The MacBook Paradox

The new MacBook is quintessentially Apple. Everything from the reimagined keyboard and butterfly mechanism to the new Force Touch trackpad and reconfigured battery, the new MacBook represents Apple at its finest. Years of hardware engineering culminating in a product that literally pushes the definition of the product category it has resided in for close to a decade. 

However, despite representing classic Apple, the new MacBook is inconsequential to Apple's bottom line. Even in a best case scenario, the new MacBook would struggle reaching 5% of Apple's operating income. As more portable (and cheaper) alternatives, mainly in the form of iPhone, continue to replace the need for laptops and desktops, the Mac's overall influence will continue to decline.

A paradox is formed as this product that best represents Apple (even down to the way it is introduced to the public by Phil Schiller), is increasingly playing a smaller role in Apple's future. This paradox represents one of Apple's long-term risks. If Apple is faced with supporting a growing list of still-loved, but increasingly inconsequential, legacy products, will Apple be able to completely focus on the future? The iPod turned out to be a blessing in disguise as the product line ran its natural course, peaking in 2009 and then steadily declining to an asterisk on the income statement.  In the future, Apple may not be so lucky, and instead have legacy products with a much longer life cycle where sales remain too high to completely ignore, but too low to move the financial needle. 

In the near-term, this risk appears to be dormant.  Apple is able to effectively focus on a narrow product lineup that still fits on one of Jony's infamous design studio tables. We will continue to see innovations with the Mac and iPad, while the iPhone and Apple Watch become a bigger piece of Apple's future plans. Tim Cook and company constantly talk about being paranoid about competition. I suspect this MacBook paradox also registers with management as something to keep them up at night. The fear is that one day Apple may unknowingly find itself chained to the past, unable to completely focus on the future for too many resources are being spent maintaining products from yesterday. 

There are signs that Apple is aware of, and taking steps to alleviate, this risk. Management's claim that they don't think about money when creating products is exemplified by not only the new MacBook, but also the low-margin iPad mini and the lack of a large screen iPhone until 2014. By simply focusing on making, and shipping, great products, the impact a product may have on the bottom line does not represent the main driver behind management's decisions. 

One of Apple's secrets has been doing very little in order to put all of its attention and resources on a few, big things. For that to continue, Apple may need to make the tough decision to stop updating product lines earlier than would otherwise be the case. Apple may continue to be lucky and have products follow the iPhone/iPod path, where new products cannibalize old products in an orderly fashion. Navigating the MacBook paradox may one day represent a tough task for Apple, but with challenges come opportunities, and in the near-term, management will marvel at the new MacBook for a few days before moving on to the next big thing. 

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