Apple punts on lower-cost MacBook

By not coughing up a low-cost MacBook, as some had expected, Apple has ceded a potentially huge market to PC makers. But is this just all part of Apple's marketing genius?

The announcement Tuesday of the $999 white polycarbonate MacBook was pretty ho-hum as product refreshes go (same price, same color as before) but the implication was important: Apple is surrendering a large, emerging laptop market to Microsoft and its coterie of PC makers.

Not that it's necessarily a bad strategy. Market researcher Gartner said recently that Apple's shipments in the U.S. grew year-over-year by 6.8 percent to total 1.57 million during the third quarter, putting it right behind Hewlett-Packard, Dell, and Acer. Comparatively, overall PC shipments in the U.S. grew by 3.5 percent from a year earlier.

But among those unimpressive overall PC numbers (HP's third-quarter shipments grew only 2.7 percent), was an impressive statistic for Acer: buoyed by Netbooks, Acer's shipments grew by 61.4 percent year-over-year, and it blew past Dell to become the No. 2 PC maker worldwide based on this growth.

Granted, Netbooks are a relatively low-profit segment (i.e., profit on a $400 Netbook is going to be a lot less than that on a $999 laptop). Nevertheless, they're a hot market. Intel CEO Paul Otellini has stated numerous times that Intel was able to create a market that grew faster than either the iPhone or Nintendo Wii. Case in point: Windows 7-based Acer Netbooks are now big on the Home Shopping Network--which claims to have sold more than 5,000 in one segment on Saturday.

And that's not the only market Apple is punting on. A new category of inexpensive, thin laptops has emerged with the roll-out of Windows 7 on Thursday. Like Netbooks, these laptops are light (typically 4 pounds) and don't include an optical drive. But they are relatively powerful and full featured. The 15.6-inch Acer Aspire Timeline, for example, with a 320GB hard disk drive and dual-core Intel processor is fairly well-endowed at only $500.

Apple is not receiving a lot kudos in the mainstream business press by sticking to its $999 guns. The Wall Street Journal said that users can get roughly equivalent laptops for a lot less at Dell and HP. And other publications have said that Apple is not just ignoring new market realities but, in fact, ignoring the Mac lineup as a whole in favor of the iPhone.

So, do consumers lose by not getting the chance to buy a competitive low-cost Apple MacBook? The short answer to that rhetorical questions is yes--because Apple offers no alternative to, for example, a thin, light $650 HP Pavilion dm3 laptop.

But an apples-to-apples (pun not intended) comparison shows that while Apple skimps on a couple of white MacBook features, it's not an egregiously bad deal for $999. Let's do a quick side-by-side of the cheapest MacBook with a mainstream HP laptop.

• For $999, you get white polycarbonate wrapped around a 13.3-inch 1280-by-800 LED-backlit glossy widescreen display, a 2.26GHz Intel Core 2 Duo processor, 2GB of memory, a 250GB (5400RPM) hard disk drive, an optical drive, and the standard wireless features. All in a 4.7-pound package.

• For $997, HP will sell you (online) an HP Pavilion dv3t series with a 13.3-inch 1280-by-800 LED-backlit glossy widescreen display, 2.0GHz Intel Core 2 Duo processor, 4GB of memory, a 500GB (5400RPM) hard disk drive, an optical drive, and the standard wireless features. Also, in 4.7-pound package.

Apple beats the HP by a hair in the processor category and loses in the memory and storage departments. If polycarbonate is, in fact, better than the plastics HP uses, then that aspect of the design would be a win for Apple.

The real win, though, is for Apple the company. It avoids the cut-throat sub-$900 laptop market and still sells--quite profitably--a lot of laptops. But will Apple be able to snub this growing market of inexpensive Windows 7 laptops indefinitely? We should know in about six months when Gartner reports first-quarter 2010 numbers.