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    Apple CFO: Netbooks Are ‘Not Something We Would Put the Mac Brand On’

    By
    Joe Wilcox
    -
    April 23, 2009
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      Apple is once again coming out against netbooks, or mini-notebooks as many analysts call them. The company’s second-fiscal-quarter results perhaps show that netbooks aren’t a good category for any computer manufacturer.

      “It’s not a segment we would choose to play in,” Apple CFO Tim Cook told financial analysts during a conference call April 22. But other PC manufacturers are aggressively dabbling in netbooks, perhaps to a fault. Last week, I called netbooks a “cheap narcotic.” They bring Windows OEMs a brief sales high, while laying their margins low.

      Gartner first-quarter PC shipment data show the negative effects of mini-notebooks on the larger PC market. Worldwide, PC manufacturers shipped 67.2 million units, for a 6.5 percent year-over year decline. In the United States, shipments declined 0.3 percent year over year to 15.2 million units. Like the previous two quarters, netbook sales were strong. But the increase in shipments command a high price on averaging selling prices and, more importantly, margins.

      Mikako Kitagawa, Gartner principal analyst, predicted that “U.S. mobile PC ASP likely will decline as much as 20 percent year-over-year in first quarter 2009.” By contrast, without netbooks, Apple margins actually increased during the first calendar quarter, which is the company’s fiscal second.

      Cook said that netbooks “are really propping up the unit numbers for the industry as a whole.” But the propping comes with consequences. In August 2008, before the big netbook sales surge, the Windows notebook ASP at U.S. retail was $689, according to NPD. By February 2009, ASP had fallen to $560, or within $20 of the average selling prices for notebooks. During the same time period, Mac laptop ASPs declined just $12 from $1,524 to $1,512.

      Mac shipments were surprisingly strong during the first calendar quarter-2.2 million units-considering how much netbooks buoyed Windows PC unit shipments, while sapping margins. Mac shipments into the channel declined 3 percent year over year, but sales out to customers were flat sequentially. First to second quarter, Mac notebook units fell 22 percent and 25 percent by revenue. Cook called Mac sales “a solid performance, particularly in this [economic] environment.”

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      Joe Wilcox

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