Apple Could Cut Mac Prices In Low-Cost PC Boom

Many analysts agree that consumers who may want a Mac are turning to Windows PCs instead in order to spend several hundred dollars less.
With consumers mostly buying low-cost PCs in the current recession, Apple could cut the prices of some of its most popular Macs.

The computer maker in the coming months is expected to release lower-priced models of the 13-inch MacBook and iMac, AppleInsider reported Friday. The MacBook currently sells for as low as $999, and the iMac starts at $1,199.

A price cut would make sense given the pressure Apple is feeling from being a premium PC vendor at a time when consumers are looking to spend less on just about everything. Overall sales of Mac computers in the first quarter of the year fell 3% from a year ago, the company reported this month. Apple's profits in the quarter were driven by iPhone and iPod sales.

Many analysts agree that consumers who may want a Mac are turning to Windows PCs instead in order to spend several hundred dollars less. In addition, schools and creative professionals, both major customers, are holding back on replacement Macs until the economy starts to improve.

Because of the economic downturn, consumer and business spending on PCs is expected to remain down for the rest of the year. As a result, Mac shipments in the second half of the year will be about flat while revenue will decline, predicts market researcher Technology Business Research. The revenue decline will be caused by Apple customers buying more of the company's low-priced systems.

Apple and Windows PC makers are seeing potential customers turn from more expensive systems to the lowest-priced models, particularly netbooks. The mini-laptops optimized for Web surfing and the most basic tasks sell for as little as $300.

Global shipments of netbooks, introduced to the market in 2007, have risen by 68.5% so far this year, according to iSuppli. That growth rate is expected to remain roughly the same the rest of the year, while the PC market in general is expected to contract by 9.5%.

The good news for Apple is that the netbook boom is not expected to last. The growth rate is expected to decelerate considerably next year as the economy improves and people have the cash to pay more for higher-performing systems.

In the meantime, Apple has no desire to enter the netbook market. COO Tim Cook has criticized the systems for having "cramped keyboards, terrible software, junky hardware, very small screens, and just not a consumer experience, and not something that we would put the Mac brand on, quite frankly." Cook made the comments during the company's earnings call with financial analysts this month.

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