My guess is a transition to only iPod touch models with much larger storage capacities. The increase in memory will increase the cost but Apple will likely sell it at price points comparable to what the large capacity ones are now. This would lead to the mentioned decreased margins. Also sales of these would likely be high to help make up for the decreased margins, especially around the holiday shopping time.
Apple is giving away the old touches now with the purchase of a macbook. They also like to announce iPods at the beginning of the fourth quarter to capitalize on the holiday shopping.
This transition seems like one they could be referring to.
* Bigger-but-still-pretty-cheap iPod Touch -- falling somewhere between today's 'TechCrunch Tablet' and the foldable OLPC dual screen [1]. Perhaps cheap because of some sort of non-AT&T carrier subsidy (Sprint/Verizon?) or built-in adware (Google).
* A true Apple TV -- big screen flat TVs with Mac innards. (I thought this was due earlier this year. [2])
* Some massive Mac/iPod/iPhone 'switcher' cross-promotion -- like rebates or bounties on your old Windows/PC units when you go fully Apple.
* Something which brings MacOS to the legacy PC world -- not quite licensed clones like the 90s Power Computing experiment, but maybe a VMWare MacOS appliance that runs on PCs, or a MacOS lite, providing a way to siphon off even more of the business and low-end markets.
* The iSteve, a digital upload of Steve Jobs onto a custom "Go Chip" created by Apple's new PA Semi subsidiary, giving Apple an immortal CEO and an early lead in the posthuman platform race.
If they mass produce Steve Jobs clones, i will buy one, or two. Just think of the uses. Cheap business consulting from an immortal entity in a microchip, thats a killer app for the CEO market :D
An Atom-based laptop, maybe? I don't think that the Eee or Wind are proper competitors, but even the most expensive versions cost around half what a basic MacBook costs. People are willing to forgive a lot for that sort of price differential.
A) The profit margin will stay at 35% until this new product is released.
b) This product won't be announced until August 19th at the earliest.
That means if the plan is to have a 30% unit margin at the end of the quarter, they are going to have something like a 25% margin for the second half of the quarter. Now since they are reducing the margin, we know they are planning to increase the volume. An atom laptop, while it would be cool, just doesn't have the potential to move several million units within the first month, which is roughly what it would take to lower the margins by that much. In fact, there is literally no new product that Apple could introduce that would sell enough units within the first month to lower the per unit margins by 10%. So the change must involve some existing product.
I think there are two realistic options here. First, they just reduce plain reduce the price of the new MacBooks and MacBook Pros. A real possibility. Second, they add an expensive component to one of their existing products. While Blueray or DDR3 would cost enough to make the numbers add up, there is no way either of those would generate enough excitement to create the extra volume Apple is looking for. So I think if they add a new component to an existing product, the only real option is SSD. Either they make SSD standard in all MacBooks, or else they replace the normal iPod with an iPod touch with way more SSD than it currently has. At least to my thinking, either a price cut or SSD are the only ways I can see the numbers adding up for Q4.
Granted, there are bound to be other price reductions, but the article makes explicit mention of a new product. Also, unless they plan to take a significant loss on the SSDs, I don't see how making them standard will make their hardware more price competitive.
The Atom laptop is a total shot in the dark, and is likely wrong, but it seems like there must be something more significant in the pipeline.
If their margins are lower and they want to make the same amount of money, that means they have to sell more. But selling more could come from either lowering the price, or keeping the price fixed but adding value. Thinking about it more, DDR3 does seem like a possibility. I don't think there is any way they can sell it to the general public on speed, but it does use about 30% less power. I'm not sure how much power RAM uses in general, but if it increased the battery life significantly (combined with Montevina) then that would be a powerful incentive to get people to switch.
Either way, my money is still on the new product being the redesigned MacBook, but I'd love to be proved wrong in a few weeks.
Actually, the conf call mentioned a "product transition", not a new product. They are changing something in their existing lineup, not adding a new product to the lineup.
From the article: The new, unnamed product will continue to have "technologies and features that others can't match," according to the CFO.
I took that to mean that it's entirely new, but it is a press release, so maybe they're talking about some minor change like it's something new and wonderful.
Apple is giving away the old touches now with the purchase of a macbook. They also like to announce iPods at the beginning of the fourth quarter to capitalize on the holiday shopping.
This transition seems like one they could be referring to.