I knew as soon as I described the true nature of Apple's consumer desktop strategy (and the limitations that require it) there would be howls of uninformed protest. Let's take another whack at it, shall we?
Originally posted by Res
Totally disagree with this one. The crippled iMac is a terrible, terrible strategy, guaranteed to shrink market share.
Try reading the original post. I never said it was a good
strategy, I said it was the best strategy available, given the circumstances.
You might not think that selling an iMac with competitive specs will attract switchers to the Mac when it is priced several hundred dollars above the equivalent PC, but I will tell one sure thing: selling "crippled" iMacs does encourage switchers -- from Mac to PC.
I *DO* think a truly competitive iMac would
attract switchers, even with a 10-20% Apple Tax. I said precisely that in my original post. The problem is that Apple cannot build such a machine
. In fact, they can't even come close. This is exactly what the Mac installed base can't get through their heads: 95% of consumers buy on price and clockspeed ONLY. On the Windows side, $999 gets you a 3GHZ HT enabled processor with a 17" LCD. On the Mac side, $999 gets you a 1.25 GHz processor and a 17" CRT. Ouch.
Now if Apple could build a 17" flat panel iMac with a 3GHz HT 975 G5 for $1199 then, and only then, could you even begin the process of justifying the extra $200, which half of the consumers would immediately choke on anyway. Now how many of you think we're gonna see an iMac with those specs and price anytime soon? Yeah, thought so.
So here's the point of my argument: Apple knows this. They're not dumb. They flat out know that 95% of consumers are never going to buy an iMac based solely on a lack of perceived
hardware parity. That's a terrible situation to be in, but the silver lining is you end up knowing a great deal about the 5% who will
buy an iMac. This 5% (mostly, but not all Mac installed base) appreciate the iMac's intangible
values: industrial design, ergonomics, integration with the OS and iApps, lack of virii, or just the plain old fact that it looks cool. What's important is this second 5% group thinks the iMac is a bargain at almost twice the price and half the speed of a Wintel, because they value the machine differently
Now I also recognize that Apple can't go too
far with this or risk turning off even that 5%. I also recognize that the current line of iMacs comes dangerously close to doing just this. However, and this is the main point, the new G5 iMacs can only be expected to re-establish the traditional iMac value proposition, NOT to grow marketshare. If Apple makes the specs of the new iMac "too good" in a doomed attempt to grow marketshare, then yeah, they'll sell more of them, but not to switchers. All that will happen is margins will go down, PM sales will go down and marketshare will NOT improve.
Since Apple introduced them Macs were always on par with the computers from the other side -- sometimes a little, faster sometimes a little slower, but always in the same performance range.
Not the same perceived
performance range. It doesn't matter what the machine can do once they get it home and actually use it. The only thing that matters is what the idiot consumer thinks
it can do when it's still sitting on the store shelf. Once the initial fad of the original iMac as internet appliance wore off and Apple simultaneously fell woefully behind in the megahertz race the iMac has gotten murdered at this game. And again, Apple cannot currently build an iMac that will reverse that trend. Stabilize it, yes, stop the bleeding, yes, but not reverse it.
Most Mac users know that they are going to spend more on a Mac than they would with a PC, but they don't mind paying for it because they think that they are getting value for their money.
Yeah you're right, Mac users don't mind. PC users do. So again, unless you're gonna hit that 3GHz/$999 combo, it doesn't matter how close you get. Anything in between that magic price point and the highest price the "enlightened 5%" will pay is the worst of both worlds. All a 2.0 GHz $1599 "marketshare" iMac is going to do is destroy margins and cannibalize Power Mac sales, because the only people who are going to buy it are people who would have either bought a more expensive iMac or moved up to a PM anyway.
When you sell a "crippled" iMac, many Mac users start feeling ripped off -- not only are they paying more for a Mac, but now it is a lot slower than a PC? That is not a tolerable situation. To a few people the use of a Mac has taken on a religious like statues, and "converting" to a PC would be unthinkable, but for most of us our preference doesn't have religious overtones, and we will switch over to PC if we feel it would be in our best interest.
Apple not only needs to encourage people to switch to the Mac, it desperately needs to hold on to the current Mac users. Anyone who thinks that trying to foster off "crippled" iMacs to the current user base is a good idea, is not thinking things through. Mac users are not easy marks waiting to be fleeced, nor religious fanatics that will flock to Apple no matter what it does. If Apples marketing department thinks we will be happy to buy computers that cost more AND preform less than PCs, then they are way out of touch with reality (and Apple is in big trouble).
As I just said, you're right that Apple has to keep the iMac competitive by Mac standards
or risk losing the "enlightened 5%". I fully expect the new iMac line to do just that by putting 1.6-2.0GHz G5s and better graphics cards into roughly the same form factor at roughly the same prices. What I do not expect (and Apple doesn't either) is for these machines to grow marketshare. They will only exist to keep the "enlightened 5%" happy, keep margins nice and high and protect Power Mac sales. The same thing the iMac line has always done.
I know it's a hard pill to swallow and we all sit around saying "why doesn't Apple do something", but the reality is their hands are tied, even after being "rescued" by the G5. The fact that Apple has been able to not only survive, but prosper by selling machines that are perceived as "half the speed at twice the price" is all the proof you need that the current strategy works. Can you imagine Gateway getting away with the same thing? No, didn't think so.