Has Apple missed the netbook boat?

Apple may have missed the netbook boat by not producing a low-priced notebook to compete with the ultra-cheap portables

Apple may have missed the netbook boat by not producing a low-priced notebook to compete with the ultra-cheap portables that have cornered a significant portion of the PC market, a survey published today said.

"They have missed the bus from a timing perspective for the holidays," said Manish Rathi, co-founder of Sunnyvale, Calif.-based online retailer Retrevo, which sponsored a poll of over 750 American consumers. "There's a big time window this holiday season, and Apple doesn't have a netbook."

According to Retrevo's survey, 37% of people who said that a Mac was their primary computer already own, or plan to buy, a netbook this year. A slightly smaller number, 35%, of consumers who use a Windows-based PC as their primary system said the same thing.

"Even worse for Apple is the fact that it's already lost the early adopters, like the 59% of the iPhone owners who responded to the survey saying they already own or plan to buy a netbook this year," added Rathi.

Apple's lack of a competitor to Windows netbooks has sparked speculation in the past that the company would be forced to enter the fray, but its most recent quarterly earnings statement seemed to put the kibosh on that theory. In the third calendar quarter of 2009, Apple sold a record number of Macs, nearly two-thirds of them notebooks, without a bottom-end price-point model. Mac sales during July, August and September were up 17% over the same period a year before.

"Sure, Apple missed the bus as far as taking an appreciable share of that market," said Ezra Gottheil, an analyst with Technology Business Research. "They missed that bus from Day One."

But that's just the point, Gottheil continued. Apple only "missed the bus" if it's just another computer maker. But it's clearly not that.

"They were never going to come close to matching the price of Windows netbooks," Gottheil argued. "For them to be successful, they don't need to seriously erode the share sold by other vendors. So to say that they 'missed the bus' on netbooks, that's just silly."

Instead, Apple could introduce a device -- call it a netbook, call it a tablet, it doesn't matter, said Gottheil -- and sell only a small number compared to the quantities delivered by the likes of ASUS or Acer, and still rake in lots of cash. It's not a zero-sum game, said Gottheil: Sales of Windows netbooks don't necessarily prevent Apple from selling something priced less than the current lowest-priced MacBook.

Like a tablet, for instance.

"Clearly, those who purchase Windows machines have expressed a certain price sensitivity compared to those who buy Macs," Gottheil said. "But although Apple has stated that they think that phones are price sensitive, they overestimated that price sensitivity by understocking the $200 iPhone, and overstocking the $100 model. I think they have evidence that the notebook market isn't quite as price-sensitive as some think," he added, pointing to Apple's recent refresh of its entry-level MacBook notebook, which it kept at $999.

That, Gottheil, continued, gives weight to a higher-, not a lower-priced, tablet, the long-rumored addition to Apple's line that analysts have been beating the drum on for months.

By contrast, Retrevo's poll indicated that for Apple to sell a tablet in large numbers, it will have to price the device under $600. According to the survey, while 68% of people who primarily use a Mac would be willing to fork over $600 or more for an Apple-made tablet, only 36% of consumers who spend most of their time on a Windows PC would pay that much.

"Mac loyalists will buy almost anything from Apple," said Retrevo's Rathi. "But how do you grow it past the loyalists?"

The only way, Rathi said, was to price it under $600. "If they had priced the original iPhone at $1,000, they wouldn't have sold many," Rathi added, arguing that to make a tablet a break-out buy, it has to appeal to non-Mac owners, as it did with the iPhone.

Gottheil countered that line of reasoning , too. "To say that a table could explode like the iPhone, no matter the price, is just crazy," Gottheil said. "You have to buy a phone, but you don't have to buy a tablet. If Apple enters that market, Amazon's Kindle aside, it will essentially have to establish the category."

Rumors of an Apple tablet received more credence today when reports surfaced of an off-the-record talk at Harvard by a New York Times editor last week. During the conversation, executive editor Bill Keller used the phrase "impending Apple slate" while describing the newspaper's plans to deliver content to mobile devices.

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Gregg Keizer

Computerworld (US)
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