Apple's New Line: Can It Make Headway in a Recession?

As per the norm, rumor-mills were ablaze with blurry photos, leaked specs and incredulous claims about Apple's (AAPL) upcoming surprises in the computer space. Just about a month after it refreshed its iPod line for the school and holiday seasons, the Mac maker returns to the stage to unveil an entire new line of laptops, with enough bells and whistles and marketing glam to gleam into the eyes of affluent America regardless of those pesky "economic headaches".

Will it be enough to satisfy Investors and bring ever-increasing tight-wallet parents out of the woodwork and into Best Buy (BBY) or Apple retail stores?

The rundown of new products in short prose will follow, as they'll cleverly be splashed across technology publications all day and likely all week. The important thing, however, is that Apple is using the rumored "Brick" design process to make cases for the entire laptop line. It's a process that is able to carve an aluminum case for each laptop out of a block of metal, saving all excess to be reused in the process at later stages. Apple getting high environmental marks for its new products is also a change for the company.

The new laptops also now have glass track-pads without individual buttons. A new feature of  the laptop line introduced Tuesday is that the glass track-pad acts as a button and introduces more multi-touch capabilities including 4 finger actions. The Pro line of laptops is now driven by not 1 but 2 graphics cards that can be turned on and off for better battery performance or better hardcore video performance.

So without further delay, here are the highlights of the announcement:

• MacBook: Original White Model price drop to $999. Apple is just barely entering the sub-$1000 market, so it may not be enough to convince analysts,  but the $999 price point is nonetheless an actractive one for the core Apple market demographic and engaging those further beyond it.
• Aluminum MacBook: In 2 configurations at $1299 and $1599
• Refreshed MacBook Air: In 2 configurations with spec bumps at $1799 and $2499
• Aluminum MacBook Pro: Multiple configurations for 15" and 17" models: 15" models in 2 configurations at $1999 and $2499
• Apple also introduced a new 24" Display for $899

So, now that the current round of rumors may be put to rest, what does the future and the holiday season hold for Apple? By all accounts of the crowd at the notebook event, the reactions to the new laptops was very positive. Will the $999 MacBook continue to be a best-seller or will Apple have to dive deeper into netbook price territory?

It is my belief that Apple's brand has for years developed a premium stigma to it and that the design prowess of the company can not be underestimated. While other computer makers may struggle with economic conditions, putting pressure on margins, Apple's pressure is offset by its current target demographic, which mainly consists of youths with disposable cash and many parents of that youth segment. Apple made big points in its presentation Tuesday about its growth in the retail segment of the US and its market share gains across college campuses. This will resonate in the years to come as well as in the short term. Of all those feeling the pressure of an economic slowdown the last truly feeling the pinch will be the more affluent and wealthy, and for that segment Apple demands a significant amount of technology/gadget attention with its iconic product line of iPods, iPhones and Macs.

That is not to say Apple shares won't feel the pressure; in fact Apple suffered as large a drop as any large tech company over the past month as fear of consumer spending shortages spread throughout markets. With Apple, the volatility comes with the secrecy and the cult-like following. But markets, as forward-looking as they are, generally aren't wrong for very long.

Apple is expected to reveal quarterly results on October 21 following a quarter mixed in terms of news coverage, events and economic activity. While it is a big back to school season for Apple at this time of year, analysts and Investors are fearful that the economic uncertainty facing the US could have had a significant impact on casual spending. Apple has proven to be recession-proof in the past, but the company will have to prove itself again with results, and prove itself yet again with guidance that doesn't scare off the institutional buyers.

Till results are revealed, analysts, investors and fan-boys have a brand new slate of Apple laptops to go and check out at Apple stores all across the country.

Disclosure: Author owns AAPL.

Comments

[Hayweed:]

You almost got it. Apple markets to the top 20% and not everyone. Dell, HP, Acer, Asus all market to the masses. The difference is that when the economy tanks and the bottom 80% cut back on purchases, the mass sellers feel it the most. High end retailers suffer some sales loss but keep their prices which results in margins staying similar. Dell went for sales at the expense of margins which was a bad decision that has now cost them big time. Apple is selling their products at the same prices while taking share. Is BMW, Porsche, Tiffany's hurting that much. Doubt it.

The meeting yesterday showed that Apple held prices steady. If they were concerned that sales were drying up they might have dropped prices. They didn't which signals that sales are humming along. If sales are off 10% and the stock is down 50%, Apple is a buy.

2008 Oct 15 11:42 AM

[ellsab:]

Didn't the MacBook get a $700 discount or 30 something % off, sounds like they have dropped their prices! And at those prices gee they are looking like they will sell like crazy. Great time to get into mac if your not an owner already, or for us long term guys, time to smile just a little more. Yes the stock might get hit in the short term, but if you saw that campus shot of all students with Mac laptops, that is the future, 5 years from now mac at $1000 plus.

2008 Oct 15 01:55 PM

[Jon T:]

Here is your answer in the Amzon list as of now:

www.amazon.com/gp/best...

Apple for quality and Windows for cheap and nasty. Quite clear really.

2008 Oct 16 10:11 AM

[Jon T:]

Oh, and notice there isn't a Windows Vista PC in the top 25, not sure where the first might be...

2008 Oct 16 10:14 AM

[KenC:]

The $999 Macbook is the formerly $1299 Macbook. It was the old mid-range model, not the old entry-level model that cost only $1099. In other words, this model dropped $300.

If you think about it, if Apple had chopped $300 off the old-entry level model at $1099, that would have been the magical $799 rumor that one person was touting. BUT, Apple typically drops the lowest model, and moves everything done one notch, when intro'ing new products.

2008 Oct 17 01:03 PM