Apple planning to slash Mac prices in bid to take even more market share from Microsoft Windows PCs?

“After nailing its third-quarter earnings last night, Apple left investors with a funny taste: The company issued a surprisingly weak outlook for its fourth-quarter revenues and gross margin, and said margins would be even thinner next fiscal year,” Dan Frommer writes for SIlicon Alley Insider. “It’s hard to imagine that people are simply going to stop buying Macs and iPods. So what is Apple hinting at? New products, no doubt. But also, we think, slashing prices to rapidly grow market share.”

“Unless Apple is building a spaceship, it’s hard to see how a few new products alone would decimate Apple’s margins to rates the company hasn’t seen since 2006. And increased spending on new products wouldn’t explain the slower projected revenue growth,” Frommer writes. “More likely: Apple is also going to slash prices to accelerate the rate it’s stealing market share from rivals. Oppenheimer even hinted at it:”

We’re delivering state-of-the-art products at price points that our competitors can’t match, which has resulted in market share gains in each of our products. We plan to continue this strategy and to deliver great value to our customers while making a reasonable margin but not a margin so high as to leave an umbrella for our competitors.

Frommer writes, “This would have been unthinkable just a few years ago, but now it seems like a great time to make a real run against Windows-running rivals like Dell and HP . Microsoft’s Vista has a tiny fan club, PC manufacturers continue to churn out uninspiring machines, and as more software moves to the Web, companies (and individuals) have fewer reasons not to buy a Mac.”

“Apple managed to steal 2.1% of the U.S. PC market in the last year with its current prices, ending up with 8.5% of the U.S. market at the end of June, according to Gartner,” Frommer writes. “Imagine what it’d be able to do after knocking a few hundred bucks off its price tags.”

Full article, including t$400 Mac minis and $600 all-purpose Mac workstations, here.

62 Comments

  1. just give me a machine between the mini and the Mac Pro…i don’t care what the cost is…i just don’t want the monitor included but would like the option of adding/upgrading the video card!!

  2. Apple has enough mula saved up that it can afford to finally clobber the competition with beyond-excellent quality at affordable prices. The more ppl they get using Macs and realizing the joys of Apple, the more permanent converts they will gain. This may be the time to go for lots of converts!

  3. My comment from yesterdays financial report article is apparently finding some adherents:

    “Analysts are puckering up over declining margins at Apple, but I’m okay with it (to a limit). The fact is that Apple is not simply losing margins, it is converting them to share of market. I think Apple is a stronger company, and better investment, when it rests on larger customer customer base. It provides a stabilizing factor.”

  4. He’s probably correct.

    The Mini hasn’t been updated in almost a year. Take out the optical drive like the MB Air (external drive becomes optional), and both the size and price shrink further. This becomes the perfect office pc replacement–small, inexpensive, functional.

  5. When it came out the $1599 “Blue & White” G3 was not junk. It was a mid-tower Mac with acceptable expandibility. No one is asking for junk. The current iMac is closer to being junk than a low-end headless mac would be. Some of us can’t afford the Mac Pro, but still expect more that the rest of the mac line offers.

  6. I’d prefer just a better mini. It’s the only mac that doesn’t have 802.11n, which is unacceptable. It should have HDMI out too since so many of us like them hooked up to our HDTVs. Better video, a faster processor and 2GB RAM default would be nice too.

  7. What about the product gap between the MacBook and the MacBook Pro? There are countless people who’d like a Mac notebook with the MacBook’s specs but won’t buy the current MacBook because of it’s 13″ screen. For them the MBP is simply overkill with its price tag.

    And poor Mac mini isn’t given enough love by Cupertino. Its specs are always dragging behind by a year or so.

  8. I said “closer” not “close.” The more items you integrate into a system, the more likely it is to fail. The integrated monitor is of average quality, and is something I personally wouldn’t even consider buying. The video card was sub par when the system was released. The ease with which you can customize an iMac to meat your needs, is questionable at best. As a computer for the masses it is nearly perfect, but it has it’s not the machine for me.

  9. Across the board price cuts do not make sense when you are outgrowing the industry by a factor of 3 to 10 depending on how you compute the numbers. So what makes more sense?

    Scenario 1:
    Apple is about to announce a game changing device. Perhaps new Multi-touch portables that obsolete the rest of their product line – think of a multi-touch display that you pickup and use as a tablet while mobile. I doubt something like this would be done but it is a possibility.

    Scenario 2:
    Adoption of new tech like solid state drives the primary storage medium. This would kill profits, but place Apple ahead of the curve on the next big performance improvements. I doubt that Apple would do this, but then again they did kill off CRT’s before everyone else.

    Scenario 3:
    Though an across the board price cut does not make sense, I could see cuts in the MacPro line. This would impact the bottom line as they have the highest margins, but it would make sense as the growth appears to be centered in notebooks, the might be willing to try to grow the share in desktops.

    Scenario 4:
    What if Apple is about to really enter the consumer market. Releasing large screen TV’s built around the Mac. This has been suggested over and over, but now Sony has managed to get Cable companies to accept a standard for settop boxes, so this makes more sense than it did before as Apple produces the ultimate way to push the Itunes Movie store into the mainstream.

    Scenario 5:
    Apple is going to offer monthy rental plans to put an end to Blockbuster and Nextflixs worries by becoming the major provider of rental movies.

    Scenario 6:
    Apple plans a hostile takeover of Microsoft. Absurd, maybe so, but so is trying to guess what Apple is going to do. No this isn’t ever going to happen because when Apple passes Microsoft in 5 years (Market Value, revenues will come a couple of years later). People will be asking this ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

    The bottom line is that the most likely thing is that they are going to pre-announce something big, like multi-touch everywhere and they are going to take a hit as everyone holds of purchases for the new stuff to come out.

    The one thing that I would bet against is massive price cuts in the line!

  10. I’d think you’d be more likely to see cuts in the consumer level as opposed to the pro line. Pro buyers know what they want and are willing and able to pay for quality.

    I’m seeing 15″ notebooks priced well below the Macbook entry level. I think Apple might be considering coming closer on the macbook level. Like getting below a $999- notebook.

    Want a bloodbath? $799- Macbook and a $399 Mini. Remember, the PC makers make money only on the box, and tithe M$ on the OS. Apple can take a hit on the box and still be in the black.

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