Apple should do what Wendy's did
It appears that Apple is doing research and homing in on what it will take to get PC users to convert. What they need to capitalize on this is a single machine that is priced within $50 of an equivalent PC, aside from the slower processor which Apple can't accommodate for. They need to sell the eMac for $899, since an equally spec'ed Dell costs about $819. Apple CAN afford to do this which I will try to roughly show later.
In the early 90's, Wendy's was a premium fast food place but charged much more than competitors. I remember a a drink, fries, and cheeseburger would cost $6 or $7. Wendy's wanted to become more mainstream and get more customers, just like Apple does. So they came out with a basic combo meal that was $2.99. But then all the other combo meals were like $5.25 and above. The idea was to offer one cheap alternative so that no one would ever be reluctant to go to Wendy's by themselves or in a group, but keep everything else expensive to keep the high margins from current customer willing to pay a premium for a something they liked. As the volume picked up, all the prices went down.
This is what Apple should do. The eMac is going to be within the specs range of most customers. Some will want a bigger monitor, some PCI slots, but it's a model that would appeal to most people coming in the door and remove the price differential. No one would be reluctant to learn about or buy a Mac because of higher prices.
Apple's usual customers have been shown to be willing to pay a premium for something they like. They'ed still sell 75% as many LCD iMacs as before, especially if they got it down to $1299 again. If someone wants a notebook, they'll still have to pay the same price. Pro customers will still need the fastest machine and pay more. But an $899 eMac assures that price won't be an issue for most prospective customers walking in the Apple Store.
Apple CAN afford to do this. Macs don't cost more than PCs because they are more expensive to manufacture. Apple has a lot of one time costs with R&D, developer relations, and the general overhead of running a company. When Apple sells 700k machines and has $1.3 billion revenue, they make about $0 for the quarter. When they sold almost 1,400k machines and and had $2.3 billion revenue, they made $233 million. What this shows is that after apple sells 700,000 machines they make 25% profit on everything else, which means they could sell at for 25% less and break even. As long as they still sold 850,000 machines besides the eMac, they would still make their $40 million they usually do. The eMacs they sell would add little profit, but greatly increase marketshare.
So if you agree with me that Apple could sell a well equipped $899 eMac without taking a loss , do you think this would bring in a lot of new customers? Do you think it would greatly cannabalize the other lines? The original iMac has been Apple's greatest success to date and it sold well when it was powerful enough fo most customers and the 15 inch screen was adequate. I think an $899 eMac could do a good deal better.
In the early 90's, Wendy's was a premium fast food place but charged much more than competitors. I remember a a drink, fries, and cheeseburger would cost $6 or $7. Wendy's wanted to become more mainstream and get more customers, just like Apple does. So they came out with a basic combo meal that was $2.99. But then all the other combo meals were like $5.25 and above. The idea was to offer one cheap alternative so that no one would ever be reluctant to go to Wendy's by themselves or in a group, but keep everything else expensive to keep the high margins from current customer willing to pay a premium for a something they liked. As the volume picked up, all the prices went down.
This is what Apple should do. The eMac is going to be within the specs range of most customers. Some will want a bigger monitor, some PCI slots, but it's a model that would appeal to most people coming in the door and remove the price differential. No one would be reluctant to learn about or buy a Mac because of higher prices.
Apple's usual customers have been shown to be willing to pay a premium for something they like. They'ed still sell 75% as many LCD iMacs as before, especially if they got it down to $1299 again. If someone wants a notebook, they'll still have to pay the same price. Pro customers will still need the fastest machine and pay more. But an $899 eMac assures that price won't be an issue for most prospective customers walking in the Apple Store.
Apple CAN afford to do this. Macs don't cost more than PCs because they are more expensive to manufacture. Apple has a lot of one time costs with R&D, developer relations, and the general overhead of running a company. When Apple sells 700k machines and has $1.3 billion revenue, they make about $0 for the quarter. When they sold almost 1,400k machines and and had $2.3 billion revenue, they made $233 million. What this shows is that after apple sells 700,000 machines they make 25% profit on everything else, which means they could sell at for 25% less and break even. As long as they still sold 850,000 machines besides the eMac, they would still make their $40 million they usually do. The eMacs they sell would add little profit, but greatly increase marketshare.
So if you agree with me that Apple could sell a well equipped $899 eMac without taking a loss , do you think this would bring in a lot of new customers? Do you think it would greatly cannabalize the other lines? The original iMac has been Apple's greatest success to date and it sold well when it was powerful enough fo most customers and the 15 inch screen was adequate. I think an $899 eMac could do a good deal better.
Comments
Yeah, I think the eMac has to hit at least $999 if not $899 soon.
<strong>I thought you were going to suggest using Steve Jobs in their ads.
Yeah, I think the eMac has to hit at least $999 if not $899 soon.</strong><hr></blockquote>
That woudl be sad because we all know what happened to Dave Thomas, RIP.
$999 agreed. 1099 is not the best price point, but I dont think Apple coudl have it lower right now. If they reduce their edu CD-ROM model to 899/949 for edu institutions/students instaed of 999/1049 then I'm sure they could get their retail CD-RW model down to 999. That would be the perfect price point.
Having the very low cost eMac is a great way to people to think of Macs seriously, then if they're happy with that they can buy it, but if they see the even more cool things a Mac can do like burn DVDs and have funky looking LCD monitors then they can spring the the top-of-the-line LCD iMac SuperDrive model and so on.
[ 06-09-2002: Message edited by: MacsKickAss ]</p>
<strong>
$999 agreed. 1099 is not the best price point, but I dont think Apple coudl have it lower right now. If they reduce their edu CD-ROM model to 899/949 for edu institutions/students instaed of 999/1049 then I'm sure they could get their retail CD-RW model down to 999. That would be the perfect price point.
</strong><hr></blockquote>
Why can't Apple have a $999 eMac now?
<strong>Why Steve!?, Why!!!!??? <img src="graemlins/surprised.gif" border="0" alt="[Surprised]" /> </strong><hr></blockquote>
He said he had an Apple Event, he said "Goodbye, I'll give you another Apple Event" and I wait, and I wait, and I wait...but non, just something second hand about eMacs and QT 6..and now I hear that he is going cross country to give a Keynote
Come on steve baby, don't we treat you right?
<strong>
Why can't Apple have a $999 eMac now?</strong><hr></blockquote>
perhaps they like making money and not losing money
<strong>That woudl be sad because we all know what happened to Dave Thomas, RIP.</strong><hr></blockquote>
Myabe I misunderstood, but I don't think that Dave Thomas died because he was in the Wendy's ads, so (although it is certain Steve Jobs will die) I think it would be fairly safe for him to be in an Apple ad...
Wendy's: home of the Triple (aka - the Artery Clogger).
Jet
<strong>
Myabe I misunderstood, but I don't think that Dave Thomas died because he was in the Wendy's ads, so (although it is certain Steve Jobs will die) I think it would be fairly safe for him to be in an Apple ad...</strong><hr></blockquote>
Logic doen´t apply to this area of the internet. Save it for where it matters.
<strong>For a minute, I thought you were advocating that Apple become the first major computer company to offer 3 beef patties in their products.
Wendy's: home of the Triple (aka - the Artery Clogger).
Jet</strong><hr></blockquote>
Oh God, **Confirmed** Apple to ship Triple Processor Powermac. affectionately called the "Triple".
<strong>
Oh God, **Confirmed** Apple to ship Triple Processor Powermac. affectionately called the "Triple".
...(AKA the 266MHz bus clogger)
<strong>
perhaps they like making money and not losing money</strong><hr></blockquote>
I'm sure the $100 difference wouldn't be that big.
let them ramp up production....give them 6-9 months and then we'll probably see a $999 eMac
patience <img src="graemlins/smokin.gif" border="0" alt="[Chilling]" />
I hope Steve Jobs dies. If he didn't die, he would live for a very long time and get very bored.