Friday, October 17, 2008

Apple Laptops Squeeze fun out of Business for Hewdell Packovo

Apple is going up-market.  Oh you say they were already there?  Not like this.  And what it means for Apples Desktop will be interesting to see too.  The new MacBooks and MacBook Pro's are beautiful.  Anyone that uses a laptop of any OS would want to use one.

Apple is telling the rest of the PC Business don't even try we will crush you if you try and chase us in the high end.

It was inevitable that as the price declined on the "commodity" end of the computing business that there be more differentiation.  That one company (Apple) has come to dominate the high end, while playing the underdog in the marketplace is amazing.

Remember the iBrick Apple building its own Factory Rumor?  ...  Ya well the fact that Apple is not selling a cheap laptop is as a result of that decision.  

Since Apple does not own factories (No-well less Fixed costs to distribute) they are not concerned about the utilization rates of those factories.  No Fixed costs or in place assets that must be used.  Apple could be the largest "virtual manufacturer" in the world.  (Made up but I will update if anyone knows for sure).   As a result, Apple can maintain high margins while Hewdell Packovo, all try to figure out how to compete.  

HewDell Packovo
The last figures I saw Apple 66% of the computer business selling for more than $1,ooo.  That means that not only is Apple making high margins  they are squeezing all the profits out of their competition at the same time.  At best 34% of the high priced Lappie business is left for Acer, Sony, HP, Dell, Lenovo, Panny....)

The Take Home (short term)

Apple has decided to forgo some level of market share growth in order to maintain high margins on their Laptop computers

The Take Home (Longer Term)

The PC business may continue to grow in unit terms but Apple is telegraphing by this decision that they think in Dollar terms the business is maturing.  The evidence suggests that further differentiation is the way to maximize the profit available for Apple.  This necessarily will limit growth of income from PCs

What this means for company growth (iphones product X) in the future is a discussion for another day (Asus as Volkswagen)

1 comment:

Brian Levine said...

Ummmm, didn't they just lower the price of their low-end MacBook?