Many people have questioned this CNC-machined approach since it first appeared a couple years or so ago.
Many people have defended it on the grounds that it is consistent with the proper business strategy of maximizing margins, i.e., percentage return on operating costs, as opposed to absolute profit without regards to operating costs or margins.
The defense is ostensibly valid, i.e., it would be correct, logically speaking, if in fact the CNC-machined approach were directly tied to that proper business strategy in the way that people who offer this defense assert that it is.
But the defense is a false defense. The correct business strategy is without question to maximize percentage return on operating costs. But the part that no one has ever demonstrated to any degree whatsoever, is how this correct understanding of business strategy demonstrates that the CNC-machined approach to building computers is a sound business decision, and not simply an obsession with a certain sort of quality.
Quality is always a subjective thing, but even if that were not the case, i.e., even if there were universal agreement that the CNC-machined approach adds genuine value to the machines, the defensive argument that has been offered is still logically disjointed. The reason is simply that there is not one scintilla of proof that computers have to be built this way lest margins suffer. I reiterate: there is not a scintilla of proof of this.
The point that many people seem to lack the ability to understand, is that when the number of units of a given product goes up, the enormous overhead associated with getting the product to production is prorated over a greater quantity of units, which manifestly lowers the total per-unit cost for the manufacturer. Thus, it is manifest that any strategy that successfully increases the number of units of a particular product can be a successful strategy for lowing the per-unit cost to the manufacturer and thereby improve the margins associated with that product. This is business 101, as it were, and yet there are many, many people on this forum and elsewhere who repeatedly say stuff that contradicts this simple, well-established truth. It is a logical fallacy to simplistically equate an improvement in margins, as a percentage of operating costs, to products that cost more to produce and that consequently cost more to the consumer and that consequently sell in lower volume. The defense that various people have offered, to the use of CNC-machining for making computers, is dead simply a bogus defense.
I have long maintained, and still maintain because I am convinced that it is true, that if Apple were to sell computers priced more competitively with the PC market, that their margins would actually increase, not by some small amount that would hardly make it worth the trouble, but by an enormous amount.
I believe this for two reasons:
(1.) Most people who choose to buy a PC do so because (rightly or not) they believe that the PC is more affordable.
(2.) There is no obvious reason why Apple would not be able to make computers just as cheaply as all the other PC makers.
When I say "cheaply", I am of course talking about the cost of manufacturing. Many people will of course jump in and claim that if you do that, quality will suffer. Well, quality will suffer, but the question is whether the reduction in quality, as assessed by the minions who go to Best Buy to purchase a generic PC, obviates the reason for purchasing an Apple computer. I can not think of a single reason why this should be so. If the CNC machining is spared, and the manufacturing is more in line with the way that most other manufacturers make computers, this should not significantly detract from the perception of quality, by the minions who buy a PC. In fact, the perception of quality should not go down very much at all, but the production cost would go down by a substantial amount. The computer could be sold at a much lower price, which would have the effect of an enormous increase in sales, bringing about an immediate and appreciable boost in margins, as a percentage of operating cost.
Apple's present business strategy does not make sound business sense. They are doing damed well to be sure. But you can be doing damed well and still not be doing nearly as well as you could be doing, and this is the case with Apple. I am 100% convinced of this.
There is only one rational argument that throws a wrench into this. If it should happen that people who presently are willing to pay the premium price for the Apple product would opt for the lower-priced Apple product if it were available at a lower price, then Apple would lose sales on those higher-priced products. If this were to happen, it is manifest that this could potentially have a negative impact on overall margins. But it is far from obvious that this would happen, and I am inclined to think that it would not happen. I am inclined to think that as long as the higher-priced products are adequately distinguished from the lower-priced products in terms of material and in terms of performance, then I see no reason to think that the present market for Apple computers would migrate to the lower-priced Apple product.
Why can't there be a Mini made the old-fashioned, cheaper way, selling alongside the newer, sexier, CNC-machined aluminum Mini? Evidently, Apple believes that if they were to do that, that it would steal sales from the sexy, aluminum Mini, and that the sales would be split between the two such that the product development overhead would prorate to a higher per-unit cost for each version. I cannot rule this out, but if the concern is valid, then the other way to manage this concern is simply not to commence development of the CNC-machined version in the first place, and to stick with the cheaper production method for this, the low-end, affordable version of the Apple computer. It will be very interesting to observe the change in the sales numbers for the new Mini as compared to the old, over the next year or so. Of course, even if the public has access to those numbers, it won't be worth much unless you also know the per-unit margins for both the old model and the new model.
The bottom line is that even after having puzzled over this for a couple of years now, I remain fully convinced that this CNC-machining business does not actually have much at all to do with maximizing margins as a percentage of operating costs. Rather, I am convinced that all it is really about is an obsession with making products that strive to a certain subjective sort of quality, with absolute indifference to any business reality. This is my opinion, and like everyone else, I am entitled to have and to share my opinion.
Forget frying eggs, I'll be able to grill me a sirloin on that baby.
