The Middle Way, and Why Apple Will Reboot the MacBook

April 10, 2012 apple

macbooks

strategy

Quick Backstory on MacBooks

Apple came out with their MacBook on May 16, 2006. It replaced the PowerBook and the iBook laptops. They stopped selling it to general consumers back in July of 2011, and stopped selling it to the educational market in February of 2012.

The Process of Buying a MacBook

Almost inevitably, I think, the first question someone asks herself when considering a MacBook: “What size screen do I want”? In the past, there was a lot more consideration paid to the processor and the memory. But even the smallest MacBook Air these days is powerful enough for most users. So the screen size, followed by the form factor, is the initial decision.

When a good friend of mine went through the “buying a MacBook for the first time” process last month, the order of his decisions went like this:

How big of a screen do I want? (Answer: Probably 15″, though maybe 13″ would do.) Do I want it to be in the slimmer “Air” form factor? (Answer: It’d be nice, but it’s not a deal-breaker.) Do I need the disc drive? (Answer: I don’t use discs a lot, but I’d like to have the option of using them.)

In the end, he was deciding between the 13″ MacBook Air and the 15″ MacBook Pro. The DVD drive in the Pro ended up being the deciding factor, and so that’s what he went with.

The Current State of MacBooks

For posterity, here are the various options currently available.

family nominal size chief differentiator price MacBook Air 11″ 64GB flash storage $999 11″ 128GB flash storage $1,199 13″ 128GB flash storage $1,299 13″ 256GB flash storage $1,599 MacBook Pro 13″ 2.4GHz dual-core Intel Core i5 processor

500 GB hard drive $1,199 13″ 2.8GHz dual-core Intel Core i7 processor

750 GB hard drive $1,499 15″ 2.2GHz dual-core Intel Core i7 processor

500 GB hard drive $1,799 15″ 2.4GHz dual-core Intel Core i7 processor

750 GB hard drive $2,199 17″ 2.4GHz dual-core Intel Core i7 processor

750 GB hard drive $2,499

It’s a little confusing when laid out in the table above … looking at it as a chart can be somewhat helpful. In the chart below, I’ve only included the cheaper option for models that have available upgrades.

MacBook Pricing, April 2012

MBA 11″

$999 MBA 13″

$1,299 MBP 13″

$1,199 MBP 15″

$1,799 MBP 17″

$2,499

As you can see, there’s a pretty substantial jump between the pricing on the 13″ Air and the 15″ Pro models. (The discrepancy isn’t as large when you include the up-sized model of the 13″ Air, but it’s still there.)

What I Think Apple Should Do

I recognize that “people telling Apple what they should do” is one of the silliest things to do. Apple’s data is far better than mine, their analysts are far smarter than I am, and they’ve been doing this for far longer than I have been (read: 10 minutes). But because the only thing I can lose by writing this is my time, let’s go. For the ease of narrative, I’m writing this as “Apple will …”, but, obviously, I have no intel or insight into Apple’s plans, their supply chain, or anything else. This is all speculative.

Apple Will Reboot the MacBook

Apple likes to spread out their news. They also like to maintain a certain level of uncertainty about their upcoming plans.

So on the day after their Q2 earnings call (April 25th), they’ll issue invites to journalists for a product announcement on May 15th. The tagline will be something that conveys the spirit of “everything old is new again,” but will be a bit snappier and more upbeat.

Journalists and pundits will assume that it’s for the revamp of the MacBook Pro. Hot rumors will include retina screens and an adoption of the Air form factor, with eliminated disc drives. Some will project that Apple will merge the Air and the Pro lines into a single family of computers.

But that’s not what’s going to happen.

What will actually happen on May 15th is that Tim Cook will announce that Apple is relaunching a classic. They’ve seen how well the market has responded to the Air — to its battery life, to its speed, to its lightness. And they’ve seen how, over the years, people have loved the performance and storage capacity of the MacBook Pro line. They don’t want to lose the Air, because it’s so good for what it is, and they don’t want to lose the Pro model, as it’s so useful for some of their most devoted users. But they wanted to take the best of both worlds, and they wanted to turn all of the knowledge they’ve gained about how people use the Airs and the Pros, and they wanted to create something new.

“But we’ve been here before,” he’ll say. “Six years ago tomorrow, we came out with a computer — the original MacBook — that revolutionized the way people interact with their world. It was portable, and powerful, and perfect. And that’s why, tomorrow, on the anniversary of its original launch, we’re doing it again.”

(Conveniently, the narrative will gloss over the fact that the MacBook Pro came out first, in January of 2006. Narratives get to choose their own details.)

Apple will come out with a brand new version of the MacBook line, in 13″ and 15″ screen sizes. It’ll have the Air’s form factor, but will use larger-capacity drives. No DVD/CD drives. They’ll use the new Ivy Bridge CPU from Intel (see Marco’s predicitons on new MacBook updates).

The difference between this scenario and all the others that I’ve seen on Apple’s upcoming plans is that Apple will maintain the current MacBook Pro line, in its larger, with-disc-drive form factor. And it’ll keep the MacBook Air line as it is, as well. The difference is that there’ll be a brand new (or new-again) line of computers sitting in the middle of the two.

Why?

Why would Apple do this? A few reasons.

1. A Desired Product

The 15″ screen with MacBook Air form factor would be a killer product. I’ve used a 15″ MacBook Pro for the last 3 years, and it’s been wonderful, but I’m planning on getting an Air next. My only problem: I’m concerned about the size of the currently-largest Air screen, 13″. A 15″ screen on an Air form factor would be ideal. (Though I recognize: There are many ways they could develop that product without rebooting the MacBook line.) Anyway, the introduction of a new line leads us into Point #2 …

2. Better Price Tiering

Up above, you saw that chart for the current MacBooks. Here it is, again, with an eliminated 13″ Pro, and with the addition of a 13″ and 15″ MacBook. (Again, I’ve left out upgrades, for simplicity. I’ve also kept all current computers priced as they are now.)

MBA 11″

$999 MBA 13″

$1,299 MB 13″

$1,399 MB 15″

$1,699 MBP 15″

$1,799 MBP 17″

$2,499

It’s simple and straightforward. It establishes a “standard” option. A default. A middle way.

Want an Apple laptop? Get a MacBook. Want it to be slightly more portable? Go with an Air. Want it to have the disc drive and be more powerful? Go with a Pro.

By introducing the middle tier, Apple would give users a sane default, which is what Apple has traditionally done so well with their hardware and software. Which leads us directly into Point 3 …

3. An Easier Buying Process

As I noted above, my friend’s first decision was based on the real estate of his new computer’s screen. By adding in MacBooks, Apple gives customers a much smoother deciding process. At the extreme ends are the 11″ Air and the 17″ Pro. In the middle, a user can decide wether she wants to go with 13″ or 15″ … and then, make the call as to whether she wants to trade down to the Air, or up to the Pro. But, again, the default would simply be to go with the vanilla MacBook. And with the defaults being the vanilla MacBooks, we get Point 4 …

4. Further Elimination of Disc Drives

At the moment, you either have no-disc-drive (the Air), or a disc drive (the Pro). While I can see Apple maybe taking the leap and dropping disc drives in the Pro models (they’ve done it before), I think customers (like my friend) would be put off at the idea of not having a disc drive even as an option. When Apple dropped floppy drives from the iMac, they were dealing with an early-adopter set of consumers. Since they’re so much more mainstream now, I think they’d have a harder time with it. BUT.

If the MacBooks are introduced, DVD drives are still an option, but, again, the standard option would be “no drive”. In fact, since both the Airs and the middle-path MacBooks would be disc-drive-less, the dominant paradigm for laptops would shift to “no drive”, and it’d continue to push that transition forward.

5. Increasing Revenues for Apple

The other points are nice, but this one is the key point for Apple.

I don’t know what the breakdown of Airs vs. Pros is for Apple currently. I also don’t know the profit-per-unit of those computers. But re-introducing MacBooks into the mix (at the hypothetical prices I outlined) increases the average cost of an Apple computer by about 4%, and in some scenarios, it increases by two or three times that amount.

Would more customers “buy up” (from ~$1,200 to ~$1,500, going from the Air to the MacBook)? Or would more “buy down” (from ~$1,800 to ~$1,500, from the Pro to the MacBook)? I can’t say. But I suspect that a user would happily go from a $1,300 13″ Air to a $1,400 13″ MacBook (which gives Apple an 8% increase in revenue on that sale). And once they’re considering the regular MacBook, it’s only another $300 to increase the screen, so why not?

Keep in mind, I’m a fairly standard consumer. I last bought a 15″ MacBook Pro, at around $2,100. I’m currently looking to buy a 13 ″MacBook Air, at around $1,300. I’d happily go with a middle-of-the-road 15″ MacBook, at around $1,700, especially if it meant that I got the larger screen and greater storage space than the 13″ Air.

6. Timing

I don’t mean to get into woo woo conspiracy theories, but there is one aspect of timing that I want to point out.

Intel’s Ivy Bridge processors were initially slated to become available to manufacturers at the very end of 2011, and would then be available in customer-facing machines in early 2012. Apple stopped selling MacBooks in summer of 2011, and then continued to sell their remaining stock to the educational market until February of 2012, when, presumably, their inventory ran out. The Intel processors have been delayed several times, but if they had come out according to their original schedule, Apple would be running out of their old stock just in time to roll out the relaunched MacBooks, using the Ivy Bridge processor.

Obviously, this could just be correlation / coincidence. I don’t even want to count it as an actual argument in favor of why Apple will go this route. Just wanted to point it out.

Counterarguments

Why might Apple not go with this approach? I can think of two reasons. (Update: a good point in the Hacker News thread suggest a third, added below.)

One argument that I expect to see against this approach would be that consumers prefer to avoid the middle of the road … they either go with luxury goods or with bargains. So, according to that line of thought, customers would want to go with either the Pro or the Air, but would avoid a middle-of-the-road MacBook. The problem with that critique, though, is that Apple is already positioned as the “premium” brand. I suspect that once a customer has made the decision to go with the higher-end Apple brand, they’re past the “bargain or luxe” dichotomy, and they then consider the options within the space.

The other problem would simply be one of finances. If the sales of this new line doesn’t make sense from a profitability standpoint, then, obviously, it’s not going to happen. Possible reasons: SSDs are still too expensive, current 1.8″ HDD capacity is too small, etc. But these details are so deep inside Apple’s books, I don’t have the ability (or time) to parse them, and I don’t know who would have the expertise to analyze them fully.

Via Hacker News user killion comes another good counterpoint, “increased supply chain complexity”: Basically, adding a new product (even if it shares the external form of the current Air) introduces new components that need to be sourced, maintained, and kept available. As he notes, “Because Apple has so few products it makes their supply and distribution chains more efficient. The economies of scale are a huge part of their profitability.”

A tangential argument against dropping the 13″ MacBook Pro is that, currently, Apple can say that MacBook Pros are available “from $1,199” … which is an impressively low number. But I doubt that positioning of the Pro model is something they need to maintain. After all, they’ll still have the whole MacBook family, “available from $999,” and I don’t know that Pro customers are looking for “value” as much as performance.

Waiting to See

So, yeah. Obviously, this is all speculative. But it seems like it’d make sense, and it’s not a theory I’ve heard anyone else talking about. I’m eager to see what happens in the next few weeks / months. Will the new MacBooks have retina screens? I don’t know. I doubt it, at first. (My guess is that they’ll add retina screens to the updated MacBook Pros this summer, and then trickle down the retina screens to the regular MacBooks in a year.) Will they add touch screens? (Again, no idea. Personally, I think it’d be great. Have you ever seen kids around a laptop?)

Bottom-line, though, I’m excited to see what happens. Now. Back to making stuff.