Apple's 2011 "Inflation Fighters"

[gkarris]

2011 is expected to be the Year of Inflation.

Computer companies will be challenged to maintain margins. They usually start forgoing features while maintaining prices, or not giving as many price breaks.

What do you think Apple will do?

My take:

iPods and iPads with some extra features, but the same memory configs at the same price point, instead of increasing memory capacity or lowering prices.

Sandy Bridge Processors in the MacBooks and Mini, maybe get rid of the Optical Drive in the regular MacBook and Mini while still maintaining the same pricepoint (note that the Air's don't have optical drives and the Mini is already available without one - Apple does have an external one available).

Anyone else have any guesses?

 

[okboy]

What do you think the chances are we will see a new processor in the iPad? I think a dual core one would make a lot of sense, as apparently they can improve battery life.

 

[gkarris]

What do you think the chances are we will see a new processor in the iPad? I think a dual core one would make a lot of sense, as apparently they can improve battery life.

Maybe in a year or so - have to justify the $499, especially with the surge of Tablets coming to market...

 

[CalBoy]

Considering how high Apple's margins are already, I think it's in a better position to keep prices more steady.

However, for the consumer electronics that have made Apple so successful lately, Apple already has a very heavy hand in one of the costliest components: flash memory. I believe there was a story last year that pointed out how Apple partially manipulates the flash market to keep prices down.

Otherwise, I suspect Apple will continue much as it has until now by giving people a poor value proposition on the face of things (ie one can typically find a notebook with macbook pro specs for cheaper), but by continuing to hammer home the value proposition argument. Apple has always been a premium brand and that isn't going to really change.

 

[okboy]

Considering how high Apple's margins are already, I think it's in a better position to keep prices more steady.

Isn't apple's margin like 20%?

 

[CalBoy]

Isn't apple's margin like 20%?

I believe its gross margins are somewhere near 40% and pre-tax margins are near 30%. Some products have a lot of margin built into them ie the $499 iPad only costs Apple $300 to make, ship, and sell. That's a 40% margin on a very popular product. I can't find the link at the moment, but I believe iPods and iPhones have similar margins. Most of the Mac lineup has margins somewhere in the mid 20s, but these days the weight of the iOS devices on Apple's books tilts the number higher.