Apple Repudiates Netbook Concept; Sets Mac Sales Record

| Analysis

Apple's Q309 Earnings Report revealed that Apple broke its record for June quarter Mac sales and came oh-so close to breaking its all time sales record for Macs. All that in, by all accounts, the worst recession ever and amidst cries for an Apple netbook.

If there was ever any doubt that Apple is on the right course with its notebook philosophy, which is most of its Mac sales, this Earnings Report removed that doubt. Apple sold 2.6 million Macs, just shy of its record of 2.611 million sold just before the economic collapse in the fall of 2008.

Today, Tim Cook responded to analyst Katie Huberty (Morgan Stanley) and said, "As you probably know, Katie, the point I'm making right now is that I think most customers that are buying a portable want a full-featured notebook. And we deliver those and deliver some incredible values in those and we feel like -- and we know from our research the customers are very happy with those. I think some of the netbooks that are being delivered or many of those are very slow. They have software technology that is old. They don't have a robust computing experience. They lack horse power. They have small displays and cramped key boards. I could go on and on but I won't."

Mr. Cook has repudiated the concept of an Apple netbook before, but many chose not to believe him. Clearly, Apple is delivering product into a space where people are thinking differently about their needs. That's an indication that Apple understands its customers better than some observers understand their own.

Apple's COO also pointed out that there was an identifiable uptick in MacBook sales right after WWDC when the MacBook line was refreshed. Again, Apple seems to have understood the market for people who wanted a 13-inch MacBook Pro with FireWire 800. At the time of WWDC, the move seemed like a minor adjustment in the MacBook vs. MacBook Pro strategy, but the effect was dramatic.

Mr. Cook continued, "I don't want to give you exact mix numbers [MacBook vs. 13-inch MacBook Pro] for competetive reasons, but let me share with you at a macro point what we saw happening last quarter. After the transition, ... we saw people up selling from the $999 [MacBook] to the $1199 MacBook Pro. Obviously for $200, it's a significant amount of features..."

Little things like this can go unnoticed, and it's not until we hear Apple explain the sales and positioning nuances that we discover how Apple relates to its customers and makes subtle changes in the product line. Combine that with Apple's brand, quality, ease of use, and a reduction in expected costs for warranty repair last quarter, which has to say something about initial quality, and we realize how Apple can nearly set an all time record for Mac sales in an economy like this.

In fact, Mr Cook pointed out that Apple Mac sales have outperformed the PC market in 18 of the last 19 quarters.

With performance like that, it seems unlikely Apple will change its notebook strategy very soon.

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2 Comments

Nemo

I agree that Apple won’t enter the traditional market for netbooks.  However, Apple may introduce a new portable/mobile computer in the netbook space that redefines the category by offering an innovative and high quality product.  There have rumors that Steve Jobs has been working on a new type of netbook, perhaps one that exploits Apple’s touch screen technology and its other notebook technologies.  But I guess that we will just have to wait and see.

csimmons

With all the goodies coming in Snow Leopard -especially the IMO very touch friendly UI changes like Dock Expos?- I think that an Apple “netbook killer” is on the horizon. The big question is which processor it will use: Intel-based or ARM / PA Semi-based?

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