Apple Questioned About Netbook (Again) and App Store Pricing and Rank Lists

MacRumors · Jul 21, 2009

Apple has concluded their financial results conference call which detailed Apple's financial results for this past quarter. The conference call included the usual mix of questions about Apple's future performance as well as hopeful questions about Apple's future plans.

Given Apple's recent decision to drop prices on their portable line, several analysts asked Apple if they had reconsidered entering the netbook/low-end market. Apple's response was the same as always, indicating that they felt the $399 and $499 netbook market held sub-standard products with poor user satisfaction. Apple insisted again that they would only enter the market if they felt they could offer a product they were proud of.

The most revealing tidbit coming out of Apple, however, was the fact they revealed they were "working on" different App categorizations in response to a question about the "race to the bottom" pricing found in the App Store. At the moment, Apple's Top 100 ranks offers the highest profile marketing channel for iPhone and iPod touch applications.

These Top 100 ranks are based on unit sales rather than revenue and are therefore skewed towards lower priced applications. As a result, apps have had to compete with lower prices in order to try to boost their exposure on these lists. Critics of this system have argued that this encourages a "$0.99 economy" which will prevent companies from investing in higher quality titles for the iPhone and iPod Touch.

Apple revealed that they are "looking for ways to categorize apps differently" and that there was "opportunity for further improvement and [they] are working on that".

Article Link: Apple Questioned About Netbook (Again) and App Store Pricing and Rank Lists

Eidorian · Jul 21, 2009

MacRumors said:
Given Apple's recent decision to drop prices on their portable line, several analysts asked Apple if they had reconsidered entering the netbook/low-end market. Apple's response was the same as always, indicating that they felt the $399 and $499 netbook market held sub-standard products with poor user satisfaction. Apple insisted again that they would only enter the market if they felt they could offer a product they were proud of.

It still doesn't keep everyone else and their dog from selling them. ION coming soon and Pine Trail was delayed to keep it from stepping on late 2009 netbook sales.

Units sold, marketshare, and profits all turn that into a jumble. Nothing concrete there on how or what makes the decisions.

DELLsFan · Jul 21, 2009

Well ... they have to say the same things ... until the tablet is ready to be released.

no.1 Apple Fan · Jul 21, 2009

I wonder what they mean by rankings. It must be hard to keep track of all the apps on the app store.

mdriftmeyer · Jul 21, 2009

If you're writing applications for the iPhone that deal in traditional markets like Mechanical Engineering, CAD, FEA, Manufacturing, Hospital Care, Insurance Industries, etc., the prices aren't going to be $.99.

MacMini2009 · Jul 21, 2009

MacRumors said:
Apple insisted again that they would only enter the market if they felt they could offer a product they were proud of.

Tablet!

Dustman · Jul 21, 2009

I don't think Apple is worried about a $499 laptop/netbook being hated by the world, they just don't want to lose those huge profit margins. Apple, more so than any other company, would be able to pull off a $399-$499 device that consumers love... they're just more about their "premium" image.

Eidorian · Jul 21, 2009

Dustman said:
I don't think Apple is worried about a $499 laptop/netbook being hated by the world, they just don't want to lose those huge profit margins. Apple, more so than any other company, would be able to pull off a $399-$499 device that consumers love... they're just more about their "premium" image.

I sadly have to agree.

We can't make the profits we want so we won't compete there. On the flip side "we'll make a tablet and heavily promote it as an internet device" comes up as well.

djellison · Jul 21, 2009

"they felt the $399 and $499 netbook market held sub-standard products with poor user satisfaction"

Pure ********. Nothing more, nothing less. People are jumping thru hoops to get OSX on Netbooks - and LOVING it. I did.

gibbz · Jul 21, 2009

Dustman said:
I don't think Apple is worried about a $499 laptop/netbook being hated by the world, they just don't want to lose those huge profit margins. Apple, more so than any other company, would be able to pull off a $399-$499 device that consumers love... they're just more about their "premium" image.

I disagree. Their reasoning is sound. These netbooks are crap, frankly speaking. Most get them due to price and overlook their shortcomings. Apple does not want to get into a market just to get into a market. Apple is great at letting a market start and flounder in inaction, then find the shortcomings and correct them, and revolutionize the market (see iPhone, etc..).

As to the premium image, they have consistently said they do not sell to everyone. I don't know why people expect them to release a junk piece of hardware and change their mindset. It is clearly working based on their results today.

gwangung · Jul 21, 2009

Dustman said:
I don't think Apple is worried about a $499 laptop/netbook being hated by the world, they just don't want to lose those huge profit margins.

Of course, in every other hardware industry, those margins are called "normal."

Eidorian · Jul 21, 2009

gibbz said:
I disagree. Their reasoning is sound. These netbooks are crap, frankly speaking. Most get them due to price and overlook their shortcomings. Apple does not want to get into a market just to get into a market. Apple is great at letting a market start and flounder in inaction, then find the shortcomings and correct them, and revolutionize the market (see iPhone, etc..).

I'd take a look at Atom + ION *ahem* The 9400M G.

It sometimes does feel like a cop out when Apple decides not to compete and throws something new out device/computer at x2-3 of what a competitor does and pass it off as a "superior replacement". Your mileage may vary and read every footnote.

*LTD* · Jul 21, 2009

djellison said:
"they felt the $399 and $499 netbook market held sub-standard products with poor user satisfaction"

Pure ********. Nothing more, nothing less. People are jumping thru hoops to get OSX on Netbooks - and LOVING it. I did.

"People", like who??

A niche group on Mac internet forums? Hackintosh netbook users are less than a fraction of a fraction of Apple's market.

Cook is right on about netbooks.

Eidorian · Jul 21, 2009

*LTD* said:
"People", like who??

A niche group on Mac internet forums? Hackintosh netbook users are less than a fraction of a fraction of Apple's market.

Cook is right on about netbooks.

It's a no win scenario. You can bring up Acer's netbook sales and hardware sale markstshare over Apple only to get talked down about how the profit margins are nowhere near what Apple makes on a sale.

MacFly123 · Jul 21, 2009

The tablet will be out either the end of this year or next year and it will be awesome!

That makes me very excited for what iPhone OS 4.0 will hold!

The App Store ideas sound good too. There needs to be some improvement.

Doctor Q · Jul 21, 2009

To make a netbook that is clearly better than the competition, but only a bit more expensive than the competition, Apple needs to change the rules of the game. I think they need at least one feature that nobody else has, maybe even a feature that nobody else even considered. What haven't we seen in a netbook that could change the entire netbook landscape?

wjkerr · Jul 21, 2009

It is about brand perception...

As previously pointed out, Apple commands a premium price point because of it has worked hard to deliver premium brand experiences, from advertising to stores to the end user experience.

Repackaging these things into a cheap $400 netbook would degrade their brand. They want no part of that. Ask Dell how things are treating them in the discount market these days.

My 2 cents.

iMacmatician · Jul 21, 2009

It might be the long-rumored mini-tablet.

panamajack · Jul 21, 2009

djellison said:
"they felt the $399 and $499 netbook market held sub-standard products with poor user satisfaction"

Pure ********. Nothing more, nothing less. People are jumping thru hoops to get OSX on Netbooks - and LOVING it. I did.

That doesn't translate into Apple making any more money than they are already! Margins on netbooks are microscopic. I'll grant you Apple is probably sacrificing some market share to netbooks, but they're the type of people like a friend of mine who is still happy using his 12" iBook G4. People who are prepared to have a netbook/ low-end laptop as their primary machine just aren't that interesting to Apple right now .... or at least they think the iPod touch is good enough for them.

Performance also matters: Apple regularly advertises the integration of the iLife suite. Any decent benchmarks showing how well those apps work on a Dell Mini?

miiles · Jul 21, 2009

Awesome. Hopefully we will see some super high quality apps with this.

jawporta · Jul 21, 2009

Apple's Netbook

Give it up already, we want a sub $300 netbook with OSX on it and Apple just ain't going to deliver that. Their idea of a netbook is the MacBook Air. Priced at $1600 or an iphone. If they made an official netbook I would bet it would be $800, and no one but the fanboys would care.

Bonte · Jul 21, 2009

indicating that they felt the $399 and $499 netbook market held sub-standard products with poor user satisfaction. Apple insisted again that they would only enter the market if they felt they could offer a product they were proud of.

Popular netbooks for the masses are in the $250-$300 range because regular laptops start at a few hundred dollar more, Apple labeling netbooks at this price could be a tactical move. $399 and $499 seems a perfect price for the iPod-Tablet, and something to be proud of.

chaosconan · Jul 21, 2009

Doctor Q said:
To make a netbook that is clearly better than the competition, but only a bit more expensive than the competition, Apple needs to change the rules of the game. I think they need at least one feature that nobody else has, maybe even a feature that nobody else even considered. What haven't we seen in a netbook that could change the entire netbook landscape?

I real tablet. Not one of those FAKE notebooks with a swivel LCD screen.

xVeinx · Jul 21, 2009

Netbooks are all about volume sales and not about margins. I thought the margins for Acer were like 5%? Essentially, they sell them for next to nothing, by including next to nothing in hardware (from a performance perspective). When the software is properly optimized, things aren't bad, but there is a definite trade off.

I think the issue for Apple isn't that they want to have larger margins so much as it is an issue of: diluting the brand, cannibalizing sales of notebooks, and paying for increased returns/fixes due to cheaper components. There is a lot to lose if not done right, and I don't believe they have any intention of being the next Dell.

SFStateStudent · Jul 21, 2009

Oh well, looks like another year of lugging around a 15" MBP. I dread the day that they create a 13" MBP.....lol

Apple Questioned About Netbook (Again) and App Store Pricing and Rank Lists

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