The Retina Display MacBook Pro has been released, and from all reports its a hit. It’s in short supply, and currently there is a 3-4 week waiting period. What does the new MacBook Pro mean for Apple? How’s $1 billion in pure profit sound?
Rags Srinivasan, writing for gigaom:
Apple made a gross margin of $18.5 billion just in the last quarter. If you peel back the layers and look at how its different product lines contribute to this margin, you will find its MacBook lines account for $1.65 billion.
Srinivasan says Apple’s profit from MacBook lines declined from 2011 to 2012, and the average selling price (ASP) of MacBook line dropped by $40. At a 47 percent unit margin, that $40 drop accounted for $52 million in lost profits. And all because their product mix changed from high priced MacBook Pros to lower priced MacBook Airs and 13-inch MacBook Pros.
He says this is about to change though. With the introduction of the MacBook Pro with Retina Display, we have to do some new calculations.
He writes, “What can we say from distribution of sales between the different MacBook versions from the $1,245 ASP numbers? For simplicity, let us treat the MacBook Air and 13-inch MacBook Pro as one category with an ASP of $1099, and the 15-inch MacBook Pro as another category with an ASP of $1799. Solving for these numbers tells us that the 15-inch MacBook Pro accounted for less than 23 percent of MacBook units sold. In other words, three in four MacBooks sold are either MacBook Airs or the 13-inch version.”
If Apple can shift more sales to a higher priced MacBook Pro, they’ll increase profits. Here comes the new 15-inch Retina Display MacBook Pro. Along with it comes a $2,199 price tag, and two compelling features, a 256GB SSD, and the lovely Retina Display.
For $400 more, customers get the Retina Display and the 256GB SSD. Don’t want the SSD? No problem, just pay $500 more instead of $400 more. That 15-inch Retina Display just got a little more attractive didn’t it?
The Retina Display isn’t available in the MacBook Air or the 13-inch MacBook Pro, if you want uber resolution, then ya gotta pay at at least $2,199 to get it.
Srinivasan continues, “This clever price discrimination will result in two positive effects on the units sold. One, some who would have settled for a MacBook Air or the 13-inch MacBook Pro will upgrade to the $2,199 MacBook Pro. Two, it will push some who preferred the 15-inch MacBook Pro to the $2,199 version with Retina Display. The net result is a higher ASP than the current $1,245 number. Even if one in ten customers of first category and one in five in the second category upgrade to Retina Display, Apple will see the MacBook ASP go up to $1,363.”
With no change at all in the total number of units sold, the ASP bump alone will result in a minimum of $200 million additional profit. But, Srinivasan says, “If you include net new purchases and higher percentage up-sells, this number could easily become $1 billion in additional profit.”
Magical.