Thank you!!!!!!!!!!!!! That was the first thing I thought of when I read the article. makes me think that the article is trash.
It's not trash, it's just a perfect storm. Intel desperately wants these companies to make nicer Intel machines before ARM arrives in laptops. These guys can't compete with Apple on price, will likely have worse margins as they usually do, and if they have to sell machines at the same price as Apple likely know they're going to get their butts handed to them. Nobody (or a very few fanatics) are going to be excited to buy a $999 Acer that has the same specs as a $999 Mac, so getting a price concession out of Intel seems like a way to at least pad margins. But, in a sweet bit of irony, there is no way Apple will sit there and let makers with smaller volumes get a better deal on chips.
Intel knows that Apple is a recompile away from being able to do a real machine on ARM, so Apple probably has that as leverage, though 3rd party apps would have the same issue as Win8-ARM (though mostly an easier time recompiling thanks to Xcode). I'd rather have an x86 laptop for the time being since I'm sure that the rendering app and CS5 won't be ported to ARM very quickly should Apple go that route.
Anyway, the whole situation is totally plausible and Intel is crapping bricks at the moment looking at ARM suddenly threaten their netbook/laptop chip market. The clone makers know that they have that as leverage - they're certainly going to try and crank out un-spectacular ARM laptops to go with Win8 when the time comes, and Intel knows it.
Its interesting that the tables are turned on overseas manufacturers. They are basically squeezed by Intel and Microsoft. This could open up doors for AMD if they have a viable mobile platform.
Given that they've just seen the U.S. government illegally stop companies from failing, they're pretty much justified in their mindset of "talk to a U.S. company to get free crap for doing absolutely nothing and whining about it long enough."
Please, PLEASE check your politics at the door. This is a tech site. There are plenty of sites available if you want to talk politics.
Then let me see if I can answer in a more age and developmentally appropriate manner for you.
Jimmy and Tommy have skateboards, which have similar features and functionality. The young men would like to purchase new skateboards. Jimmy takes on a paper route and forgoes his weekly candy bar to earn money and reduce his expenses for the purchase. Tommy companies bitterly to anyone within earshot about the price, and writes a letter to the company president. "If the folks who made the wheels didn't charge so much, I could afford a new skateboard. You should do something for ME!"
Jimmy was clever and figured out how to make a premium edition of the newspaper (whatever that might mean) using the same basic stories. Tommy works hard, he's just not as smart as Jimmy and never figured out how to be innovative and increase his margins, so he doesn't earn as much. Realistically, he never will be. He's not looking for a handout, but as the newspaper company sees some terrifying competition coming up, it would rather have both Jimmy and Tommy sell premium papers. The newspaper offers Tommy a premium design for the paper he sells, and Tommy is smart enough to realize that HIS customers might not be willing to pay the higher price AND that the newspaper company wants this so badly that he might be able to get a better price on the paper from them.
Newspapers aren't a good analogy, but that's closer than essentially 'Tommy just complains too much and won't work to buy a new skateboard.', which really is completely disconnected from what is going on in the market. Trying to connect this to a political position is just a hell of a stretch.
This will not help them. Because if intel lowers price then they will have to extend that to Apple as well. You cant charge all but one company a price. So if apple gets it cheaper then they can lower the price of the air and still keep the same profit margin on the product.
Quote:
Originally Posted by AppleInsider
Struggling to compete with the pricing of Apple's MacBook Air lineup, "Ultrabook" PC makers have again asked Intel to reduce the price of its mobile CPUs.
Executives from both Acer Taiwan and Compal Electronics have turned to Intel and asked the chipmaker to aid them in achieving pricing below $1,000, according to DigiTimes. Intel has partnered with PC makers to push a new specification, dubbed "Ultrabook," designed to compete with Apple's popular thin-and-light MacBook Air.
Scott Lin, president of Acer Taiwan, reportedly said that his company is likely to adopt a lower-end processor or reduce component specifications to meet the sub-$1,000 price goal. He said Intel refuses to provide vendors like Acer with a subsidy on CPU prices.
Intel allegedly hopes to have 40 percent of consumer notebooks be super-light Ultrabooks in the future. But Ray Chen, president of Compal Electronics, said he thinks it's unlikely Intel will achieve that goal with current pricing.
"He added that if Ultrabooks suffer from weak sales, while Apple continues to enjoy strong profit, the Wintel alliance will need to do something or else all the related IT player may be gone together," the report said.
Price issues have been a recurring theme in the Ultrabook saga, as PC makers have failed to match the pricing on Apple's MacBook Air lineup. A month ago, Intel was said to have denied a request from PC makers for a steep 50 percent discount on CPUs for the Ultrabook specification.
In addition to struggling with pricing, Ultrabook makers have also had to contend with Apple's dominance in the overseas supply chain. In August it was said that Ultrabook makers were out-muscled by Apple for acquiring unibody metal chassis for ultraportable notebooks.
Apple's MacBook Air lineup starts at $999 with the low-end 11.6-inch model, and Intel hopes to compete with Apple on pricing. But some of the first Ultrabook models announced were priced well above the $1,000 threshold, such as Asustek's 13.3-inch UX31 at $1,600.
Intel's Ultrabook design calls for systems to retail for less than four figures and sport form factors that are no more than 20 millimeters thick, with "tablet-like features" in a "thin, light and elegant design." The new MacBook Air design first released in late 2010 has proven to be so popular that it even prompted Apple to discontinue its white entry-level MacBook, which also sold for $999.
Perhaps. Perhaps it is semantics. Two people go to buy a car. One person says "Please lower the $17k price by $2k so I can afford to buy the car. I only have $15k and I really need this car."
The other says "If you sell this car to me for $15k, I'll buy it. Otherwise, I'll go the the dealership next door."
No difference in results, but the perceptions are wildly different. One seems to be bargaining from a position of strength, the other weakness. Which on is more likely to get the desired result?
Depends on the dealer. What's his position? Currently, Intel, with respect to the PC guys is stronger.
As someone who has watched the Apple saga for a long time, the current state of affairs is astounding.
For so long all we heard about was the Apple tax, and how Apple only made overpriced machines for people that valued bling over substance, and that Apple's products were all show and no go, etc. etc.
Meanwhile, the PC industry continued the fabled "race to the bottom", shaving nickels off their BOM and cheapening their wares to the point of disposability. That 18 month old PC staring to get a little flaky or slow? Go to Walmart and buy a new one for $350 including monitor!
Apple, obviously, had no chance to compete in that kind of market, and was going to wall itself off in its golden ghetto of pompous aesthetes and foppish posers. Even when they could get into a new market and briefly achieve price parity, the inevitable drive to cheap commodity hardware would shortly leave them once again high and dry.
And here we are. PC sales are flattening, PC manufacturers are making no to little money, consolidations are underway, and markets are shifting to reward quality and portability.
And abruptly, Apple is sitting pretty. They've been steadily investing in manufacturing processes that allow them to offer very high quality for the least possible money, amassing a war chest that allows them to lock up supply chains, investing in anything that allows them to make their products lighter, thinner, more rigid, with better battery life and good performance.
The PC guys have not. They know how to try and get parts for cheap, and put them in boxes that occasionally are tricked out with a little style, when the mood strikes, but such gestures generally go nowhere and are summarily dropped.
And now they're kind of screwed. Sure, they will continue to sell far more cheap, heavy, kind of crappy notebooks than Apple ever could. But they're not making any money off of them, and those chickens are starting to come home to roost. They start looking around for the kind of design that might actually coax their customers to spend a few more bucks and guess what? There's Apple, with all their ducks in a row, and having left little room for anyone else to play in their space. That fancy pants ghetto suddenly doesn't look so silly, does it?
As someone said, these clone makers just aren't set up to design and innovate. It's definitely a joke considering the 'Apple tax' stuff people still spout off about. Whether it's the iPad, the Air, the iMac (and maybe even the Pro's in the future?), these knockoff companies can't catch Apple on making a NICE machine.
Yeah, it's frankly amazing to see what state the PC industry is in after all these years. From the very first piece of Apple hardware I've ever bought (a G4 powerbook) I've heard nothing but "overpriced toy", "too expensive", "hyped up fashion item" and similar remarks from people that were still living in the PC world. Look at where we are now. Except for a few manufacturers, the Acers, Dells, Asuses, Packard Bells and all the other shovelware PC makers have not been able to come up with anything besides increasing volume and lowering margins. Now that more and more consumers are kind of fed up with craptastic, generic plastic computers they already hate and want to replace within a year, they are completely clueless as to what happened and how they should adapt to remain relevant.
Perhaps. Perhaps it is semantics. Two people go to buy a car. One person says "Please lower the $17k price by $2k so I can afford to buy the car. I only have $15k and I really need this car."
The other says "If you sell this car to me for $15k, I'll buy it. Otherwise, I'll go the the dealership next door."
No difference in results, but the perceptions are wildly different. One seems to be bargaining from a position of strength, the other weakness. Which on is more likely to get the desired result?
Depends on the dealer. What's his position? Currently, Intel, with respect to the PC guys is stronger.
Perhaps. Perhaps it is semantics. Two people go to buy a car. One person says "Please lower the $17k price by $2k so I can afford to buy the car. I only have $15k and I really need this car."
The other says "If you sell this car to me for $15k, I'll buy it. Otherwise, I'll go the the dealership next door."
No difference in results, but the perceptions are wildly different. One seems bargaining from a position of strength, the other weakness. Which on is more likely to get the desired result?
Depends on the dealer. What's his position? Currently, Intel, with respect to the PC guys is stronger.
I would say the first part of your analogy is correct, but the second transaction looks more like "I will buy 1000 of these cars for my rental fleet if you take 15% off the total price. Moreover, I will commit to buying 10,000 of these cars over the next two years for my hugely successful chain of highly cost efficient rental locations for a fixed price I will negotiate now that may or may not reflect pricing changes that are advantageous to me."
Then, the car manufacturer sees that the rental business as operated by customer B is likely to be a source of lucrative sales, and, hoping to get more players involved, publishes a business plan for just such a highly efficient rental franchise. Then, customer A declares that they can't possibly offer car rentals at competitive prices and take advantage of this franchise scheme unless the car manufacturer offers them big discounts, despite the fact that they can't commit to any particular purchase volumes, now or in the future.
As someone who has watched the Apple saga for a long time, the current state of affairs is astounding.
For so long all we heard about was the Apple tax, and how Apple only made overpriced machines for people that valued bling over substance, and that Apple's products were all show and no go, etc. etc.
Meanwhile, the PC industry continued the fabled "race to the bottom", shaving nickels off their BOM and cheapening their wares to the point of disposability. That 18 month old PC staring to get a little flaky or slow? Go to Walmart and buy a new one for $350 including monitor!
Apple, obviously, had no chance to compete in that kind of market, and was going to wall itself off in its golden ghetto of pompous aesthetes and foppish posers. Even when they could get into a new market and briefly achieve price parity, the inevitable drive to cheap commodity hardware would shortly leave them once again high and dry.
And here we are. PC sales are flattening, PC manufacturers are making no to little money, consolidations are underway, and markets are shifting to reward quality and portability.
And abruptly, Apple is sitting pretty. They've been steadily investing in manufacturing processes that allow them to offer very high quality for the least possible money, amassing a war chest that allows them to lock up supply chains, investing in anything that allows them to make their products lighter, thinner, more rigid, with better battery life and good performance.
The PC guys have not. They know how to try and get parts for cheap, and put them in boxes that occasionally are tricked out with a little style, when the mood strikes, but such gestures generally go nowhere and are summarily dropped.
And now they're kind of screwed. Sure, they will continue to sell far more cheap, heavy, kind of crappy notebooks than Apple ever could. But they're not making any money off of them, and those chickens are starting to come home to roost. They start looking around for the kind of design that might actually coax their customers to spend a few more bucks and guess what? There's Apple, with all their ducks in a row, and having left little room for anyone else to play in their space. That fancy pants ghetto suddenly doesn't look so silly, does it?
Good post! Something definitely went wrong along the way.
Yeah, it's frankly amazing to see what state the PC industry is in after all these years. From the very first piece of Apple hardware I've ever bought (a G4 powerbook) I've heard nothing but "overpriced toy", "too expensive", "hyped up fashion item" and similar remarks from people that were still living in the PC world. Look at where we are now. Except for a few manufacturers, the Acers, Dells, Asuses, Packard Bells and all the other shovelware PC makers have not been able to come up with anything besides increasing volume and lowering margins. Now that more and more consumers are kind of fed up with craptastic, generic plastic computers they already hate and want to replace within a year, they are completely clueless as to what happened and how they should adapt to remain relevant.
The problem is that the clone makers never really competed with Apple - they competed with IBM, who had uninspiring beige boxes at a higher price. As the whole PC industry (non-Apple) commoditized, IBM sold their business to Lenovo and nobody has a margin left. They never had to actually design a product and don't know how to. HP maybe could have, but just gave up.
Intel is suddenly very afraid of ARM, and Microsoft is being killed by Android on the phone side and has to worry about only having their OS on pieces of junk on the PC side. There's no value in the clone business, potentially marginalized value in the clone OS business... It's a thing of beauty.
First, there are ways to build a computer other than using machined aluminum.
Second, aluminum machining capability is available in thousands, if not millions, of shops around the country. There's no way Apple has monopolized the aluminum milling market.
Bottom line is that Apple can do it with Intel's old prices - and still yield a nice margin. There's no intrinsic reason why Ultrabook makers can't do it, too. Even Apple's vaunted volume advantage is not that big a deal. Volume reduces costs dramatically on some things, but not on machined parts. There, the volume savings are much more modest. And most of the other components are industry standard (CPU, RAM, screen, power supply, etc).
It would be interesting to see why they're finding it so hard. My guess is that they don't get the entire Ultrabook concept and they're trying to jam it full of everything from serial ports to parallel ports to 10Base2 connectors along with Blu-Ray and 100 other things that the machine doesn't need.
Honest question:
As I understand it state of the art Intel chips cost around $100-$120 in quantity.
State of the art ARM chips cost $20-$25 in quantity.
Aside, for now, the differences in architecture, 64-bit, etc... Is an intel chip worth 5-6 times an ARM chip?
Why?
Could a 4-ARM motherboard (8 cores, 8 GPUs) compete with a Intel i7 (8 cores and 1 GPU)?
Will the equation change dramatically when ARM goes 64-bit?
Good post! Something definitely went wrong along the way.
Yep, nice summary. 'Something definitely went wrong along the way' is Apple's 'something definitely went right along the way.' They've always been about making better products instead of just cheaper ones, and clearly that was the right call.
Comments
Thank you!!!!!!!!!!!!! That was the first thing I thought of when I read the article. makes me think that the article is trash.
It's not trash, it's just a perfect storm. Intel desperately wants these companies to make nicer Intel machines before ARM arrives in laptops. These guys can't compete with Apple on price, will likely have worse margins as they usually do, and if they have to sell machines at the same price as Apple likely know they're going to get their butts handed to them. Nobody (or a very few fanatics) are going to be excited to buy a $999 Acer that has the same specs as a $999 Mac, so getting a price concession out of Intel seems like a way to at least pad margins. But, in a sweet bit of irony, there is no way Apple will sit there and let makers with smaller volumes get a better deal on chips.
Intel knows that Apple is a recompile away from being able to do a real machine on ARM, so Apple probably has that as leverage, though 3rd party apps would have the same issue as Win8-ARM (though mostly an easier time recompiling thanks to Xcode). I'd rather have an x86 laptop for the time being since I'm sure that the rendering app and CS5 won't be ported to ARM very quickly should Apple go that route.
Anyway, the whole situation is totally plausible and Intel is crapping bricks at the moment looking at ARM suddenly threaten their netbook/laptop chip market. The clone makers know that they have that as leverage - they're certainly going to try and crank out un-spectacular ARM laptops to go with Win8 when the time comes, and Intel knows it.
And who is company Y when Intel is company X?
http://sites.amd.com/us/microsoft/wi...Windows-7.aspx
http://www.engadget.com/2011/09/14/a...-hands-on-wit/
http://sites.amd.com/us/microsoft/wi...Windows-7.aspx
http://www.engadget.com/2011/09/14/a...-hands-on-wit/
Nice try.
Given that they've just seen the U.S. government illegally stop companies from failing, they're pretty much justified in their mindset of "talk to a U.S. company to get free crap for doing absolutely nothing and whining about it long enough."
Please, PLEASE check your politics at the door. This is a tech site. There are plenty of sites available if you want to talk politics.
Be an adult and take it elsewhere.
Then let me see if I can answer in a more age and developmentally appropriate manner for you.
Jimmy and Tommy have skateboards, which have similar features and functionality. The young men would like to purchase new skateboards. Jimmy takes on a paper route and forgoes his weekly candy bar to earn money and reduce his expenses for the purchase. Tommy companies bitterly to anyone within earshot about the price, and writes a letter to the company president. "If the folks who made the wheels didn't charge so much, I could afford a new skateboard. You should do something for ME!"
Jimmy was clever and figured out how to make a premium edition of the newspaper (whatever that might mean) using the same basic stories. Tommy works hard, he's just not as smart as Jimmy and never figured out how to be innovative and increase his margins, so he doesn't earn as much. Realistically, he never will be. He's not looking for a handout, but as the newspaper company sees some terrifying competition coming up, it would rather have both Jimmy and Tommy sell premium papers. The newspaper offers Tommy a premium design for the paper he sells, and Tommy is smart enough to realize that HIS customers might not be willing to pay the higher price AND that the newspaper company wants this so badly that he might be able to get a better price on the paper from them.
Newspapers aren't a good analogy, but that's closer than essentially 'Tommy just complains too much and won't work to buy a new skateboard.', which really is completely disconnected from what is going on in the market. Trying to connect this to a political position is just a hell of a stretch.
Oh, forgot about the banks. I'm talking about favoritism in what's supposed to be a free market economy.
However, that's secondary to the point I'm making. I knew people wouldn't give a crap about the real point, though.
Most likely, people, myself included don't care about it HERE. Take it somewhere else.
Struggling to compete with the pricing of Apple's MacBook Air lineup, "Ultrabook" PC makers have again asked Intel to reduce the price of its mobile CPUs.
Executives from both Acer Taiwan and Compal Electronics have turned to Intel and asked the chipmaker to aid them in achieving pricing below $1,000, according to DigiTimes. Intel has partnered with PC makers to push a new specification, dubbed "Ultrabook," designed to compete with Apple's popular thin-and-light MacBook Air.
Scott Lin, president of Acer Taiwan, reportedly said that his company is likely to adopt a lower-end processor or reduce component specifications to meet the sub-$1,000 price goal. He said Intel refuses to provide vendors like Acer with a subsidy on CPU prices.
Intel allegedly hopes to have 40 percent of consumer notebooks be super-light Ultrabooks in the future. But Ray Chen, president of Compal Electronics, said he thinks it's unlikely Intel will achieve that goal with current pricing.
"He added that if Ultrabooks suffer from weak sales, while Apple continues to enjoy strong profit, the Wintel alliance will need to do something or else all the related IT player may be gone together," the report said.
Price issues have been a recurring theme in the Ultrabook saga, as PC makers have failed to match the pricing on Apple's MacBook Air lineup. A month ago, Intel was said to have denied a request from PC makers for a steep 50 percent discount on CPUs for the Ultrabook specification.
In addition to struggling with pricing, Ultrabook makers have also had to contend with Apple's dominance in the overseas supply chain. In August it was said that Ultrabook makers were out-muscled by Apple for acquiring unibody metal chassis for ultraportable notebooks.
Apple's MacBook Air lineup starts at $999 with the low-end 11.6-inch model, and Intel hopes to compete with Apple on pricing. But some of the first Ultrabook models announced were priced well above the $1,000 threshold, such as Asustek's 13.3-inch UX31 at $1,600.
Intel's Ultrabook design calls for systems to retail for less than four figures and sport form factors that are no more than 20 millimeters thick, with "tablet-like features" in a "thin, light and elegant design." The new MacBook Air design first released in late 2010 has proven to be so popular that it even prompted Apple to discontinue its white entry-level MacBook, which also sold for $999.
Now you are just playing with words.
Perhaps. Perhaps it is semantics. Two people go to buy a car. One person says "Please lower the $17k price by $2k so I can afford to buy the car. I only have $15k and I really need this car."
The other says "If you sell this car to me for $15k, I'll buy it. Otherwise, I'll go the the dealership next door."
No difference in results, but the perceptions are wildly different. One seems to be bargaining from a position of strength, the other weakness. Which on is more likely to get the desired result?
Depends on the dealer. What's his position? Currently, Intel, with respect to the PC guys is stronger.
For so long all we heard about was the Apple tax, and how Apple only made overpriced machines for people that valued bling over substance, and that Apple's products were all show and no go, etc. etc.
Meanwhile, the PC industry continued the fabled "race to the bottom", shaving nickels off their BOM and cheapening their wares to the point of disposability. That 18 month old PC staring to get a little flaky or slow? Go to Walmart and buy a new one for $350 including monitor!
Apple, obviously, had no chance to compete in that kind of market, and was going to wall itself off in its golden ghetto of pompous aesthetes and foppish posers. Even when they could get into a new market and briefly achieve price parity, the inevitable drive to cheap commodity hardware would shortly leave them once again high and dry.
And here we are. PC sales are flattening, PC manufacturers are making no to little money, consolidations are underway, and markets are shifting to reward quality and portability.
And abruptly, Apple is sitting pretty. They've been steadily investing in manufacturing processes that allow them to offer very high quality for the least possible money, amassing a war chest that allows them to lock up supply chains, investing in anything that allows them to make their products lighter, thinner, more rigid, with better battery life and good performance.
The PC guys have not. They know how to try and get parts for cheap, and put them in boxes that occasionally are tricked out with a little style, when the mood strikes, but such gestures generally go nowhere and are summarily dropped.
And now they're kind of screwed. Sure, they will continue to sell far more cheap, heavy, kind of crappy notebooks than Apple ever could. But they're not making any money off of them, and those chickens are starting to come home to roost. They start looking around for the kind of design that might actually coax their customers to spend a few more bucks and guess what? There's Apple, with all their ducks in a row, and having left little room for anyone else to play in their space. That fancy pants ghetto suddenly doesn't look so silly, does it?
As someone said, these clone makers just aren't set up to design and innovate. It's definitely a joke considering the 'Apple tax' stuff people still spout off about. Whether it's the iPad, the Air, the iMac (and maybe even the Pro's in the future?), these knockoff companies can't catch Apple on making a NICE machine.
Yeah, it's frankly amazing to see what state the PC industry is in after all these years. From the very first piece of Apple hardware I've ever bought (a G4 powerbook) I've heard nothing but "overpriced toy", "too expensive", "hyped up fashion item" and similar remarks from people that were still living in the PC world. Look at where we are now. Except for a few manufacturers, the Acers, Dells, Asuses, Packard Bells and all the other shovelware PC makers have not been able to come up with anything besides increasing volume and lowering margins. Now that more and more consumers are kind of fed up with craptastic, generic plastic computers they already hate and want to replace within a year, they are completely clueless as to what happened and how they should adapt to remain relevant.
Perhaps. Perhaps it is semantics. Two people go to buy a car. One person says "Please lower the $17k price by $2k so I can afford to buy the car. I only have $15k and I really need this car."
The other says "If you sell this car to me for $15k, I'll buy it. Otherwise, I'll go the the dealership next door."
No difference in results, but the perceptions are wildly different. One seems to be bargaining from a position of strength, the other weakness. Which on is more likely to get the desired result?
Depends on the dealer. What's his position? Currently, Intel, with respect to the PC guys is stronger.
But there is no car dealership Next door.
Perhaps. Perhaps it is semantics. Two people go to buy a car. One person says "Please lower the $17k price by $2k so I can afford to buy the car. I only have $15k and I really need this car."
The other says "If you sell this car to me for $15k, I'll buy it. Otherwise, I'll go the the dealership next door."
No difference in results, but the perceptions are wildly different. One seems bargaining from a position of strength, the other weakness. Which on is more likely to get the desired result?
Depends on the dealer. What's his position? Currently, Intel, with respect to the PC guys is stronger.
I would say the first part of your analogy is correct, but the second transaction looks more like "I will buy 1000 of these cars for my rental fleet if you take 15% off the total price. Moreover, I will commit to buying 10,000 of these cars over the next two years for my hugely successful chain of highly cost efficient rental locations for a fixed price I will negotiate now that may or may not reflect pricing changes that are advantageous to me."
Then, the car manufacturer sees that the rental business as operated by customer B is likely to be a source of lucrative sales, and, hoping to get more players involved, publishes a business plan for just such a highly efficient rental franchise. Then, customer A declares that they can't possibly offer car rentals at competitive prices and take advantage of this franchise scheme unless the car manufacturer offers them big discounts, despite the fact that they can't commit to any particular purchase volumes, now or in the future.
As someone who has watched the Apple saga for a long time, the current state of affairs is astounding.
For so long all we heard about was the Apple tax, and how Apple only made overpriced machines for people that valued bling over substance, and that Apple's products were all show and no go, etc. etc.
Meanwhile, the PC industry continued the fabled "race to the bottom", shaving nickels off their BOM and cheapening their wares to the point of disposability. That 18 month old PC staring to get a little flaky or slow? Go to Walmart and buy a new one for $350 including monitor!
Apple, obviously, had no chance to compete in that kind of market, and was going to wall itself off in its golden ghetto of pompous aesthetes and foppish posers. Even when they could get into a new market and briefly achieve price parity, the inevitable drive to cheap commodity hardware would shortly leave them once again high and dry.
And here we are. PC sales are flattening, PC manufacturers are making no to little money, consolidations are underway, and markets are shifting to reward quality and portability.
And abruptly, Apple is sitting pretty. They've been steadily investing in manufacturing processes that allow them to offer very high quality for the least possible money, amassing a war chest that allows them to lock up supply chains, investing in anything that allows them to make their products lighter, thinner, more rigid, with better battery life and good performance.
The PC guys have not. They know how to try and get parts for cheap, and put them in boxes that occasionally are tricked out with a little style, when the mood strikes, but such gestures generally go nowhere and are summarily dropped.
And now they're kind of screwed. Sure, they will continue to sell far more cheap, heavy, kind of crappy notebooks than Apple ever could. But they're not making any money off of them, and those chickens are starting to come home to roost. They start looking around for the kind of design that might actually coax their customers to spend a few more bucks and guess what? There's Apple, with all their ducks in a row, and having left little room for anyone else to play in their space. That fancy pants ghetto suddenly doesn't look so silly, does it?
Good post! Something definitely went wrong along the way.
Yeah, it's frankly amazing to see what state the PC industry is in after all these years. From the very first piece of Apple hardware I've ever bought (a G4 powerbook) I've heard nothing but "overpriced toy", "too expensive", "hyped up fashion item" and similar remarks from people that were still living in the PC world. Look at where we are now. Except for a few manufacturers, the Acers, Dells, Asuses, Packard Bells and all the other shovelware PC makers have not been able to come up with anything besides increasing volume and lowering margins. Now that more and more consumers are kind of fed up with craptastic, generic plastic computers they already hate and want to replace within a year, they are completely clueless as to what happened and how they should adapt to remain relevant.
The problem is that the clone makers never really competed with Apple - they competed with IBM, who had uninspiring beige boxes at a higher price. As the whole PC industry (non-Apple) commoditized, IBM sold their business to Lenovo and nobody has a margin left. They never had to actually design a product and don't know how to. HP maybe could have, but just gave up.
Intel is suddenly very afraid of ARM, and Microsoft is being killed by Android on the phone side and has to worry about only having their OS on pieces of junk on the PC side. There's no value in the clone business, potentially marginalized value in the clone OS business... It's a thing of beauty.
This is silly.
First, there are ways to build a computer other than using machined aluminum.
Second, aluminum machining capability is available in thousands, if not millions, of shops around the country. There's no way Apple has monopolized the aluminum milling market.
Bottom line is that Apple can do it with Intel's old prices - and still yield a nice margin. There's no intrinsic reason why Ultrabook makers can't do it, too. Even Apple's vaunted volume advantage is not that big a deal. Volume reduces costs dramatically on some things, but not on machined parts. There, the volume savings are much more modest. And most of the other components are industry standard (CPU, RAM, screen, power supply, etc).
It would be interesting to see why they're finding it so hard. My guess is that they don't get the entire Ultrabook concept and they're trying to jam it full of everything from serial ports to parallel ports to 10Base2 connectors along with Blu-Ray and 100 other things that the machine doesn't need.
Honest question:
As I understand it state of the art Intel chips cost around $100-$120 in quantity.
State of the art ARM chips cost $20-$25 in quantity.
Aside, for now, the differences in architecture, 64-bit, etc... Is an intel chip worth 5-6 times an ARM chip?
Why?
Could a 4-ARM motherboard (8 cores, 8 GPUs) compete with a Intel i7 (8 cores and 1 GPU)?
Will the equation change dramatically when ARM goes 64-bit?
Good post! Something definitely went wrong along the way.
Yep, nice summary. 'Something definitely went wrong along the way' is Apple's 'something definitely went right along the way.'
But there is no car dealership Next door.
Come on Jackons, you're screwing up the grading curve for the whole class.