Apple Netbook Rumors Swirl, Key Issue is Price

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The average  selling price of notebooks thanks to netbooks have been dropping like a stone and that poses a problem for Apple so accustomed for charging a premium for its easy on-the-eyes but brutal on-the-wallet technology.

Rumors about an Apple netbook continue to swirl. The latest is that Foxconn, the giant  Chinese designer and manufacturer of computer and electronics is making an Apple netbook for release in mid-2009. Unfortunately, the unique “Official Responses to Market Rumors” part of Foxconn’s web site does not address the Apple netbook rumor.

Let’s look at the decline in average notebook selling price during the first quarter and how that could impact an Apple netbook.

“Mini notebooks (aka netbooks) did well in the challenging economic environment where consumers’ number one priority was to save money. Mini notebooks continued to put pressure on low priced mobile PCs. This pressure was mainly felt in the consumer market, but it expanded into select professional markets as well, including the education segment. U.S. mobile PC ASP (average selling price)  likely will decline as much as 20 percent year-over-year in first quarter 2009,” Gartner principal analyst Mikako Kitagawa said in a mid-April announcement.

That translates to an ASP that declined from about $690 per notebook in August to around $560 by the end of February, according to Gartner data cited on eWeek Microsoft Watch. That post carried the headline “Netbooks are a Menace.” To whom? PC vendors who probably wish they never happened.  On the other hand, netbooks are terrific for cash-strapped consumers.

Netbook sales while brisk are savaging the profits of notebook makers (netbooks dominate the Amazon bestseller list under Computers & PC Hardware.) Relying on unnamed sources, Digi Times just reported Acer and Asus netbooks missed their Q1 projections, by the way.

IDC, the other big research house tracking PC shipments, had much the same thing to say about Q1 with HP, largely netbook-less Toshiba and Acer thanks to netbooks making gains mostly at Dell’s expense.

What does this mean for Apple and a potential MacNetbook? Can Apple whose PC market share slipped a mere 1.2 per cent in the first quarter from a year ago charge a premium for its netbook and avoid jumping into the $100 to $400 dogfight? If it’s cheapest MacBook lists for $1,299, that leaves plenty of room underneath for a $600-$900 MacNetbook. That’s even with the cheapest MacBook going for just under $1,000 on Amazon.

One story says Apple has always said it’s not interested in serving up a low-cost notebook, but how can it ignore the only bright spot in an otherwise sluggish PC market? It can’t really, but searching “low cost notebooks” on the Apple site yields irrelevant scraps.

Will customers bite for an $800 MacNetbook? Indeed, Apple has extremely loyal followers, but when you get into the netherworld of lowest-cost netbooks, market dynamics change. A netbook for $200 or a quarter the possible price of the Apple MacNetbook is mighty attractive in these financially troubled times.

Apple rarely comes out with a flop so my guess is the machine will be head and shoulders better than all the cookie cutter PC netbooks. It has better be if Apple expects to charge a 2-4x premium.

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