The Apple notebook guessing game

Will the company make the price drop plunge on Tuesday when it rolls out its new notebook lineup?

Erica Ogg
Erica Ogg Former Staff writer, CNET News
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur.
4 min read

As with any Apple event, there's plenty of rumor and speculation to go around. The lead-up to Tuesday's event in which "the spotlight turns to notebooks," according to the event invitation, has been no different.

The Mac maker has invited journalists down to its Cupertino, Calif., headquarters to get a look at its new round of notebooks Tuesday morning. But what exactly Apple CEO Steve Jobs will unveil is anyone's guess.

We have a few clues in the form of purported "spy shots," or leaked photos, of the redesigned notebooks that have made the rounds on blogs, but of course those should be regarded with skepticism. Still, the consensus is that we'll see a major redesign to the MacBook lineup which is more than 2 years old.

There could be some interesting interior changes too. On Sunday, a new round of rumors cropped up that Apple may be switching to Nvidia's graphics chipset, while maintaining Intel CPUs.

It's been rumored for months that the lower-end MacBook will take on aluminum casing, which would make sense since it's already used for the MacBook Pro, but we could also see a move to LED (light-emitting diode) backlighting as Apple has already has done with the MacBook Air.

Both new chipsets and new casing could increase the cost of building the MacBook and MacBook Pro. But on the other end of the spectrum, Apple might be showing off a lower-priced option, too.

There has been a lot of chatter lately that Apple will offer a notebook for $800. The prevailing opinion is that it would be a completely new model, not a price-reduction to a current product--possibly an under-featured version of the current MacBook model, sans the optical drive or less RAM, smaller hard drive, and fewer ports while retaining the look of the current MacBook as well. But it's just a guess. That price tag, though, would put Apple in the same price range as a wide variety of notebooks from every other major PC maker.

Though we're clearly in the midst of an economic meltdown, it would be odd timing for a company that has never felt the need to compete on price with the likes of Dell and Hewlett-Packard, a practice that arguably hasn't been hurting Apple.

Apple's prices on the MacBook, for which it charges $1,099 for the current base model, aren't drastically different than similarly featured notebooks from Dell (like the XPS 1330 series) or HP (like the Pavilion dv3500t series), though market leaders Dell and HP have traditionally offered more customizable options than Apple, and often for cheaper. For example, HP charges $75 to upgrade 4GB of memory from 2GB. Apple charges $200.

Steadily gaining market share
Despite that, Apple has continued to outgrow those two in sales. It increased sales by 38 percent in the U.S. during the second quarter of this year, compared with U.S. leader Dell's 11.5 percent growth, and HP's 6 percent, according to IDC.

And while Apple still lags far behind those two in market share, it's steadily making gains.

For those reasons, a cheaper notebook at this point doesn't make a whole lot of sense, since people have clearly been willing to shell out for Apple's current notebook lineup at $1,099 and up.

At the same time, there is a precedent here for Apple offering a lower-end, less-expensive alternative model in a product category. Take the iPod. Apple started with the first iPod in 2001 at $399 for 5GB; the company then expanded the line to include the 4GB iPod Mini three years later at $250; then in 2005 a $199 2GB Nano came along, as well as the $79 Shuffle.

The company knows what it's doing when it comes to filling in those price gaps, said Stephen Baker, vice president of industry analysis at NPD Group.

"They have the experience of how to manage that and do it in a sort of competitive market," said Baker. But he still questions the timing. "Eventually they have to (offer a lower-end model notebook), but I don't see the evidence that they need to find new buyers now that aren't willing to spend over $1,000."

If Apple did decide to make a notebook for less than $1,000 for the first time, it would be a bigger deal for the company itself than for the market. The rest of the industry made the leap over a year ago, many already selling 15-inch notebooks for around $500. So while something like this would definitely grab its competitors' attention, and could be a major motivating factor for people unsure about switching to a Mac to finally make the leap, it's not like buyers haven't already had the option of getting a sub-$1,000 nicely configured laptop elsewhere.

"If they do it, it will be interesting to hear why they're doing it," said Richard Shim, notebook and desktop analyst at IDC. "At the very least it's a no-lose situation (for Apple) from purely a market standpoint, from gaining share."

For complete coverage of the Apple notebook news, see "Apple polishes up its MacBook line."