Apple plans mystery "product transition"

During his quarterly financial results call, Apple's chief financial officer Peter Oppenheimer revealed that the company will make a key "product transition" that cuts back on its profit margins to help shut out rivals.


A frequent point of discussion during the hour-long call, the mystery transition will drop Apple's gross margins from 34.8 percent in the spring quarter to just 31.5 percent in the July-to-September window in which the update takes place, ultimately settling at about 30 percent during Apple's fiscal 2009.

Oppenheimer is deliberately short on details, not wanting to pre-announce the product or allude to its nature, but explains that cost will be a driving factor.

The Cupertino, Calif.-based company often introduces products to the market with new technology at a high price, according to the executive, but often seeks to drive the price lower over time. It never wants to create a profit margin so wide that it creates an "umbrella" for rivals that lets them safely undercut Apple's pricing and steal sales.

The new, unnamed product will continue to have "technologies and features that others can't match," according to the CFO.

While notions of what this transition entails are likely to become clearer soon, several product categories are just now reaching the ends of their typical cycles, with updated MacBooks, the Mac mini, and new iPods all due for refreshes or replacements in the near future. Apple is also still believed to be developing its multi-touch tablet but has slipped out little extra information beyond leaks near the start of 2008.