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Don't Expect A Netbook -- Or Steve Jobs -- At Macworld

Two things you shouldn't expect to see at the Macworld Conference & Expo this year: Steve Jobs, and a netbook computer. Apple announced this week that Jobs will break tradition and not deliver a Stevenote. That's a fact. Meanwhile, Ezra Gothheil, analyst at Technology Business Research, predicts that Apple will launch a $599 "netbook" notebook computer at the January conference. That's speculation -- and I think it's wrong, too.

But first, the Stevenote: Jobs's annual performance at Macworld is the highlight of the year for the Mac community. For Apple users, Christmas, Kwanzaa, Hanukkah, New Year's, and Thanksgiving are just events to fill the empty days until Steve takes the stage in January. Jobs's Macworld keynote is where the company unveiled its biggest products of the decade: The iPod, the iPhone, and last year's MacBook Air.

When I heard Jobs was backing out of Macworld, I immediately jumped to the conclusion that he must be terribly ill.

However, after looking into it a bit further, I saw that there are other, more plausible and innocuous explanations for his absence, having nothing to do with Jobs's health. There are sound business reasons for Apple to skip the conference.

But first, Jobs's health: Jobs was diagnosed with pancreatic cancer in 2004. For most people, that's a sentence to a fast death -- but Jobs has a rare, treatable form, which was treated successfully in 2004. Jobs was rail-thin at the iPhone 3G announcement in June, sending observers into a frenzy of speculation; MarketWatch, for example, described him as "gaunt" and "emaciated." Apple stock took a 10-point dive in October after a prankster posted a false message, on CNN's iReport citizen
journalism site saying Jobs had had a major heart attack.

So it's natural to guess that Jobs's absence from Macworld is dire news indeed. After all, Jobs's keynote at Macworld is the marketing highlight of Apple's year -- the only reason he'd miss that is if he were very, very sick. Right?

Not so much.

There are good business reasons why Jobs might skip Macworld. Apple says trade shows are becoming less important to the company. In its press release announcing Jobs's absence from Macworld, the company says that its retail stores and Web site are becoming more important channels to reach customers. Indeed, the next Macworld will be Apple's last, the company says. Philip Schiller, Apple's senior VP of Worldwide Product Marketing, will deliver the opening keynote instead of Jobs.

Apple's withdrawal probably means the end of Macworld Expo, JupiterMedia's Michael Gartenberg told Macworld magazine.

"A Macworld Expo without Apple is like an airport without any airlines," John Gruber, of the blog Daring Fireball, wrote. "The duty-free shop isn't going to keep the lights turned on," Gruber was quoting himself, he wrote those sentences in 2002, when Apple pulled out of the summer Macworld Expo, which was held in Boston.

The shows are expensive, and they put a lot of pressure on Apple to make major product announcements on the Expo schedule, not on its own, Gruber said six years ago. All those arguments are valid for this week's decision as well.

And Jim Goldman, writing at CNBC, said the decision to skip Macworld was "more about politics than his pancreas," according to sources inside Apple.

He added, "Sources tell me that if Jobs for some reason was unable to perform any of his responsibilities as CEO because of health reasons, which would include the Macworld keynote, I should 'rest assured that the board would let me know.'"

Apple doesn't need Macworld to promote its products, Gartenberg said. "Unlike other companies, Apple are able to draw press and analysts to an event anytime they want."

So, in conclusion: There's no reason to believe Jobs is sick again. Apple probably has purely business reasons for withholding Jobs from Macworld this year, the same reasons it's pulling out of the show after this year.

Can we say for sure that Jobs is healthy? No. Absent a peek at his medical records, all we can do is speculate, and choose whether to believe Apple's statements. Apple and Jobs are going to have to put up with speculation about Jobs's health for years to come. Every time he sniffles, or skips a meeting, it's going to send the stock price plummeting.

And there's another business reason for Jobs to skip Macworld this year: No big product announcements, Gartenberg said, "Without Steve Jobs it's probably going to be a tame Macworld this year," he said.

That runs contrary to Gottheil's speculation. He said this week he believes Apple will launch two mobile Internet devices, one similar to the 13-inch MacBook Air and another more like a netbook, which are typically sub-$500 laptops with screens 10 inches or smaller. Apple, however, is likely to charge $599 for its netbook, Gottheil said.

Gottheil says he expects Apple will offer content, applications, and games through the App Store, as it now does for the iPhone.

Jobs turned his nose up at netbooks during a teleconference with analysts in October. "We don't know how to make a $500 computer that's not a piece of junk," Jobs said.

Of course, Gottheil isn't saying that Apple will come out with a $500 netbook -- the device he's predicting will cost a benjamin more than that, which would let Jobs off the hook for his earlier disdainful statement.

However, Gruber says: "No way."

The whole idea is predicated on the assumption that MacBook sales are in the tank -- that the economy is in the shitter and the new MacBook lineup is priced too high. But that's only half right. The economy is in the shitter, but MacBook sales remain strong. My sources indicate that Apple did gangbuster business selling MacBooks on Black Friday, and holiday sales are strong overall. Sales of desktop Macs -- Mac Pros, iMacs, and Minis -- may well be down, or at best flat, year over year. But Mac laptop sales are up up up, especially the new aluminum MacBooks.

Indeed, Mac laptop sales grew 22% in November vs. a 15% increase for Windows, according to market researchers NPD. Overall, Mac sales were flat last month, while Windows PC sales grew 7% year-over-year.

Gottheil said that both of the notebooks he's predicting will be announced next month and available midyear. Gruber had particular disdain for that forecast, which he called, "The stupidest aspect of Gottheil's prediction."

Gruber said, "The only reason anyone pre-announces any product is in the hope that customers will wait for it." To do so with new notebooks would be to cannibalize sales of Apple's existing notebooks. Apple could get away with that in January 2007, when it announced the iPhone, because Apple then had no existing phone line to cannibalize.

What's the source of Gottheil's information? "I made it up," Gottheil told Philip Elmer-DeWitt at the Apple 2.0 blog at Fortune magazine. "I have no spies or internal information. It's triangulated. It's logical. It fits with what they're trying to do. And it solves a lot of problems for them."

So what will Apple announce at Macworld Expo? How about a nice upgrade to the Mac Mini, Apple's low-end desktop, priced starting at $500? That's according to Wired.com.

P.S. In other news: Apple is canceling Christmas.

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