Apple to introduce more affordable Macs, sources say

Posted:
in Future Apple Hardware edited January 2014
Determined to grow its share of the personal computer market during the worst economic climate in its corporate history, Apple is tailoring changes to a pair of its offerings that will help drive down prices of some of the most popular Macs, AppleInsider has learned.



Word of the changes comes just weeks after Cupertino-based company became the target of a renewed advertising blitz from rival Microsoft Corp., which is using a new series of controversial television spots to cast Macs as overpriced novelty PCs that command a premium purely for their distinctive aesthetic.



Still, people familiar with the matter say Apple's move towards more affordable Macs isn't so much a response to Redmond's marketing antics as it is an interim solution to combat the proliferation of budget notebooks -- often called netbooks -- until the company is ready to introduce its own take on the market in the much rumored Newton-like web tablet, a project which is taking considerably longer to complete than once anticipated.



Those same people maintain that the Mac maker has absolutely no interest in catering to the netbook market as it exists today, which -- as interim chief Tim Cook repeatedly points out -- is comprised of systems with "cramped keyboards, terrible software, junky hardware, very small screens, and [a poor] consumer experience."



While the tiny notebooks aren't threatening Apple's capacity to profit from its Mac business, the Windows-based systems are for the first time this year showing signs of hampering the company's potential for share gains and serving as a pesky reminder that the highly-competitive PC market isn't boundless, especially given the current economic climate and subsequent pullback in consumer spending.



For the three-month period ended March, Apple announced that Mac units contracted by 3 percent, signaling the first time in nearly 6 years that the growth of its personal computer business reversed course on a year-over-year basis to see growth fall into red figures. Consequently, market research firm Gartner estimated that the company's share of the U.S. PC market slipped 10 basis points to 7.4 percent.



Though the fall was marginal at best, it was the second time in as many quarters that Apple watched its share retreat while netbook maker Acer posted unit shipment growth upwards of 50 percent and beyond. As such, the company plans to institute changes that will rekindle growth and help it better contend against a barrage of cheap netbooks, all without devaluing the customer experience that had previously driven Mac growth for 23 straight quarters.



More specifically, consumers in the coming months can look forward to more affordable versions of both the 13-inch MacBook and iMac, according to people who've proven extremely reliable in predicting Apple's future business directions. The MacBook -- which currently starts at $999 when fitted with a previous-generation polycarbonate enclosure and $1299 in an aluminum unibody casing -- is the bestselling Mac in terms of volume. The iMac is the most popular Mac desktop.







While exact pricing is unclear or still undetermined at this time, the Mac maker earlier this month quietly flaunted its capacity to deliver a premium system at near recession pricing when it began offering educational institutions a 2GHz, 20-inch aluminum iMac for $899. Even when priced at a $100 to $150 markup for the consumer markets -- as Apple is more than likely eager to preserve its margins -- such an offering would make a material dent in the entry-level cost of owning or switching to a Mac.



It's believed that the first batch of more affordable Macs could turn up as early as this spring as part of a restructured MacBook line, while MacBook Pros for the most part would stay their course and benefit slightly from Intel's planned Montevina refresh, which should nudge clock speeds. This would afford Apple a means of sparking renewed interest in its portable products ahead of Intel's Nehalem-based "Calpella" mobile platform, which should land anytime between late this year and early next, and without having to tack on auxiliary features that would drive up costs at a time when the company is looking to lower prices.



Meanwhile, Apple is also gearing up for its annual back-to-school promotion in early June that should, like last year, offer educational customers a free iPod touch with the purchase of any qualifying Mac. Should the promo, which typically runs through September, overlap the introduction of more affordable Mac offerings, their combination could land an isolated yet dizzying blow to rival's efforts to portray Macs as impracticable purchases during the current economic crunch.
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Comments

  • Reply 1 of 293
    istinkistink Posts: 250member
    It's about time. Good job Apple. Now in one of those MS commercials someone can say "Hey wait, look at this one. It's affordable AND it's a mac! I'm getting this one!" and the announcer guy says "Hey wait a second!"
  • Reply 2 of 293
    lilgto64lilgto64 Posts: 1,147member
    Why not just have an educational pricing for all event for a weekend or a week or a month?



    Then again I don't quite get how the car makers can have an employee pricing sale and then the following week expect anyone to want to buy their products at the regular price. Same thing with furniture - not that I mind paying for a quality product - but I don't spend money frivolously (well, most of the time) and after seeing year after year the "Biggest Sale of the year" or "we will never have a sale this good again this year" I can wait until next years blow out sale for any item I don't desperately need right now.
  • Reply 3 of 293
    kim kap solkim kap sol Posts: 2,987member
    OHHHH! So NOW they're taking this shit seriously. Thanks Apple.



    PS: F U
  • Reply 4 of 293
    vinney57vinney57 Posts: 1,162member
    Quote:
    Originally Posted by kim kap sol View Post


    OHHHH! So NOW they're taking this shit seriously. Thanks Apple.



    PS: F U



    What on earth is your problem?
  • Reply 5 of 293
    lkrupplkrupp Posts: 6,682member
    This is NOT good. I repeat, NOT good. Thus begins the slow, downward spiral to mediocrity. Do the previous posters really think Apple can produce cheap PCs like Dell without sacrificing quality, customer service, and margins? If so then you live in a fantasy world. Just imagine what a $500 Macbook would look like. It would look like an Acer of course. I'm sorry but even Jon Ive can't make a silk purse out of a sow's ear. The drive for market share also drives down margins as Michael Dell has found out the hard way. You have to keep selling more and more just to break even.



    I hope the "we want cheap Macs" crowd doesn't get their wish any time soon. I would rather see Apple stop making Macs altogether before producing drab, black plastic abominations. Leave the trailer park market segment to Dell and the design-impaired nerd crowd.
  • Reply 6 of 293
    wtbardwtbard Posts: 42member
    When I first started using my iPod touch, the first thing I wanted was a larger screen, preferably 8x11, but 5x7 minimum. I don't care what it's called. I have numerous uses in mind and they don't require a lot of horsepower. Cost would be more important so I could buy more of them.
  • Reply 7 of 293
    asciiascii Posts: 5,941member
    If netbooks are so crappy, then they will only serve to lower people's opinion of windows, and make it more likely that they get a Mac when the netbook finally karks it.
  • Reply 8 of 293
    kasperkasper Posts: 941member, administrator
    Quote:
    Originally Posted by lkrupp View Post


    This is NOT good. I repeat, NOT good. Thus begins the slow, downward spiral to mediocrity. Do the previous posters really think Apple can produce cheap PCs like Dell without sacrificing quality, customer service, and margins? If so then you live in a fantasy world. Just imagine what a $500 Macbook would look like. It would look like an Acer of course. I'm sorry but even Jon Ive can't make a silk purse out of a sow's ear. The drive for market share also drives down margins as Michael Dell has found out the hard way. You have to keep selling more and more just to break even.



    I hope the "we want cheap Macs" crowd doesn't get their wish any time soon. I would rather see Apple stop making Macs altogether before producing drab, black plastic abominations. Leave the trailer park market segment to Dell and the design-impaired nerd crowd.



    Please don't misinterpret my article. Apple isn't going to make cheap PCs. That's not what this is about. It's about marginal yet noticeably more affordable Macs on par with the company's current standards. It could be as simple as taking the current models and lopping $100 - $150 off in a few months.



    I was very conscience of using the term "more affordable" rather than "cheap." I did this for a reason.



    K
  • Reply 9 of 293
    hmurchisonhmurchison Posts: 12,141member
    Good idea



    Let's get back to getting Macs into homes and then augmenting these Macs with iPhones ,

    iPods and Apple TV.



    Sometimes it's about selling the whole ecosystem and yes MobileMe plays a vital part in Apple's future. It's the glue that's going to seal the Internet with the home LAN.



    What's hard for us all to justify today is paying fat margins for computers when many of our jobs are hanging by a thread. I've already had some of my bennies reduced but I'm glad to be collecting a paycheck.



    Margins and products evolve over time. Get marketshare..it "is" important.
  • Reply 10 of 293
    virgil-tb2virgil-tb2 Posts: 1,416member
    Quote:
    Originally Posted by lkrupp View Post


    This is NOT good. I repeat, NOT good. Thus begins the slow, downward spiral to mediocrity. Do the previous posters really think Apple can produce cheap PCs like Dell without sacrificing quality, customer service, and margins? If so then you live in a fantasy world. Just imagine what a $500 Macbook would look like. It would look like an Acer of course. I'm sorry but even Jon Ive can't make a silk purse out of a sow's ear. The drive for market share also drives down margins as Michael Dell has found out the hard way. You have to keep selling more and more just to break even.



    I hope the "we want cheap Macs" crowd doesn't get their wish any time soon. I would rather see Apple stop making Macs altogether before producing drab, black plastic abominations. Leave the trailer park market segment to Dell and the design-impaired nerd crowd.



    Don't panic.



    I think this article is ever so ham-handedly trying to hint at changes to the marketing of the products, not Apple reducing their margins (which would lead to exactly what you are afraid of).



    I would bet that they are talking about the idea of changing the MacBook so as to have a cell antenna. This would allow them to sell MacBooks with extra features (wide area wireless networking), at a lower cost than the current MacBoks (if you buy a contract with AT&T or Verizon).



    Otherwise this makes no sense at all.



    For an additional minor picky point, this part:



    "... It's believed that the first batch of more affordable Macs could turn up as early as this spring as part of a restructured MacBook line, while MacBook Pros for the most part would stay their course ..."



    Makes no f-ing sense at all. What is "the MacBook line" when you take out the pro models?

    Isn't that just "the MacBook"???



    I mean I know no-one like a grammar/english Nazi, but there are so many errors in every single article AppleInsider publishes now that it might be worth it to hire an editor to simply read this stuff before it's posted.
  • Reply 11 of 293
    Apple rumors are a dime a dozen.



    But if true... an iMac running around the $799 - $850 price point, and lower Mac Mini prices $100 across the board... then Apple has something for budget buyers.



    Apple knows better than to cheapen up their products too much - both in price and quality.



    iLife alone is worth nearly a $100 in the Mac world... and would probably take $200 - $300 in the Windoze world to (poorly) replicate.
  • Reply 12 of 293
    The day after Apple concedes and cuts pricing, analysts will be howling about the margins and would scream bloody murder if the price point went back up. lkrupp puts it a bit strongly, but fundamentally he's right. Price cuts are not the way to go.



    That said, I doubt they're going to cut pricing. I wouldn't be surprised if the usual inventory-clearing price cuts were -pitched- as a 'recession' sale sort of thing. But I don't see why they'd do anything outside the usual playbook.
  • Reply 13 of 293
    Quote:
    Originally Posted by Virgil-TB2 View Post


    Don't panic.



    I think this article is ever so ham-handedly trying to hint at changes to the marketing of the products, not Apple reducing their margins (which would lead to exactly what you are afraid of).





    I don't think you understood the article. It's clearly speculating that the prices of the computers will drop in price, therefor reducing the profit margin.
  • Reply 14 of 293
    The best move would be to start with the Mac mini. Make the entry level be $499 and include the full 4GB of memory out of the box. (Just running a web browser these days sucks up most of the resources.)
  • Reply 15 of 293
    Not only is the "time" right given the economy, but this is a good response to the direct advertising blitz.



    AAPL may be wise to adopt an approach where they sell the machines much cheaper and then make money on the software and let uses stock the machine how they want.....Vs the bundle approach. If you really want to play in the big hardware game, then you must target the "average" customer. The average customer, unfortunately, has no idea the "value" of the Mac bundle. And, I'm afraid no amt of advertising will educate them either. Therefore, break your products out and make your money back via line item pricing.



    Will be interesting to see their approach....Probably will be just less specs for less money, is my guess.
  • Reply 16 of 293
    I think some moderate pricing concessions are smart right now. Apple needs to grow market share for future performance across the board.



    Stan



    P.S. my son came up with an idea to help people laid-off in this economic climate. Go to http://www.giftcardsfordinner.com and please help spread the word!
  • Reply 17 of 293
    hmurchisonhmurchison Posts: 12,141member
    Deliver a 20" Apple display with iSight with Displayport



    Drop the Mac mini to $499



    Drop iMac pricing $100.



    Extend the MobileMe trial period to 90 days.



    If someone buys a Mac and a iPod Touch give a 10% discount on the Touch



    Offer free ugprades to Snow Leopard.



    Lot's of marketing options and potential here. Frankly I'm sick of Wall St dictating

    who's doing well when their candy asses needed to get bailed out as well.
  • Reply 18 of 293
    Quote:
    Originally Posted by AppleInsider View Post


    Meanwhile, Apple is also gearing up for its annual back-to-school promotion in early June that should, like last year, offer educational customers a free iPod touch with the purchase of any qualifying Mac. Should the promo, which typically runs through September, overlap the introduction of more affordable Mac offerings, their combination could land an isolated yet dizzying blow to rival's efforts to portray Macs as impracticable purchases during the current economic crunch.



    Just wondering why, in the article, this is linked to a 2008 news release of the back-to-school promotion? While this is likely for 2009, it's not official.
  • Reply 19 of 293
    dr millmossdr millmoss Posts: 5,403member
    I've got to disagree with the concept of "recession pricing." There's really no such thing. If the cost of goods fall broadly, this is called deflation, which is a precursor to depression. We may have gotten used to the idea that the cost of technology declines over time, but this is the natural order of things for this particular good, not "recession pricing." You normally won't find companies lowering their prices, even in a recession, unless their costs of production decline -- and if costs of production start plummeting, watch out!
  • Reply 20 of 293
    Look, I'm typing this on a Samsung NC-10 that cost $399. I upped the RAM from 1 to 2 GB for something like $12. I am very happy with this netbook for what it is and it certainly isn't the proverbial "a piece of crap" Steve Jobs was talking about.



    Apple had better get in the game with something, otherwise they will lose market share. Phil Schiller won't admit it, but you know he's concerned. They will introduce something soon, but it won't be a run-of-the-mill netbook because all they have done is trash talk netbooks. As is common with Apple, it will be something that fits the target market but it will have a slighly different, improved flair to get people's attention. And it will cost more money.
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