How Macbook Predicts the Future of Apple

Posted on Sep 09, 2014
By Gaurav Aidasani

Two products are synonymous with Apple's future: the iPad and the iPhones. Together, the iPad and iPhone generate about 70% of Apple's sales. With the increase in sale of Android powered phones, people are worried about the future of Apple devices.

Android devices are priced at half or one-third of Apple devices. Technology market watchers think that the way forward for Apple is to lower their prices and win back their customers who have converted to Android.

They are not wrong. In the near future, we will reach a point where the iPhone and Android phone will be exactly matched on specifications. And with their rapid launch cycle, Android phones may end up getting better than Apple on specs and mobile software.

When that happens, buys will choose Android because it is the same product with a better price. What will be Apple's fate then?

To get a possible answer to that question, let's turn our attention to another Apple product that has defied market logic: The Mac. Apple’s Mac business has been performing better than the consumer PC business for years. The Macs competitors are devices that are cheaper with comparable specs from companies like Dell, Samsung, Lenovo etc. Yet Mac sales have been rising slowly and steadily.

Technically, with its premium price range, the Mac should have been history. Or it should have been cheaper to deal with the competition. But Mac shipments were up 18% last quarter. Former Apple executive Jean Louis Gassee wrote, "Naysayers will continue to contend that the prices of competing tablets are preordained to crash and will bring ruin to Apple's Affordable Luxury product strategy ... just as they predicted netbooks would inflict damage on MacBooks."Naysayers will continue to contend that the prices of competing tablets are preordained to crash and will bring ruin to Apple's Affordable Luxury product strategy ... just as they predicted netbooks would inflict damage on MacBooks."

But Apple does not sell Macbooks alone. It also sells the iPhone, iPad and the iPod. These high-performing ‘affordable luxury’ products along with their ecosystem of apps and media make for a great what are awesome!

The iPhone might occupy the same space for mobile phones that the Macbook does for laptops. And it might steadily churn out profits while at it.

Apple is also planning to launch the iWatch in fall 2014. It might not be a big revenue maker like the iPhone but it will be a part of an ecosystem that work and compliments other Apple devices. As Gassee puts it, "The sweet spot on Apple's racket is the set of customers who, like Tim Cook, use MacBooks and iPads. It's by no means the broadest segment, just the most profitable one."