Apple Financial Results — No Netbook Needed
Netbook enthusiasts have called for Apple to produce its own version of the low-cost notebook. There have even been analysts that stated Apple ignores the hot netbook market at its own peril. Apple has held firm that they would never produce such a “sub-standard” type of device. The firm’s stellar financial results announced yesterday can be viewed as a loud raspberry to those who want Apple to make a netbook.
The model Apple has always used for its computer business is simple — make premium computers that sell at a high profit margin. That model is still working just fine, as the quarterly results prove yet again. Apple sold over 3 million Macs in the last quarter, of which 2/3 were notebooks. The total profit was $1.67 billion on revenues of $9.2 billion. This performance is outstanding in any economy, much less a down economy, and there is no reason for Apple to change the way it does business. My take on these numbers is that Apple would be crazy to introduce a cheap netbook. There’s no way Apple can make a 36.6% margin in the netbook segment and they’d be crazy to try.
*IF* Apple made a netbook, they would probably price it at a 36% premium!
A typical netbook (if there is such a beastie in that absurdly fast moving market) sells for around $400. While I am willing to concede that Apple design and build quality would raise the price over some of the crap that is being produced these days, Apple gets its notebooks build by the same Asian factories as every other PC “manufacturer” with the same production costs and parts costs.
So if we take the $400 price and tack on 50-80 for goodies like an aluminum chassis and higher end lcd, toss in $20 for engineering NRE amortization, you are still at 470-500. If you tack on another 100 for absurd Apple gross margins you are still under $600…. which the Mac faithful would happily pay. Heck if I thought it was a better build netbook I would have paid it.
The issue is not that they could not make a netbook and maintain their margins, the issue is that the $600 netbook would significantly erode sales of $1000 laptops and given that they are making boatloads of money on these, doing a netbook would be stupid. Why compete with themselves, with a lower priced product, unless they could sell enough of them to make up the difference?
This may change if Android starts eating their phone business.
I agree.
Also, your comment is more informative than the original article.