An $800 MacBook would be 'the height of folly' - report

[AppleInsider]

Had Apple succumb to calls from industry watchers to release a new MacBook at or below the $800 price point, it would have amounted to "a value-destroying event of epic proportions," according to a newly published analysis.

In a report released Wednesday, Needham & Co's Conor Irvine and Charles Wolf, one of the more colorful analysts covering Apple today, commended Apple for avoiding the "folly in pricing for market share," and instead sticking to its roots as a value-driven organization that produces world class, differentiated products a cut above the rest of the industry.

That differentiation has recently set Apple apart from the pack and kept Mac growth on a pace well above the industry average. But as the analysts noted, an "increasing choir of pundits" under-appreciate the company's fundamentals and have called for the Mac maker to introduce a notebook computer priced in the $600 to $800 range so it can hit the "sweet spot" of the market and keep its business growing through the looming recession. Apple has ignored that advice to instead pursue what it calls a "winning strategy."

"There are some customers which we choose not to serve," CEO Steve Jobs stated in the company's earnings reports conference call yesterday. "We don't know how to make a $500 computer that's not a piece of junk, and our DNA will not let us ship that. But we can continue to deliver greater and greater value to those customers that we choose to serve. And there's a lot of them.

"We've seen great success by focusing on certain segments of the market and not trying to be everything to everybody. So I think you can expect us to stick with that winning strategy and continue to try to add more and more value to those products in those customer bases we choose to serve."

Demand elasticity in a tough economic environment

The Needham report added, "The observers arguing for Mac price cuts point out that during a recession, users who might otherwise buy a Mac, may opt for an entry level Windows notebook instead. However, this argues against price cuts even more strongly because it implies that the price elasticity of demand between Macs and Windows PCs is lower and the value destruction is greater than we assumed in our analysis," pointing to its projection for sales at both $800 and $900 low end targets.

Demand elasticity relates to the willingness of buyers to stretch their options and switch vendors, in this case based entirely on price. Many analysts compare Macs with similarly equipped generic PCs as if both were equal commodity products, just as HP and Dell compete primarily on price in selling wholly interchangeable, generic PC products.

That isn't how Apple views the situation. Jobs indicated that his company views its Mac, iPhone, iPod, and software products as unique, insisting that "none of our competitors can deliver products in this class." Speaking of customers on a budget due to lean economic conditions, including education buyers, Jobs said, "while they might postpone purchases, they are more likely to delay than switch."

Apple's Mac sales figures bear that out. The company has consistently outpaced the sales growth of generic PC makers in every quarter over the last four years apart from the first quarter of 2006, at the height of Apple's Intel transition. Over the last two years, Apple's sales growth has ranged between 30% to 50% every quarter, compared to less than 20% growth among generic PCs in general.

Needham's analysts point out that Apple's unique circumstances of having products that are clearly differentiated from generic Windows PCs gives the company the opportunity to sell to markets Dell and HP can't compete in, and that misguided efforts to become a generic PC vendor, something many pundits have long insisted Apple do, would only erode the company's profits as well as its image and allure.

"In short," the Needham analysts reported, "Apple has demonstrated that there are a significant percentage of Windows users who recognize the value of a Mac and are willing to pay more for comparable configurations of Macs and Windows PCs. This argues that Apple should focus its resources on making the Mac even more unique as it did with the recent introduction of the MacBook, which features an all-in-one design and a versatile, multi-function track pad that no Windows competitor will be able to emulate for the foreseeable future."

Chasing Apple's runaway success

Microsoft has recently scrambled to deride Apple's added value approach to building desirable, distinguished computers that people are willing to pay a premium for; the company's $300 million ad campaign has sought to insist that generic PCs are not actually suffering from the problems related to the latest version of Windows Vista, which Apple has dubbed the "V-word" in its own ads, while also presenting a series of users who appear happy using generic PCs that are not made by Apple.

Microsoft has also tried to shed the negative connotation of the "Windows tax," which refers to the added cost Microsoft contributes to the price of generic PCs as allowed by its position of monopoly control over the generic PC operating system, and attach the "tax" idea to Apple instead, complaining that customers of Apple's premium hardware and lower priced software would be better suited to buying cheaper, generic PCs running Microsoft's more expensive software instead.

At the same time, Apple is also under assault from PC maker Psystar, which insists that Apple's Mac OS X software is so much better than Microsoft's Windows or open source Linux that the Mac OS must legally be viewed as a separate market, and has demanded that the courts force Apple to license its software to Psystar so it can benefit from Apple's software technology without spending the efforts to develop its own operating software.

Apple has insisted that Psystar already competes against the company's Macintosh systems with both Windows and Linux PCs, and insists it has the legal right to decide for itself who it chooses to do business with, including the licensing of its operating system software.

Outside of the relatively minor Psystar, Microsoft's top PC makers have all been influenced by Apple's industry leading growth to investigate the use of alternative operating systems, with Dell and Acer shipping new Linux-based PCs, and both HP and Sony rumored to be working on operating systems of their own.

[ View this article at AppleInsider.com ]

[bigmc6000]

"...both HP and Sony rumored to be working on operating systems of their own."

Dear Lord I certainly hope those rumors are wrong. That would be a complete disaster for both of them.

On a separate note I'm glad to see someone defending the point that SJ always likes to point out - people want value for the dollar and that doesn't always mean buying the cheapest product...

[irnchriz]

Originally Posted by bigmc6000

"...both HP and Sony rumored to be working on operating systems of their own."

Dear Lord I certainly hope those rumors are wrong. That would be a complete disaster for both of them.

On a separate note I'm glad to see someone defending the point that SJ always likes to point out - people want value for the dollar and that doesn't always mean buying the cheapest product...

They were building an OS on top of linux. Basically just their own frontend.

[bigmc6000]

Originally Posted by irnchriz

They were building an OS on top of linux. Basically just their own frontend.

I suppose I can see Sony pulling it off w/ their experience with the PS but HP at this point I think would just be pushing money down a rabbit hole. If they feel like wasting money I'll be more than happy to give them my checking account number

[anantksundaram]

Originally Posted by AppleInsider

Demand elasticity relates to the willingness of buyers to stretch their options and switch vendors, in this case based entirely on price. Many analysts compare Macs with similarly equipped generic PCs as if both were equal commodity products, just as HP and Dell compete primarily on price in selling wholly interchangeable, generic PC products.

'Price elasticity of demand' has little to do with 'stretching options' (whatever the heck that means). It simply refers to the change in quantity demanded for a product when its price changes: for instance, price-elastic products will see a decline in quantity demanded when price increases; price-inelastic products will see little change. Generally, differentiated products (e.g., Apple) tend to have inelastic demand while commodity products (e.g., PCs) tend to have elastic demand. Price elasticity is determined by the availability of cheaper alternatives.

So all this guy is saying is: Apple is unique, and PCs are not really an alternative, so its its demand is price-inelastic. Ergo, there is really no need for Apple to cut its prices and lower its margins.

Jobs essentially said the same thing much better, and in one sentence, when he implied that he has little interest in price-sensitive customers. (Now, that might be a tad arrogant, but he stated it far more simply than the highly contrived and convoluted logic of this analyst.)

[FuturePastNow]

Originally Posted by irnchriz

They were building an OS on top of linux. Basically just their own frontend.

The world does not need any more Linux distros. If they want Linux, they should just use Ubuntu, or Fedora.

[BuffyzDead]

I LOVE IT!!

As a business owner selling Pizza, I can not agree with Apple more.

I ONLY want to cater to those customers that are willing to pay $4.50 a slice and up!!

I feel there is significant value in my Pizza, and business has never been better. Customers are 5 deep to pay for our value-added Pizza. Those that want the $1.25 slice, can choose to go right down the road, because as Steve says "There are some customers which we chose not to serve."

GO APPLE

And everyone else, go get a $399.00 eee pc, or whatever!

[Lun_Esex]

Originally Posted by anantksundaram

Jobs essentially said the same thing much better, and in one sentence, when he implied that he has little interest in price-sensitive customers. (Now, that might be a tad arrogant, but he stated it far more simply than the highly contrived and convoluted logic of this analyst.)

It's true, though. People who value price on top of everything else when choosing their computers are not Apple's market.

For one thing, that means that Apple's core values are secondary to them--and why should Apple spend much effort marketing to people who aren't primarily interested in what Apple has to sell?

For another, people who make decisions based on price above all else are fickle and don't have brand loyalty. They're the type of people who buy generic products at the market like no-name "Beer" and "Cola" and "Potato Chips." The ONLY way to keep those people as customers is to ALWAYS have the lowest price products. That's a road Apple will never, ever go down.

Apple's doing just fine without trying to slug it out in the bottom of the barrel market.

[mjtomlin]

Originally Posted by bigmc6000

"...both HP and Sony rumored to be working on operating systems of their own."

Dear Lord I certainly hope those rumors are wrong. That would be a complete disaster for both of them.

It wouldn't necessarily be a disaster. Microsoft can no longer force OEMs into exclusivity contracts (only allowed to bundle Windows with hardware sales). Manufacturers are free to allow customers choose different operating systems. If HP or Sony think they can add value to their systems by developing tailor made operating systems, then why not? This has been Apple's approach for the last 30+ years.

This isn't 15-20 years ago, when it was all about the platform. Today it's all about the content, most of which is based on open standards supported by many different platforms and partners. It doesn't matter whether the platform is closed, open, or open sourced, all that matters is compatibility with open standards. Hopefully, in the near future, proprietary "standards" will all die a wonderfully horrible death.

[Xian Zhu Xuande]

Whether people like it or not, Apple's words are backed by the numbers.

[minderbinder]

I hate to say it, but apple DOES ship an $800 laptop.

They just overcharge for it by several hundred dollars.

[Eriamjh]

Hmmmm. Could it be the reason the Mac mini isn't getting the attention/revisions it deserves?

[TBell]

I once overheard the owner of a very successful multimillion dollar food company in Ann Arbor tell an employee who was relaying to the owner how a customer was complaining about the price to an item one of his stores sold. The owner's answer was to raise the price because the price must have been too low if the customer felt it was warranted to complain about the price.

[infinitespecter]

Originally Posted by minderbinder

I hate to say it, but apple DOES ship an $800 laptop.

They just overcharge for it by several hundred dollars.

For the nth time, Macbook pricing is perfectly in line with it's competition (yes, there are other 13" notebooks that cost as much or more). Just because you can get some 15" Compaq for $400 does not mean that the Macbook is overpriced.

[robb01]

Ive always thought they needed more entry level laptops to capture that share of the market

_____________________

[teckstud]

Originally Posted by infinitespecter

For the nth time, Macbook pricing is perfectly in line with it's competition (yes, there are other 13" notebooks that cost as much or more). Just because you can get some 15" Compaq for $400 does not mean that the Macbook is overpriced.

That wasn't a new notebook by any means but merely a clearance sale on an old notebook.

[MacTel]

Black Friday may see the low-end MacBook drop to $899. That would be awesome, but I'm sure Apple will avoid the low-end.

[wobegon]

Originally Posted by teckstud

That wasn't a new notebook by any means but merely a clearance sale on an old notebook.

If they wanted a clearance sale, they would have killed it off completely, not upped its specs or dropped the price (depending on how you look at it). Not arguing that it's not on its way out, it is, they're keeping it alive until they can drive down the higher price of the new MacBooks, which is due to the more expensive unibody construction process.

Apple now sells the updated last gen MacBook as a sub-$1000 laptop to students ($950 to be exact) and they've been selling the Mac mini to students for $580 since as long as I can remember.

[Reek!]

Originally Posted by bigmc6000

I suppose I can see Sony pulling it off w/ their experience with the PS but HP at this point I think would just be pushing money down a rabbit hole. If they feel like wasting money I'll be more than happy to give them my checking account number

So they can spend your money, too?

[mikeske]

What do you get from Apple? A really nice computer that actually works, that looks really slick and does what most buyers of Apple computers want it do, WORK. It has it own operating system that does not get infected by junk from the web, it is not loaded with additional junk from the hardware supplier that will never be used or wanted.

I for one will pay more for something that works and does what I want it to do. When I bought my iMac, I was totally shocked that it only took 15 minutes from removing the computer from the box to the computer doing what a computer is suppose to do. This was really a surprise after 20 years of having to deal with the junk that Windows has become

For me a computer can be priced at whatever price point the company desires as long as it works and Apple computers work well.

If you remember not long ago a computer set folks back $1500 for a cheap computer all the way up to the sky for a more expensive ones. The first computer I bought back in 1980 cost me over $4400 that had MS DOS and now we consider computers as appliances.

[TenoBell]

Originally Posted by minderbinder

I hate to say it, but apple DOES ship an $800 laptop.

They just overcharge for it by several hundred dollars.

Nice quip, with out the inconvenient need for proof.

[tundraboy]

Originally Posted by anantksundaram

'Price elasticity of demand' has little to do with 'stretching options' (whatever the heck that means). It simply refers to the change in quantity demanded for a product when its price changes: for instance, price-elastic products will see a decline in quantity demanded when price increases; price-inelastic products will see little change. Generally, differentiated products (e.g., Apple) tend to have inelastic demand while commodity products (e.g., PCs) tend to have elastic demand. Price elasticity is determined by the availability of cheaper alternatives. )

Close but not quite.

Price-elastic demand means your total sales revenue goes up when you reduce the price. For practically all products, lowering the price will increase the quantitiy demanded. That is not price elasticity. Price elasticity means when you decrease the price of a product, the increase in units sold more than makes up for the decrease in price so that your total sales revenue (Price X Quantity) goes up even though you decreased the price.

Price-inelastic products face a decrease in total revenue when you lower the sale price. i.e. the increase in quantity sold does not make up for the decrease in price. Or put the other way around, total sales revenue for price-inelastic products go up even with a price increase. The increase in price more than makes up for the decrease in quantity sold. Perfectly inelastic products are things like cigarettes, alcohol and other addictive substances. Think about it.

[Frank777]

The MacBook price is fine, provided they don't cut features. So where's Firewire?

[sflocal]

No point in trying to convince the "cheapskates", or getting them to understand that Apple is more than just a bunch of common-PC components in a pretty package.

If certain people can honestly say with a straight face that Apple should get into the same market as the eeewPC line, then they have issues that a quality-focused company like Apple could not (and should not) help with.

The entire user experience from the hardware to the software is what makes Apple stand out in an arena of generic PC's. It's too bad price is your #1 priority. I for one pay for having a better machine, OS, etc than having to deal with the instabilities of a non-OSX machine.

You want cheap? Stick with Dell and the other low-cost providers. I can see why Apple does not want to "serve" you. Your crowd belongs to that group of high-maintenance folks that can never be satisfied no matter what one does. If Apple really tried to be everything to everyone, they would have been out of business years ago.

[tecton]

Originally Posted by Lun_Esex

It's true, though. People who value price on top of everything else when choosing their computers are not Apple's market.

For one thing, that means that Apple's core values are secondary to them--and why should Apple spend much effort marketing to people who aren't primarily interested in what Apple has to sell?

For another, people who make decisions based on price above all else are fickle and don't have brand loyalty. They're the type of people who buy generic products at the market like no-name "Beer" and "Cola" and "Potato Chips." The ONLY way to keep those people as customers is to ALWAYS have the lowest price products. That's a road Apple will never, ever go down.

Apple's doing just fine without trying to slug it out in the bottom of the barrel market.

Actually thats me with food. I don't care about the brand because I don't think there's a big difference (unless it's organic) I'll grab the cheapest, but these are commodity goods.

Computers, cars, and houses have traditionally not been these kinds of cheap commodities. But I guess it's changing, with the popularity of netbooks and "the race to the bottom" as Sony put it computers might be becoming just another cheap appliance. Consumers already seem to think so.

People often compare Apple to luxury cars, it's the ferrari of computers, the products are definitely a better quality, and apple customers pay a higher price than PC users.

But with the iPhone and Macbooks now targeting a wider range of consumers it seems they are enticing consumers who think of, and expect all apple products to be cheap commodities.

I wouldn't mind if they were cheaper as long as the quality doesn't drop.

[akhomerun]

usually i like apple's strategy, but in this case i disagree. if apple doesn't know how to make a computer that's not a piece of junk and is priced at $800, i can point steve to a number of companies that can.

the fact is that there are a few PC companies who make fantastic quality value priced PCs with better specs and reliability than many apple models. steve's quote definately falls under the reality distortion field category.

there's no reason why apple can't ship an $800 laptop of reasonable quality that satisfies even apple's profit margins and standards of quality, fashion, and elegance.

why doesn't apple make a celeron machine? or maybe an amd machine (apple doesn't need intel's exclusivity perks anymore and intel seems to care less about apple these days as well) it wouldn't lower the quality of the machine or significantly reduce performance for home users.

the general idea of not catering to all customers is absolutely true. apple is a premium computer outlet. but steve is wrong, a premium machine can be built and sold for $800.

[sflocal]

Originally Posted by akhomerun

why doesn't apple make a celeron machine? or maybe an amd machine (apple doesn't need intel's exclusivity perks anymore and intel seems to care less about apple these days as well) it wouldn't lower the quality of the machine or significantly reduce performance for home users.

Apple already does that. It's called the Mini. And look at the flak Apple gets from high-maintenance people complaining that they don't use the most cutting-edge technology for it. How would your recommendation to that be any different? For the price point, the Mini is a great little box. Cheap enough to enter Apple crowd but not break your bank account.

[guinness]

Originally Posted by bigmc6000

I suppose I can see Sony pulling it off w/ their experience with the PS but HP at this point I think would just be pushing money down a rabbit hole. If they feel like wasting money I'll be more than happy to give them my checking account number

HP has been making a server OS for years (HP-AIX), and Sony has experience with BSD (the PSP and PS3), as well as selling a version of Linux for the PS2.

In all reality, what they would likely do, is make a customized Linux distro (my guess is Debian-based, as that has a lot of momentum because of Ubuntu), and make it for opportunities a user wants a basic OS to quick boot into (< 30 secs).

[cameronj]

Originally Posted by TBell

I once overheard the owner of a very successful multimillion dollar food company in Ann Arbor tell an employee who was relaying to the owner how a customer was complaining about the price to an item one of his stores sold. The owner's answer was to raise the price because the price must have been too low if the customer felt it was warranted to complain about the price.

That post needs more periods.

[Boondox]

Originally Posted by akhomerun

usually i like apple's strategy, but in this case i disagree. if apple doesn't know how to make a computer that's not a piece of junk and is priced at $800, i can point steve to a number of companies that can.

the fact is that there are a few PC companies who make fantastic quality value priced PCs with better specs and reliability than many apple models. steve's quote definately falls under the reality distortion field category.

there's no reason why apple can't ship an $800 laptop of reasonable quality that satisfies even apple's profit margins and standards of quality, fashion, and elegance.

why doesn't apple make a celeron machine? or maybe an amd machine (apple doesn't need intel's exclusivity perks anymore and intel seems to care less about apple these days as well) it wouldn't lower the quality of the machine or significantly reduce performance for home users.

the general idea of not catering to all customers is absolutely true. apple is a premium computer outlet. but steve is wrong, a premium machine can be built and sold for $800.

Jobs said $500, not $800. $800 is some price target some knucklehead analysts came up with as a target. He also said they choose not to compete in the $800 market. There's two different concepts at play here.

Apple doesn't make a celeron machine because the company chooses not to serve the market where products than run them operates. As a small business owner, I can see his perspective on this.

A premium product loses its perceived value if it is sold too cheaply.

[aaarrrgggh]

The gap is between a netbook style computer and a cheaper laptop. Lowering the price of a Macbook to $800 wouldn't do anything for Apple, but producing a bridge computer in a netbook form factor could be a great thing for Apple long term.

[bugsnw]

Jobs also remarked once that Apple only makes products they themselves would be proud of to own and use. So forget about the $500 underwhelming notebook.

It's funny that many from the PC side don't understand Apple's DNA. If we apply this cheap logic to cars, we would demand that Lexus makes a Lexus for $9,999. It's not going to happen. And if it did, it certainly wouldn't be a Lexus.

I'm glad Jobs verbalized that there are markets Apple doesn't want to serve. Stop moaning about Apple's premium products that are awesome values and work on the other side of the equation. Make a little more money (or save) and join the club when you want to step up.

[MaynardJames]

Originally Posted by tundraboy

Close but not quite.

Price-elastic demand means your total sales revenue goes up when you reduce the price. For practically all products, lowering the price will increase the quantitiy demanded. That is not price elasticity. Price elasticity means when you decrease the price of a product, the increase in units sold more than makes up for the decrease in price so that your total sales revenue (Price X Quantity) goes up even though you decreased the price.

Price-inelastic products face a decrease in total revenue when you lower the sale price. i.e. the increase in quantity sold does not make up for the decrease in price. Or put the other way around, total sales revenue for price-inelastic products go up even with a price increase. The increase in price more than makes up for the decrease in quantity sold. Perfectly inelastic products are things like cigarettes, alcohol and other addictive substances. Think about it.

Actually, what anantksundaram said is right. Price-elasticity of demand is a measure of the percentage change in quantity demanded based on the percentage change in price. It is true that for almost all products that lowering the price will increase the quantity demanded. The reverse is also true. But, different products react differently in quantity demanded when there is a change in price. Some have drastic increases in quantity demanded when price decreases, some have little change. Products that have more drastic change are elastic, products with little change are inelastic.

What you said is correct though, but is not the definition of price elasticity. Total Revenue is affected by price elasticity.

[Urenstaat]

Originally Posted by bugsnw

It's funny that many from the PC side don't understand Apple's DNA. If we apply this cheap logic to cars, we would demand that Lexus makes a Lexus for $9,999. It's not going to happen. And if it did, it certainly wouldn't be a Lexus.

True, but Apple is a software company first, according to Steve Jobs a couple of years ago, and needs a cheap computer to draw people into OS X. That's why the Mac mini is so brilliant. Most switchers have a screen and keyboard laying around... That also why Apple needs a sub 1000 dollar notebook. To get people hooked on OS X. If it wasn't for this, there wouldn't be a Mac mini or an entry level MacBook..

Of course, lately the iPhone also drew people into OS X, so I wouldn't be surprised if Apple axed the mini and a cheap MacBook.

[federmoose]

Originally Posted by akhomerun

usually i like apple's strategy, but in this case i disagree. if apple doesn't know how to make a computer that's not a piece of junk and is priced at $800, i can point steve to a number of companies that can.

the fact is that there are a few PC companies who make fantastic quality value priced PCs with better specs and reliability than many apple models. steve's quote definately falls under the reality distortion field category.

there's no reason why apple can't ship an $800 laptop of reasonable quality that satisfies even apple's profit margins and standards of quality, fashion, and elegance.

why doesn't apple make a celeron machine? or maybe an amd machine (apple doesn't need intel's exclusivity perks anymore and intel seems to care less about apple these days as well) it wouldn't lower the quality of the machine or significantly reduce performance for home users.

the general idea of not catering to all customers is absolutely true. apple is a premium computer outlet. but steve is wrong, a premium machine can be built and sold for $800.

2 points.
1) of course a "premium" machine can be built and sold for $800. but there would probably be only marginal profits that would be completely wiped out by R&D.
2) most of these $800 machines piggyback on someone else's crap OS. When you buy a mac, you are paying for the privilege of OSX. That's the so-called "mac tax". You're paying for a better OS and a better UI. If all you care about is hardware, go somewhere else... apple isn't catering to you.

[federmoose]

Originally Posted by cameronj

That post needs more periods.

I'd prefer semicolons, colons, comas, etc. Grammar nazi to the rescue!

[solipsism]

Originally Posted by federmoose

2 points.
1) of course a "premium" machine can be built and sold for $800. but there would probably be only marginal profits that would be completely wiped out by R&D.
2) most of these $800 machines piggyback on someone else's crap OS. When you buy a mac, you are paying for the privilege of OSX. That's the so-called "mac tax". You're paying for a better OS and a better UI. If all you care about is hardware, go somewhere else... apple isn't catering to you.

To further add to your point, non-Mac PCs come filled with trialware that offset that is paid for the by the program developers to the OEM which helps make the machine's initial price cheaper for the consumer. Apple no longer packages MS Office for Mac Test Drive or, oddly, an iWork demo. The only app that is not fully functioning in OS X in Quicktime's Pro features, but sense Leopard it has the ability to do full screen, so the higher-end features aren't really necessary for most people.

[ljocampo]

I'll way in on the Lexus analogy of @bugsnw.

I agree totally. Apple's perceived brand value would suffer. It isn't in their DNA and the company would lose more than it gained. Remember John Scully? Someone above said Apple is a software company. That's not why they started making their own software. Apple sells "an experience." They make software to make that experience unique and pleasurable. They are the Lexus of computers and I hope they stay that way.

If you want to play, you've got to pay. Brand loyalty proves Apple is smarter than the cheapos.

[rtdunham]

RE: the exchanges on price elasticity...

It's reassuring to me that there are folks like all of you--anantksundaram, tundraboy, Maynardjames--who have knowledge in special fields and are willing to share it. Your contributions (and others who contribute in different areas of expertise) are what make this forum so valuable.

Thanks.

[rtdunham]

Originally Posted by bugsnw

... If we apply this cheap logic to cars, we would demand that Lexus makes a Lexus for $9,999. It's not going to happen. And if it did, it certainly wouldn't be a Lexus.

True that, but it WOULD be a Toyota. There's a reason the car-makers who manufacturer cars that are closer to commodities--Nissan, Toyota, Honda, VW--all have luxury (think apple-level) brands (think Infiniti, Lexus, Acura, Audi). Talk of Apple entering a lower price point market is just the same business philosophy in reverse. Maybe it's right for apple, maybe it's wrong, I'm not smart enough to make that judgement.

But there's a difference between entering a product market, and a price market: IMHO, there is a market for several Apple products--designed and priced as only Apple would price them--between the iPhone and Macbook.

The "bigger iPhone" for want of a better name, would be an example of apple creating a new market. The apple netbook would be an example of apple entering a market that is no longer nascent (see Amazon's top 25 seller list) , as it did with mp3 players and cellphones.