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Stop the Noiz

Could a Minitower Mac Be Apple's 'Transitional Product'?

Frank Fox - 2008.07.24, revised

Popularity: LEMLEMLEMLEM

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A new "transitional product" from Apple? What could it be?

The guesses have been a new Mac Tablet or an overhaul of the MacBook and MacBook Pro. For both of these guesses, I'm not impressed. Demand for tablet computers hasn't shown to be very high for the Window's version; I don't see a big drive for more. Overhaul of MacBooks may happen to keep up with new versions of Intel chips, but that doesn't support a "transitional product".

In the quarterly conference call, Apple CFO Peter Oppenheimer highlighted the company's competitive pricing. Then there was discussion of expected growth to market share. Apple expects a growth to the retail channels overseas, because they will need more coverage to handle growth of Mac sales, not just iPods and iPhones. That sounds like plans for serious product growth.

For clues I think we have to look at Apple's current product lines. What areas of the market hasn't Apple cornered with their unique brand of cool looks and features?

Apple seems to have complete coverage of the mobile computing field. They have the ultraportable market with the iPhone. The lightweight laptop is pinned down with the MacBook Air. Between the MacBook and MacBook Pro, they cover from consumer to professional.

Sure a Mac Tablet could be squeezed in, but the notebook range is already full and selling well, 37% growth year over year. No obvious holes there.

On the desktop, we find only three choices: The Mac mini is appliance computing at its best. The iMac is a wonderful compact design with a large monitor for the average user. Then we have the top-end professional muscle of the Mac Pro. The Mac Pro is multiprocessor power for heavy-duty video and design work. Desktop growth was fantastic, 49% year over year, but this was largely attributed to iMac sales

The only thing missing here is a low cost, high volume minitower for the consumer who doesn't need professional performance.

Apple vs. Psystar

The minitower is also where Psystar tried to generate sales that honestly weren't being satisfied by Apple. With Apple suing Psystar out of existence and dropping hints of a "transitional product", what could Apple be up to? Could it be thinking that it wants a clear field to launch its new product?

The Mac mini is nice. I own one that I'd like to move to the living room to connect to my HD TV.

With what should I replace it? The Mac mini has limitations because it is built like a laptop with no monitor and a notebook hard drive. That means small size at the expense of hard drive space and processor speed. Another mini is not quite what I want for an upgrade.

I need a different product to transition beyond the Mac mini.

Since I already have a monitor, I don't exactly need or want an iMac. I need a different product to transition beyond the Mac mini. I want an inexpensive desktop so I can get a nice performance boost today, but I don't want to spend much money. Besides the Mac mini design and performance hasn't gotten a lot of attention from Apple lately - I wonder why?

Maybe Apple, like me, is ready to transition away from the Mac mini. They need something to get sales really rocking in the desktop arena. Maybe a 49% growth rate isn't good enough. Apple is now shooting for the number 2 spot in computer sales, so look out HP and Dell.

Apple will need to target the consumer/business desktop market. To me, a great "transitional product" would be a minitower designed by Apple.

Impacting Gross Margins

A minitower would definitely impact gross margins. This was mentioned in Apple's last quarterly report, so that makes sense. Apple will have to be price competitive to fight for market share. I believe Apple can do it. It will have only one product to support instead of a dozen, like Dell or HP in this range.

During the conference call, Oppenheimer talked about how Apple is now pricing computers to beat the competition. I've written about this in the past: Mac Pro Beats HP and Dell at Their Own Game: Price and MacBook Holds Its Own Against Dell and HP Notebook Pricing.

The more of these computers they plan to sell, the bigger the hit to margin - and they are forecasting a big hit in earnings per share. Apple would take this loss in order to gain both market share and really establish the Mac OS as a contender in the market. It is also the right time to take away XP users before they switch to Vista.

The big question isn't what Apple is going to release, but what will it look like? What surprise is Apple planning for us?

I get excited thinking how far Apple will push the design to separate itself from the competition. Will it be small like the Mac mini, cube shaped, or some other form factor that makes you go Wow!

The funny thing is that even if Dell or HP knows that it is coming, they can't do a thing to stop it. They haven't done very good at beating Apple on design; I think this will be another smack against their bottom line.

I'll be saving my pennies and keeping the Mac mini working hard until it can be retired to the living room to enjoy an easy life. LEM

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