Just released figures from research firm NPD seem to suggest that Apple has a firm handle on the rich and famous.
In June, Apple owned 91 percent of the so-called premium computer market — machines costing ,000 and up. That’s up three points over May’s figures. Way back in early 2008, it was a mere 66 percent. Apple is clearly doing something right to attract the well-heeled.
Historically, Apple has been happy to maintain the status quo, to remain in the upper registers of the market and avoid slugging it out in the cheap seats. Even as netbooks seemed to take the computing world by storm, Apple steadfastly refused to bow to calls to dive into the low end of the computing pool. Just last week, Chief Operating Officer Tim Cook reinforced his company’s position, saying, “Our goal is not to build the most computers, it’s to build the best. Whatever price allows us to build the best computer, we’ll build it there…We can’t build a great 9 computer.”
I agree. The average netbook makes a rusted out 1988 Toyota Tercel liftback look luxurious in comparison. Flimsy keyboards, snap off-but-not-back-on parts, and squeaky and creaky plastic everywhere else promise a mercifully short and sad service life. You get what you pay for, which in the case of the average netbook is relatively little. Relatively elevated return rates and online forums and blogs filled with nasty comments suggest I’m not alone in my disdain for this vision of uber-cheap computing.
Apple, for good reason, is steering well clear. This is where bottom feeders live, and presumably go to die. Introducing a full-on netbook at this price point would surely kill its carefully cultivated brand.
But if you read into Tim Cook’s careful choice of words, you may notice something else: Namely that they can’t build a 9 computer, but they’d be happy — and absolutely able — to build a 9 something else. They already make an even less expensive device that possesses many of the attributes mobilenauts hold dear. Depending on where you buy it and what your particular needs are, it’s either an iPod touch or an iPhone. With a little stretching and tweaking, it’s not out of the realm of possibility that something based on iPhone/iPod Touch bones might make a great 9 something.
Of course, that’s not what the rumor mill is saying. The latest word (which, as you know, I’ve already bet my next mortgage payment on) is that Apple’s bringing a 9 tablet-based device to market sometime in 2010. Apple, which has been defining and redefining form factors since the day it was founded, has never been content to simply follow anyone else’s lead. So whatever it has in store, count on it not being a me-too product. And while all this speculation grew tiresome months ago, it still begs two key questions that don’t seem to be getting much air time:
- Should it be a downsized Mac or an upsized iPhone/iPod Touch?
- Will it cannibalize existing Mac sales in either case?
Let’s look at them in order:
Downsized or upsized? I’ll apologize in advance for not having a set answer for this. Wait, I lied. I do: It depends. Our one-size-fits-all understanding of mobility needs to be replaced with something a little more flexible. For some folks, mobility is the ability to quickly look up stuff online, send relatively short e-mails, and maybe do some light editing. For them, the average iPhone or BlackBerry may be enough. For users who take their machines into meetings and remote offices and need to create larger volumes of work, a keyboard-equipped form factor with a real screen and Actual Microsoft Office, or something like it, are critical. An upsized iPhone — complete with non-standard productivity apps and the need to sync and translate files — may be just the ticket for lighter mobile needs, while a downsized Mac may suit the road warriors among us. Notice I didn’t say Windows XP-powered netbook. Would you honestly want to crack one of those open in your next business meeting?
Cannibalize the Mac? It sounds like heresy to deliberately sell a less expensive product that knowingly cuts into sales of existing, more expensive, and higher margin offerings. The heresy issue is something that’s seemingly dogged Apple forever. Indeed, other Tier 1 vendors that have gone down the netbook route have experienced it first-hand as their early netbook offerings shifted some revenue away from their existing low-end conventional laptops. So it’s entirely fair that Apple, whose brand image is arguably more polished than those of its competitors, is afraid to even open up that Pandora’s Box. But no company can afford to ignore its market. And if Apple fans expect a something that offers reasonable mobility and workflow support and costs in the high three figures, then it unnecessarily assumes major risk by ignoring the growing calls for too long.
In the short term, such a device may indeed siphon away some dollars from folks who would have purchased a full-on MacBook or MacBook Pro. In the long term, however, it’ll attract additional attention and customers to the brand and prevent existing customers from looking elsewhere when they want something smaller than a conventional laptop. Erosion of existing customers is the biggest danger Apple faces by delaying the inevitable.
As much as Apple would like to maintain its current product roadmap and ignore what’s happening in the lower end of the market, it can’t afford to sit still. The world is changing around it, and the company must adapt its product line to suit customers’ evolving needs. That may mean iPhones on steroids, MacBooks struck by shrink rays, or both of the above.
History is filled with examples of companies that, content to occupy their niche, missed the higher order changes outside their little islands that eventually swallowed them whole. While I’m hardly accusing Apple of keeping its head in the sand, it needs to accelerate its ability to adapt to global trends that redefine what hardware looks like and how it works.
Nothing snobby about that.
Carmi Levy is a Canadian-based independent technology analyst and journalist still trying to live down his past life leading help desks and managing projects for large financial services organizations. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.