A Perfect Time for Clones?
Knowingly or not, Apple is paving the way for a successful Mac clone venture in the near future. Without serious threat to its hardware sales, Apple could see a significant increase in market share for OS X, along with added revenue from licensing. Macworld was the turning point. The new iMac, Apple's flagship for the consumer market, is now sporting a G4 processor. I believe this signals the imminent release of the G5 processor for the Pro Mac lineup, followed later by a G5 Powerbook and a G4 iBook, all possibly within a year. So what has that to do with clones?
The answer is staring us in the face -- the G3 process will be out of the Mac lineup, but it could be used in OS X compatible computers to compete with Windows PCs in very cost sensitive markets. One or two companies could do very well in such a niche. Its low performance would keep it from being too serious a threat to Apple, and Apple holds the licensing power to keep that way. Clones can be limited to G3 processors that cannot be upgraded.
What does everyone think about G3-only clones? Would it be workable, or do you have a better idea? What kind of clone computer would you like to see?
The answer is staring us in the face -- the G3 process will be out of the Mac lineup, but it could be used in OS X compatible computers to compete with Windows PCs in very cost sensitive markets. One or two companies could do very well in such a niche. Its low performance would keep it from being too serious a threat to Apple, and Apple holds the licensing power to keep that way. Clones can be limited to G3 processors that cannot be upgraded.
What does everyone think about G3-only clones? Would it be workable, or do you have a better idea? What kind of clone computer would you like to see?
Comments
We are competing against the monster (PCs) why not compete against clones and make some money off it while improving our market share? Interested in comments.
Sure they only have 4-5% market share, but they are making money (except for this past quarter).
The strategy they are using is a very simple one. Build a computer that looks nice, runs well, using a very elegant OS that both consumers and professionals will enjoy.
Keep professionals happy with award winning software that kicks the pants off other companies (FCP, DVD Studio Pro).
Keep consumers happy with award winning software that is free, and allows the customer to use the full capacity of the computer without buying extra software. And make it easy and fun to use.
Create "digital lifestyle" appliances (such as iPod) in order to complement the computer. Make these appliances the best in the business.
All this together makes people want the computer.
Build "Apple Stores" in many places around the country so those who do not know about the benefits of a mac can learn, and buy.
Slowly we will see APple gain in market share.
They will never have as much as MS today (which is good, cause then they'll be sued for having a monopoly), but they will be HUGE.
Mostly in the consumer, education, artistic professionals area.
Business will always use PCs cause they're cheaper and they get the job done.
Clones would cut a HUGE chunk out of Apples revenue.
And people would still not want one - they woudln't want a mac. People don't want macs because they don't know how to use them. Lower the price and most people will still not want one cause they can't use it.
So the goal is to get them to want to learn to use it by making it look nice, and advertising it properly so that it's appealing. Then people will choose to learn to use it.
Clones is a bad idea.
Love Andrew...it's really late. 4AM I'm going to bed.
It doesn't trust *anybody* to get it right, and won't let anyone else even try.
Rightfully so.
The PC market is a mess with different hardware, crappy drivers... yech!
Apple believes that it can and should be easier for those of us who need good machines but don't want to waste time figuring them out.
Thank goodness, too.
The G3 going away is a good thing! Eventually software developers will be able to code for AltiVec and not worry about non-AltiVec machines. The sooner G3's aren't being built, the sooner that transition will occur (and no I'm not saying it'll happen immediately -- it'll take years, but the sooner those years start, the better).
In addition, G4 prices will come down when the number being sold goes up. If machines are coming out with G3s, those are lost G4 sales. Apollo w/ a process shrink should make the G4 cheaper, smaller, and lower power (giving it more potential to go faster), this means it will be better suited to portables than previous G4s. The G3's day is done, the sooner the better.
(I currently own a G3, by the way)
The low end market may not be huge, but it has more influence on the growth, or lack of growth, than its size would suggest. Having a low cost OS X computer can leverage growth beyond the number of units sold. It would act as a growth catalyst for OS X.
Businesses want a platform that gives them a wide range computer options, and one of those options needs to be low cost. If the Mac had such a low end model, it would be a big asset for getting some businesses to consider the Mac. Without a low cost model, the Mac is at a serious disadvantage in business.
A low cost Mac would help Apple sales in other markets too. It is always easier to try a different product when there is less to risk. If the entry stakes are too high, they may never take that first step. People can become repeat customers for the Mac only if they buy something in the first place. Apple present strategy is very good, and I sure hope it works well. Yet, with nothing at the low end, it is just going to be a lot harder and slower.
So why the concern about market share? Everyone knows the luxury auto maker comparison, but it does not hold for a computer platform, which needs applications, which in turn needs developers. I would say that my very biggest concern for Apple is market share, to keep the best applications coming. Developers now could be sensing a renewed interest in the Macintosh, and they want to be in on the growth. If the growth does not occur, or is insignificant, I think we will see many of these developers losing interest. So increasing market share for Mac OS X is vital. If a low priced Mac will help that growth, it too is vital.
<strong>Several good issues have been raised here about clones. Since almost 90 percent of Apple's revenue is from hardware, a low impact on sales is the most important consideration. By limiting clones to the very low end market with a G3 processor, they cannot go after Apple's bread and butter product lineup.</strong><hr></blockquote>
And that sticks them in a market where there's little - if any - money to be made. eMachines' profit margin on a box evaporated if the owner made more than one call to support! Companies will either decline the offer or find some way to get up into the sweet spot for PCs ($1200+) where the money is.
[quote]<strong>Apple does not compete in cheap computers, and likely never will.</strong><hr></blockquote>
Not by accident.
Apple's obscurity in enterprise has nothing to do with the retail prices of the machines, by the way. Nobody pays retail for big purchases, and Apple is extremely aggressive with bids, beating out offers from Dell and IBM and Compaq by significant margins when they have the opportunity to. It's just that Apple isn't considered an enterprise company, and Macintosh isn't considered an enterprise platform. $500 clones won't do anything to change that.
[ 01-17-2002: Message edited by: Amorph ]</p>
I do think that Apple should sign a strategic alliance with IBM for the use of OS X server on IBM's high end servers. This is a market which Apple does not compete in, yet would encourage IBM to push the envalope in Power PC development. It would also make OS X more attractive to IT departments.
As far as the G3 goes, it is possible that as its size, and power requirements are reduced that it could be used in a PDA, Smart Phone, or Web Pad with a "lite" version of OS X.
Apple is perfectly positioned to be the company that releases this close machine, and they almost already have. They're still selling the old iMac and this takes the place of the need for a close. Apple could easily sell one of these for $599 if they wanted to drop into a lower market range, the range people are thinking the clone would fit. If Apple wants to be there, they could within a few minutes.
So after the new iMac has taken hold and the first sub $1000 iMac2 has hit the market, Apple could further differentiate the two iMacs by releasing a $499 iMac1. It's doubtful any clone maker could compete with this after the licensing fees they would have to pay for the OS.
I'm not suggesting Apple would do this, but if they really want that low end customer, they could easily do it AND still control the whole widget.
Regarding comments about the G3, over a year ago I read about a G3 processor called the Thunderbird. It has memory management, PCI bus controller and other such stuff on the same chip as the G3 to really keep costs low. Such functions typically takes added microchips on the motherboard, which adds to manufacturing cost. I always thought the Thunderbird would be great for many things, including a low priced, very simple computer. It would be low performance, but computers get used for many things beside the digital hub, and low performance is not a drawback. What comes to mind are simple industrial controllers, for equipment, lighting and such things. It is a totally different market, but one that is likely dominated by Window or DOS PCs right now.
Sorry to keep coming back to one point, but a computer platform cannot be for a niche market. A particular hardware company may serve a niche market with their equipment, but the computer platform really needs to be ubiquitous, or found everywhere. Apple could succeed marginally, by sticking to the digital hub in home and professional computers. But marginal success does not attract developers or build confidence in customers and investors. Apple cannot ignore markets like general business uses, or industrial controllers, or many other places where computers are used today that most people don't even think about. If Apple can build simple hardware to be used in such markets, it will go a long way to making OS X ubiquitous. The solid Unix base of OS X is a fantastic asset for most of these "other" markets.
Any chance OSX will work with this motherboard?
Apple currently subsidizes OS development with hardware sales, but if IBM could put OS X on some big iron, there's room to give Apple the OEM licensing fees they require.
I do think IBM could provide a service that Apple can't. Big, robust, servers with a service plan to support big purchases.
The only fly in the ointment I can think of is that Apple may have to penetrate the enterprise market first. Otherwise, who would want to buy one of these servers?