What Apple's New Notebooks Must Be

Click here for images of the new MacBook, MacBook Pro and MacBook Air.

Rumors spread like a California wildfire over the last month about new Mac notebooks, but particularly since last week's not-the-least-bit cryptic invite to an Apple event tagged "The spotlight turns to notebooks." Apple fanned the flames of rumors, which is all free marketing.

GOT A TIP OR RUMOR?

I find the rumors to be, well, dull. OK, so Apple may go all aluminum enclosures. Designwise, what's so innovative about that? There has been buzz about Apple swapping out integrated Intel graphics for discrete Nvidia chips. OMG. Really? Yeah, and Windows notebook OEMs didn't go discrete long ago—for much less than a Mac notebook. Then there are the rumored price cuts. Shocking—a sub-$1,000 laptop. Say, that's real innovative in a sub-$500 Windows and Linux notebook market.

The Rumor Mill
I'm not picking on Apple but making a point. The rumors—all that free marketing for Apple—make much ado about nothing. Feature for feature, Apple notebooks have fallen way behind their Windows counterparts, as I so rudely blogged back in August. But the buzz is great marketing.

"There are signs that Apple—long the most secretive company in the tech world—has thrown in the towel on fighting leaks," former ThinkSecret editor Nicholas Ciarelli blogged Oct. 5. He emphasized about leaks: "If anything, they generate a great deal of excitement around its announcements."

Absolutely. All-too-secretive Apple doesn't clamp down on rumors the way it used to. There are a few sensible reasons:

• The marketing value of rumors is measured in the stock price, which tends to go up.
• Mac news has gone from a few sites, such as ThinkSecret, half a decade ago to the mainstream today. Apple can't wildly issue legal warnings when Mac rumors regularly run in Fortune, or blogs like Engadget and Gizmodo.
• There are too many leaks to plug. Apple's product portfolio is bigger than it was five years ago, as are its manufacturing and distribution operations. More people know about Apple product plans, and no NDA will gag everybody.
• Apple makes more products available on the release date. Years ago, Apple typically announced a product weeks before availability. The process was good for secrecy, but bad for sales. By moving product through the channel faster, Apple risks more information leaks.

Configuration Guidance
The rumors are great marketing, and there's still plenty of secrecy to keep those rumors coming. For this post, I'm going to ignore most of the rumors and deal with what Apple must do to maintain or regain a competitive edge with Windows notebooks.

• 4GB of memory must be standard on new Mac notebooks. The Windows portable market has pretty much standardized on 3GB and is moving to 4GB. But Windows Vista has some, ah, issues above 3GB of memory. The move to 4GB wouldn't just be about hardware specs, but bragging rights—Mac OS X over Vista.
• 256MB must be entry-level graphics memory, and dedicated rather than integrated; 512MB on midrange MacBook Pros and 1GB on high-end models (at least the 17-inch model).
• LED replaces LCD across the product line, even a sub-$1,000 model, should there be one.
• Hard drive capacities should start at 250MB, 5400 rpm, and really 360GB. Storage is cheap, and consumers doing video or snapping lots of pics will want it eventually.

The question: If Apple adds more, how much—if any—should it cut costs to gain share? Remember in the United States, according to NPD, one in five notebooks sold at retail is a Mac and one in three dollars spent on laptops is for a Mac. Apple's base for building share is solid.

Earlier today, BernsteinResearch analyst Toni Sacconaghi upgraded Apple to "Outperform" in part because of expectations that Apple would cut notebook prices. I don't think so, even with the difficult economy. I could see Apple offering one configuration under $1,000, but not wildly cut prices—although a high-end reduction would be timely and consistent with past behavior. Apple is more likely to make its notebooks more appealing at current prices.

Click here for a list of features and specs of Apple's new notebooks.

Still, Toni makes a compelling argument for the benefits of massive price cuts. The analyst writes: "Our analysis suggests that offering a notebook priced at $900 would expand Apple's addressable notebook market by nearly 50 percent in revenue terms (and 67 percent in unit terms), while an $800 offering would increase Apple's addressable revenue market by 69 percent."

Brand Matters
But there are risks, too. Apple is a premium brand, something the company wouldn't want to risk. In aggressively moving into the sub-$700 PC market, Apple launched the Mac Mini. The company carefully carved out a low-cost brand identity through a no-frills approach. Apple provides the CPU, but the buyer ponies up his or her existing monitor, keyboard and mouse. While Apple CEO Steve Jobs positioned the approach pragmatically—most people already had these peripherals—the company also separated thrift-store Mini pricing from the more premium Mac brands.

Apple's approach to product design emphasizes and extends the premium association with the notebook brands. Yesterday, Oct. 12, BetaNews founder Nate Mook and I bantered over IM about presidential politics, Apple and the new, really great Jack's Mannequin album "The Glass Passenger." Nate quipped: "My buddy is sitting next to me with his [MacBook] Air. My laptop looks like a Volvo compared to his Ferrari."

The point: Apple's branding means something. The company shoudn't risk its premium notebook brands tomorrow with cutthroat pricing. If there is a sub-$1,000 laptop, Apple should differentiate by something, such as new subbranding, lesser configuration or design appeal. Apple should keep the premium brands above $1,000.

Finally, I have to ask what Toni is smoking—or drinking. Those growth predictions for $800 and particularly $900 Mac laptops are too high, methinks.

[Please send your tips or rumors to watchtips at live.com.]

Related Posts:

• It's Official: New Notebooks on Oct. 14, Apple Watch, Oct. 9, 2008
• Is Brick the Next Cube?, Apple Watch, Oct. 5, 2008
• Mac Laptop Retail Share: 35% Measured in Dollars, Apple Watch, Sept. 26, 2008
• Apple Demands a High Price to Be Cool, Apple Watch, Sept. 26, 2008
• Putting Mac Selling Prices in Context, Apple Watch, Aug. 8, 2008
• Vista PCs: These Prices Are Insane!, Microsoft Watch, Aug. 5, 2008
• Should You Pay Twice as Much for a Mac?, Apple Watch, Aug. 5, 2008
• Can Price Cuts Get Apple 10% Share, Apple Watch, July 23, 2008

Posted by Joe Wilcox on October 13, 2008 7:35 PM