The $800 rumor that spoiled Apple’s party
Blame Duncan Riley.
Last Wednesday, he posted an “exclusive” on his blog — The Inquisitr — under the headline: “Apple to launch $800 laptop.” Although his scoop was unsourced, the news that Apple was set to announce its cheapest notebook computer ever was picked up by Apple blogs and mainstream publications around the world — including the New York Times. Bernstein Research analyst Toni Sacconaghi even published a spreadsheet calculating how much an $800 laptop would increase Apple’s available market.
So when Steve Jobs unveiled Apple’s new line of laptops on Tuesday with starting prices of $1,299 for the MacBook, $1,799 for the MacBook Air and $1,999 for the MacBook Pro, you could almost hear the sound of Apple’s (AAPL) shares falling.
What this means is that Apple is not — with one exception — lowering prices in order to grow its market share. In fact, it raised the base price of the MacBook $200. Steve Jobs is clearly sticking with the strategy that has worked for the company since he came back to Apple in 1997: building high-end, high-margin computers and selling them at a premium to discriminating users.
The one exception is the original white MacBook — the best-selling MacBook ever, according to Jobs — which sold for $1,099 when it was introduced two years ago and will now sell for $999.
What you don’t get with the white MacBook, however, are the new features introduced on the redesigned MacBook and MacBook Pro:
- Unibody aluminum frames (aka “the Brick“)
- LED-backlit glossy displays
- New graphics chipsets offering a 3X-to-6X performance boost
- Button-less multi-touch glass trackpads
- Longer (5 hour) battery life
Except for the pricing, almost none of this was a surprise, given that the specs had been largely nosed out by rumor websites days — if not weeks — in advance. Even the pricing — and the fact that the $800 rumor was wrong — had been leaked a few hours before the event, perhaps to lower expectations on the Street.
If so, it was in vain. Apple’s share price, which had gained a record-breaking 13% on Monday and opened higher Tuesday morning, was down more than 5% by the time Jobs finished his presentation and gone to the Q&A. (In fairness, so were most of the other tech stocks.)
“Apple is very good at pricing,” says Stephen Baker, vice president of industry analysis for The NPD Group, who believes Apple was right to hold the prices of the new MacBooks steady. “They haven’t run out of headroom yet. I expect they will eventually find a way to build out a line that will come in at $799, but they’ll do it in their own way and at their own pace.”
Piper Jaffray’s Gene Munster points out that it’s unlike Apple to continue sales of an older model at a reduced price, but considers the move “prudent” given investor sentiment about companies that target high-end consumers, as Apple does.
“We believe the company is positioning its Mac lineup for an extended macroeconomic slowdown,” Munster wrote in a report to clients issued after the Apple event. He added, however, that having seen the machines first hand, he thinks the improvements are significant enough to drive buyers up to the $1,299 price-point. “Of the MacBook buyers who would have considered the $1,099 version, we believe more than half will opt for the more expensive $1,299 version instead of the $999 option.”
See here for my colleague Jon Fortt’s live blog of the event.
UPDATE: Apple has made Tuesday’s presentation available as a QuickTime movie. Click here to watch it.
[Photo courtesy of Engadget.]
This one’s for you Ted.
You can drive a normal Sedan or you can drive a Rolls. You can feel the difference only when you step out of each one of them.
Ha so funny. I use both everyday and unless you have an IT department behind you with the PC you can expect to spend a lot of your time with virus protection and upgrades and finding updates. I guess you all are willing to work on these things for hours year after year. Take the $400 or so difference and you are probably doing it for $1.50/hr. Get a life and a Mac.
This is for Peter, Canastota, NY :
“But in my world, the price tag is king. I’ll be just as comfortable with a Mac or a PC, but the PC is always the better deal for the money.”
Yea…. well Taco Bell is always cheaper than the Outback Steakhouse or Red Lobster… will you only eat there because it is so CHEAP?
It’s literally been decades since the Mac was technically superior to the PC… back in the 80s when Macs could run Flying Toaster screen savers, but PC graphics were still too primitive. Today, both are pretty much on equal footing. There’s no longer any application where you HAVE to get a Mac rather than a PC.
“Ted from NJ should actually price and equiv. model from Dell or HP with the same specs as see how much cheaper it is. I’d even encourage you to post a the config/price here.”
Lenovo W500-4058 15″, 2.53GHz cpu (T9400), 4GB 1067MHz-RAM, FireGLV5700-512MB-VRAM, 1.3Mpixel integrated camera, 320 GB HD, Dual layer-8x DVD-R, express card &PC slots, BlueTooth & wireless AGN, Options: Blu-ray burner, 2.8Gz cpu, e-SATA docking station, etc.
Cost w/o options is $1829.00
Apple Macbook-Pro same config.: $2499.00 -No optional Blu-ray, e-SATA, etc.
$670.00 differential on listed prices at company e-stores.
I’d like to compare Apples’ offerings with the HP or Lenovo W700 mobile workstations but Apple doesn’t offer a 64 memory controller, Blu-ray, dual HD raid, Nvidia FireGL MXM with 1GB-VRAM, or quad core cpus….
Been a Mac user for over 10 years. Got burned for over $1000 on a 22′ LCD display and learned my lesson well: wait a year to upgrade… make sure no dies from it first.
“Apple’s new laptops cure cancer and make you 50% smarter.”
“Hey, this is just another laptop!”
“See? You’re getting smarter already!”
I wonder why Business follows Apple so closely. Large businesses use PC and Mainframe, because the software that runs their businesses is built on Windows, Linux, HPUX, AIX, Solaris, AS-400, iseries… NOT fake unix based APPLE operatings systems and these companies are not going to pay a premium for inferior equipment that they can not use.
Ted from NJ should actually price and equiv. model from Dell or HP with the same specs as see how much cheaper it is. I’d even encourage you to post a the config/price here.
I’ve done this many times with ppl over the years and each time Apple is not far off. And for the far better longevity, customer support and service I have gotten from Apple(both as an end user and a large education customer) it very much worth it.
“Apple’s new laptops cure cancer and make you 50% smarter.”
Throw in male enhancement and I’m in for 2!!!
I’ll agree with high-margin, but not so much with high-end. Ted in NJ did a great job demonstrating that.
Discriminating users? Definitely. Most people who buy Macs only do so because they think they have a point to prove against Microsoft. But in my world, the price tag is king. I’ll be just as comfortable with a Mac or a PC, but the PC is always the better deal for the money.
It’s literally been decades since the Mac was technically superior to the PC… back in the 80s when Macs could run Flying Toaster screen savers, but PC graphics were still too primitive. Today, both are pretty much on equal footing. There’s no longer any application where you HAVE to get a Mac rather than a PC.
I wish Apple would reconsider their pre-release strategy on information. In normal times, it’s fun to speculate on the mysterious “what’s next” from the company. But the ability of rumor-mongers to sully the actual release and make it anticlimactic takes control away from Apple.
No one on the sidelines seem to be learning that Internet rumors are just that. Instead, they become angry at Apple. The fact that secrecy harms the stock price is another frustration. When the debut of an innovative, handsome and well-designed machine is met with angry disappointment and a sagging stock valuation, something seems awfully wrong.
The pricing is alittle above what the machine is worth for a laptop right now but as Ted of Princeton NJ posted,
If you are just a blind apple follower just throwing money at the company to be “hip” then that’s fine. Just don’t grip that most of us were hoping and for what apple originally was known to deliver – a better hardware laptop/computer.
A shiny new body for clumsy people and a little longer life battery. Blah.
This laptop will not make it to the next generation and is only being sold as a filler for people that will just throw money for shiny things and a free apple sticker with purchase.
Apple would probably have been better off presenting a laptop for $3k with the 64-bit address support in the memory controller + expanded 8GB RAM with blueRay – larger static HD’s etc etc.
In Europe, the white MacBook, costs 899 euros.
Entry new macbook, at 1149 euros is still 150 euros too expensive… psychologically.
I looked at the new MacBook pros and I’m underwhelmed. These are NOT particularly high end Laptops. Yes they’ve made a nice solid thinner aluminum case, improved the graphics chipset/core, and are now up to par on 1066 MHz-DDR3 memory, but several Laptops with similar hardware and size are available at half the price. The only compelling/distinguishing feature of these machines is the MacOS operating system which frankly is not worth the 1-1.5k$ premium Apple is charging for these laptops. No blue-ray (not even as an option), no 64-bit address support in the memory controller and 4GB maximum RAM with only a 2 slot logic board. In fact for about the same price you can buy a Dell or Lenovo 17″ mobile workstation with Dual HD raid-0, 8 GB DDR3 RAM, and quad core cpu (ok that’s ~ 1k$ more), NVIDIA Quadro FX-MXM graphics, and (for ~$450 more) an optional Blu-ray burner. And Apples’ 17″ laptop still uses the slower 667MHz memory. Very disappointing.
“Eventually, you will see Apple’s OS compatible with all desktops aka Microsoft”
And Satan will be driving a snow plow to work.
Another Apple rumor that is 100% wrong AGAIN. Steve Jobs is dying. Steve Jobs had a heart attack. $800 laptops, blaa, blaa, blaa.
I can’t believe anybody believes any of this stuff anymore.
I think I will start my own blog to manipulate investors.
“Apple’s new laptops cure cancer and make you 50% smarter.”
Notice a pattern? Someone spreads a rumor knowing that it can’t be fulfilled prior to an event or earnings announcement. …
As long as there’s a sucker that sells, you’re going to have these bottom feeders spreading rumors… what, you expect better from idiots or cons?
Yeah, and in ol’ chrome-dome Jim’s words, “the Four Horsemen” of misinformation and non-information: PED, Scott Moritz, Eric Savitz, and Cramer himself. It’s just extremely frustrating seeing you guys getting a venue for your scribblings and no regulation.
ex ped: You’re painting with a pretty broad brush, Mr. BMWTwisty, something that’s probably easier to do when you don’t post under your real name.
For the record, I was not involved in spreading the $800 rumor. I did report Gene Munster’s prediction that Apple would offer notebook starting at $899-$999 (see here). That one turned out to be at least partially right.
What is he talking about??? High end machines, no way! Apple hardware is proprietary but in no way is the latest and greatest. For that, one needs to build their own computer and install whichever OS they want to run. If an Intel chip, Mac OSX, Linux and Windows; if AMD, Linux and Windows, for the time being. Apple is still trying to make big money on legacy machines hoping that people won’t catch on. Eventually, you will see Apple’s OS compatible with all desktops aka Microsoft.
You crack me up.Talk about self-fulfilling prophesy. You’re just another one one of the unoriginal rumormongers. Your point is that a rumor didn’t come to pass? That Apple’s stock is down at the moment? FWIW, all the tech stocks are down today at about the same percentage. Yes, this is the typical “sell the [non]news” event. C’mon, man, talk about something real for a change. Wait, you did that the other day. Good job! BTW, you still don’t have a clue about the actual dynamics of the Apple phenomenon. Apple will keep on rolling along and folks like you will still be stymied in their attempts to come up with a good explanation for it. Gene Munster and Jim Goldman get it, thhough.
You can buy a Mac Mini for $599. But, I guess that doesn’t fit into the story…
This is just like Scott Moritz, raising an impossible bar for Apple to reach, so when Apple doesn’t reach it, it hurts the price. Remember, Moritz floated the impossible report that Apple was planning to sell 1M iPhones on the original weekend in 2007? Of course, that was shown to be a total lie, since Apple had not even made 1/3rd that number in prep for the launch weekend. Naturally, when Apple does not reach these impossible numbers, investors get disappointed. Certainly the shorts who are in bed with Cramer and Moritz and the like are happy all the way to the bank.
The rumor is used to exacerbate the normal ’sell the news’ effect.
Peruse the roughlydrafted.com site to learn the mechanics of this if you are confused.
The last time this kind of garbage happened, it centered around a heart attack rumor as I recall.
The market in general was up about 11% yesterday. Apple’s stock wasn’t ‘up’ on that rumor alone. If you follow Apple you’d know that almost without fail their stock drops on the days of these announcements.
That is what one gets when trusting un-sourced articles. As for calling the SEC, don’t bother. Lying is not against the law.
John Q Stupidblogger:
I don’t understand… I read it on the Internet. It’s got to be true!!
Yet one more reason why many people still look upon the Internet with a critical eye.
Philip Elmer-DeWitt obviously doesn’t cover Apple events that often.
Apple’s stock price drop today has nothing to do with Wall Street’s reaction to the “rumors of lower priced MacBooks” not being a reality.
Apple’s stock price drops after Every and Any announcement they make. Look it up for the past three years at least. Apple can announce record profits and their stock price falls. Apple can announce the new iPhone and their stock price falls. Apple can announce new iPods at lower prices and increased market share of the computers in both the consumer and education sectors and their stock price falls.
Need I go on? Sounds like Philip Elmer-DeWitt was himself a victim of the Rumor Mill and now is trying to justify his misinformation by saying “look what happened to Apple” for not complying with what a bunch of misinformed and irresponsible journalists (if you want to call them that) published.
Apple should sue said journalists and the publications they work for for printing said trash statements / assumptions and thus possibly harming their stock price and market value.
Something, perhaps, for the SEC to look into?
Apple priced its new MacBook computers even better than the so called “sub $1,000″ notebook that was expected.
The new $1,299 MacBook gives performance that is nearly comparable to the $1,999 MacBook Pro. This is a $700 SAVINGS, in an elegant machine.
Apple will entice many new buyers that did not want to spend $1,999, and felt that the previous $1,099 MacBook was too child-like and too low in graphics performance.
Apple now gives the MacBook line a lot MORE graphic performance for a lot LESS money!
Notice a pattern? Someone spreads a rumor knowing that it can’t be fulfilled prior to an event or earnings announcement. Disappointment drives the stock down. That is how the shorts/crooked ‘journalists’/the mob have infiltrated and corrupted the market. Where is the SEC?
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
Peter says: “Most people who buy Macs only do so because they think they have a point to prove against Microsoft.”
This is simply an uninformed generality. I work with many designers and graphics professionals who prefer Macs not because of their wanting to prove a point to Microsoft but because the OS is more stable, more intuitive and easier to work with than Windows. I myself don’t care about Microsoft one way or another, other than some misgivings about my frustrating experiences with WIndows in the past. Sure I would like to pay less for a laptop, but only if it runs an OS that is as easy and pleasurable to use as Apple’s.
Do you pay a premium for Apple products? No doubt. And many of my colleagues aren’t exactly thrilled about paying more for their products. But it is a price they are willing to pay – not to prove some point to Microsoft or impress their friends and neighbors, but to get the right tool for the job.