a new laptop from Cupertino seems increasingly likely.

The latest details come from 9to5Mac's Mark Gurman.

Gimme the deets
According to the report, the 12-inch MacBook Air is due out this year, marking the first major form factor redesign since 2010 for Apple's consumer notebook family. As usual, Apple's never-ending pursuit of thin and light is expected to continue on, with notable reductions on both fronts.

The rumored 12-inch model is approximately the size of the current 11-inch model (albeit thinner), but Apple is slimming down the bezels in order to pack in the slightly larger high-resolution display. Perhaps most interesting, Gurman believes that Apple is doing away with the majority of the usual ports found on laptops, and that the new MacBook will only have a USB Type-C port and a headphone jack.

The new USB Type-C port is capable of powering displays and transmitting power, making it possible for Apple to consolidate functions into one port. Prior rumors had suggested that Apple wanted to make the laptop fanless, which meant it might be waiting on Intel's Core M processor.

Of course, Apple likely hasn't finalized its plans yet, and could go a different route. Ditching legacy ports in favor of a single new port would be risky, even if USB Type-C is clearly a technology in its "ascendancy." Generally, Apple is unafraid of making bold moves in the name of catalyzing adoption. The Verge notes that Apple has been silently backing USB Type-C, allocating more engineers to its development than the majority of its peers.

There's plenty more where that came from
There are a few ways that a 12-inch MacBook Air could strengthen Apple's current Mac momentum. While The Verge wonders if the new laptop will be cheaper in order to better compete with Google Chromebooks and cheaper Windows laptops, that would be uncharacteristic of the company. Even more so if it features a Retina display.

Apple has indeed been aggressively lowering the prices of MacBook Airs, but a redesigned model would be starting out at the top of its manufacturing cost curve. That would make it difficult for Apple to maintain its Mac margin profile if it were too aggressive on pricing reductions.

That being said, a 12-inch MacBook Air could make room for further price reductions in the current 11-inch model, which Apple dropped to $899 in April 2014. Apple could potentially consider another price reduction for the 11-inch model, perhaps to $799, to keep it distanced and differentiated for the new 12-inch model.

While the broader PC market mildly improves, Apple continues to gain traction. In Q3 2014, Apple grabbed the No. 5 vendor spot on a global basis, according to IDC. That's thanks to a long string of quarters where Apple's Mac shipments have outpaced the broader market (33 out of the last 34 quarters, to be precise), slowly but surely growing its global share.

Releasing a redesigned 12-inch Retina MacBook Air while lowering the price of the 11-inch MacBook Air would be a powerful combination to keep up the momentum.

Evan Niu, CFA owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), Google (C shares), and Intel. The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), Intel, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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