Random Topic 1: Some of this is the problem with the all-in-one strategy if there is no up-grade path. The crt iMac is still a cool form for the 90% of the people who deal in Dells and CTL's etc. But if you can't put a 500 gig G4 in one, you have a machine that for most people sits on a shelf as an icon to old technology. You should never allow the monitor to outlast the cpu in an AIO. I think you could still sell crt iMacs to people if their friend next door was upgrading his Bondhi to that 500G4 for $200. THAT would be getting a new computer for less than $399.
Random Topic 2: At the lower end, PC boxes are cheaper to make, but they have to keep changing the plastics ('a la Dell and HP) slightly to demonstrate innovation. Apple puts alot more R&D into style at the beginning, which makes the boxes at first more expensive, but at some point, the fact that the crt iMac looks exactly the same as it did years ago means that in economies of scale it must be as cheap as (if not cheaper than) a comparable HP box?!? Besides the AIO means less plastic. So why isn't it cheaper by now? Especially if the PPC chips are reasonably priced.
Possible answers to own question...
1. Because 4 years of iMacs sales represents fewer computers than 1 year of Dell's?
2. Because you are also buying a great bundle of "free" software which probably has to be treated as a +$100 accessory to every unit. That +$100 is much more significant at the low-end than at the high-end.
Random Assertion: $500 should still be in reach, but if every low end crt iMac has to pay its part of iLife and Safari development, it might be impossible to get to $399.
Once people wake up, they will pay the premium. If they dont want a good computer than can buy a cheap one, Apple wont make a cheap computer, cheap is cheap.
Fine. Then they need to stop marketing to the consumer market with these Switch Ads on TV and Time, Newsweek, Businessweek mags. If you want to sell to the upper 3% tax bracket then quit advertising in the wrong places.
</strong><hr></blockquote>
Did you even notice the magazines you spoke of? And the TV ads are mostly on CNN and other similar type programs. They aren't during wrestling shows, or baseball or Celebrity Mole or the Rikki Lake show. They are shown to a particular audience, the same audience the companies I mentioned go after. This audience does not care for the cheapo alternative.
i love you guys-have no idea what i would do with my spare time without you. The non stop "apple needs to do this" is so entertaining, its like we have some pool of genius mac users who think they could run the company and make it great. "lets put the shittiest stuff possible into a white box and sell it dirt cheap." Yea thats a wonderful idea. The truth is, apple may do this when their second and third generation hardware runs OS X without a hitch. The truth is only the fastest and newest macs run without a hitch. That means when 1 GHz G4 with a 166MHz bus is apples second or third generation, they could pull something off like this. But most likely by then there will be even more demanding software, and to run it you will need the newest hardware.
The point is, apple is not trying to play the dell game. They are not trying to obtain world domination. They are sticking by their principles of innovation and pushing forward new software and hardware technologies. If you have read The Fountainhead, picture apple as Howard Roark. They are masters at what they do, and if they change, they will become nothing just like everybody else. Also, Apple doesn't cater to the interests of the masses(in the general sense), although it may seem like they do at times. This is because [steve] has a vision .....ok i am done. I know when i start thinking of PC users as souless second handers, i need to go to bed. g'night and try not to worry about Apple. They know what they're doing.
<strong>did everyone hear on the confernce call today. Gross margin was back up to something like 27.7%.
That's ridiculous....</strong><hr></blockquote>
And it _STILL_ wasn't high enough to cover R&D. Shaving $100 off the price of the boxes doesn't generate enough incremental sales to cover the decrease in gross margin.
That is, $1000-100 doesn't seem like a big deal. But the price of the hardware was 770. (Determined from the margin) So profits went from $230/box to $130/box -> _TWICE_ as many machine need to sell. There's no way Apple can double their units sold with just $100 off the friggin price.
Yes, at $200 or maybe $300 off the price we'd start seeing substantial increases in sales. But at $200 the profit is $30/box, and at $300 off, the profit is negative $70. Even at negative $70 a box people aren't going to swarm to Apple. More sales? Sure! Enough to make a) a serious dent, or b) economies of scale kick in? No. Apple's already using a slew of commodity parts, and if they doubled the unit production rate tomorrow they'd have to pay MORE per unit -> gearing up for increased (unexpected) production is inefficient. If it doubled and stayed there, the new factory capacity would then get more efficient... but not efficient enough to overcome the fact that you're losing $70 on every box out ther door. Remember, you aren't trying to get back to '$0' profit, they need to get back to $230 profit/unit -> that's the level that sustains R&D.
If shaving $100 off everything permanently would increase marketshare while maintaining roughly the same 'profit' per quarter (not per unit), Apple would probably do it. They have the data - all those rebates tell Apple precisely how much people are willing to pay for everything, and give data on how many people would fork over money at various price points.
So either a) no one at Apple has a degree in marketing or economics, or b) the data do not support lowering the price. You pick.
<strong>The question: Why doesn't Apple produce a $399 computer to gain marketshare?
Don't use that BMW crap. Its like saying, come on, switch automobiles from your Ford (Dell) to a BMW (Apple)! Most people will say, "Yea, right, and how much? You've got to be kidding me, go fly a kite!" But if BMW produced a car at $15K, a lot of people will buy it. If Apple wants people to switch, then they need to introduce a computer at a respectable introduction price.</strong><hr></blockquote>
First thing, if BMW produced a car at $15K, that would be a real crap (just look at the $25K BMW 316i Compact which already is crap, and you'll understand...).
Then, a $399, or even a $499 Mac would go against Apple's philosophy (value added is the keyword at Apple, and you can't spend much in R&D to develop a $499 machine with a lot of value added) and it wouldn't even be competitive against budget-PCs sold at the same price.
However, there is room for some new Apple device in the $399-$499 range. I think that a very low-end tablet Mac would be great stuff. Let me explain: most people need a portable computer less than 10 or 15 times a year (e.g. to store digital pictures while on holiday, to check a mailbox when you're abroad, to type a report during the weekend...). Such tasks don't need a lot of speed. Therefore, why wouldn't Apple create a tablet Mac based on some inexpensive CPU (a G3 class CPU running @ 500MHz for example), with a 12" LCD screen (with some crappy video system using shared video memory), 256Mb of SDRAM, USB and Bluetooth support, and a 10-15Gb HD, running on a light version of MacOS X (just withdraw Speech, Classic, Universal Access, Colorsync, Print Center, etc... even technologies such as OpenGL wouldn't be crucial in such a device... however, Ink would be essential!) ?
Add iSync capabilities (via Bluetooth, maybe...) to synchronize the device with your desktop computer, and you'll have a great inexpensive device for occasional travellers. Add a combo drive (as a Build To Order option...) and you'll have a good substitute for the much anticipated Video iPod...
Since that kind of devices would be new (remember that Tablet PCs usually are high-end -therefore very expensive- machines...), so Apple would immediately create value added if they sold this tablet. And since such a device can't be used decently as a stand-alone computer, that wouldn't cannibalize desktop sales. That wouldn't even stop laptop sales, since this machine wouldn't be targeted to intensive travellers... plus, all the technologies contained in such a device already exist, so the R&D investment would be pretty small.
I don't know about you, but if Apple released that kind of tablet around $400-500, i'd buy one immediately. However, it seems that Apple has several innovative DLDs in its labs, that will partially do what this tablet device would do... so i guess that post is not very useful to the community, since it's pure speculation about a product that's not likely to be released... but i'll post it anyway! Go ahead and send me your reactions!
VW has been making some quality products. I have the new jetta and it rocks. The Gulf is the jetta with no trunk basically so you should be happy.</strong><hr></blockquote>
It's amazing how much stuff you can fit into a Golf. I have a 1997 Golf GL that has helped me through two moves. The only thing I need right now is keyless entry as my locks are frozen every morning. Grrrrr....
It's amazing how much stuff you can fit into a Golf. I have a 1997 Golf GL that has helped me through two moves. The only thing I need right now is keyless entry as my locks are frozen every morning. Grrrrr....</strong><hr></blockquote>
The Volkswagen Forums are at <a href="http://www.vwvortex.com"; target="_blank">VW Vortex.com.</a>
The iMac is $1,199. Let's say the display costs Apple ~$200. Put the display away and you have a nice $999 machine that will run OSX fast enough. And since the eMac's display is probably around $100 this means that with a headless e/iMac at $999 Apple would still have their margins intact. Now if we consider some components were cheaper to manufacture and Apple managed to do it at $899 I think that would sell ok.
<strong>The iMac is $1,199. Let's say the display costs Apple ~$200. Put the display away and you have a nice $999 machine that will run OSX fast enough. And since the eMac's display is probably around $100 this means that with a headless e/iMac at $999 Apple would still have their margins intact. Now if we consider some components were cheaper to manufacture and Apple managed to do it at $899 I think that would sell ok.</strong><hr></blockquote>
$899 for a low-end computer without a display is still expensive compared to the PC world
It's amazing how much stuff you can fit into a Golf. I have a 1997 Golf GL that has helped me through two moves. The only thing I need right now is keyless entry as my locks are frozen every morning. Grrrrr....</strong><hr></blockquote>
You know the golf has that right? At least the jetta does. The only time I even use the keys in the door is when I forget to close the sunroof, then I do that trick where you turn the keybackwards and all window go up, sunroof closes and doors lock.
<strong>$899 I think that would sell ok.</strong><hr></blockquote>
I don't have any issue with Apple designing towards the lower end of things, I'm just saying that they can't take any of their _current_ product, unaltered, drop the price 20%, and come anywhere near making a profit off that.
BTW, I think the Mini is made by Austin, a British company acquired by BMW. The little Mercedes is called the A-class. It isn't sold in the US; it looks sort of like a shrunken ML430. Mercedes also makes small trucks, but you seldom see them in the US.
Comments
Random Topic 2: At the lower end, PC boxes are cheaper to make, but they have to keep changing the plastics ('a la Dell and HP) slightly to demonstrate innovation. Apple puts alot more R&D into style at the beginning, which makes the boxes at first more expensive, but at some point, the fact that the crt iMac looks exactly the same as it did years ago means that in economies of scale it must be as cheap as (if not cheaper than) a comparable HP box?!? Besides the AIO means less plastic. So why isn't it cheaper by now? Especially if the PPC chips are reasonably priced.
Possible answers to own question...
1. Because 4 years of iMacs sales represents fewer computers than 1 year of Dell's?
2. Because you are also buying a great bundle of "free" software which probably has to be treated as a +$100 accessory to every unit. That +$100 is much more significant at the low-end than at the high-end.
Random Assertion: $500 should still be in reach, but if every low end crt iMac has to pay its part of iLife and Safari development, it might be impossible to get to $399.
[I admit, however, that $399 is pie in the sky.]
[ 01-15-2003: Message edited by: Bacon ]</p>
<strong>
Fine. Then they need to stop marketing to the consumer market with these Switch Ads on TV and Time, Newsweek, Businessweek mags. If you want to sell to the upper 3% tax bracket then quit advertising in the wrong places.
</strong><hr></blockquote>
Did you even notice the magazines you spoke of? And the TV ads are mostly on CNN and other similar type programs. They aren't during wrestling shows, or baseball or Celebrity Mole or the Rikki Lake show. They are shown to a particular audience, the same audience the companies I mentioned go after. This audience does not care for the cheapo alternative.
The point is, apple is not trying to play the dell game. They are not trying to obtain world domination. They are sticking by their principles of innovation and pushing forward new software and hardware technologies. If you have read The Fountainhead, picture apple as Howard Roark. They are masters at what they do, and if they change, they will become nothing just like everybody else. Also, Apple doesn't cater to the interests of the masses(in the general sense), although it may seem like they do at times. This is because [steve] has a vision .....ok i am done. I know when i start thinking of PC users as souless second handers, i need to go to bed. g'night and try not to worry about Apple. They know what they're doing.
That's ridiculous....
<strong>did everyone hear on the confernce call today. Gross margin was back up to something like 27.7%.
That's ridiculous....</strong><hr></blockquote>
And it _STILL_ wasn't high enough to cover R&D. Shaving $100 off the price of the boxes doesn't generate enough incremental sales to cover the decrease in gross margin.
That is, $1000-100 doesn't seem like a big deal. But the price of the hardware was 770. (Determined from the margin) So profits went from $230/box to $130/box -> _TWICE_ as many machine need to sell. There's no way Apple can double their units sold with just $100 off the friggin price.
Yes, at $200 or maybe $300 off the price we'd start seeing substantial increases in sales. But at $200 the profit is $30/box, and at $300 off, the profit is negative $70. Even at negative $70 a box people aren't going to swarm to Apple. More sales? Sure! Enough to make a) a serious dent, or b) economies of scale kick in? No. Apple's already using a slew of commodity parts, and if they doubled the unit production rate tomorrow they'd have to pay MORE per unit -> gearing up for increased (unexpected) production is inefficient. If it doubled and stayed there, the new factory capacity would then get more efficient... but not efficient enough to overcome the fact that you're losing $70 on every box out ther door. Remember, you aren't trying to get back to '$0' profit, they need to get back to $230 profit/unit -> that's the level that sustains R&D.
If shaving $100 off everything permanently would increase marketshare while maintaining roughly the same 'profit' per quarter (not per unit), Apple would probably do it. They have the data - all those rebates tell Apple precisely how much people are willing to pay for everything, and give data on how many people would fork over money at various price points.
So either a) no one at Apple has a degree in marketing or economics, or b) the data do not support lowering the price. You pick.
Prices need to fall by at least 20%!
SCREW Market share! Make a profit!
<strong>The question: Why doesn't Apple produce a $399 computer to gain marketshare?
Don't use that BMW crap. Its like saying, come on, switch automobiles from your Ford (Dell) to a BMW (Apple)! Most people will say, "Yea, right, and how much? You've got to be kidding me, go fly a kite!" But if BMW produced a car at $15K, a lot of people will buy it. If Apple wants people to switch, then they need to introduce a computer at a respectable introduction price.</strong><hr></blockquote>
First thing, if BMW produced a car at $15K, that would be a real crap (just look at the $25K BMW 316i Compact which already is crap, and you'll understand...).
Then, a $399, or even a $499 Mac would go against Apple's philosophy (value added is the keyword at Apple, and you can't spend much in R&D to develop a $499 machine with a lot of value added) and it wouldn't even be competitive against budget-PCs sold at the same price.
However, there is room for some new Apple device in the $399-$499 range. I think that a very low-end tablet Mac would be great stuff. Let me explain: most people need a portable computer less than 10 or 15 times a year (e.g. to store digital pictures while on holiday, to check a mailbox when you're abroad, to type a report during the weekend...). Such tasks don't need a lot of speed. Therefore, why wouldn't Apple create a tablet Mac based on some inexpensive CPU (a G3 class CPU running @ 500MHz for example), with a 12" LCD screen (with some crappy video system using shared video memory), 256Mb of SDRAM, USB and Bluetooth support, and a 10-15Gb HD, running on a light version of MacOS X (just withdraw Speech, Classic, Universal Access, Colorsync, Print Center, etc... even technologies such as OpenGL wouldn't be crucial in such a device... however, Ink would be essential!) ?
Add iSync capabilities (via Bluetooth, maybe...) to synchronize the device with your desktop computer, and you'll have a great inexpensive device for occasional travellers. Add a combo drive (as a Build To Order option...) and you'll have a good substitute for the much anticipated Video iPod...
Since that kind of devices would be new (remember that Tablet PCs usually are high-end -therefore very expensive- machines...), so Apple would immediately create value added if they sold this tablet. And since such a device can't be used decently as a stand-alone computer, that wouldn't cannibalize desktop sales. That wouldn't even stop laptop sales, since this machine wouldn't be targeted to intensive travellers... plus, all the technologies contained in such a device already exist, so the R&D investment would be pretty small.
I don't know about you, but if Apple released that kind of tablet around $400-500, i'd buy one immediately. However, it seems that Apple has several innovative DLDs in its labs, that will partially do what this tablet device would do... so i guess that post is not very useful to the community, since it's pure speculation about a product that's not likely to be released... but i'll post it anyway! Go ahead and send me your reactions!
Cheers
The Nocturnal
<strong>
VW has been making some quality products. I have the new jetta and it rocks. The Gulf is the jetta with no trunk basically so you should be happy.</strong><hr></blockquote>
It's amazing how much stuff you can fit into a Golf. I have a 1997 Golf GL that has helped me through two moves. The only thing I need right now is keyless entry as my locks are frozen every morning. Grrrrr....
<strong>
It's amazing how much stuff you can fit into a Golf. I have a 1997 Golf GL that has helped me through two moves. The only thing I need right now is keyless entry as my locks are frozen every morning. Grrrrr....</strong><hr></blockquote>
The Volkswagen Forums are at <a href="http://www.vwvortex.com"; target="_blank">VW Vortex.com.</a>
<strong>The iMac is $1,199. Let's say the display costs Apple ~$200. Put the display away and you have a nice $999 machine that will run OSX fast enough. And since the eMac's display is probably around $100 this means that with a headless e/iMac at $999 Apple would still have their margins intact. Now if we consider some components were cheaper to manufacture and Apple managed to do it at $899 I think that would sell ok.</strong><hr></blockquote>
$899 for a low-end computer without a display is still expensive compared to the PC world
<strong>
It's amazing how much stuff you can fit into a Golf. I have a 1997 Golf GL that has helped me through two moves. The only thing I need right now is keyless entry as my locks are frozen every morning. Grrrrr....</strong><hr></blockquote>
You know the golf has that right? At least the jetta does. The only time I even use the keys in the door is when I forget to close the sunroof, then I do that trick where you turn the keybackwards and all window go up, sunroof closes and doors lock.
<strong>
The Volkswagen Forums are at <a href="http://www.vwvortex.com"; target="_blank">VW Vortex.com.</a></strong><hr></blockquote>
The moderator forum is at <a href="http://forums.appleinsider.com/cgi-bin/ultimatebb.cgi?ubb=forum&f=9"; target="_blank">Moderators Forum</a>
<strong>$899 I think that would sell ok.</strong><hr></blockquote>
I don't have any issue with Apple designing towards the lower end of things, I'm just saying that they can't take any of their _current_ product, unaltered, drop the price 20%, and come anywhere near making a profit off that.