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Wanting a Mac, But Buying a PC

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Price and an aversion to netbooks are hurting Apple.

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The feature that is front and center in this year's back-to-school ad campaigns from laptop manufacturers is price.

The introduction of netbooks -- small, pocket-book size notebooks for on-the-go computing -- has literally transformed the market of quality machines that are available from leading brands like Hewlett-Packard (HPQ) for as little as $280.

Consider this pricing against the cost of Mac notebooks, which start at $999, or the much sought after MacBook Air, which runs a cool $1,499!

Apple (AAPL) has always been vulnerable when it comes to price, but that didn't seem to matter too much in pre-recession times when the company blew away the competition with its "Hi, I'm a Mac" cool.

These days, things are markedly different, with price listed as the number one consideration by concerned shoppers.

The first problem for Apple is that it is unlikely to be able to level the playing field on price anytime soon, if at all. The message has come down from Steve Jobs that they are not interested in producing anything close to a netbook, and acting CEO Tim Cook took the same line, contending that the netbook experience suffers because of "cramped keyboards, terrible software, junky hardware, [and] very small screens."

And therein lies the second problem for Apple.

The netbook experience has actually gotten better and will get a whole lot better still when the netbook version of Windows 7 hits the market later this fall.

The Online Mom reviewed a number of less-than-$500 back-to-school notebooks earlier this month and netbooks like the Acer Aspire One 751h features a near 12-inch screen and a near full-size keyboard. If your primary goals are to surf the web, manage email, or stream video, netbooks like this can offer a high level of customer satisfaction.

The price issue confronting Apple was neatly illustrated by some research highlighted in a recent Engage: Gen Y article by Dan Coates, co-founder of market research firm SurveyU. Two years ago, although he found that Dell was the more popular choice when it came to laptops with 33% of the market, Coates declared that Apple (then at 23%) would take over by the summer of 2008 based on purchase intent. However, when he reviewed the figures for last month, Dell (DELL) still led the pack at 31%, but Apple hadn't moved – it was still stuck at 23%.

A bigger surprise was that Apple still led the way on purchase intent, with 37% of students saying their next laptop would be a Mac (down from 44% in 2007). This clear gap between purchase intent and actual purchase activity can only be explained by one thing: price. Most students are on a tight budget or turn to their parents to finance the laptop purchase. Under these conditions, Apple's selection of gorgeous but unaffordable Macs gets short shrift.

As Coates goes on to write, Microsoft (MSFT), with its Laptop Hunters campaign, has finally found the hot button that makes Apple squirm -- price. Unless Apple can come up with a low-cost alternative, we can expect students -- and moms and dads -- to continue to say thanks, but no thanks!
No positions in stocks mentioned.

© Monica Vila, The Online Mom.

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