In news that surprised few, earlier today Apple announced (via The Verge) a new 128 GB model of its 4th generation iPad. The new model will be available on February 5 and it will cost $799 (Wi-fi only) and $929 (Wi-fi + LTE).
Let that last number sink in for a moment: $929. The price is not that significant on its own since Apple has never been known as a value brand. No, the real significance lies in another number: $999. That is the price of an entry-level MacBook Air—a full-on premium laptop. Matter of fact, BestBuy and Amazon had that same MacBook Air model on sale for $799 just this last weekend. Apple is not only going after the entire laptop industry with its iPad guns blazing, it’s seemingly turning those same guns on itself.
But should we be all that surprised, really? The writing has been on the wall for some time. Steve Jobs began the ‘post-PC era’ talk almost three years ago; even if he was directing that salvo at PC-makers, he had to know that the war would eventually become civil. The last two OS X releases added more cross-platform iOS-to-OS X integration (iMessage) and also aped some of iOS’s look and feel (app shelves; Mac App Store). And the final straw might have been last week’s earning report, where MacBook performed dismally, selling more than 1 million fewer laptops than in the year-ago quarter while the iPad continues its meteoric rise. What’s more, MacBook sales dipped for the first time year-over-year since 2004, according to Cult of Mac.
The deeper you look, the more it’s obvious that the strategy is pure dollars and sense for Apple; iPads are simply more profitable that virtually any MacBook SKU. Cult of Mac has a good write-up showing iPad profit margins across its three Wi-fi-only models, and its lowest gross profit margin is 37% and it goes as high as 48%, according to the iSuppli data. The new 128 GB will probably top 50% gross profit margin. Tough to ignore.
Just look around you; the people have spoken. On airplanes. In coffee shops. At the office. Heck, even at restaurants and ball games. iPads are everywhere and as long as Apple can keep offering the iPad experience at 1/2 the price of the cheapest MacBook Air, buyers will continue to be lured by that enticing value proposition. Sure, people still need to do real work, so let’s not write eulogies just yet. I think the likely endgame is to keep the MacBook as the hipster-chic high-end niche product with a loyal following willing to pony up the cash.
MacBook may still have the history and brand cachet on its side, but the iPad is winning by sheer brute-force sales. Truckloads. Fleets of truckloads. International trucking companies with fleets of truckloads. It may not happen overnight, but for MacBook, it’s simply…