MacBook Pro: Too Much Computing Power

The new MacBook Pro has a price tag between $1,199 and $2,499. It is more powerful than the mainframes IBM marketed in the 1960s. The computer has quad core processors, Thunderbolt technology, and an HD camera.  Intel (NASDAQ: INTC) i7 chips and AMD (NYSE: AMD) graphics chips help run the MacBook Pro. The introduction of the product increased the share prices of each company.

Apple’s share of the US PC market is now 10.5%, according to research firm IDC. That share moved up by double digits recently, and that is expected to continue. Apple has a large presence at the top end of the market where computers cost more than $1,500. Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) hold more of the market for lower-priced PCs.

Apple may soon be undermined by its own technological prowess. The level of computing power in laptops has become extraordinary, so extraordinary that most buyers do not need it. There are few consumers who play complex games or require extra processors for complex tasks.

Consumers may be more budget conscious with the recession just ended – not ended at all in some parts of the economy. Smartphones and tablet PCs may be easy to sell now. Their price points are in the hundreds of dollars. Their novelty is great. It is impossible to argue whether these new devices will sell as well a few years from now. Experts expect tablet PC sales will soar. It is a projection based on a forecast of human behavior and needs to be treated as such.

One thing that is more certain is that the laptop PC is now over twenty years old. That makes it easier for consumers to judge its value compared to new handsets that act as tiny computers. Apple has been able to push up the price points of what people will pay for high-end laptops. Part of that is due to branding, part to design, and part to computing power. That set of propositions will lose their charm as consumers discover that their machines are over-powered.

Douglas A. McIntyre