by Tom Kaneshige

Microsoft Laptop Hunters vs. Apple Big Spenders

Jul 27, 2009 2 mins

Apple Leaves the Low End, and the Bad Financials, to Microsoft

Apple said again in its earnings call last week that it has no intention of entering the low-end netbook market—and why should it? Market researcher NPD Group says Apple commands 91 percent of the U.S. retail market for personal computers that cost more than $1,000.

That’s not just a lion’s share.

Apple’s dominance in the high-end isn’t because there’s little competition. Windows-based PC makers all sell computers costing well more than $1,000. In fact, four of the six Laptop Hunters in the Microsoft ads had budgets up to $2,000. So if these four PC shoppers in the high-end bought Windows PCs, as NPD Group suggests, some 130 people bought Macs.

Apple continues to make strides in the high-end PC market even in a recession. Apple sold 2.6 million Macs this last quarter, up 4 percent from a year ago. Microsoft, meanwhile, announced its financials a few days ago and they were less than pretty.

Of course, the vast majority of personal computers sell for under $1,000. And Apple hardly plays in this end of the market with only a few Macs, the most significant being the 13-inch MacBook for $999.

Then again, why buy a MacBook after Apple came out with a 13-inch MacBook Pro starting at $1199? Only a few months ago, you’d have to spend $1999 for a MacBook Pro. The $1199 MacBook Pro is a compelling offering for those in the upper low-end to keep up with the Joneses.

Apple’s success with the MacBook Pro price cuts prompted Mike Abramsky of RBC Capital Markets to ask Apple about the opportunity for lower-priced, entry-level PCs.

Apple COO Tim Cook responded: “At this point, we don’t see a way to build a great product for this $399, $499, this kind of price point … the Mac has outrun the market a staggering 18 of the last 19 quarters, and I think that really says that we do have the right approach.”

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