Low Ball

in General Discussion edited January 2014
Can Apple compete with a 349 dollar PC?

Hewlett-Packard announced the D220 low-end desktop PC for small businesses, which offers the Linux operating system. It comes without monitor and likely no bundled software at these prices. With Linux and a 2.0 GHz Celeron processor it sells for 349 dollars US. For 80 dollars more it comes with Windows XP Home. For 150 dollars more, the processor can be upgraded to a 2.4 GHz Pentium 4. So, a snappy PC that is capable of running Microsoft Office will cost 579 dollars. Add the cost of a monitor and this is the real competition for the business market. The D220 comes with a CD ROM drive.

Apple could compete. The local Mac dealer sells the eMac without modem for $699, and I'd bet the eMac has a better graphics card than the HP D220. So, if business pays 120 dollars for a 17 inch monitor, the HP D220 and the eMac cost the same, and surely Mac OS X is far superior to Windows XP Home. I'm not suggesting that the eMac is the answer to the business market, but pointing out that Apple could compete very well, with the right product for this market.

The HP D220 is in what HP calls a micro tower. It is 14 inches high, 7.1 inches wide and 15.4 inches deep. This general size case is what many have been asking for in these discussions. Apple could offer two motherboard options. The low end would have a G3 with the video chip soldered onto the motherboard. The higher range would have an AGP graphics card and a G4 processor.



  • Reply 1 of 11
    yevgenyyevgeny Posts: 1,148member
    With a junk video card (if it even has one) a junk mobo, yeah, I am sure that the Linux option will be really popular. Don't forget to add the standard $40 blurry PC fishbowl 14 inch monitor.

    This computer will be a large success in the trailer homes.
  • Reply 2 of 11
    shawkshawk Posts: 116member
    And in other news:

    Can Porsche fend off the Yugo threat?
  • Reply 3 of 11
    screedscreed Posts: 1,077member
    Well said Shawk.

    How much profit is HP making with this hardware?

    Let me rephrase that. Does HP make any profit with this hardware?!

    Okay, they've eliminated the Microsoft tax, but...

    What happens to the inventory that doesn't sell? That's right, you dump it elsewhere, like eBay, at a loss if need be. Perhaps at a loss that outweighs the slim margin of a sale.

    Does this boost HP market share? Maybe, but again, inevitably at a loss.

    Shareholders like market share, but swear by profit. Profit means there will be a company next year for shareholders to, well, hold their shares.


    You want Apple to make a low end Mac to increase market share and spread the faith. I get that. I agree with that. Apple needs a headless iMac. Kick the CRT to the curb.

    What we do not need is an Apple with warehouses full of unsold Macs sitting there for weeks and months.

  • Reply 4 of 11
    hmurchisonhmurchison Posts: 12,218member
    I think the $349 price point is rediculous. We all like to think that ultra cheap computers are the key for a platform but I believe deals like this don't work for 1 primary reason.

    If a Person or Company can only afford $349 for the computer then odds are they can't financially support the platform. This does a company no good. PC's have been selling at the $500 point for a couple of years or more now and it hasn't resurrected anything. As a matter of fact PCs are still in a slump.

    Apple would be best to team with Nvidia. Develop a low cost chipset with integrated graphics like nForce IGP and sell a simple system for $499. There would be very little profit in it but Mac user would snap'em up in droves. With 10/100 and a 700Mhz G4 they'd make a nice little Network Mac. Hell call it netMac.
  • Reply 5 of 11
    theflythefly Posts: 72member
    While I don't think Apple will sell a $349 computer, I do believe they'll be able to sell a cheaper eMac or headless Mac, but not before the PowerMac line regains it's sales.

    The Apple line has to maintain a higher margin to maintain their revenue. But as we know, the Power Mac line has been shrinking in sales over the past couple of years. For example, last quarter Power Mac sales are down 26% from the year previous.

    If the PM line picks up sales and starts selling 300k units per quarter (it did 142ish last quarter), it would allow Apple to reduce their margin on eMacs and iMacs but still maintain their preferred gross margin.

    Does that mean we'll see lower prices? Maybe, maybe not, but we may see better systems for a given price point.



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  • Reply 6 of 11
    neutrino23neutrino23 Posts: 1,522member
    Definitely the trend is in this direction. We are still hungry for more performance so we are willing to pay a premium for that. In the not too distant future we will be able to buy the equivalent of today's dual G5 for small money. What will happen to all of the computer related companies then?

    If Apple sells 5 million computers a year then at $200 each that is $1 Billion. Much less than they gross now on fewer computers. Probably Gateway and some others will go under or get out of the computer business.

    Apple seems to be preparing for this by looking for some kind of subscription business. iTMS, .Mac, yearly OS X upgrades are all ways of building on going businesses that don't depend on hardware purchases.

    What will happen to Dell when they sell $100 computers? Even if they sell 10 million a year that's just $1 Billion, much less than they gross now. With their low margins they will be highly stressed. When they make less than a dollar per computer how can they keep their business going? I think they can't. Something will have to give.

    By the way, I've used some of these cheap computers. They are barely functional. Blurry monitors, flimsy keyboards, slow response, and many other negatives.
  • Reply 7 of 11
    johnsonwaxjohnsonwax Posts: 462member

    Originally posted by hmurchison

    I think the $349 price point is rediculous. We all like to think that ultra cheap computers are the key for a platform but I believe deals like this don't work for 1 primary reason.

    Well, I can get an eMac for $749. It includes the monitor and a more appropriate OS for a desktop. It's probably still about 50% more (maybe a bit less) than the HP offering. If Apple could show a credible office suite bundled, then I think they might get somewhere.

    These do work for business because they are instrumental for wide-scale deployments. Xserves and OS X Server get some attention in enterprise, but they only really shine when hooked up to Apple desktops which they can't snarf up in volume at super low prices. It's the total cost of the package that kills the deal because 5,000 desktop systems will completely swamp the costs of servers/solutions. $100 on those desktops is half a million dollars. That's half a million dollars of OS X Server, Xserve, Xserve RAIDs, and whatever else.

    Right now, Apple isn't getting any of those dollars. Apple basically doesn't need to turn a profit on those desktops if they are being sold to enterprise because they'll get the sales and they'll get the profits on the other products. Their overall margin will plummet, but their profits won't. Now you know why Dell has different price structures depending on where you come from. At work I can't buy a 2.8GHz P4 from Dell for less than $1000. I'm in the wrong market for their best prices. Personally, I can get the same machine for half that. Cool, eh?

    Apple's not ready for this yet, though. Another year.
  • Reply 8 of 11
    aquaticaquatic Posts: 5,602member
    Re: credible office suite. They have everything inhouse except Word and Excel. Mellel opens Word docs and is pretty damn cool, I enourage anyone interested to check it out. I don't do spread sheets but I imagine there is an equivalent there too. Besides there's always Office.

    Cheap Macs? iBooks are always getting cheaper. They're such a great deal, and when they get the new IBM G3s they will be even more so. eMacs are a good deal too, though I'd like to see the price go down just a little. A bit. iMac prices...blech.
  • Reply 9 of 11
    snoopysnoopy Posts: 1,901member
    Gee, some people must just read the first line and then responded. The point is that a local Apple dealer here already does compete very well with this cheap 349 dollar PC. They are selling a 699 dollar version of the eMac for business mainly I would guess. This eMac is without modem and maybe without some of the bundled software. This is a new eMac from the factory and is not refurbished. I did not ask whether this is a test market or what.

    So how does this eMac compete with a 349 dollar PC? Easily. Very few will buy the 349 dollar product. By the time a customer adds Windows XP Home and upgrades the processor, the price is 579 dollars without monitor. Add a reasonable 17 monitor and we have the price of the stripped down eMac that the local dealer is selling. I'm sure the eMac has better video too, plus it has FireWire built in.

    The simple point I'm trying to make is that Apple has the wrong kind of low end product for most business. Apple could put the guts into a micro tower and sell it for 579 dollars, the price of that cheap PC once it is upgraded. Well, let's say 599 dollars because it's Apple and a little nicer.

    What HP and others do is offer a very cheap model that very few people buy. It gets people thinking that this company really has rock bottom good prices. The PC that people end up buying usually costs them much more than the low price that first attracted them. Well, I'm not sure Apple should play this game, but they could. Apple might offer a low ball motherboard with a G3 CPU rather than G4, with the video chips soldered on the board, and no AGP socket. It could also eliminate FireWire and the modem. This Mac might sell for 499 dollars and maybe built to order only. However, most businesses would buy the 599 dollar version.

    Apple needs a low cost office Mac so there is a complete Mac solution for small business. Very few are going to buy half Macs and half Windows PCs for their business. If Apple does not have a low end office Mac, Apple does not have a complete solution and will not be considered. As bad a Microsoft may get, when only Windows PCs offer everything, that is what business will buy.

    Just one comment on market share. The Porsche analogy makes Mac users feel good, but Porsche can do well with one percent of the market. Apple cannot. The Mac OS needs developers to keep it viable. The Mac cannot serve a few niche markets and expect to keep many developers interested. More developers are getting interested in the Mac because they see potential promise. If the Mac stagnates, and market share does not grow, many of these developers will begin to lose interest and drop the Mac. Apple does not need really cheap computers, but they need a good product in the price range that most businesses and households end up buying.
  • Reply 10 of 11
    bodhibodhi Posts: 1,424member
    General Discussion...
  • Reply 11 of 11
    bungebunge Posts: 7,329member
    The G5 is here and the old G4 motherboard could be useful in future cheap products. That's my feeling. Take away a few pieces and leave just 1 PCI slot, only 4x AGP, 1 GB RAM Max, 100bT ethernet, who knows. You'll have a machine that doesn't compete with the G5.
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