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$900 MacBook would grow Apple's addressable market by 67%

post #1 of 53
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Shares of Apple are on the rise after Bernstein Research upgraded the Mac maker and said a new MacBook priced at $900 would broaden the company's potential notebook customer base by 50 percent in terms of both units and revenue.

"We are upgrading Apple to Outperform - while reducing our target price from $175 to $135," analyst Toni Sacconaghi wrote in a research note to clients. "We believe that the stock is overly discounted, that Apple's short-term financials are likely to remain relatively healthy despite economic weakness, and that the company's longer term growth story remains intact."

Sacconaghi turned a particular focus to Mac growth, which he said is the "biggest wildcard among Apple investors today." He said that even if the global PC market remains flat in 2009 and Apple's share gains slow by 25 percent, the company would still see approximately 13 percent Mac growth.

"We feel confident that Apple will be a share gainer, as the company continues to expand distribution and purchase intention remains high," the analyst wrote. "Perhaps most importantly, we expect Apple to lower price points to address a much broader market at some point over the next year."

To this end, Sacconaghi pointed to a recent internal analysis which revealed that a MacBook priced at $900 would expand Apple's addressable notebook market by nearly 50 percent on a revenue basis, and 67 percent in terms of units. Should rumors of a $800 MacBook prove true, it would broaden the company's addressable market by 69 percent in terms of revenue, the study found.

While such moves would undoubtedly pressure gross margins, the analyst notes that the company already factored this into its forecasts when it guided gross margins down 150 basis points for fiscal 2009 even given the expected positive impact from iPhone sales.

"Apple's cost structure has high variable costs, creating less earnings downside risk than many investors may realize," he added. "Given its extensive use of contract manufacturing, Apple's COGS (Cost of Goods Sold) are nearly entirely variable, and operating expenses relative to gross margins are low; the upshot is that Apple's earnings per share suffers less to a given revenue reduction than many of its peers."

In the short term, Sacconaghi said predicting Apple's share price and direction may prove difficult given a number of factors, which could lead to fluctuations between $75 and $135. In particular, he said the company's upcoming revenue guidance for the December quarter could apply new pressure on shares. The Street is looking for sales just shy of $11 billion for the three-month period, but given the company's traditional practice of providing conservative estimates, management could wind up guiding $1 billion below expectations.

Also complicating matters is the difficult compare that exists between the December quarter of 2007 and the December quarter of 2008, namely expectations of a more than 20 percent fall-off in iPod revenues, a tougher consumer spending environment, and the absence of software revenue generated by last year's Leopard launch.

A photo showing the empty shell of what may be Apple's first sub-$1000 MacBook.

Looking a bit further down the line, the Bernstein analyst said he's confident Apple's secular growth story remains in tact. He expects Macs to continue to grow at least 9-10 percent annually, and said Apple TV holds the potential to "act as the centerpiece of the digital home, and could ultimately morph into a capable set-top box replacement."

In the meantime, he believes the company holds a " unique opportunity" to convert its iPod install base -- estimated at 120 to 130 million -- to iPhones.

Shares of Apple were trading up $8.40 (or 8.69 percent) to $105.20 amid a broader market upswing.

An update to Best Buy's inventory system, noted over on our Backpage blogs (RSS), includes six new models with prices inline with today's offerings. There is, however, a question of whether Best Buy is making assumptions, as is sometimes the case, or acting on advance knowledge from Apple.
post #2 of 53
Wonder if this would bring the base MBP to about $1,800? Doubt it...but I sure hope so.
post #3 of 53
Well I hope the stocks aren't up 8% because of a rumor on the prices going down, because then the stocks may slide tomorrow. Obviously as someone pointed out the whole market is up today.

But also Gizmodo and 9to5 are showing printout from Best Buy that show the prices are the same. So if they are true, only a new model would perhaps have that price point or it will just be the same as always (which Apple tends to never lower prices, just increase specs.)

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post #4 of 53
I think apple will just not raise the specs on the base model on the new macbooks as much and get an 800-900 starting price which can easily go up after you add more ram, cpu speed, etc. But they really need to fill in the gap between the ultra cheap dells for 500 bucks and their cheapest model at 1100
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post #5 of 53
I just hope they keep the ease of upgrade for the MB - that's one of the biggest factors for me. I can have apple give me 1GB and then order a 4GB set from crucial and if my HD ever gets too small or anything it's just a quick easy job to replace it.

Fingers crossed!!!
post #6 of 53
$800 MacBook? Bring it on I say. It's about time Apple took the bull by the horns and went after the "less expensive" end of the notebook market. There are a hell of a lot of consumers at this end of the market and many $$$'S to be had from them.

How many people, realistically, do you know that spend $1500 or so on a notebook? A few. The real share of the market is at the lower end. Apple could win a lot of hearts and minds with a cheaper machine.
post #7 of 53
Rumors like this are toxic, because everyone is going to decry Apple when it inevitably doesn't arrive, all because of the built up expectation from a rumor that probably has no basis, and now Apple is going to look like the bad guy when fancy new MacBooks are released tomorrow at the same price point as before.
post #8 of 53
I don't think we will see a cheaper macbook anytime soon, i do see the cheapest macbook coming with a super drive and a LED backlit screen and staying at the same price, but not price cut, not while Apple can just improve the hardware and leave the price the same
post #9 of 53
A story about made up numbers based on made up numbers? Seriously? What's going to happen if Apple DOESN'T hit this fictional price point?
post #10 of 53
Quote:
Originally Posted by MiMac View Post

$800 MacBook? Bring it on I say.

This article is about $900 MacBooks
/s
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #11 of 53
Oh thank you AppleInsider!

You don't like like any criticism so you delete my post?

My comment about you attributing the 8% rise in Apple stock to this analyst's report was fair, in that linking the two was wrong when the the market in general is up and Apple is obviously benefiting from a market rebound and not this analysts.

If you don't like the comment, then state why and argue your logic. Don't just delete the post like a coward.
post #12 of 53
Looking at the article again, I see you have now removed the offending lines that I was critical off, so that is good.

Still it was wrong to delete my post, and you should have just made the comment that yes, perhaps the linking of the market upswing to the analyst was wrong and that you had removed the comment.

By simply deleting the post with no comment, just builds ill will.
post #13 of 53
Wow..........$800 huh. I think the red bubble wrap is so cool.
post #14 of 53
Quote:
Originally Posted by UltimateKylie View Post

Well I hope the stocks aren't up 8% because of a rumor on the prices going down, because then the stocks may slide tomorrow. Obviously as someone pointed out the whole market is up today.

But also Gizmodo and 9to5 are showing printout from Best Buy that show the prices are the same. So if they are true, only a new model would perhaps have that price point or it will just be the same as always (which Apple tends to never lower prices, just increase specs.)

Nah, the market is up because of the increased liquidity for lenders, the actions of the European and Asian countries and some speculation that the bottom had already been reached.

Personally, I think the market's usual irrational exuberance has been replaced with plain old irrationality.

Proud AAPL stock owner.

 

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post #15 of 53

WOW... I've been advocating that Apple go for marketshare and do a sub-$1000 notebook for AGES. And met with stiff disagreement at every turn most every time I said it.

Now, alluva sudden, it's the conventional wisdom that Apple should do this???

LOL, how times change. Guess I'm just ahead of my time.

And it looks like I may be picking up one of these new MacBooks too, now that Steve has apparently stopped directly injecting overblown margins into his veins. Can't wait 'til the event tomorrow.

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post #16 of 53
Quote:
Originally Posted by TBaggins View Post


WOW... I've been advocating that Apple go for marketshare and do a sub-$1000 notebook for AGES. And met with stiff disagreement at every turn most every time I said it.

Now, alluva sudden, it's the conventional wisdom that Apple should do this???

LOL, how times change. Guess I'm just ahead of my time.

And it looks like I may be picking up one of these new MacBooks too, now that Steve has apparently stopped directly injecting overblown margins into his veins. Can't wait 'til the event tomorrow.

...

Unless I misread the article a 2nd time, I don't see where Apple has indicated that they are going to build a $900 notebook. What the analysts are saying is that Apple would do well to do that. But it doesn't mean Apple will.

If they do, it will be interesting. I doubt it as they like to put themselves in the same places as any "luxury" brand such as Mercedes, BMW, B&O, etc. and do not want to "water down" their brand-image and risk being known as a "cheap" brand like Dell.

*** Update ***
I'll be the first to eat my words. I just read the other article that Walmart may start selling the iPhone. I guess Apple doesn't care about their brand image anymore if they would allow the most scandalous company in the U.S. to sell their product.
post #17 of 53
Boy oh boy … another Apple meeting that will disappoint.

It has to disappoint someone!

Someone wants a cheap (with all of the bells and whistles) laptop …

Someone wants Apple to keep making tons of bucks …

Someone wants a kick-ass big laptop, for cheap …

Someone wants new monitors …

Someone wants flash drive iPhones …

Someone wants new desktop units …

Someone wants blu-ray drives …

Someone wants thin …

Someone is fine with thick … as long as it has "this" processor …

Someone will not like the margins …

And the beat goes on.

Apple will NOT please everyone tomorrow, so Apple will disappoint everyone tomorrow, and then - the stock will go down

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post #18 of 53
A return to the $899 price would be very good for Apple. A larger screen Macbook would be even better.
post #19 of 53
Quote:
Originally Posted by ncee View Post

Boy oh boy another Apple meeting that will disappoint.

It has to disappoint someone!

I'm waiting for the the inevitable disappointed "why no new iMacs/Mac Pros/Monitors/Snow Leopard announcements?" after the "Spotlight Turns to Notebooks" press conference.
post #20 of 53
Quote:
Originally Posted by dr_lha View Post

I'm waiting for the the inevitable disappointed "why no new iMacs/Mac Pros/Monitors/Snow Leopard announcements?" after the "Spotlight Turns to Notebooks" press conference.

You forgot the "why no update for the Mini?"
post #21 of 53
Quote:
Originally Posted by AppleInsider View Post

...the Bernstein analyst said he's confident Apple's secular growth story remains in tact....

Well so much for the secular growth how about the religious growth?
What if if there's no growth in tact and Apple remains no more tactful than at present?

How about AppleInsider does even elementary proofreading?
Nah, it'll never happen.
post #22 of 53
I think you all are reading too much into the current market situation concerning these announcements. The cheaper macbook rumor has been floating around before the Dow tanked last week, so assume Apple's decision to introduce a lower priced macbook has anything to do with their current stock value
post #23 of 53
One of these days Steve will return to 'One more thing' and blow everyone's mind ... one day ...
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post #24 of 53
An 800 $/ Macbook would almost make me feel guilty not buying it.., you know, just for e-mails and to PO the PC heads.
post #25 of 53
Steve Jobs is widely claimed to be elitist, and in a sense he is. But as a product designer he has always tried to balance releasing products that satisfied his own aesthetic standards that were nevertheless within the reach of as many people as possible. "Apple as choice of the elite" was a necessary positioning strategy with the pricey, and then niche, Macintosh. NeXT machines had to be high-end or Steve would have broken his non-compete agreement with Apple. With the desktop war over, Apple needed a new computer. Now they have one in the iPhone, and the game is on again. Those of us who remember the Apple ][ and the original intentions of the Mac team are not surprised to see Apple gunning for mass popularity with the iPhone.

While Wal-Mart is ruthlessly efficient, demanding of its suppliers, and responsible for a great deal of manufacturing moving to China as a result, Apple can hardly say they're on any kind of moral high ground, relatively speaking: Apple is ruthlessly efficient, demanding of its suppliers, and it has moved as much of its manufacturing as possible to China, with the rest going to Taiwan and Korea. The city-sized factory that makes iPods has been nicknamed "Mordor" by Apple employees. It's not pretty, even if the end products look pretty.

As far as $800 notebooks go, Apple understands that hardware is part of the platform. There are certain minimum standards that they try to adhere to as broadly as possible (we can all think of exceptions, of course) so that the Mac experience is consistent, Apple's job as a system vendor is easier, and there is one maximally large market for the vast majority of hardware and software developers. They haven't targeted the cheap laptop market because there's no way to make a good laptop at those prices, and until recently there wasn't much point in trying because Macs were stuck in their niche. But you can believe that they've trying to figure it out since OS X stopped teething (at the latest). Apple's laptop growth is explosive, the platform is increasingly seen as a valid and appealing choice, and the numbers don't lie. If Apple produces a sub-$1k laptop ($999 doesn't count) that isn't fragile, bulky, prone to crashing or overheating, loud, slow, or otherwise plagued with the issues that plague cheap laptops they will own that market.
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post #26 of 53
Removed.
post #27 of 53
Quote:
Originally Posted by digitalclips View Post

One of these days Steve will return to 'One more thing' and blow everyone's mind ... one day ...

August/September 2009 - Mac touch

One more bling...
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #28 of 53
Quote:
Originally Posted by Fast Fred 1 View Post

Wow..........$800 huh. I think the red bubble wrap is so cool.

Yeah, it's Product Red Bubblewrap™
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #29 of 53
Quote:
Originally Posted by Banalltv View Post

An 800 $/€ Macbook would almost make me feel guilty not buying it.., you know, just for e-mails and to PO the PC heads.

Judging by the new manufacturing process, a.k.a. the brick, and coming from working in that industry before I don't see how they'll have a chance of selling this for $800. I've seen all those pics, the whole top, keyboard tray and side walls is machined out of one solid piece of aluminum. I'd be frankly surprised to see a $899 price point. Unless Apple are in fact making the product themselves.

Oppenheimer - "transition, cost" etc.

The only way I see this being less than $950, is if in fact they are producing these things in their own smallish factory in Asia. At least that part of the product. Which is easily believable. I worked in a place which could make these out of aluminum, but the cost to get something like this made was astronomical. We're talking thousand$ per unit. Even at millions of units they still wouldn't be as cheap as Apple would need them to be in order to sell at these kinds of prices I don't think.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #30 of 53
Quote:
Originally Posted by Amorph View Post

If Apple produces a sub-$1k laptop ($999 doesn't count)


999 is < 1,000, last time I checked.

But I agree with those who say that $800 would be surprising.


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post #31 of 53
Quote:
Originally Posted by TBaggins View Post

999 is < 1,000, last time I checked.

Technically, yes. Psychologically, maybe. But I have always assumed that sub-$1k means substantially less than $1,000. The sweet spot seems to be $800 from the people I talk to.

Quote:
Originally Posted by TBaggins View Post

But I agree with those who say that $800 would be surprising.

It would be shocking. I think $900 is a better bet. I think $999 is even more likely. It would allow Apple to split that last crucial hair that gets them under $1k. But they'll still miss the sweet spot in that price range.
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post #32 of 53
Quote:
Originally Posted by TBaggins View Post


WOW... I've been advocating that Apple go for marketshare and do a sub-$1000 notebook for AGES. And met with stiff disagreement at every turn most every time I said it.

Now, alluva sudden, it's the conventional wisdom that Apple should do this???

LOL, how times change. Guess I'm just ahead of my time.

And it looks like I may be picking up one of these new MacBooks too, now that Steve has apparently stopped directly injecting overblown margins into his veins. Can't wait 'til the event tomorrow.

...

If Apple does do this. I would believe it is because they have been able to get the cost of bulk component purchases and manufacturing down to where in the long run Apple will continue make their revenue margins. This is something Apple likely was not able to do in the past.

Its likely Apple is able to do this because Nvidia wants its chipsets to gain respect and wide use. Apple promoting them in its notebooks is an excellent way to achieve such respect.
post #33 of 53
Here's what I think will be introduced tomorrow:

New all aluminum MacBook, no plastic, traditional trackpad, same screen, LED backlight, no FireWire port. Apple will either include a USB-FireWire adapter or you can get your own. Faster FSB, much faster integrated graphics. A base price of $899 would increase sales.

New aluminum MacBook Pro. New enclosure, similar to MacBook, with magnetic latch-less closure and MacBook-like keyboard. Same screen. Traditional trackpad. New hybrid-SLI graphics uses integrated graphics in low demand, low battery situations but uses dedicated discreet 9600M GPU at other times. They might even be able to share task load at times.

MacBook Air could get the new nVidia chipset and a Penryn CPU. If so, that'd increase battery life while also increasing graphics performance.

What I don't expect to see:

Glass trackpad
Two-tone plastic aluminum
16x9 displays

It'd be wonderful if Apple would make a MBP with a 16.4" 16x9 display but I tend to doubt that'll happen this time. If it were to happen, it'd obviate both the 15.4" and 17" displays.

About the stock:

My guess is that the new portables are priced into the stock now. As I'm writing this, AAPL continues to go up after hours, now at 110.85. There could be some selling on the news, starting around 1 PM ET. What often happens is an increase in the stock price in the morning followed by some selling in the afternoon. Of course, things could be different this time.
post #34 of 53
Quote:
Originally Posted by Amorph View Post

The city-sized factory that makes iPods has been nicknamed "Mordor" by Apple employees. It's not pretty, even if the end products look pretty.

You know this for a fact? I had never heard that before, but then if that is the case, does that make SJ Sauron? Eeww.
post #35 of 53
Quote:
Originally Posted by Amorph View Post

Technically, yes. Psychologically, maybe. But I have always assumed that sub-$1k means substantially less than $1,000. The sweet spot seems to be $800 from the people I talk to.

It would be shocking. I think $900 is a better bet. I think $999 is even more likely. It would allow Apple to split that last crucial hair that gets them under $1k. But they'll still miss the sweet spot in that price range.

I'd say it counts. It's only a $1, but then you add in Amazon's lowered prices and student discounts and you get it for even less, but as you mentioned, it's a psychological thing.

$899 seems doable, but where are they gonna cut out $200 off the price of the current MacBook? As for the pundits clamoring for an $800 MacBook, which probably won't happen and will probably drop the stock tomorrow (not that it already won't drop after today's gain), I have to wonder where they are pulling these numbers from.

My theory is...
Since Apple has a 70% marketshare of ALL consumer PCs in the US, which is near the saturation point, so they have only three choices ahead of them...

. . . .1) Move into the business sector (but that would mean making a whole new Apple division)
. . . .2) Make a fervid move into other countries markets (which they are doing, but at a slow pace)
. . . .3) Sell cheaper machines to attract more buyers

Only the latter is Apple's show in for continuing to increase their marketshare. But they have to do it in a way so they are not just making cheap, commodity HW that has to be riddled with crapware in order to turn a buck.

Also, Apple's year-over-year growth since moving to Intel has put certain strains on Intel's production. Unlike other vendors, like HP and Dell, who sll considerably more PCs than Apple, they do not use nearly as many of Intel's select, top-of-the-line processors. By offering a couple cheaper Macs both Intel and Apple are less rushed, while Apple still maintains significant growth.

The only issue I see here is maintain profit margins. Do the more expensive Macs take the all on this or does Apple remove quintessential "Mac-like" features, such as FW400, 1" cases, and slot loading drives, but still offering Mac OS X?
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post #36 of 53
Wow - a low price Mac just in time for the recession. Was it foresight, or just the reward for efficiency?
post #37 of 53
They are not going to take out $200 in costs. They will let the price-cut eat into their profits, for the sake of putting price pressure on competitors. Over time, they expect to increase their gross sales, which will bring their profits back up, but this time with a greater domination of the laptop market.
post #38 of 53
Quote:
Originally Posted by NeilM View Post

Well so much for the secular growth how about the religious growth?
What if if there's no growth in tact and Apple remains no more tactful than at present?

How about AppleInsider does even elementary proofreading?
Nah, it'll never happen.

From the Mac OS X build in dictionary:

secular |ˈsekyələr|
adjective

1. denoting attitudes, activities, or other things that have no religious or spiritual basis : secular buildings | secular moral theory. Contrasted with sacred .

2. Christian Church (of clergy) not subject to or bound by religious rule; not belonging to or living in a monastic or other order. Contrasted with regular .

3. Astronomy of or denoting slow changes in the motion of the sun or planets.

4. Economics (of a fluctuation or trend) occurring or persisting over an indefinitely long period : there is evidence that the slump is not cyclical but secular.

5. occurring once every century or similarly long period (used esp. in reference to celebratory games in ancient Rome).
post #39 of 53
Quote:
Originally Posted by ascii View Post

Wow - a low price Mac just in time for the recession. Was it foresight, or just the reward for efficiency?

I think it has to do with the the saturation of their current market, which I detailed in a post above. I think the recession and Windows Vista is just a "fortunate" happenstance for Apple.


Quote:
Originally Posted by Macd-to-death View Post

They are not going to take out $200 in costs. They will let the price-cut eat into their profits, for the sake of putting price pressure on competitors. Over time, they expect to increase their gross sales, which will bring their profits back up, but this time with a greater domination of the laptop market.

Perhaps not $200, but they will reduce aspects, and perhaps build quality to a point that make the endeavor worthwhile. Apple is not know for being a loss-leader company, and I see no reason why they would start now. However, you do have a valid point in that once you get people onto a Mac it will harder to get them back to a Windows-based system.
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post #40 of 53
Quote:
Originally Posted by sflocal View Post

they like to put themselves in the same places as any "luxury" brand such as Mercedes, BMW, B&O, etc. and do not want to "water down" their brand-image and risk being known as a "cheap" brand like Dell.

Couple of problems there. It's widely known that B&O products are terrible. Interesting looks, but awful performance, ergonomics, user interface, etc. Apple may be perceived as overpriced, but only diehard Windows fans think Macs and/or OS X don't work well.

There's also the oft-repeated matter of needing to be a luxury brand like Mercedes. Mercedes also makes and sells their A-Class in Europe, which runs about $30,000, hardly a premium vehicle. They're also the makers of the Smart car, which has finally made it to US shores starting at $12,000. Mercedes is not as exclusive as most Americans think.
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