Macworld 2009: Why you won't see cheaper Apple products

As San Francisco readies for tomorrow's opening of Macworld, the annual gathering of the Apple tribe, there's been wild speculation and even wilder punditry surrounding Apple's decision to pull out of the show after this year, and over Steve Jobs' decision to hand over tomorrow's keynote address to Apple vice-president Phil Schiller.

More interesting to me, though, is the question of whether Apple can continue to defy the gravity of the economic downturn, and whether its announcements over the next few days will reflect a move to lower pricing.

While Apple stock did lose roughly 50 percent of its value in 2008, the economic meltdown that seems to be hurting the rest of the industry hasn't had much effect on Apple—at least not yet. Defying analysts' recession fears and lowered projections, Apple sailed through the holiday period with a 19 percent increase in new, unique online customers. Both iPhone and Mac market share continue to increase. The iPhone App Store is off to a healthy start.

And Apple spent over $1 billion on R&D in 2008—which has to be leading somewhere, most likely a place that scares the heck out of the competition.

All of which hasn't deterred some pundits from asking whether Apple might go down-market at this show, if only as a preventative measure against what's looking more and more like a prolonged recession.

Apple's feeding off the bottom of the market seems, to me, improbable. For one, the company has never engaged in a "race to the bottom", where margins are dangerously thin, a strategy that's plaguing other PC manufacturers in the netbook space. They simply don't have to do that—and Apple's stockholders would revolt if they did.

Apple prefers to take the lead in product design and development, generate excitement, buzz, and sales, grab a significant chunk of the medium and high-end, then challenge the rest of the industry to keep up—iPhone being a case-in-point.

This has been their business model for a long time, and the best argument against their doing it now. An alternative scenario making the rounds is more intriguing: In addition to the 3D interface patent it filed last year, Apple has also applied for a patent on some new touch-screen technology. So instead of a standard Apple-branded netbook, this line of argument goes, we may instead—and this is highly speculative—be treated to an entirely new class of device, on the order of a super-size iPod with a completely overhauled touch-screen interface and lots of ports.

Technically it would be an "iPod-Touch-netbook-tablet," uniquely Apple, and, for the company, of course, the best of all possible worlds. It might run on processors built by PA Semi, which Apple quietly acquired in 2008, ostensibly to build processors for the iPhone. But if this rumored product materializes, expect a higher price tag, not a "competitive" one.

Prediction: There will be either (a) no offering at all, or (b) a product that, like the iPhone, is completely disruptive.

Tomorrow, a few hours before the keynote, I'll blog on what I do expect we'll see when Mr. Schiller takes the stage. In case you're interesting in following the keynote blow by blow, I'll be Tweeting it (posting on Twitter), Wi-Fi connection permitting. My handle is "CU_tomtech."

—Tom Olson