Is the Pressure Growing on Apple to Produce Cheap Gear?

December 29th, 2008

When you’re number one in a market, the pressure is always on to somehow remain on top, or even expand the difference between you and number two.

Apple has to worry about that primarily with the iPod and iTunes. But since both are so far ahead of the rest of the market, it doesn’t seem likely that a true competitor will arise before the entire segment becomes over-saturated and irrelevant, and that’s probably already happened. The iPod touch did well at Amazon, and that an obvious bridge product that takes the digital media player concept to the next generation.

What’s that next generation? Likely some sort of netbook-style device. It appears that such things are doing pretty well right now, if only because many customers simply cannot afford a full-featured note-book. For simple email, Internet surfing and word processing, a smaller portable computer with a slower processor and tinier hard drive might be an adequate solution.

I am, though, assuming that most of the people who bought those netbooks this holiday season are actually going to be reasonably satisfied with their purchases, and aren’t even now returning them in droves because they just weren’t up to the job.

When it comes to Apple, you just know they are watching this state of affairs closely and they may have already decided what direction to take. Indeed, the iPod touch is essentially a netbook, except that it’s saddled with a touch keyboard and tiny screen. I don’t know what Apple has in their test labs, but a grown up version, perhaps a modern-day successor to the eMate 300, might be the perfect solution; that is, if they can deliver one for a reasonably low price.

The top-of-the-line touch retails for $399 with a 32GB Flash drive. That is pretty much in netbook territory already, so you have to wonder how much Apple can add to the price and still keep it competitive. More to the point, how expensive can it be before it encroaches on MacBook territory?

My feeling is that $599 is as far as Apple can go. The question is what room does that give them to expand the “touch” concept into something that more closely resembles an actual note-book computer? Well, certainly larger LCD displays are always costly, but moving from a Flash drive to a standard hard drive can save a bundle. Consider that the iPod Classic, with a 120GB traditional drive, is $249, $150 cheaper than the high-end touch.

Taking that same drive and putting it into a variation of the iPod touch with a larger screen may be quite feasible, and Apple could no doubt bring it into the marketplace at $599, fully outfitted with 1GB of RAM and all the standard Mac goodies, such as iLife. There will not, however, be an internal optical drive, although, as with the MacBook Air, you’ll probably be able to hook up external peripherals via a USB port, perhaps a miniature one to reduce space.

Does that mean that customers will ditch the MacBook in favor of the new Apple netbook? Perhaps to some degree, but a “touch Pro” might attract a whole new class of users who are right now spending their hard-earned money — what little there is of it — on PC netbooks.

Now I realize that Steve Jobs is on record as saying that Apple doesn’t plan to play in the cheap PC sandbox, that they will not produce “junk” simply to grow volume. I respect that decision, but certainly a grown up mobile device based on the iPod touch or even the iPhone won’t be a peace of junk — far from it. As with any Apple product, it’ll be sleek, with a typical understated elegance that will surely look great when you have the pleasure of carrying one around.

As regular readers of this column have seen, the unheralded Mac mini also has a fairly decent share of fans. It would be a mistake to discontinue this product, and I’ve already speculated that a souped up version will make its debut during Philip Schiller’s Macworld Expo keynote next month.

Now it may well be that the new mini will look the same as its predecessor, and simply carry more powerful parts and sell for essentially the same price. That, and a decent ad campaign, ought to be sufficient to move a fair number of units. It’s also quite possible that Apple will slim it down even further, taking it closer in size to the Time Capsule.

It’s almost a certainty that there will be a new wrinkle on the iMac lineup, although most of the changes will no doubt be internal. Some are talking about a four-core processor, along with the higher-grade NVIDIA graphics chips that debuted this fall in the MacBook Pro. A Mini DisplayPort for external monitors seems a given.

Beyond this, there’s a published report now that Apple might provide the Apple TV software for all Macs — at a price. If this is true, would it indicate that the Apple TV itself is going away? Perhaps. Then again, a new Mac mini with similar capabilities would be a worthy replacement, don’t you think?

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4 Responses to “Is the Pressure Growing on Apple to Produce Cheap Gear?”

  1. javaholic says:

    I agree it’d be a mistake on Apples part to axe the mini. In case Steve’s missed it, it’s currently the 3rd best selling desktop on Amazons website for the holiday season. Not bad for a computer that continuously misses out on the royal, glossy treatment its siblings get.
    I also wouldn’t be surprised if they dumped the ATV or perhaps morphed it with the mini. The ATV wasn’t as well thought out as it should’ve been for the price, hence it being relegated to ‘hobby’ status by the Apple brass. I looked at the ATV, but instead I use a Core 2 Duo mini with a bluetooth keyboard and mouse as my media centre. I’ve hooked it up to my 46″ Sony HDTV via a DVI to HDMI cable and it works nicely. Been spending a few lazy days ‘handbraking’ my dvd collection, adding music, photos etc, and having Leopard on tap makes the mini a much more versatile choice than the ATV.

  2. Bill in NC says:

    PC Netbooks you can already load Leopard onto relatively easily (e.g. Dell Mini, MSI Wind) are around $300.

    While we all expect to pay more for Apple branding, I suspect twice as much would be a deal-breaker.

  3. Bill in NC wrote:

    PC Netbooks you can already load Leopard onto relatively easily (e.g. Dell Mini, MSI Wind) are around $300.

    While we all expect to pay more for Apple branding, I suspect twice as much would be a deal-breaker.

    It all comes down to features and hardware configurations, not price. If you match the hardware, there is no Apple tax. But there’s nothing comparable to a netbook, so no basis for comparison.


  4. RB says:


    I think netbooks offer a lot of promise for the computer industry as a whole (’09 sales are estimated at 11 million units), not just Apple. Unfortunately, Apple will probably try to figure a way to gouge people for a netbook instead of pricing it appropriately with some of the nicer ones out there. They are so much better than an iPhone or crackberry for actually reading things, not to mention touch typing rather than “thumb typing”.

    The netbook is still evolving as the manufacturers figure out what people want and taylor their product to those desires, but they are not a replacement for a full featured notebook, much less one that is a “desktop replacement”. They are light, conveniently sized and easy to take with you. They are likely to be an additional piece of equipment rather than a substitute for the laptop that the user still has.

    Some of the netbooks presently offered (and more to come) will offer integrated 3G for those who absolutely, positively go into withdrawal between wi-fi hot spots. (The wireless providers are overcharging for their data services in my opinion as it is, but it remains to be seen what the judgment of the market will be in this regard.) Many people will like one to drag along when traveling simply because it is small enough and light enough to drag along when they would not take a full sized laptop. (I have spoken with several people who were purchasing them for this very purpose when leaving on vacation or whatever.)

    Although Apple is likely to focus on an ARM processor of their own specification, if not their own design, the current generation of Atom CPU based units are not that bad and will be better when the NVidia 9400 series GPU is incorporated into them in ’09. (HD video playback is reported to be just fine with this chip set and NVidia estimates that the “premium” for including it should be less than $50 retail.)

    I think many Apple users will wind up with something like this whether Apple makes one or not.

    P.S. Oh, I do hope that somebody at Apple gets around to including a two button track pad.

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