Apple ( AAPL) hopes to get a badly needed shot in the arm Tuesday when it takes the wraps off of its eagerly awaited next-generation notebooks. The stock has taken a pounding during the current economic crisis, including a sharp drop following a false media report that founder Steve Jobs had suffered a heart attack. Apple has kept details of Tuesday's mini-laptop event under wraps, creating plenty of buzz. Kevin Keller, a hardware analyst at the technology research firm iSuppli, said it's unlikely the launch will be a game changer because of the current slowdown in demand for PCs and laptops. "I don't see a tremendous wave there, frankly," he said. "It's a fairly saturated market." Apple will find itself competing with Asus, Dell ( DELL), H-P ( HPQ), Lenovo, Intel ( INTC), MSI and others who are touting mini-laptop computers selling for less than $500. Still, Apple may have some MacBook tricks up its sleeve. If the rumors are correct, the launch will feature a low-cost $800 notebook and an aluminum casing technology code-named Brick. The launch of a low-cost notebook would close a gaping hole in the company's product portfolio. Apple's lowest-priced laptop is $1,099, and it has typically charged higher prices than comparable Windows-based computers. Apple hopes to use the launch to get a jump on its rivals for the holiday season. "It's a good idea to get this in ahead of the holiday season," said Doug Bell, a research analyst at IDC. "Having a low-cost option is a good defense mechanism against low consumer confidence."
Apple is not the only one pursuing this strategy. Dell recently unveiled its $349 Inspiron Mini 9 notebook, although Bell warns that these mini-laptops are hardly a silver bullet for tech companies. "Many of the vendors are getting into this market because they are worried about the market taking off and not being part of it," Bell said. But he warned that the margins are slim compared to traditional, more expensive notebooks and laptops. "In the ultra-low cost market, price is a factor
and to make these things smaller to fit into the compact form-factor is more expensive." Apple's Brick technology may offer a solution to this problem, according to the many bloggers who have been salivating over the technology. The term, Brick, refers to the way that the notebooks are manufactured, with Apple said to be building the devices' enclosures from a single piece of aluminum rather than the traditional mixture of different plastic components. "Obviously, with a single component, you're saving your assembly time and you're saving some hardware and fasteners," said iSuppli analyst Keller, who warned that a large plate of aluminum "is not cheap." Whatever the manufacturing techniques involved in the production of Apple's next-generation notebooks, it will be interesting to see how the concept of an aluminum MacBook resonates with users. On the one hand, the aluminum "brick" offers greater durability than plastic components and draws on the same esthetic principles that have made Apple's other products so popular.
On the other hand, some wonder whether this is the appropriate time to come out with an aluminum-based notebook as opposed to one that is super-cheap. "Going to a single aluminum piece would be thicker and more robust than a multi-part solution," said Keller. "
And Apple is going to external aluminum in a lot of their products -- iPods all have these aluminum enclosures and aluminum is also used on the iMacs." Keller said the engineering community is abuzz with the brick fabrication process but it's not a top priority for consumers. "If the only real innovation that Apple is offering here is something that's not very high profile to the consumer, like the aluminum enclosure, then the consumer is not going to get too excited about that." Apple's shares rose Monday in anticipation of the notebook launch. The Cupertino, Calif.-based company's shares closed up $13.46, or 13.9%, to $110.26, reversing a recent slump. The stock, however, still has a long way to go before it reaches its 52-week high of $199.83, which occurred on Dec. 28, 2007. At least one analyst thinks that the future looks bright for Apple's Mac business, especially if cheaper MacBooks are unveiled at Tuesday's "town hall" meeting in Cupertino. "We expect Mac sales to remain healthy as the company continues to gain share; we also anticipate a migration to lower price points, which will dramatically expand Apple's addressable market," Sanford Bernstein analyst Toni Sacconaghi, said in a note. "Most importantly, we expect Apple to lower price points to address a much broader market at some point over the next year."
Sacconaghi estimates that a $900 notebook would expand Apple's addressable notebook market by nearly 50% in revenue terms and 67% in unit terms. He said a $800 notebook would increase Apple's addressable revenue market by 69%. "Given the specter of downward revisions, we would advocate that investors look to gradually build positions now, and to purchase both before and after key news dates this month:
Tuesday's notebook product announcements and FQ4 08 earnings on October 21st," added the analyst.