“I don’t have any inside information,” said Ezra Gottheil of Technology Business Research Inc., as he spelled out his take on Apple’s next hardware move. “This is just by triangulation.”
Citing evidence that included the gloomy economy, climbing sales of the least-expensive laptops, and comments CEO Steve Jobs made in October , Gottheil said Apple would show a pair of netbooks at January’s conference, then as it did two years before with the iPhone, put it on the market mid-year.
“They like to have a big surprise at MacWorld,” Gottheil said. “They don’t need to have one, but they like to.” But Gottheil had more than just Apple’s habit of springing surprises in mind. “It looks like netbooks are real, and getting a certain amount of traction. And this recession looks serious.”
In a research note three weeks ago, Gottheil concluded that Apple would enter the netbook market sometime in the first six months of 2009, in large part because of slowing consumer spending. Unlike other computer makers, Apple has avoided the bottom of the market, leaving it vulnerable as US$300-$400 netbook sales have surged.
The problem with producing a netbook, Gottheil said then, was that if it was simply a stripped-down MacBook , Apple ran the risk of cannibalizing sales of its higher-priced, and higher-margin, notebooks.
Apple, in effect, needs something completely different, Gottheil said.
That’s why he believes Apple will introduce netbooks next year that, like the company’s iPhone, will exist in an Apple-controlled “closed system” where software is delivered via the App Store, device restore is done from iTunes , backup is available through an optional online service, most likely MobileMe, and peripheral and add-on choices will be limited.
The App Store will be one of the keys, Gottheil said. “By controlling the software that can be loaded and the hardware that can be attached, Apple’s device will be simpler, easier to use and more reliable than a PC, and will excel at the functions most required by users,” he said.
With the infrastructure and connections Apple already has, it can redefine the netbook category. “The issue here is making it dirt-simple for the user,” he said. “Macs have a good deal less hassle than PCs, but they don’t have zero hassle. To some people, they are intrinsically intimidating.”
The problem with current netbooks, including those powered by open-source Linux, is that while they may sport a simplified interface and be attractively priced, they lack many of the elements that Apple has. “The vendors did not invest in everything necessary to deliver the device, including software development, partnerships with other hardware vendors and online services,” Gottheil said.
To succeed, a netbook needs strong software, an online delivery system for that software and “enforced limits” on the supported peripherals, he said, pointing to Google Inc. as a possible software partner and supplier, the App Store as the delivery system and Hewlett-Packard Co. as the most likely peripheral partner.
Gottheil’s betting that Apple will unveil two netbooks next month, one about the size of the MacBook Air, the other a $599 machine similar to the smaller Linux- or Windows-based netbooks.
The time between then and a mid-year release would be required, by Gottheil’s reasoning, to prime the developer pump, as Apple did earlier this year when it announced it would open the iPhone to third-party programs four months before it launched the iPhone 3G.
“I don’t necessarily expect it to be a touch screen,” he said. “In fact, I don’t think it will. But I do think that the interface would present simple, straight-forward choices.”
The App Store connection also makes sense, said Gottheil, even if Apple doesn’t make much money from its cut of software sales, as it’s claimed on iPhone program sales. “Because all the applications are delivered through the iTunes App Store, Apple will maintain sustained relationships with users, making it easier to up sell and cross-sell,” he said.
On the down side, although this different tack would reduce MacBook cannibalization, some would be inevitable, Gottheil predicted. And if Apple sells the device at the $599 price he expects — that number derived by parsing Jobs ‘ comment that the company doesn’t “know how to make a $500 computer that’s not a piece of junk” — that still puts its system at nearly twice that of the lowest-priced netbooks.
“The issue, really, is that even Macs are too complicated for some people,” Gottheil said. “But a [Mac] netbook doesn’t have to be all things for all people.”