The $399 question: Revisited by the media

13

Comments

  • Reply 41 of 71
    xypexype Posts: 672member
    [quote]Originally posted by cubist:

    <strong>BTW, I think the Mini is made by Austin, a British company acquired by BMW.</strong><hr></blockquote>



    BMW sold off Rover et.al. but retained the right to the Mini brand and is in fact making the Mini and selling it in the BMW shops. Now I don't know where it's manufactured, but it _is_ BMW. The old Mini was not, but this one is.
  • Reply 42 of 71
    steve666steve666 Posts: 2,600member
    [quote]Originally posted by mjpaci:

    <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>



    I had the same problem with my car-solution=spray WD40 inside and around the lock and pull the key in and out and turn the lock a few times till it feels loose. You won't have the problem anymore!...........................
  • Reply 43 of 71
    Nevyn's analysis was absolutely right. This is all you need to know to understand why Apple doesn't lower prices on it's current models. If Apple lowers the price by $100 they only get a few more sales, but then they have to sell 50% to 100% units more to get the same profit.



    Apple's goal is not to grow marketshare without making money. That doesn't get them anywhere at all. Us Mac fans might be happy but it is not a victory for them. If Apple sold a $500 Mac that did everything people would just buy it and use it. Would they buy a $1999 iMac the next time? Maybe, but more likely they would just buy the $500 model again.



    Right now Apple is making no profits. Their goal is to find a way to sell more machines and make $200 - $300 profit on each. They are right in that their current customers are willing to pay more and are not extremely cost conscious. The eMac is a great value but it hasn't even outsold the LCD iMacs. You would expect that the $999 with rebate price point would far outsell $1199 to $1999 models but it didn't.
  • Reply 44 of 71
    [quote] Nevyn's analysis was absolutely right. This is all you need to know to understand why Apple doesn't lower prices on it's current models. If Apple lowers the price by $100 they only get a few more sales, but then they have to sell 50% to 100% units more to get the same profit.

    Apple's goal is not to grow marketshare without making money. That doesn't get them anywhere at all. Us Mac fans might be happy but it is not a victory for them. If Apple sold a $500 Mac that did everything people would just buy it and use it. Would they buy a $1999 iMac the next time? Maybe, but more likely they would just buy the $500 model again.



    Right now Apple is making no profits. Their goal is to find a way to sell more machines and make $200 - $300 profit on each. They are right in that their current customers are willing to pay more and are not extremely cost conscious. The eMac is a great value but it hasn't even outsold the LCD iMacs. You would expect that the $999 with rebate price point would far outsell $1199 to $1999 models but it didn't.

    <hr></blockquote>



    You're first point. You're right up to a point. If they make price cuts, they've got to sell more units to make up for the price cuts. They'd have to have the infrastructure in place to get those said units. That's where the retail operation comes in. If Apple gets to near 100 stores then they can cut prices. Alot of people are going into the Stores. But many are coming out without Apple computers. To get growth and real movement with the stores, as opposed to standing still, they're going to need something cheaper. I think price is a factor. That would help them sell more much more units. Like I said, Apple are putting in place a good distribution model between the online store, their retail operation and their 3rd party partners. It's coming.



    Your 2nd point about the £500 Mac. Nope. People said that when people on these boards raged about sub £1000 Macs. Did it put Apple out of business? Nope. They're making profits on all their Macs. No, you're not going to get 'power'Mac premiums on low end iBooks or iMacs...but that isn't always the point when you're trying to grow marketshare.



    Take Commodore. (Before disastrous management decisions...) They sold shed loads of Amigas, making £50 off each machine and made heaps of money (before they tried to get into the PC bus' and lose it all...) And the Amiga was only £395. Great machine. As always, though, Apple would have to justify why you'd pay 3 grand for a 'power'Mac when you could get an iCube for £399. But...hasn't that always been the way in the PC market? It's always been the way for Apple. Except you don't the same kind of enforced obselesence in the PC market...



    My point? Apple can cut prices to a degree on existing product lines, yes. But it would be better, in my view, along with slight price cuts to their desktop ranges, to broaden the product lines they do have. Look at the Laptops, Apple now have options from £795 to £2500. That's more like it. Desktops, I'd like to see options from £395 to £5995 (I'm thinking of dual to octo 970 workstations and on...)



    Example 1. Introduce a new 'budget' Single cpu 'power'Mac tower. Three models below the lowest dual model 'power'Mac. Range in price from 895 to £1195 inc VAT.



    Example 2. Push the iMac 2 down a little to replace the eMac. iMac 2's in price £795 to £1095 inc VAT.



    Example 3. Headless iCube underneath the eMac (or to replace the not too popular eMac...) ranging in price from £395 to £695 inc VAT.



    If Apple can make money on a ridiculously priced Music player, they can do a headless computer under £500.



    3rd Point. The eMac isn't that good an Apple solution with a dodgy monitor. So. No. It ISN'T selling as well. If they sorted out the price on the iMac 2 they wouldn't need the eMac or classic iMac. To me, getting £200-300 on each machine sounds a bit much. Perhaps it would be better to lower margins a little more on the desktops.



    The Apple laptops are leading the way on this. Heck, when Apple get a news article saying the PowerBook 12 incher is £500 quid cheaper than an equiv' specced PC laptop...then you know Apple is doing something right.



    So.



    How the hell can't they do the same on the desktop ranges?



    Introducing two further Powerbook models was inspired and I'm sure will pay divided on unit and profits on the next quarter for the pro-lap top.



    I think Apple should broaden the 'power'Mac range and introduce a proper sub'iMac2 computer to give people more choice.



    Lemon Bon Bon



    [ 01-18-2003: Message edited by: Lemon Bon Bon ]



    [ 01-18-2003: Message edited by: Lemon Bon Bon ]</p>
  • Reply 45 of 71
    bungebunge Posts: 7,329member
    [quote]Originally posted by Lemon Bon Bon:

    <strong>

    How the hell can't they do the same on the desktop ranges?

    </strong><hr></blockquote>



    They need a new chip to further differentiate the high end model. Low end, low priced G4 towers are fine if there's a compelling product for higher margins still available.
  • Reply 46 of 71
    jdbonjdbon Posts: 109member
    This is from the Seatle Times:

    Ironically, my two-month experiment (which I will continue) gave me a greater appreciation for a third platform: the Apple Macintosh. Built like Linux on a Unix base, Mac's OS X offers the reliability of Linux and even better digital-content features than Windows.



    In fact, the Mac is still a fun computing experience, in contrast to the PC's cross-your-fingers exercise in driver installation, setup and reboots.



    If Apple offered a $400 computer, there would be no comparison at all. As with doctors and dentists, pain eradication apparently costs extra.



    <a href="http://seattletimes.nwsource.com/html/personaltechnology/134617744_ptlinux180.html"; target="_blank">http://seattletimes.nwsource.com/html/personaltechnology/134617744_ptlinux180.html</a>;
  • Reply 47 of 71
    "If Apple offered a $400 computer, there would be no comparison at all. As with doctors and dentists, pain eradication apparently costs extra."



    Yeah. Something like that.



    Lemon Bon Bon



  • Reply 48 of 71
    [quote] They need a new chip to further differentiate the high end model. Low end, low priced G4 towers are fine if there's a compelling product for higher margins still available. <hr></blockquote>



    Agreed. Let's hope the wait is finally over by July's Macworld.



    Lemon Bon Bon
  • Reply 49 of 71
    Does it not occur to anybody that in current market conditions (i.e. bad), building low end machines is a good way to lose money? PC vendors are getting hammered even thought they do have these ultra-low cost machines.



    The problem is that it costs (for example) $385 to build such a machine, the distributor and the retailer each get their cut (even in the AppleStores the employees and rent need to get paid). That puts the cost up to $395. So now they're making $4 on a machine that they just spent $395 to get to the customer. If they fail to sell one of these machines they just wiped out the profit from almost 100 machines that they did sell. If they end up with 1000 unsold machines sitting in a warehouse, that wipes out the profit for 100,000 of these machines. Now remember that these are the lowest end machines that can be built, and therefore the most sensitive to obsolecence. Look at current unsold inventory levels of fairly powerful, full featured and attractive machines... there are thousands sitting around unsold. The low end market is a good way to lose lots of money really fast, and given Apple's current processor situation selling such a machine would cannabilize their current products, causing even greater losses. Bad bad bad idea.



    Going forward the 7457 and 970 processors will become available which makes the high end PowerMacs compelling even if there are low end 1 GHz G4 machines on the market. At that point a "headless iMac" starts to make sense, as long as the margin is sufficient to cover potential losses (10-20%). To get even lower end, Apple could design a machine for specific markets but only build it on-demand in volume -- i.e. go to schools to get orders for X, and then go and build X machines to fill those orders. This significantly reduces risk and still makes a low cost machine available to their institutional customers. Building an ultra-low end machine for consumers is not in the cards unless a large retailer wants to take the gamble on their own (i.e. commit to buying 10,000 units for resale).
  • Reply 50 of 71
    [quote] Does it not occur to anybody that in current market conditions (i.e. bad), building low end machines is a good way to lose money? PC vendors are getting hammered even thought they do have these ultra-low cost machines.<hr></blockquote>



    Does it occur that launching a laptop costing £2,600 into a bad economy is a good way to lose money? Or leave product specs stagnant for a year to boost sales? Or give away great software for free when even crap shareware costs something? Or not recognising that my CPU partner was having problems many, many moons ago and should have done something about it sooner?



    I dunno. Guess I don't have the business expertise of Apple.



    However, if Apple can sell an overpriced iPod music player for a ridiculous amount of money (more than most low-end/cheapo Dell computers...) then I'd be amazed Apple couldn't have a compelling argument for a £395 headless Mac.



    And that's what it boils down to. Is the product compelling? Regardless of whether it is £2695 or £395.



    Do they want the edu' market or not?



    Lemon Bon Bon



    [ 01-18-2003: Message edited by: Lemon Bon Bon ]</p>
  • Reply 51 of 71
    [quote]Originally posted by Lemon Bon Bon:

    <strong>



    Does it occur that launching a laptop costing £2,600 into a bad economy is a good way to lose money? Or leave product specs stagnant for a year to boost sales?



    I dunno. Guess I don't have the business expertise of Apple.



    However, if Apple can sell an overpriced iPod music player for a ridiculous amount of money (more than most low-end/cheapo Dell computers...) then I'd be amazed Apple couldn't have a compelling argument for a £395 headless Mac.



    And that's what it boils down to. Is the product compelling? Regardless of whether it is £2695 or £395.



    Do they want the edu' market or not?



    Lemon Bon Bon </strong><hr></blockquote>



    But the laptops are making them money, aren't they?



    They might want the edu' market, but they may not be currently in a position to do anything about it. If you see a nail that needs to be hammered, but you forgot your hammer then the first thing to do is go and get your hammer. You could try hitting it with something else, but it probably won't work as well and it may hurt in the process.
  • Reply 52 of 71
    amorphamorph Posts: 7,112member
    There is also the rebate.



    The rebate allows a computer maker to advertize a significantly lower price without actually impacting their profit much, because something like 90% of people never mail in the rebate, and the process of getting a rebate is slow and troublesome enough that the company gets to earn some interest on the full price before paying the rebate. The risk is, of course, that there is no control over how many people might decide to send in a rebate, especially if it's attractive and the economy's weak, and if too many people do then the company offering the rebate takes a bath.



    Apple is quite fond of rebates. I believe that many of the el cheapo machines out there now use them to get their advertized prices. So Apple is already prepared. I don't think they'll get anywhere near $399, but they should be able to make a compelling desktop offering sub-$1K with the debut of the cheap, cool 7457 this spring.
  • Reply 53 of 71
    xypexype Posts: 672member
    [quote]Originally posted by Programmer:

    <strong>If you see a nail that needs to be hammered, but you forgot your hammer then the first thing to do is go and get your hammer. You could try hitting it with something else, but it probably won't work as well and it may hurt in the process.</strong><hr></blockquote>



    My first tought was using my head but you have a point as far as hurting goes...
  • Reply 54 of 71
    [quote] But the laptops are making them money, aren't they?



    <hr></blockquote>



    I wonder why that is, Programmer?



    And if I had a crap CPU, I'd take a Sledgehammer to it...



    Lemon Bon Bon



    [quote] I don't think they'll get anywhere near $399 <hr></blockquote>



    They did with the iPod. The cheapest 'Mac' available. I think they 'could' get near. They need to listen to the 97% a little more. And tailer something accordingly.



    [ 01-18-2003: Message edited by: Lemon Bon Bon ]</p>
  • Reply 55 of 71
    xypexype Posts: 672member
    [quote]Originally posted by Lemon Bon Bon:

    <strong>They did with the iPod. The cheapest 'Mac' available. I think they 'could' get near. They need to listen to the 97% a little more. And tailer something accordingly.</strong><hr></blockquote>



    Problem is Apple can listen all they want, they a] need to make a profit and b] can not perform acts of magic. I think Apple does read/listen to the response they get and I expect "cheap" G4/G3 machines when the 970 starts appearing. Since then Apple would have an argument for a larger difference in price between the pro and consumer models (AND there would be a noticeable difference in performance).



    I bet 97% of people would like the new Mercedes SL for $10.000, too. Heck, I'd pay 12.000!
  • Reply 56 of 71
    jpfjpf Posts: 167member
    What gets me is that Sony has shipped 50 million Playstation II's in less than 3 years. By March or so, 1% of the population of every man, woman and child on planet earth will have a Playstation II. For flippin entertainment.



    That's an incredible product at an incredible volume. The only thing I can think of that comes with that type of fast volume is cellphones.



    Apple can and should introduce a product that has fast growth and can appeal to a world market. I believe if they want to grow the marketshare, they have to introduce a mac based system at a price point for consumption. What if Apple did introduce a Mac at $399? How many people would buy it? About everybody....
  • Reply 57 of 71
    amorphamorph Posts: 7,112member
    [quote]<strong>I wonder why that is, Programmer?</strong><hr></blockquote>



    Because people are willing to spend lots of money on them, despite the "antiquated" technology in them?



    (Oh, and PowerMacs outsold PowerBooks 3:2, and iBooks as well. Someone's buying them.)



    [quote]<strong>And if I had a crap CPU, I'd take a Sledgehammer to it... </strong><hr></blockquote>



    Yeah, platform changes are trivial, they have no repercussions at all, and AMD is doing so well...



    [quote] I don't think they'll get anywhere near $399



    <strong>They did with the iPod. The cheapest 'Mac' available.</strong><hr></blockquote>



    Oh, please. The iPod is not a Mac. It's not even in the ballpark. If you think it is, get OS X running on it and come back to me.



    Let's consider the iPod in the proper context: MP3 players. Here, it's one of the most expensive devices available, and it's also the #1 seller, consistently. In other words, Apple can charge a premium price for a premium product and thrive. They do it with the iPod, and with the PowerBook. They don't have to be cheaper than the Nomads and Dells out there as long as they're that much better.



    Desktops are difficult because they're so general purpose that no matter what Apple does, they'll have failed to design for someone out there. I think that a round of updates to their consumer lines (including a fix for the eMac) and a modest price cut will do them well. If Apple fixes whatever strange thing prevented the LCD iMac from getting updated, and standardize on the 17" LCD, it should be a lively seller.
  • Reply 58 of 71
    nevynnevyn Posts: 360member
    [quote]Originally posted by JPF:

    <strong>Apple can and should introduce a product that has fast growth and can appeal to a world market. I believe if they want to grow the marketshare, they have to introduce a mac based system at a price point for consumption. What if Apple did introduce a Mac at $399? How many people would buy it? About everybody....</strong><hr></blockquote>



    $399 is just _too_ low.



    The $799 CRT iMac is a DOG. But it has essentially the lowest possible machine to run Mac OS X. Shipping something that can't run Mac OS X is madness.



    600 MHz PPC G3, 128 MB RAM, 40 GB HD, CD-ROM, 10/100 enet, 56k modem, Rage 128 graphics.



    The only piece we could strip out to save money is the screen itself - and there's no way Apple's paying more than $100 for that. They could strip the enet & modem - that might be another $100 off. Still too friggin much - and now they're peddling junk.



    ----

    As far as Mac OS 9 is concerned, yes - Apple could sell a _much_ lower-end machine. I have a Power Mac 8100/120 MHz, 24 MB RAM running Mac OS 9, and it keeps up with kids games/browses/emails fine. They could sell THOSE for $399. There wouldn't be much flocking though.



    So _next_ year maybe Apple could sell $399 machines if they wanted to, or _last_ year. But not _this_ year.
  • Reply 59 of 71
    ptrashptrash Posts: 296member
    Seems this statement kind of slipped by:



    [quote]Apple tried to drum up excitement for the rest of the year when, at the Macworld show, Jobs declared 2003 to be the "year of the notebook," saying notebook PCs would eventually make up more than 50 percent of Apple's unit shipments. Jobs also introduced both Apple's biggest- and smallest-ever PowerBook computers: a 17-inch-screen laptop pegged to cost $3,299 and a 12-inch-screen device for $1,799.<hr></blockquote>



    If 2003 is the "year of the notebook" and notebooks will eventually make up 50% of Apple's unit shipments, then (unless the above is marketing BS) it isn't too big of a leap to assume that faster PowerMacs are NOT going to make an impact on unit sales in 2003. So either they (970s/G5s) are not going to arrive until late in the year, or they'll be proiced so high that Apple won't sell a helluva lot of them.



    Apple may also be thinking that that 17" monster Powerbook will be bought in place of PowerMacs-further tilting the balance in unit sales in favor of notebooks (although it's kind of a stretch calling that thing a notebook).
  • Reply 60 of 71
    amorphamorph Posts: 7,112member
    [quote]Originally posted by Ptrash:

    <strong>Seems this statement kind of slipped by:



    If 2003 is the "year of the notebook" and notebooks will eventually make up 50% of Apple's unit shipments, then (unless the above is marketing BS) it isn't too big of a leap to assume that faster PowerMacs are NOT going to make an impact on unit sales in 2003. So either they (970s/G5s) are not going to arrive until late in the year, or they'll be proiced so high that Apple won't sell a helluva lot of them. </strong><hr></blockquote>



    I think it's part covering for lagging desktop sales, part going with an industry trend toward notebooks, and part playing to the strengths of their current platform: The G4 might not do so well in a tower setting, where it's up against much bigger, hotter chips, but within a heat- and power- constrained environment it's just about unbeatable. Apple's legendary ID also comes into play more with notebooks.



    [quote]<strong>Apple may also be thinking that that 17" monster Powerbook will be bought in place of PowerMacs-further tilting the balance in unit sales in favor of notebooks (although it's kind of a stretch calling that thing a notebook).</strong><hr></blockquote>



    Not relative to the 8-10lb behemoths shipping from Dell and Alienware and other other PC makers. LapZilla might be large in two dimensions, but at least it doesn't weigh so much.
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