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Wednesday, October 22, 2008

Could Education Sales Sputter?

In Tuesday's results call, it was nearly nothing but good news as Apple had arguably their best quarter ever when looking at revenue generated across the product lines. Steve Jobs joined the call, and briefly discussed some ways in which the economic downturn could affect Apple.

He said, and rightfully so, that Apple has some of the best customers in the world, and if times get tough, they are more likely to put off a new Mac purchase until the economic environment changes, rather than buy a competing product. For retail customers, that could be very true. But there's one major market for Apple in which the almighty dollar trumps brand loyalty: education.

Tim Cook reported in the call institutional education sales in the US were down 7%. They were also down 28% in California. In an otherwise stellar financial quarter, these numbers could point to future problems. If the economy sputters through several quarters of educational purchasing, districts will feel the pressure to either purchase lower-priced PCs, or hold off altogether. This makes it all the more frustrating that sources point to an impending discontinuation (but hopefully a revamp instead) of the Mac mini.

Apple can make as many computers out of a single piece of aluminum as they want, but it doesn't mean anything to the institutional education market. Districts don't want to spend hundreds or even thousands of dollars on adapters to attach Apple's latest and greatest to existing monitors for example.

With the educational discounts gone from the iPod, and reduced on laptops, maybe this market isn't as important to Apple as it once was.


mrfearless47 said...

I was taken aback by the reduction in the discounts for the new MacBook. They are still significant for the MacBook Pro, but the pricing for the new MacBook only shows a $50 discount. I suspect many individuals, eligible for the educational discount, will hold off purchasing until the new MacBooks enter the refurbished supply chain. I saved quite a bit buying a new MBP, but I held off upgrading one of my MBs because the educational pricing wasn't any good.

jamie said...

I remember when high end Powerbooks received $200 off. I think within 2 years time we will see the disappearance of student discounts completely and replaced with rebates on iPod/Mac bundles, similar to what they typically have during back to school.

Jim said...

School districts may not have a choice when faced with these issues. In years like this, they face cuts in the funding they receive from state grants and local taxes. Very rarely could these funds be held until the following school year. Schools can not wait for economic changes. If they have already put in an installment of Apple products, they would have to cut back their purchase to match the cuts in their budget. If they haven't moved to Apple from the days of Gateways and Dells, then expect that new computer lab to be filled with dollar stretching PC's.

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