by Tom Kaneshige

Microsoft Laptop Hunters vs. Apple Big Spenders

Jul 27, 20092 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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