Better Value Macs

This thread is just a continuation of the iMac Future thread, which talks in depth about just this issue. iMac Future

One post I just made there talks about better value iMacs and eMacs. Allow me to quote that post.

Ok, I went to my favorite thinking place today and came away from there with a few things.

To sell the iMac there needs to be a commercial about iLife. To me that is a no brainer, it would give people at least minor insight into what is different about a Mac. If a commercial showed people editing vacation video in iMovie, iPhoto slideshows, iDVD, and downloading a song from iTMS for the slideshow; then that might drive home SOMETHING to people. Then dont mention computer cost at the end of the commercial, just "iLife from Apple for $49."

How will this sell an iMac? When people go into an Apple store they will be looking for the lowest cost machine to run iLife with. Give them that machine in the form of a new iMac. But what will be different and what will Apple be able to do to sell a lower cost yet target market hitting iMac?

iMac target market: Everyone but the pro's and hardcore PC geeks.

iMac pricepoint: Two models, one at $799. The second at $1199.

Model 1-$799

Fast G4 processor
60 GB HD
512 RAM
No display
Cube Shaped
Combo Drive

Model 2-$1199

Single processor G5
80 GB HD
512 RAM
No display
Cube Shaped
Combo Drive standard with Superdrive as a BTO for $99 more.

The eMac: Turned into an ultra-cheap computer, almost like the original iMac in design. Make it a 15 CRT, and give it a slow processor marketing it mainly for education or the homeless. We're talking $499 at the very most. And for God's sake, lose 20 LBS.

This would take back the education market in a big way and give consumers an iMac that goes back to its roots (which in my mind is power at a good price and simplicity, a computer capable of running the latest software and OS--AIO is not necessarily a must for the iMac). A low cost computer for education, and low cost iMac Cubes that deliver power but at a reasonable price. Maybe then Apple could also manufacture a lower cost 15'', 17'', and 20'' LCD to compliment the iMac.

I think this would work.

It cool my man, it cool.

Hi Snoop;

There is no doubt in my mind that price is an issue. I like to offer up a $500 machine that Apple could push. The ultimate price is not an issue as long as it is reasonably close to mainstream PC hardware pricing.

Apple has a problem, if they loose an entire market segment they will paint themselves into a corner. That would be the vertical market supplier position like SGI and others. In other words they would become completely irrelavant with respect to home users and corporate users. Apple is almost there now.

You are right about those low cost machines from other vendors. They often do everything that the user wants them to do without issue. Since for many the PC is a tool and nothing more cost vs performance is a big factor.

Look at it this way woodworkers have the option of buying many different routers. Before you go out and buy a high performance router, one has to justify the expense in one or more ways. Things such as durability come to mind along with user features. A Mac has the user features across all model lines. What the IMac does not offer for its price range is durability! Not in the sense of mechanically wearing out, but in its ability to maintain usefullness over the years. The IMac is in this class due to processor performance that is now 2 or 3 year behind where it should be.

My biggest fear is that Apple will introduce new IMacs, or its follow on, running at 1.4 or 1.6 GHz. It doesn't matter what PPC processor is in the machine it will be too SLOW in that range.

Some may look at these numbers and say "What are you crazy" and I will respond calmly no. The IMac hasn't been effectivley updated in over a year, it is currently so far behind that it needs atleast a 100% gain in performance. I think if Apple tries to deliver a machine running much slower than 2GHz they will recieve a rude awakening from their customer base as they slowly migrate to other platforms.

This user base errosion is happening now and will only accelerate in the midst of lackluster machines and crude marketing attempts. The new releases, that should debut in the coming weeks, will have a direct impact on how Apple is precieved in the market place. If they screw it up there will be far fewer sales than they might have imagined.

This is really a shame too as the market place really wants alternatives to the generic PC. The trick is to make those alternatives feasable purchases.

Thanks
Dave

Dave,

unfortunately, you've fallen under a particularly evil, and insidious spell of misdirection...

why do most people buy computers (personal, as in, 'for the home', because that's what we're talking about)? I'll make it easy for you, it'll be multiple choice.
For one of the following five reasons:

1) To "have the in-ter-net" (includes email, because so many people don't understand the seperation of the two, thanks to A-hole-L).

2) To write (aka 'use Word', general Office work).

3) To appease their children (pirate music, IM, some amount of games, etc).

4) All of the above.

5) Two of the above.

I'd bet that a lot of people on these boards would argue with me, possibly even take offense. But We, us godly ones, are the few. We've been so far removed, either be choice or by evolution, that we often have trouble recognizing the herd of our ancestors behind us.

So what? Most consumers will NEVER push an iMac (with it's "pathetic" G4 @ 1.25GHz) to its limit. In fact, most consumers would be so much better served in their desired uses, as well as their yet undiscovered uses, by an iMac than any "PC". The simple truth is that through superior design (both form and function) an Apple Macintosh frees the user to attain computer ease, without having to deal with computereeze.

Even my father, an alum of WANG, DEC, NEC, Intel, PictureTel, etc... can't keep up with the constant security patches, Ad-Ware, virus threats, and instability of a nice new PC with the "insecure by default" Windows XP Professional. Do you think he's smiling, counting the $400-$500 he saved in not buying a Mac?

I agree, Dave, Apple has got to vastly increase its competitiveness with other PC vendors.

The eMac should be no more than £495. (Hell, considering it's a one-piece design with a cheap CRT, stingy ram and a cpu speed that first appeared two years ago...)

If the G5 is THAT cheap (as rumoured...) then why not stick a 2 gig G5 in an eMac with integrated graphics and push a volume builder at £495? Lose the CRT if it keeps costs down and margins up..?

Apple are in a catch 22. They are facing erosion in terms of market share. Yes, their installed base is increasing with each sale. But the problem is the PC market is growing bigger and faster in significance than Apple is.

At this rate of going, developers might eventually say enough is enough and pull the rug.

The smaller you are the less likely you are to have influence on the market.

Sure, Apple is in the press at the moment, they've hit some home runs with the G5 Tower, iPod, iTunes and the Powerbooks. But they can't afford relative failures like the Cube and iMac 2 to dominate their consumer thinking. They have to change their products and listen to what the PC public want.

Yeah, they may want an alternative to M$. They may want security...but Apple have to be their with a cheap enough product. (This doesn't mean £199 Wallmart Linux box...) This might mean a cheap, smart Apple white mini-tower for £495. A 'risk free' proposition. And for too many people outside Apple's 'sweet spot' and in the PC 'sweet spot', Apple simply have got a value and spec answer. The eMac looks way out of its league competing with Dells offering 17 inch LCDs and 2.6 gig Pentium with 512 megs of ram with combo drive for the same price.

Apple's stance on ram pretty much sums up the entire 'Why are Macs more expensive?' argument. £512 megs of ram is dirt cheap and Apple want to charge you and arm and a leg for something they can get even cheaper!

Apple have got to remove barriers to PC people buying their Mac kit. Distribution and access is improving with Apple stores (and including non-American centric International flag ship stores is a GOOD THING!)

But when people get there, they have to have a product that meets their needs. Not something Appleinsider loyalists say they should be happy with. They're coming from a PC perspective. They're used to a good deal on price and performance. Why pay for something slower? (...and the fact they may just do email isn't a good enough reason to have a 3 year old processor stuck in your consumer lines.) Why have something that is inflexible. They already have a monitor. They don't want or need another.

And how are Apple going to help PCs users stuck with hundreds in PC software? No switch-software pricing trade-ins/cross-grades to help take the sting out of the Mac 'deal'.

It's this kind of consumer thinking that has got Apple to the 1.8%-3% marketshare they currently enjoy.

They have to create a product that casts the widest net possible. The eMac and iMac 2 alone are not the entire answer. They're a limited rebuke to the PC equation.

And the one place Apple is going to get Mac growth is by taking them from M$/Wintel/x86 customers.

Until they grasp that nettle in a meaningful way I can see their marketshare eroding below 1% in the next year or two.

Apple's Mac business is barely making a profit. (I suspect the bulk of last quarter's profits came from the iPod...) Until they can score a 'Mac' home run they won't increase marketshare.

They're doing some good things. But the consumer line needs some radical rebooting. It needs to be price competitive with up to date specs. In fact, many people will only come when Apple/IBM deliver superior consumer performance to Wintel. Some switchers have been attracted by the iLife/'X' and stylish exteriors of the Apple line. But why haven't the switchers come over in droves?

PSCates may say 'advertising' and Amorph may say 'awareness'.

Yes, these are problems. However,

The rate at which iMac2/eMac sales are shrinking highlights a fundamental problem with Apple's AIO only consumer desktop policy. It's not just the move to laptops. Apple consumer desktops aren't selling and the sharp % drops quarter to quarter show that very soon the iMac 2 could go the way of the ill-fated Cube.

Apple needs a 'doomsday' consumer machine. One that can take on the Wintel.

Ask yourself this question, 'Why did Apple not successfully build on the iMac?' A machine which sold up to half a million per quarter. To me, they should have been upto one million consumer desktops per quarter by now.

They didn't successfully follow up soon enough with a product that met the iMac's original mandate. 'A computer for the rest of us'. The cheapest iMac in the UK was £595. That was three years ago.

They should be even cheaper by now.

I'm critical of the consumer line because Apple appear to be one-dimensional instead of successfully following through with their products.

Look at the iMac2, 13 months without an update. No meaningfuly cpu or spec update and when we get any bumps they're way out of date...and wayyyy over priced. A few months after launch the price is hiked up.

Looking at what should be (and was) a sales flagship, it's easy to see why Apple is in danger of dropping into fractions of marketshare instead of whole numbers!

...and if the iBook is the answer, then why isn't Apple selling half a million of them?

Because Apple has this secure base of Mac users it's not being driven directly by Dell to be more competitive on hardware price. But Dell, indirectly is working Apple. Apple just don't seem to have an answer, the flexibility or the imagination to do for the Mac what the iPod is doing.

Imagine if you could get a nice white £395 'iPod' style Mac to go with their £245 iPod. PC users might give it a whirl. iPod is selling the music player argument but it won't give Apple the Mac sales by proxy unless they have a 'cheap enough' product.

It's the same old Apple. Big margins vs marketshare. (I know, I know, Apple needs their margins to stay profitable...) But Apple will never reach their 10% goal unless they can slay the 'critical mass' Mac marketshare cow.

Sorry for the rant, but I feel for Apple at times when I see just how much good they are doing with G5 towers, G5 X-Serve, Panther, iPod, Powerbooks...retail stores, X-Raid, X-Tools..., iLife '04.

They're doing a lot of good stuff. But even with all the unprecedented pro' Mac press coverage...the Mac marketshare slipped.

Lemon Bon Bon

That has to be one of the longest posts I have ever seen. Some good ideas make up for its prodigious length. Some days I want a price competitive computer. But then I look at the four mac I use, one (G3) is still cranking after more than six years. I am certainly not upgrading as much as my PC friends. Either because I don't need to, or because (they say) I can't afford to. The whole chicken-egg thing.

LBB et al.:

I agree Apple needs to grab the spotlight with a good value machine. I notice Apple is now doing retail store Business Wednesdays which shows they know Apples should be going into business. They also have the Xserve to open the door to corporate, so wouldn't it be nice to have a business offering as well. Begs the question what a business offering would be.

I believe a business offering would be different than an all-in-one. Businesses already own monitors. PC's do not require purchase of a monitor. I think Apple's business offering at this point needs to be able to use existing (business desk) monitors. Only in that way can a Mac compete with PCs for the business desktop. Of course, wihtout the screen, removing the screen will eliminate the uniqueness factor (a la iMac) and put the focus squarely on feature-for-feature comparisons on price and performance. I really hope Apple addresses this issue sooner than later as I am helping a business upgrade their computers (Macs) this year, and I'd love to upgrade them all with good value, high business performance OSX computers (but not necessarily SuperDrives, etc.). This machine would need to be a good value like the eMac (but no screen) but for business (not education); I'll call it the oMac (o[ffice]Mac).

I'm a little afraid Apple (Steve Jobs) is taking the approach of creating value from below (the iPod getting more functional and expensive) rather than just kicking butt with a value oMac. Sometimes it's just excruciatingly painful to watch Apple address opportunities, but with Xserve opening doors and OSX at industrial strength, it would be great to see Apple address (small business and corporate) office with a first-class oMac machine to complement eMac and iMac.

Fingers crossed for oMac sooner than later!

[QUOTE]Originally posted by Lemon Bon Bon
I agree, Dave, Apple has got to vastly increase its competitiveness with other PC vendors.

The eMac should be no more than £495. (Hell, considering it's a one-piece design with a cheap CRT, stingy ram and a cpu speed that first appeared two years ago...)

Agreed

If the G5 is THAT cheap (as rumoured...) then why not stick a 2 gig G5 in an eMac with integrated graphics and push a volume builder at £495? Lose the CRT if it keeps costs down and margins up..?

The eMac doesnt need a G5 to sell, it needs to cost less money.

Apple are in a catch 22. They are facing erosion in terms of market share. Yes, their installed base is increasing with each sale. But the problem is the PC market is growing bigger and faster in significance than Apple is.

At this rate of going, developers might eventually say enough is enough and pull the rug.

Developers wont stop development for a community that has millions of active users, regardless of how many other people use PC's. As long as it is profitable for them to write apps and product hardware for the Apple platform, they will.

The smaller you are the less likely you are to have influence on the market.

Eh ehm?

Sure, Apple is in the press at the moment, they've hit some home runs with the G5 Tower, iPod, iTunes and the Powerbooks. But they can't afford relative failures like the Cube and iMac 2 to dominate their consumer thinking. They have to change their products and listen to what the PC public want.

Agreed. Apple can not just rely on product "home runs" to continue profitability and marketshare increases. It could work I guess, If they are the tech version of Babe Ruth. But even Ruth couldnt hit a game winning homer every plate appearance. Apple needs to sure up their consumer line in a big way. This time, design innovation is less of a requisite than competitive prices.

Yeah, they may want an alternative to M$. They may want security...but Apple have to be their with a cheap enough product. (This doesn't mean £199 Wallmart Linux box...) This might mean a cheap, smart Apple white mini-tower for £495. A 'risk free' proposition. And for too many people outside Apple's 'sweet spot' and in the PC 'sweet spot', Apple simply have got a value and spec answer. The eMac looks way out of its league competing with Dells offering 17 inch LCDs and 2.6 gig Pentium with 512 megs of ram with combo drive for the same price.

Some of that statement is true, but the eMac bit is framed improperly. The eMac is not meant to compete with anything that has an LCD. It is designed specifically for sitting on desks in schools and having little kids use them constantly. The only reason we can even buy eMac's is because it offers people a way to use a Mac at the $700 level, specs are not a concern. Price is the issue with the eMac, that's the only issue with it. For what you get with it, it should cost $499..which I think will happen soon. Apple would be foolish to introduce a really fast computer with amazing specs that costed very little. They need to bargain people into buying a Mac, the type of people who dont know specs (which is nearly everyone) but only check the bottom line. The eMac could even lose some spec weight and drop considerably more in price, and become a very good switcher platform.

Apple's stance on ram pretty much sums up the entire 'Why are Macs more expensive?' argument. £512 megs of ram is dirt cheap and Apple want to charge you and arm and a leg for something they can get even cheaper!

It sums up the fact that they are just throwing a bone to vendors. That's all it is, politics.

Apple have got to remove barriers to PC people buying their Mac kit. Distribution and access is improving with Apple stores (and including non-American centric International flag ship stores is a GOOD THING!)

Right on.

But when people get there, they have to have a product that meets their needs. Not something Appleinsider loyalists say they should be happy with. They're coming from a PC perspective. They're used to a good deal on price and performance. Why pay for something slower? (...and the fact they may just do email isn't a good enough reason to have a 3 year old processor stuck in your consumer lines.) Why have something that is inflexible. They already have a monitor. They don't want or need another.

Agreed. If you check out what I say with my iMac perspective in the iMac Future thread you might see it my way. I think Apple will probably do something along the lines of what I have suggested. A $799 and $1199 headless iMac-check out the thread for further detailed speculation.

And how are Apple going to help PCs users stuck with hundreds in PC software? No switch-software pricing trade-ins/cross-grades to help take the sting out of the Mac 'deal'.

That one is easy, offer the type of enduser software they currently are. It covers normal use very well. For power users, the software they were using to do that work on the PC has to be more elegant and run more quickly on the Mac. All while being able to obtain a mac for less money than it costs to do so now.

It's this kind of consumer thinking that has got Apple to the 1.8%-3% marketshare they currently enjoy.

Not entirely, but it is a contributing factor, and I think Apple is in better position to attempt to reverse this thinking than they ever have been in before.

They have to create a product that casts the widest net possible. The eMac and iMac 2 alone are not the entire answer. They're a limited rebuke to the PC equation.

Very well stated.

And the one place Apple is going to get Mac growth is by taking them from M$/Wintel/x86 customers.

Until they grasp that nettle in a meaningful way I can see their marketshare eroding below 1% in the next year or two.

Thats a stretch, especially considering their offerings are not as dier as you suggest. In fact, Apple offers great computers and software solutions, just at too high of a cost for the average consumer.

Apple's Mac business is barely making a profit. (I suspect the bulk of last quarter's profits came from the iPod...) Until they can score a 'Mac' home run they won't increase marketshare.

iPods only accounted for 10% of overall quarterly revenue.


Apple needs a 'doomsday' consumer machine. One that can take on the Wintel.

Again, youre rehashing, but right.

They didn't successfully follow up soon enough with a product that met the iMac's original mandate. 'A computer for the rest of us'. The cheapest iMac in the UK was £595. That was three years ago.

They should be even cheaper by now.

Youve been over this now, agreed.

Because Apple has this secure base of Mac users it's not being driven directly by Dell to be more competitive on hardware price. But Dell, indirectly is working Apple. Apple just don't seem to have an answer, the flexibility or the imagination to do for the Mac what the iPod is doing.

Dell is doing nothing to goat me to use a PC. I use a Mac for the software, OS, and the attention to detail involved with all of that and the hardware. Price is not an issue for me, so I'm lucky in that respect. Apple just needs to compete on price, in terms of innovation, nobody competes with them.

Imagine if you could get a nice white £395 'iPod' style Mac to go with their £245 iPod. PC users might give it a whirl. iPod is selling the music player argument but it won't give Apple the Mac sales by proxy unless they have a 'cheap enough' product.

The iPod for Windows is just Apple putting its best face foreward with the rest of the world. It is supposed to make people think that, 'if the iPod is this good so must be the Macintosh.'

It's the same old Apple. Big margins vs marketshare. (I know, I know, Apple needs their margins to stay profitable...) But Apple will never reach their 10% goal unless they can slay the 'critical mass' Mac marketshare cow.

I think all of the Apple media attention is ever so slightly but surely turning people towards innovation over low cost. Low cost needs to happen, but in the meantime there will be enough people who will pay a premium for the best solution. Apple is very comfortable for the short term (5 years at least).

Well, I hope Steve 'Moses' Jobs is the one to lead us Mac users to the 'promised land' of 10% marketshare.

Thanks Messiah' for taking the time to make the considered reply.

(I like to repeat myself in rants...)

Lemon Bon Bon

It's never going to happen.

You guys need to understand a little about branding and brand guardianship. Producing a bargain basement computer will weaken Apple's brand and lifestyle values.

If Apple suddenly goes cheap/mass market they'll instantly lose their all important 'status symbol' values. Apple was never, and never will be, about creating the computer 'for the rest of us'. They are about creating the computer 'for the rest of us who appreciate the good things in life and are willing to pay for a premium brand'. Their most successful consumer machine, the iMac, was never competitively priced. It was attractively priced, which is another thing entirely.

Apple are the BMW or Mercedes of the computer world. They are not, and should not become the Fiat of the computer world. Premium brands like BMW or Mercedes tend to be successful, budget brands like Fiat do not. Fiat have been fighting for survival for as long as I can remember, and they produce the best selling car in Europe. Of course, many premium brands have a lower TCO, which is why people with their heads screwed are willing to pony-up, up front.

You never hear about BMW or Mercedes fighting for survival, and you never hear about them trying to break into the budget market either. Apple should continue to do what they do well - they have after all ridden out a lot of tough times which saw their 'competitors' closing their doors. And they do after all, have a lot of money in the bank. Apple's biggest threat is not their decreasing market share or Windows, but their shareholders who want to turn them into Fiat.

If you'd like to own an Apple machine, but can't afford it, then that's all the better. They like to keep people like you out of their exclusive little club.

I'd like to share a little story from the UK if I may. It's not directly related, but I think it's interesting nonetheless. Burberry, the famous English clothing label is in a bit of a pickle at the moment. For many years they have been seen as a premium brand, and any self respecting Chelsea Girl wouldn't be seen dead without their distinctive tartan-like pattern.

The problem is, that working class football 'casuals' (hooligans) and NEDs (non-educated deliquents) have also started buying their products, because they have become something of a status symbol in these social circles as well. Now no self respecting work shy/drug dealer/mugger would be seen drinking Buckfast in the park without their beloved Burburry baseball cap (pure quality man). The problem is that bouncers and doormen have started turning away anybody wearing Burberry garments, because they have noticed that all the trouble makers wear Burberry. And it's made the news in the UK - which is a really big problem for Burberry.

The toffs are no longer buying Burberry because they don't want to be mistaken for lager louts. And as soon as this happens Burberry loses its status symbol and the NEDs stop buying it as well. Big, big problem for Burberry which is a brand with a long and established tradition.

It's all about selling a lifestyle. It's the smart (and cheap) way of adding perceived value.

You are entirely wrong and your perspective sickens me frankly. Apple has a lot of highly paid people working for them that study the market and they know all of this a lot better than we do. Sometimes I ask myself why I come here and waste time speculating about stuff that professionals pour over for a living. I only do it because I like to use my limited knowledge, which is so because we all only have access to so much information; but I come here to see how close my thinking is in line with Apple's own.

Apple does not mind being a status symbol, what company would? But it that does not mean that they dont want more sales, because ultimately the employees at Apple will lead more elite lifestyles if their company can get more money; which leads to the employees getting more money as well.

Apple wants to sell machines, but not at the expense of the brand or the health of the company.

"If they arent selling it, it wouldnt help them if they were." That is one quote you may want to think about.

Apple works on making new things to sell that would help their bottom line and also their EVENTUAL bottom line (as a cheap Mac might do). Apple has people that just figure out statistics (it is their job, it is marketing!) about whether or not certain things will really help the company. They have Ph.D's working on solutions!

It is (if you dont know) very hard to get a job at Apple. The competition for a job there is very intense, if you have ever looked at the educational backgrounds of their execs, it is intimidating. Harvard MBA's, Stanford, Carneggie Mellon, UCLA, USC, Michigan, Princeton, etc.

Apple is in a tough position because they should WANT to keep their brand value high, while also catering to the average person. It is a win/win situation if it can be had, but it is hard for that solution to be produced. Sony is able to do it, VW is able to do it, and so many other companies are able to offer "quality at ordinary people prices."

Apple can do that and they want to, they are just figuring out how to. There is no way Apple is just ignoring problems it has, they wouldnt be in business if they did.

You know, it doesn't matter if the average user will ever use 1/2 the power that a G4 has at 1.25 Ghz because the marketing people long ago turned clock frequency into a tool to sell computers. Even if the consumer could care less the salesmen will use it to sell the computer that they want to sell the consumer, and the consumer will listen because the salesman will say it is a better value. With the iMac's at less than half the speed of competitively priced systems (CompUSA has a 3Gzh PIV w/15"LCD in the paper today for $1249.91) it is not hard to convince a non-Mac user to go with another system. The only thing the iMac has going for it is design, and that isn't keeping isn't sales numbers where they should be. The iMac, as it stands today, should be starting out around $799.

What makes you think that I don't know what I'm talking about? What's my real name? Where do I live? What do I do for a living? What kind of car do I drive? What kind of computer do I use? Do I own my property or do I rent it? You seem to know an awfull lot about about me without actually knowing anything about me?

Actually, I'm a professional branding consultant. That means that I've done the further education thing and that I am a fully qualified professional. You may not like were I'm going with my argument, but that doesn't mean I'm wrong. I do this every day for a living. I'm commissioned by everyone from one-man-band start-ups to the UN. I'm no where near as good as the people Apple employs, but I probably understand the way that these things work better than most of the people here.

But let's get back to Apple and your arguments, because I'm afraid you've just contradiced yourself there.

Yes, Apple employs in house marketeers, and I'm sure it also commissions external consultants. I'm sure Apple regurally employ the people who are the best in their field to work on their marketing campaigns, and that they're all highly qualified. People like Chiat-Day, Frog Design, IDEO. Steve Jobs himself is also on the board of GAP and Pixar, and it's rumoured that even Disney are now courting him. These people all know what they are doing, and Apple has money in the bank. They are successfull at what they do.

This begs the question, why does Apple have such a small market share?

Has anybody ever stopped to consider that it's intentional?

Of course they'd rather sell more machines - it's a business after all.

But it's important to remember that Apple wants to sell more machines on Apple's terms.

It's a fact that everybody harps on about how Apple should produce 'cheaper' kit. It's also a fact that Apple has never ONCE produced a 'cheap' piece of kit. You always pay a premium for the Apple brand. They may represent better value to the end user, but don't confuse better value with more affordable. Often better value means paying a little extra but getting a greater ROI. When creating a lifestyle brand, the customer should always feel as though they are spending that little bit extra, but that it's worth it in the long run. For many people, the most expensive G5 fully loaded with RAM offers better value for money than any other computer out there.

It's interesting that your argument also relies on two brands that are actually premium brands, both of which employ this style of marketing. VW and Sony are brands which are recognised the world over. They are both respected brands.

Firstly, VW. The VW Golf GTi has long been a status symbol, and VW is considered by many to be a premium brand. It is the car that all executive wannabes drive before they get their first 3 series BMW. It's market value retention is second to none for that class of car. VWs products are recognised for their quality and reliability, and their authorised showrooms are always spotless. They have these brand values because they have spent time and money marketing themselves as such. Did you know for instance, that it is against the VW brand guidelines to say that one of their cars has a 'Sale' price, this is to protect the brand values - VW should never be seen to have to offer their cars in a sale. Dealerships can, and have, lost their franchises for infringing these guidelines.

VW, like Apple is a premium brand.

Likewise you pay a premium for Sony products. Flat panel Sony TVs are currently more expensive than budget brands like LG Electronics and Beko. The Sony product line is generally recognised as offering quality and reliability. It is rarely recognised as being 'cheap'. It is still regarded by many as being a brand that offers value for money. You won't see Sony marketing themselves as being 'cheaper than Beko'. It's more likely that it'll be the other way around.

Both these brands are indeed able to sell to everyday people, but their products are compelling enough for these everyday people to pay a little extra for them. This is exactly what Apple is doing at the moment. It has had incredible success with the iPod, which is more expensive than most MP3 players.

Producing cheaper products at the expense of design, easy of use, functionality and reliability won't do Apple any favours in the long run.

So how close to you feel your views are to a professionals?

Well, since you seemed to call me out, I'll bite.

Those brands are able to sell to everyday people, because their products are compelling enough at low enough prices that still remain in reach for people, yet priced slightly above the crap cars. I would say that they command a slight premium compared to what Apple's model is.

Apple is gorging margins on every ipod and iMac/eMac it sells right now. Of course, I think that is ok to do when people will buy it, but when people stop buying, doesnt that set off alarms? Dont people start to wonder, "maybe we need to rethink price, maybe rethink strategy, maybe both?"

I would agree with you that you pay more of a premium for Apple products than you do for the likes of VW and Sony. But I thik there are also number of benefits that we, as Mac users, take for granted.

It's interesting that you have a flat panel iMac, a machine that isn't exactly famed for it's value for money, but probably reflects Apple's way of doing things better than any other computer they have ever brought to market.

Do you like it? Do you feel an affinity towards it? Are you emotionaly attached to it? It's a product that has been well designed, is extremely good at what it does, and offers unparalled ergonomics. Whilst it's not the most powerful machine out there, what it lacks in performance it more than makes up for with personality and character.

This is what Apple does best. They have the best OS in the industry, the best design team, they produce products that are easy to understand and use. All these things, and the research required to develop them, cost money. People want the Macintosh Experience, without having to pay for it. Which seems unfair to me.

I personally don't mind paying a little bit extra for something that I think is streets ahead of the competition. If someone wants raw performance, and doesn't want to pay for all of Apple's R&D and for all the other great Mac specific things like Panther and Expose, then it already exists - it's called Windows.

If they want the Macintosh experience, and all the cool benefits that make it this experience, but they don't want to pay for it - then I don't know what to say to that.

What do you think?

I rarely post here, but I read often, and these kinds of posts are frustrating to me -- there's not enough breadth or depth of thought.

First off, let's be clear: Apple's market share will never be a *big* number, no matter what they do -- they are trying to compete with the sales of a half dozen or more significant hardware manufactures and one giant software manufacturer who often times doesn't play by the rules. If they loaded Macs up with software and gave them away for free there would still be a limit on how much their market share would increase for the years to come...

More practically, Apple must make basic decisions based upon total profits. If the dollar margin is half as much for a cheaper product, they really do have to sell twice as many for it to make sense. And there are additional costs associated with making more sales, like product support (and more support will be needed the further you try to push their product line down into the mass market).

There's all this talk about Apple "gouging" their customers by making "too much" margin on their products. I want someone complaining about them not having a cheap enough product to actually take the time to make the business case for a cheap product line -- write down what the product would sell for, how much it would cost to manufacture, and show that they could sell X times as many of these and make more *profit* from the whole exercise (we'll just ignore how it might impact their brand and sales of high-margin products). You must remember that dramatically reducing the manufacturing costs (and amortized design costs) will likely greatly impact the perceived value of the product, pushing the price you can charge for it closer to the cost to build it.

PS -- I am very happy with the range of products that Apple makes and the prices they charge for them. For me, I am getting what I pay for. Every company makes some mistakes, but trying to undercut PC manufactures whose only intellectual property lies in ways to make things cheaper would be the greatest mistake Apple could make -- they need to continue to lead the industry with great products, not turn into a commodity business.

I could care less regarding status symbols and computers....

(BMW a status symbol? only for the rich? I offer their new 1 Series line of cars... those things are crap regardless of what logo you put on it...)

APPLE...I want a wider product line, this includes a cheaper entry level computer....

in the end, market share does account for something...I dunno if Apple will ever do something drastically significant to address this .....

Just because something is sold for a lower price doesnt mean that it has to be sold at a lower standard than Apple is accustomed to.

So, what are your thoughts on that?

How do you sell an eMac - below Steve's stated standard already, in that it has a CRT - without lowering Apple's standards even further?

Apple has built a value-added platform, and it helps Apple as much as it helps their customers. It is vital, from a software planning and development point of view, to know that you can count on FireWire being there, and Ethernet, and various other technologies - not only that, but specific implementations of those technologies. That makes planning, designing, implementing, testing and QA all much easier. From a consumer point of view, an eMac can do almost everything Apple advertises except burn DVDs. There are no second-class citizens in the Mac lineup: A Mac is a Mac, and they all share a wide set of essential qualities and capabiltiies.

In a very real sense, a stripped down machine isn't a Mac.

That doesn't mean Apple shouldn't make it, however. They're already fielding another platform: iPod. There have been murmurs in other threads about a QuickTime-based device. Now, if you think about the use of the machine described in the top of the thread - "email, internet, light word processing" - you don't need a PC. In fact, from a design point of view, the idea of buying a tower and a separate monitor and plugging everything in just to do that is profoundly silly. There are phones that can do that now. They're not ideally suited to the task, but they can do it. Hell, pagers can do email. Pagers!

If a phone can do these things, in terms of technical capability, then these applications have moved from the personal computer space to the appliance/accessory space, and perhaps they are best served by an accessory. It won't be a Mac, because that means a full-featured and highly integrated personal computer. It will be small and suited for the tasks required of it. It can be priced around the same price as the Lindows machines and low-end PCs and succeed there. It would have to be able to stand alone, unlike iPod, but of course it would sync seamlessly with a Mac.

I think this is eminently doable, and the time is right. The idea that light use should require a full, desk-hogging PC and GHz anything besides wireless is flatly absurd.

I believe that people would see such a small device as a toy, that is why they do the little things on a big machine. Plus, their is also that, "if I want to venture into other computing things I can" mentallity to a lot of people.

There is a lot of smack talked about the eMac, but quite frankly, it is an excellent computer for the money.

Sure, us armchair product pricing experts can throw out any price we imagine; $100 iPod Mini, $500 computer, but we haven't a clue what it takes to run a computer factory... or engineering, or any of the thousands of things it takes to produce products.

Hell, I'd like to have a $10,000 Porsche, but it ain't going to happen... unless you recognize the original VW bug as a Porsche design

supposedly computer prices are inching up and up now over the course of time... I think the days of a super cheap computer are numbered... what you all need to consider is dell doesn't sell that many cheap computers. They mainly sell to 800+ market and out of those really 1000+ its just stuff for them to throw out to the masses for people to even consider their other computers as an option...
"hell if they are going to sell a computer for 399, I wonder what they'd offer for a better computer?"

So you are willing to give up reasonable performance when your browser is loaded down with Javascript and Jave applications? With the spread of broad band do you want your Mac to be limiting the interactive nature of some of the web sites out there? Do you ever have another app running at the same time?

Well here is a quick sell for jsut about any PC on the market at the moment. Start up word on the PC right next to a Mac and see how responsive things are. Granted the PC will be slowed down to a crawl 3 month after leaving the store due virus checkers, spyware and other crap. The point remains that the iMac will be precieved as being very slow.

Yeah I take offense. Please don't compare me our any other mortal to god! I'm not by any means religous but I don't have a superiority complex either. You underestimate just how much productivity some PC users get out of their machines. It is not a question of knowing the hardware nor the OS, it is a question of taking a software package and using it as a tool. Many people use these tools to the point of saturating their PC's, that doesn't imply though that they are geeks by any stretch of the imagination.

This is completely wrong! The whole reason that the IMac has such a problem in the market place right now is that people consider it to be to slow. It is way to slow to paly games. It is way to slow for a MS Office power user.

There is no ease in a slow computer. It is a major source of frustration.

I neve said the MS world is a bowl of cherries. In fact that is one of the reasons I make use of Linux. But you know what one of the reasons that Apple doesn't get hit with every know virus is that there is little pay off for the virus writers due to the lack of targetable machines. MacOS/X is not perfect with respect to security. It is certianly better than the latest and greatest from MS but do not underestimate potetnila vulnerbilities.

Guys its nto an issue of clock frequency per say, it is an issue of performance. To not update a machine such as the Imac for over a year is pathetic. What is even more worriesome is that when that IMac was put on the market a year ago it was out dated the day it went on sale.

Now I can understand to a limited extent the Motorola issue but Apple could have done a little more for these machines.

What Apple needs to gain credibility in the consumer market is a machine that doubles performance and is well under $750 dollars. This is a machine that has to ship with atleast 512Meg of memory and a G4 or 970 class procesor running at 2GHz. The goal being to double or better the machines performance. To ship anything less in todays market place is to kill the product before it even leaves the door. Apple neeeds to overcome the image of it has of selling over priced useless hardware. The G5 Towers are a good start as are the new XServes, now Apple needs a consumer machine that people will want to buy.

Look at it this way guys, you all have had a chance to read the sunday papers. There you should have seen the the weekly adds from the "discount retailers". Taking those flier into account somebody point out to me how Apple can justify the prices it has on its consumer hardware. For under six hundred dollar you can walk out of a store with a complete PC system. I'm not asking Apple to deliver that type of system, all I'm asking for is a tower/cube/brick in that price range that has reasonable performance. The printer and the monitor don't need to be included.




What sells the faster computers is the software that demands all of the CPU's resources. The IMac and its G4 implementation is frankly a dog when it comes to driving the more demanding software.

As to that P4 I willing to bet that it was equiped with a reasonable amount of memory also.

Are you trying to say you can judge the performance of a computer by using Microsoft Word? Really?

Ain't it the truth! Windows is the only thing most will ever try, no matter what. Go figure.

Excellent post, by the way.

The eMac and the Imac where all excellent computers at one time that I will freely admit. But the world does not stand still and demands from users increase as that world turns. The only time it would be reasonable to recomend a eMac is when there is a requirement for an all in one. The machine is otherwise dated and not a good place to be investing ones money. It will not be a machine that will easly run the latest and greatest software package next year. In fact it has trouble with some of the applications people would want to run on the machine today.

Well I think I have more of a clue as to what is possible than the brand consultant that has such high regard for VW. First off; the computers are being built in a place where labor costs are almost nill. Second; I know how much it costs me to have the local computer shop put together a PC, which by the way will use all the same parts as a Mac except for the main board and the CPU. We all know very well that Apple as a large manufacture is getting far better pricing on its component than the local computer store. I also do business with a number of electronics suppliers on a reasonably consistant basis, so I have a good idea of what electronic hardware costs in lower volumns.

I'm not asking for the world or all the capabilities of the G5 Towers. All I want is a box that will hook up to any standard flat panel and a printer of my choice. There is no requirement for PCI slots or other expansion except for possilbly a slot for a second disk drive. All we are talking about is a brick with a fast processor, USB, Firewire, SATA and networking ports. Add to that a slot for a video card. If Apple and IBM can't do this as a SOC then they certainly should be able to do it as a two chip implementation.

It is a new world at 90nm, things that where impossilbe last year are now the new frontier. It really isn't even fair to compare computer manufacture with the manufacture of other hard goods. No other industry has ability to shrink their hardware and at the same time increase performance to the extent that the computer industry can. You have to realize that IBM once had production plants as big as those of GM just to manufacture mainframes, just about all of the PPC's outclass the capabilities of the machines that came out of those old factories. The industry hasn't hit the wall yet, in fact we are at the stage of having another level of integration possible.

Dave

I actually think the entry level eMac is pretty good value.
The extra cash for a super drive isnt so good, I saw Sony dvd writers at comp usa the other night for 170. They were +/- as well.

They real thing here, is that people understand what it means to buy an up gradable machine.
Im not saying they use it, most people dont, but they understand. It is another feature on their check list. Additionally, most people I know have a monitor that survives at least two machines, if not more. For some reason people struggle on with crap monitors stuck on top of good hardware. They would be better investing in a better monitor. Anyway, people know that in the future their machine will be obsolete, and feel comforted that they can carry some hardware over, or upgrade.

I think that leaves the eMac as a psychological loser. Its not a worse machine, or worse value for money.

Interestingly, Apple does well in the notebook market, why? Because their machines match the features of the competition, for similar prices. Upgrades arent an issue. Most people dont know what a pc-card is ( how do they know what desktop expansion is then ? ). They feel that Apple notebooks dont short change them in anyway.

Unfortunately, Apple has no machine for me. Even paying for an eMac would be tight right now, the fact that I would have to replace it completely in a year or less to get a better machine really puts me off investing now. I will stick with my old iBook, and save for whatever it is that Apple has coming up.

If you are a user of Word and it is importnat ot your operation than yes that is how the machine will be judged. But before we get into an argument about that reality, do realize that MS word is not well done with respect to the Mac.

The same approach would be taken buy someone using a CAD application or a custome piece of modeling software. If both machines support the same app then it is reasonable to compare the performance of the apps.

The problem isn't just with MS Word, many programs simply do not run wel on Apple hardware. Part of that is the programmers and the porting efforts involved. But alot of the problems are hardware related. It is not something that can be denied even though Apple users will try to do so.

In the context of Apples "low cost" line, those machines do not perform well against i86 machines in a similar price range running the same apps. This is not a surprise to anyone I hope. And yes there are exceptions.


Thanks
Dave

hey -

lots of good stuff in this thread (and lots of stuff that's been repeated on the mac web for years now ... :-). i just wanted to highlight 2 comments from earlier posts.

concentricity said:
__________________________________________________ ______________________
why do most people buy computers (personal, as in, 'for the home', because that's what we're talking about)? I'll make it easy for you, it'll be multiple choice.
For one of the following five reasons:

1) To "have the in-ter-net" (includes email, because so many people don't understand the seperation of the two, thanks to A-hole-L).

2) To write (aka 'use Word', general Office work).

3) To appease their children (pirate music, IM, some amount of games, etc).

4) All of the above.

5) Two of the above.
__________________________________________________ ______________________

well, the real pickle apple's got itself into with consumer hardware is the success of the "digital hub" strategy. now everyone wants to be able to burn DVDs, work with iMovie, import all those 100's of photos into iPhoto, etc., etc. five years ago, email and word were enough - not anymore. my folks are looking to get a new mac in the next year or so. and i'm really unsure what to recommend in the current lineup that won't feel dog slow with these type of applications.


and amorph said:
__________________________________________________ ______________________
In fact, from a design point of view, the idea of buying a tower and a separate monitor and plugging everything in just to do that is profoundly silly. There are phones that can do that now. They're not ideally suited to the task, but they can do it. Hell, pagers can do email. Pagers!
__________________________________________________ ______________________

this is an excellent point, and probably at the heart of the boom in laptop sales over the past 2 years (and also a result of the cell phone revolution). bringing it back to my parents example - they have an imac now. but even though they pay almost no attention at all to tech news, they understand that they can get a DVD-burning laptop now, and combined with Airport they do anything on the computer that they want to ... ANYWHERE. this is a big deal for everyday consumers, and represents a huge leap in everyday utility.

finally, it needs to be said every once in a while here. these issues are not being ignored by apple. i am sure that they're trying to find the sweet spot between power and price for the consumer line. don't you think they know how slow a 1.25 GHz computer sounds to the average consumer ? fortunately for all of us, the IBM partnership should provide them with lots more options for their products across the board - right now, and long into the future.

ok - back to lurking mode.
- matt

Exactly what I was getting at. The desktop is dying, because it's overlarge, overcomplicated and immobile when everything else is becoming portable and self-contained and miniaturized. It's an artifact of a vanishing era, at least in the consumer space.

One thing that struck me: Consumers went right from 15" monitors on desktops to... 15" monitors. In laptops, of course. Of course, no-one will buy a desktop with a 15" monitor anymore (which is just one more ding against the current line of iMacs), but it still seems to be a sweet spot with people. It's large enough to seem roomy, but not too large. And that's a point that I think a lot of power users and computerphiles miss: People who don't care about computers that much don't like them to take over, actually or visually. A laptop with a 15" screen is a nice compromise between spaciousness and manageability.

I think it remains to be seen whether people who just want to do "email and internet and a few other things" (something I hear a lot these days) really are interested in a machine that's capable of much more. I think the increasing chorus that wish represents is a response to the increasing complexity of PCs, and thus their increasing inability to efficiently and intuitively do what most people want them to do. I'm willing to bet that a little appliance would take care of a lot of people - and of course, if they wanted a fully featured machine, well, the appliance just happens to work really, really well with a Mac. And then you still have the appliance for when you just want to do a little surfing and emailing.

I must respectfully disagree with that particular point, Amorph. There definitely are people who are satisfied with 15" desktop screens. Heck, there are people who really don't care about the size of the screen, nor the quality, for that matter. I've seen people setup their new bargain basement PCs with new, pathetic 14" monitors, and I've seen contended people use horrendously low refresh rate 15" LCDs. (When I say horrendously low, I mean monitors that have such poor refresh rates I can see the horizontal lines when I look at them in my peripheral vision.) If people are satisfied with 15" laptops, then it's logical that a certain segment of users will find nothing wrong with that size screen on the desktop. Flipping through the channels, I saw the home shopping network pair a terrifically overpriced VAIO with a 15" LCD. So there are definitely people out there prepared to use that on their desktops.

The truth is, if the iMac 15" were decently priced, I myself would pick one up. These aren't bad machines after all. The really strange thing about the iMac's price structure is that its low-end is more expensive than the midrange iBook! At the very least, the low-end iMac should be less expensive than the equivalently featured iBook. There always used to be a portability price premium, but the iMac defies that venerable trend. If it's more expensive to produce a 15" iMac as compared to a 14" iBook, then there's definitely a deficiency somewhere. I can only imagine that the articulated arm is the culprit, as others have often suggested. It also seems that Apple has forgotten what the iMac is supposed to be. The iBook serves the entry level market better than it did before - it has actually gotten cheaper. The iMac, on the other hand, has been made into something that it's not - a midrange machine. (If Apple was hoping to see appreciably improved iMac sales figures due to the iMac 20", the company really has to go into drug rehabilitation.) Because of the iMac's deficiency, Apple is relying upon the eMac to serve the market the iMac was originally introduced for. Hopefully it won't take Apple too many quarters more to realize the iMac needs substantive change.

No kidding!

Big Mac, I enjoyed your post. Calling it as it is. Weird how the entry iBook is just a little more expensive than the entry eMac. What with the eMac supposedly being the edu' machine. No wonder Apple is selling more iBooks than iMacs, the iBook offers way more value. Not surprsingly Apple gets those large iBook edu' contracts...

Two iBook models below the entry iMac 2. Er. Strange.

It's a pity Apple can't get a similar value proposition going for its Consumer desktop Macs.

Something is wrong somewhere...

Lemon Bon Bon

Horrible car analogies aside, I find this debate pretty intriguing. As long as were all offering opinions, Ill take a swag at it.


These would be the same highly-paid individuals who created, marketed, and saw the demise of the Macintosh Cube?

These would be the same highly-paid individuals who (through careful analysis and planning) have seen Apples overall market share SHRINK in recent years?

Well, at least theyre highly-paid.


It is also very hard to get a job at Motorola. They wont even speak to you unless you have at least a 3.7 GPA in the Engineering field out of college.

All of that discretion didnt seem to help them when they closed 3 Motorola plants in Arizona, though.

Im not trying to single you out, Messiahtosh, but you seem to be operating on the premise that educated equates to successful. It is somewhat of a historical irony, then, that some of the most successful computer industries have been started by, and continue to be successful solely because certain CEOs did NOT finish college.


Actually, I used to think that Apple was small by design. That is, until Steve jobs proclaimed that greater market share is what Apple Computer was trying to achieve.


Well, NEVER is a mightly long time.

Even Bill Gates has realized the error of saying never. (Nobody will ever need more than 640k RAM)

Seems to me that there are MANY successful companies who (at one time or another) were small contenders in the market. History seems to indicate that the management of said companies used a VERY AGGRESSIVE and sometimes SLIGHTLY ILLEGAL business plan to become number one in their respective markets.

Though it may not be honorable, it certainly is POSSIBLE for Apple Computer to draw upon the experiences of other companies in the computer industry to better their market share.


Dont mean to be rude, but what EXACTLY is an Apple Standard?

Because Apples GUI (OSX) doesnt obey all of the Human Interface Standards.

And Apples hardware has had NUMEROUS technological, performance, and cosmetic problems over the years. MacFixIt is a testament to some of them.

So, when we speak of Apple compromising quality, Im inclined to wonder WHAT quality theyd be compromising.

My Armchair Quarterbacking
Folks, I don't have an MBA. I'm not smart enough to understand the inner-workings of running a successful computer company. And I'm most certainly NOT one of the people that Apple would consider taking advice from.

But I do know that a PC user isn't going to drop $800 for an Apple machine that does LESS than their $450 Dell machine. (Note that "LESS" implies that the user will have to re-invest in productivity and application software native to the MacOS).

Respectfully,
-Antithesis

You just answered your own question: If there was no Apple standard, you'd lose your basis of comparison here.

But I was speaking more in terms of a baseline functionality: Steve proclaimed the death of the CRT, setting the LCD as an Apple standard. The eMac doesn't measure up to that. FireWire, Ethernet, USB, USB 2, now AltiVec, AirPort and Bluetooth capability... that's the "Apple standard" I was referring to.


Consumer Reports just rated them #1 in reliability and support, again, and CR is not a particularly Mac-friendly publication. So, granting all the problems reported at MacFixIt and elsewhere, they're still holding themselves to a higher standard, and succeeding.

But that's a different argument. What I was arguing was that there's a certain Apple standard feature set for Macs, and any Apple machine that doesn't meet that minimum feature set is not going to be a Mac. It's not going to be able to do the things that Apple says Macs can do.


That depends on their experience with the $450 Dell.

Ah, gotcha. The "feature set" makes more sense.


Well, I'm not disputing that Apple makes a very good product. Likewise, they do a decent job with support.

Unfortunately, I've been "burned" by Consumer Reports in the past, so I'm unlikely to take "their" word for it.


Agreed.


That's a good point. What makes the disgruntled Dell user switch to the Macintosh as opposed to staying with Windows on another vendor's hardware?

I'm not certain of the answer, but I'm fairly certain that most "switchers" will not be able to see many differences (aside from the cosmetic) when taking a 10-minute test drive in the corner of their local CompUSA.

It seems that a sure-fire way for a Windows user to appreciate the MacOS is to sit down and use the thing for a few days (perhaps a week). Of course, one must convince a Windows user to abandon all software and competetive pricing to purchase the Apple computer with the OS in the first place.

Kind of "chicken-and-egg" if you ask me.

-Antithesis

It's ALL about the software! People will most likely be disgruntled with Windows itself and the attendant problems of using it. That is the pull, and Apple tried to capitalize on that dissatisfaction with the "switcher" ads. Unfortunately they failed to offer an inexpensive, yet competitive, product for those switchers to consider.


Most consumers in the "target audience" for the iMac and "switcher" campaign have few commercial grade software titles. These are not your Photoshop users. The stuff they have was bundled with their computer or bought from the bargain bins. This is what iLife is all about. For most people "abandoning all [Windows compatable] software" is their best and most rewarding move.

This same discussion, over and over, and that same stupid, broken car analogy. As always, the answer lies somewhere in the middle.

Apple is more concerned about profits than anything else. That is as it should be; they're a public corporation, and that's their responsibility to their shareholders.

However, for their long-term profitability (at least until they decide to abandon the Mac as primary revenue-generator) they must maintain a certain "critical mass" of marketshare. That is to say, they don't need 50%, but then they probably couldn't survive at .1% either. Their current consumer product line, with stagnating or decreasing sales, is not holding up its end of the bargain. It doesn't matter if they're nice machines or not. They're not selling enough; in my opinion they're not selling nearly enough.

To me, it's ridiculous to think that Apple can afford to (voluntarily or not) cherry-pick a progressively shrinking percentage of the market in order to maintain arbitrarily high margins. The long-term result of that approach is that Apple's market share shrinks until it eventually collapses. Macs are never going to be for everyone, but they can't be so exclusive that they become irrelevant.

But it's equally silly to think that Apple must have a machine that's twice the performance at half the price of their current models. It'd be nice, of course, but it's not necessary. 2 GHz G5 in a $500 machine? Get real. One day they may get to that level of competitiveness, but they don't need to blow their profit model to smithereens in one shot.

What they need is to address the fact that they have nothing whatsoever to appeal to a huge class of potential customers. Any price drops or performance increases (significant ones) would help. Any headless consumer machine would help, because lots of people want that, regardless of its relative merits vs. an all-in-one. It doesn't have to be dirt cheap and crappy, but, as with the eMac, if they need to make certain compromises than so be it.

Obviously Apple knows that their consumer desktop sales need to improve. But the fact that they've held the line for so long on pricing makes me wonder about their thinking. While they should never abandon profitability, they need to keep the Macs moving out the doors. If that means sacrificing a little short-term profitability in exchange for securing their long-term revenue stream, then IMHO they need to do that.

It's funny that a recent interview with Steve, he said how in the late 80's/early 90's Apple went for profits instead of market share, and it was a big mistake. It sure looks like that's what they're doing now.