May 1, 2014 — by: Mark Reschke
Categories: MacBook, Review, Rumors

Macbook_air_updateApple’s MacBook Air offerings saw a small refresh on Tuesday, with little fanfare and with little changed. Yet the update may be the products most significant since the MacBook lineup expanded to include the Air in 2008.

Apple included a small update to the processor, moving the needle north by 100 MHz, and claims slightly better battery life in various areas of use. Nothing else within the specifications has changed, save for one telling area — price.

Apple lowered the price points for the MacBook Air family by $100, with an $899 price tag for the entry level 11" laptop. The 13" base configuration now starts at $999. Shifting prices downward happens at Apple, but it is not typical and may signal a more aggressive strategy moving forward.

Apple owns over 90% of the $1,000+ laptop market. While that may sound incredibly impressive, it is also a very small niche of the entire laptop space. But the number is significant in that Apple owns the majority of laptop profits, much the same way Apple enjoys owning a disproportionate share of smartphone profits. 

Moving the MacBook Air to a sub-$1,000 price point moves many fence sitters looking at high-end PC laptops to entertain a MacBook Air instead, and that market is is worth the price drop. Technically, Apple opened itself up to another 6% of the potential laptop buying market (product sold between $800 - $899). However, the physiological sales point of $899 may be more powerful for Apple than other PC manufacturers. No other company has been able to up-sell customers into their product better than Apple. Apple’s MacBook brand and quality are major factors in pulling consumers north. In the case of an $899 MacBook Air, it will tempt $700 - $799 price point buyer as well. The result is Apple has just opened itself up to another 15% of the laptop market.

The small update to the MacBook Air, coupled with a significant $100 drop cannot be underestimated, either now or in the Fall future. We have covered rumors of an ARM A8 powered, fanless, 12" MacBook Air coming later this year. An A8 powered MacBook Air, which will surely deliver more profitability to Apple versus Intel inside, may be a secondary reason for moving MacBook Air prices slightly south. 

The current update by Apple is certainly welcome, but the pricing, rumors, and the 64-bit desktop-class marketed ARM technology Apple has been pushing as of late, signals something bigger is on the horizon than just a lower priced MacBook Air.

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