What is Cooking in the Apple Kitchens isn’t what Folks Suspect
The internet is, once again, awash in rumors about forthcoming Apple products. The buzz this time: the iPhone nano or a much cheaper MacBook. While an iPhone nano is a possibility someday the version the Daily Mail dreamt up is a definite no go. More interesting is the chattering surrounding the idea of a cheap notebook
The impetus for the belief comes from Apple's recent earnings call. CFO Peter Oppenheimer predicted that overall margins would decrease and gave lackluster predictions for the coming quarter. The lackluster predictions are nothing new, if you follow Apple's earnings calls closely you'll realize that if he could, Peter Oppenheimer would predict that Apple would sell just enough stuff to get by and never enough rectangles to actually turn a surprising profit. Mr. Oppenheimer obviously takes a cue from retired coach and and great media sandbagger Lou Holtz
Though the behavior wasn't anything new, people glommed on to"product transtion"and "lowered profit margin" to come up with some seemingly well founded guesses as to Apple's next product. So, what product could be transitioned? The Mac Pro? Sure, but Apple sells three of those a year so it wouldn't have a big impact on the bottom line. The iMac? Recently refreshed and a pretty nice machine. The MacBook Pro? Hey, why not. The alumnium form factor has been around forever (despite persistent carbon fiber rumors) and it is a pretty popular machine. But what about the MacBook? They sell more of those things, they are perfect for back to scholl and that was mentioned by Mssr. Oppenheimer as well. Everything adds up, it has to be the MacBook.
Once the MacBook is decided on as the target it is time to start thinking about what Apple could do... Lower margins means a price drop right? Add in the"product tansition"and you've got the MacBook evolving into a some weird iPhone/Laptop hybrid with a super low price. You know the whole touch based thing and new sexier looks
Well to drop the price substantially Apple is going to have to trim some costs from the MacBook. First, they'll slap in a slower processor. Most people don't need a beefy processor so not many will notice. The next thing Apple will be forced to do is chop off some components. You look at the mini and you see that Apple doesn't mind leaving stuff to get the machine to a price point. So goodbye firewire. Integrated video will definitely say. What else can the macbook jettison? The optical drive! Who needs it really? The machine comes preloaded with the software and anything people that are going to be using this computer for won't require massive storage. I'm thinking 60 GB. Finally, Apple will need a new name for the thing and since the naming department is apprently relying on syrup of ipecac and alphabet soup to come up with new names the easy guess us that it will be called the MacBook Suck
Powerful enough for most folks and smaller than and MacBook. Sounds like a winner. Now with parts being jettisoned the price must adjusted. How much will Apple knock off the base price? Internet pundits are predicting an $800 price point but caution that Apple rarely meets the speculation on price. Lucky for us we don't have to wonder about the price for the MacBook suck because Apple already makes it and it runs $1799. The company calls it the MacBook Air and sells a ton of the things
So if it isn't a wildly inexpensive notebook what is Apple cooking? A few people at Apple know but they aren't saying. One thing we can be certain of: Whatever it is when it comes out it will be underwhelming and overpriced compared to the speculation. And you'll want it very, very badly
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Comments
OK, you have made a few good points. But your position is not helped by crude comments such as MacBook Suck. Really.
Oh, and please proof your copy ... I found at least three typos without looking hard.
Truly, and sadly as these Easter Egg hunts, as you call them, suggest - along with a lack of clear thinking - eliminating this particular web site from my reading list.
There are more articulate sources available.
I didn’t think this article made much sense.
Lower margins don’t mean a price drop at all. They CAN mean that, but you’re getting confused by the word “lower”. If it helps, remember you can have a MUCH more expensive computer that has a LOWER gross margin than the cheaper - it just means Apple isn’t making as much money for it’s $$ invested.
Also, if you had been right and they were lowering the price AND LOWERING THE MARGIN, then obviously they don’t then remove components. That would instead mean a cheaper product with the SAME MARGINS.
Greg, I have to agree with you 100%. C.H. finally takes a fall in what “lower” margin really meant. Thanks, Greg. You explained it simple enough for me to understand.
BTW, this “lower” margin predictions by the CFO does not mean Apple is developing one particular product that is destined to ding the bottom line. No, it is not enough for a Macbook lite or iPhone nano nor AppleTV 1080p to have this big an impact to the overall profit margin.
No, Apple has to be shifting not one or two product lines but the whole entire hardware and software lines. Did we already forget what is coming down the pipe this time next year? Oh yes, it’s OSX 10.6 Snow Leopard. How can we forget already?
We have been fooled once again that Snow Leopard will be a yawn inducer comes Macworld 2009 intro. But Snow will be the exact catalyst of this upcoming big architectural shift - and this is for the record - these new and less expensive hardware and software features will require a new 64-bit machine to work.
Yes, OSX Snow will still work with your Mac mini or iMac Core 2 or that 8-core Mac Pro you have in your SOHO now BUT don’t be too confident it will have these upcoming glitzy hardware magic that Apple is clearly working on.
So, there are plenty of rumours out there of H.264-accelerated codec chip, a move back to PPC, to AMD, a shift to NVIDIA chipsets, etc, etc. Some of these predictions do make common sense but some are absolutely and ridiculously floated.
Remember though that Apple invested $270-some millions for Palo Alto Semiconductor for something. And whatever that something has to be that good for Steve to buy into. And, oh yes, PA Semi do make darn good low-power PPC and related chipsets for the US Air Force.
This is the most plausible “margin blackhole” that the dear CFO has warned us coming. OSX 10.6 Snow + PA Semi stuff + architectural changes to all hardware lines + lower prices = lower revenue overall + lower profit margins to boot!
So, what is not to love? Bring them on!
Thanks Robomac.
I’m intrigued by what Apple might introduce, though I’d think for many users it could be “ho-hum”. That’s partly because I agree it’s unlikely to be a single product but something more broadly across the range, which means the change might not be very expensive. If it was a single product like an AppleTV then they’d have to be making quite a loss on it for it to affect the gross margins as reported.
Yes hardware acceleration is a possibility and for the amount of time I spend encoding I’d welcome it. Other possibilities include SSDs (but I think that’s too big a price jump), or some change to displays (either higher resolution plus resolution independent OSX, the new camera-integrated-LCD patented last year, or touch).
I guess we’ll find out soon enough.