Apple netbooks and why analysts are clueless

Wed, Jan 21, 2009

Analysis, News

With Apple set to announce earnings later today, talk of Apple sales suffering due to the increasing popularity of netbooks is rampant.  It’s a valid point to make, and if consumers want an Apple netbook, then more power to ’em.  It’s a whole another story, however, when analysts start predicting doom for Apple because it doesn’t have a competing product in the netbook market.

The problem with “analyst” demands for a netbook is that it flies in the face of everything an anaylst wants to see in a company: PROFITS.  The margins on netbooks are incredibly low, and for some companies, it may even be negative.  That said, the minute Apple comes out with a netbook, these same analysts will be issuing negative reports on Apple with predictions that their lower margin netbooks will eat into their higher margin notebook business.  From an business perspective, unless Apple can somehow figure out how to make a profit on a 4 to 5 hundred dollar netbook, there’s no rational reason for Apple to enter the market at all.  Yet the birds keep on chirping…


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