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ZDNET's key takeaways
- Apple's MacBook Neo has reset the "cheap PC" baseline.
- That's bad news for the makers of Windows PCs.
- But it might be even worse news for the Chromebook.
I have yet to lay hands on a MacBook Neo. I plan to visit my local Apple Store this weekend to see, touch, and vibe with this product in person.
But I don't need any hands-on experience to know that this is a very big deal for Apple. For as long as I can remember, Apple's strategy has been brutally successful at capturing an enormous share of the high end of the computing device market. It's been able to maintain luxuriously high profit margins for those products, while leaving the middle and low end for PC makers who survive on the thinnest of margins.
Also: MacBook Neo review: My biggest concern with Apple's near-perfect budget laptop
For years, the Mac product line has been the poster child for that strategy. Apple has maintained the price of its least expensive MacBook, the MacBook Air, at around $1,000. It has refused to play in the "cheap PC" market - that segment filled with slow, homely Windows PCs that cost between 500 and 800 bucks.
When you think of Windows PCs in that price range, you think of Walmart and Home Shopping Network, and you set your expectations as low as you can tolerate. There are some pleasant surprises in that category, but mostly those machines have defined "Good enough" and "Well, at least it's cheap" as product categories.
So, the first thing Apple does with the launch of the MacBook Neo is to reset the baseline for a PC in the under-$800 segment. Yes, there are compromises in its design, but none of those compromises are dealbreakers. For the target market, 8 GB is enough, and capping RAM at that amount is a way for Apple to ensure that it doesn't cannibalize from its MacBook Air installed base. The $699 model has biometrics, which makes it the right choice for home users, while the $599 model seems aimed at the education market (where it costs $499) and really doesn't need that feature.
Where's the market for the MacBook Neo?
Who's going to buy these machines? Maybe it's easier to say who's not going to be standing in a line for a MacBook Neo.
First, an observation. We're in a replacement market for PCs. There aren't many new PC buyers out there, and the challenge for PC makers is getting people to replace their devices more often.
Also: MacBook Neo vs. MacBook Air: How between Apple's entry-level laptops
The biggest factor is platform preference. If you want a Mac, you go to the Apple Store. If you want a Windows PC, you go just about anywhere else. The fact that Apple now has an entry-level Mac under $1000 isn't going to convince huge swaths of the market to ditch Windows, any more than they're likely to jump to desktop Linux this year.
The least likely place where you'll find those switchers is in enterprise deployments. That's historically been Microsoft's cash cow. The corporate world runs on Windows (except in the art department) and there are plenty of midrange PCs from Dell, HP, and Lenovo that are aimed at those cautious, conservative corporate buyers. And Cloud PCs, which are the modern equivalent of mainframe terminals, are an alternative as well, especially for so-called frontline workers who don't need to take a laptop home to work nights and weekends.
The next segment gets mixed together under a bunch of labels: prosumers, knowledge workers, digital nomads, solopreneurs, influencers, hobbyists, and enthusiasts. These are people who depend on their computing hardware for serious work, including content creation, consulting, and coding. They would not be caught dead with a cheap laptop that is capped at 8 GB of RAM, regardless of its quality. The buyers in this category made their platform decisions long ago, and this product launch won't change any minds.
Also: MacBook Neo proves that Microsoft had the right idea, but the wrong execution
Which brings us to the home segment. These are consumers, students, people running side hustles, and folks living on fixed income. They don't really have any platform loyalty. For the most part, this group has bought Windows PCs because MacBooks were too expensive. That's all about to change. That's especially true for people who own iPhones and have always hankered for those iPhone-Mac connections. Maybe some families will even buy new MacBook Neos for the kids.
And then there's the education market, where Chromebooks have been surprisingly successful for two reasons: they're easy to manage, and they're cheap. But they're also tied to Google services. At $499 for the education version, the MacBook Neo has to look very appealing to buyers looking to put high-quality, secure gear into schoolrooms
Who wins? Who loses?
In some ways, Apple is doing Microsoft a favor with this launch. The people who buy cheap PCs are also cheap when it comes to paying for add-on services. So getting rid of those low-end customers doesn't make a huge dent in Redmond's revenue line.
But carving into that segment is bad news for Microsoft's hardware partners. Those cheap PCs might not have impressive margins, but their sheer volume plays a role in helping the big OEMs negotiate deals for the components that go into PCs at every price point. When volume goes down, so do margins. The PC business has been miserable in recent years, and it's not likely to get better.
Also: After using MacBook Neo, it's clear Windows needs to rethink its PC strategy
The ones who should worry most? Chromebook product managers. They could make a strong case against the cheap Windows PC market by emphasizing the stability and ease of management of their devices. But those arguments aren't effective against a MacBook that costs under $500.
It will be fascinating to see how well these products sell and what kind of margins Apple can earn on them.
Meanwhile, I expect there are some executives in Redmond and Mountain View who are staying up late trying to figure out how to compete in this new world.
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