Anyone who disses (that may not be the correct spelling) your powerbook is ignorant. And its far from 1999 technology, it takes a while for a processor to be refined in a way that it can be used in a laptop like the power book.
Let's look at some real numbers compared to these made-up ones everyone seems to be agreeing are the best.
Quote:
Originally posted by hmurchison
eMac- Drop the entry down to $699 Top unit $999
iMac- 17" $1299 20" $1999
Powermac Express- Tower single G5 $1299. Plastic Case
Powermac - All Duals $1699 and up
I won't touch on the rest of hmurichson's post, just this part.
Apple's gross profit margin is 26.7 percent. I don't feel like trying to find more specific numbers for the different models because this is sufficient enough to make my point.
Take the 1.6 Ghz single G5 tower, for example. Current price: US$1799.00. Profit: 1799.00*0.267 = US$480.33. Cost to Apple: 1799.00*0.733 = US$1348.67. Your price: US$1299.00. So, your "Powermac Express" may sell, yes, but would mean Apple loses US$49.67 per unit. Apple may cut these losses by using cheaper plastic cases, as you mentioned, but let's not forget the initial R&D costs of designing a new case. You and I both know there's not a snowball's chance that Apple would drop the G5 into a generic ATX case. For one, it'd be way too hot.
The iMac, starting at 17" by your proposal, is currently priced at: US$1799.00, same as with the above G5. Your price: US$1299.00. So, again, Apple loses US$49.67 per unit.
The eMac change is the only one that might work. Current price: US$799.00. Profit: 799.00*0.267 = US$213.33. Cost to Apple: 213.33*0.733 = US$585.67. Your price: US$699.00. In this case, Apple would earn US$113.33 per unit.
Let's look at this in a more generic sense. The 17" iMac will make a fine example. It costs US$1799.00. Say we here agree the price should be dropped by US$200.00, knowing that Apple will still be profiting a good bit. Profit before the drop is US$480.33. Profit after the drop is US$280.33. Now, we all know that if Apple starts reporting reduced profits in quarters to come, the real economists will start to worry. In order to maintain the same gross profit, assuming production costs are constant, Apple has to sell 71% more iMacs.
The same logic applies across all lines. Cut prices by a little and you have to sell a lot more to make up for it.
Apple's really in a no-win situation right now regarding any sort of price war. The only way out now is through innovation. Entice PC users with the lovely iPod, iPod Mini, and iTunes and get them to switch over to a Mac. Keep the killer pro titles like FInal Cut and DVD Studio rolling out. Keep updating the great consumer apps like iLife with GarageBand, iPhoto, and iDVD. Bring more updates to Mac OS X itself to make it irresistible to Windows and Linux users. Find ways of convincing network admins and corporations that Xserve is just as economically feasible as a home-built PC.
Apple can only win by improving the whole package, not by cutting prices.
Apple already makes a whole better package... getting consumers to understand that is the hard part, maybe a year of insignificant losses (loss leader products) will gain enough marketshare to enable a future return to profitablity.
Someone else mentioned that people will buy the same computers they use at work, I believe this is true, the first people I ever met who used macs also used them at work and whenever I talk to people about buying copmuters they always look at what dell has to offer (thats what we use at work). People supposedly want to be able to work at home with their computers (kinda like "you" wanted a computer to do homework when you were a kid).
Of course it doesnt occur to them that Office runs nativley on Mac because "they dont do graphics and stuff". Really mac needs to get more of their computers into the hands of computers.
I think the eMac is ugly and personally will never buy another computer with a CRT. I would definately buy a headless computer with eMac specs. Apple could definatley turn the eMac into a viable loss leader product that people could simply change out their old computer with. The purchase of an AIO leaves many non famliy types with two computers in their house, makes perfect sense to geeks but not ordinary people. They know their current PC can be upgraded (the person who sold it to them said so, the person also mentioned macs couldnt be) and one day might just take it to the PC shop for the upgrades. People who cant be bothered with upgrading also cannot be bothered changing over all their software and games to the mac (yes consumers play games... it might not be the focus of their computer purchase but how many people call you up wondering why their new game doesnt work with their el cheapo integrated graphics, after they figure out the 3d card thing they are sold on PC upgradabillity - its not so scary).
So to counter this, I suggest... a new widget... more powerful in the consumers eye than anything before... A headless eMac... with TV tuner... and 100% compatible with the PS2. There's your Commodore 64 for the new millenium.
The bMac has the basic problem that it's not the hardware that's the #1 obstacle to Mac acceptance in business, it's the software - or rather, the lack thereof. All those VB apps, custom POS and inventory applications, and Access-driven apps will have to be scotched and reauthored, or run in Citrix or VPC. Some apps aren't even available.
So, what if Apple built a bMac and nobody cared? They'd look really stupid, and they'd probably lose ground. I think the iMac is a defensible sale as an enterprise desktop - it has advantages and disadvantages relative to the usual, and the biggest disadvantage (other than software compatibility) is price. If the demand for a desktop that is not an iMac is there, Apple can supply it with a much lower chance that they'll release an expensive flop and get laughed at. Apple does not want their first significant foray into enterprise to be a failure.
Brad's post is good, but it's worth remembering that Apple's average margin is 26.7%. The lower-line the machine is, the lower the margin is. At the outset, Apple earned less than 10% on the LCD iMac. That's why they had to bump the price up when RAM prices increased. I imagine that their margins are better than 10% now, but they're not 25%. Even the "cash cow" iPod has an average 20% margin. The high-margin products are the professional lines, and specifically the PowerMac.
Just to make things more interesting, Fred Anderson just got done saying that Apple is positioning the PowerMac aggressively price-wise in order to sell more units. That drives down their average margin, which analysts and stockholders don't like to see, and it reduces Apple's ability to shave margins on the consumer lines - those now have to hold steady to prevent Apple's average margin from eroding further. Apple doesn't have a lot of room to move here. They haven't in years. That's why they tend to move conservatively.
Let's look at some real numbers compared to these made-up ones everyone seems to be agreeing are the best.
I won't touch on the rest of hmurichson's post, just this part.
Apple's gross profit margin is 26.7 percent. I don't feel like trying to find more specific numbers for the different models because this is sufficient enough to make my point.
And Apple's margin comes from Powerbooks and g5s...not imacs and emacs... So it is in Apple's best interest to get the pro machines prices where they would fly off the shelves and still have high margin. The cost of components is lowering a lot, so it is possible for price drops. By next quarter apple will sell at 1.1 ipods per mac sold, and average profit on ipods is $150...which couyld make up for slightly lower prices.
See above: iPod sales will depress Apple's average gross margins, even as they contribute to the overall bottom line. Both margin and profit per unit are better for Apple's professional Macintoshes.
Apple really, really wants people buying PowerBooks and PowerMacs. As of last quarter, the PowerBook is outperforming Apple's expectations, and the PowerMacs are within Apple's expectations (but tending toward the low side). This is not what Apple wants.
I see the PowerMac's current "slump" as an indication of the trend I've been arguing for (and while this might seem like my ego coloring my perception, keep in mind that I'm used to being wrong when trying to predict Apple!). There was a rush of demand among people who really did need that kind of juice, and a lot of other people are looking at that great big tower with its scorching CPUs and thinking, "well, gee, I don't need all that." Apple may have put itself in the interesting position of placing a machine that's more than people need at a price point they've traditionally been willing to spend, which ironically puts an enormous price pressure on every other line! The more aggressively Apple tries to push this firebreathing beast of a machine, the more people will buy PowerBooks. In fact, I think the most urgent reason to update the iMac, now that it's gone upscale, is to catch those people who want something with the power of a pro workstation without the big honking tower. Because, let's face it, most of Apple's traditional pro market can use PowerBooks as workstations right now. Some of them are using eMacs as production machines! (Alternately, Apple can move the iMac back down to the low end and put something else in the space it's currently occupying.)
Long term, though, even that's not going to be a growing niche. More and more people want portables. Fortunately, Apple's offerings in the portable arena are strong, but they might end up having to concentrate even more on their portable offerings as time goes on.
You know, I see more and more people using Macs who weren't in the past. Maybe they're not selling more than they did before, but they're selling more to users outside of the regular Apple base. ...Or at least it seems that way.
Um, no, I'm comparing a Celeron to an equivalent of a bargain bin Mac for the developing countries in Asia, South America and elsewhere. You know a $400-500 PC that will be plenty fast enough for Friendster, web browsing and e-mail. A 2.4 GHz Celeron is a speedy chip.
And yes, I've seen the price of a 3.2 GHz P4, and of a 2.2 GHz Athlon 64. Are you sure you want to see the price of a 3.2 GHz P4?
Right now I can get a Dell Dimension 8300 with:
3.2 GHz P4
1 GB RAM
120 GB S-ATA HDD
8x DVD+RW drive
128 MB Radeon 9800 Pro
SoundBlaster Audigy 2
3-port FireWire PCI card
Gigabit ethernet
etc.
for guess what? $2000. That's a Dell mind you. A whitebox PC would be even cheaper. An equally configured Athlon 64 2.2 GHz from HP is $1800...Yep, as cheap as a 1.6 GHz G5 tower with less RAM, HDD space, a slower DVD burner, a much slower GeForce FX 5200...
I could build the above 3.2 GHz P4 for $1600 and an Athlon 64 2.2 GHz for even less ordering parts through a reputable online PC shop like NewEgg.com.
It's me who should be rolling the eyes.
I'm talking about the price of the processor itself - not a computer!!
It's absolutely not impossible for Apple, HP or others to make a $2000 Mac with a top of the line G5 processor in it.:
I'm talking about the price of the processor itself - not a computer!!
It's absolutely not impossible for Apple, HP or others to make a $2000 Mac with a top of the line G5 processor in it.:
Remember when I wrote this?
Quote:
PPC is cheaper how?
A 2.4 GHz Celeron is $70 retail
A board for that Celeron is $40 retail
1 GHz MPC7457s are still around $140 each in quantity.
Custom boards? How much would those cost?
Cheap G5s maybe? Hah! For $70? ROFL! AMD's budget chips are even cheaper
You responded to it.
A 1 GHz MPC7457 is $140 in bulk.
A 1.6 GHz PPC970 is +$250 in bulk
Is a mobo for that 970 or 7457 going to cost $40?
The Dell Dimension I configured is top of the line. Substitute the 1.6 GHz G5 and mobo for the 3.2 GHz P4 and mobo and you have abou the same pricepoint. I wouldn't want to see the bake-offs for that though.
ANYWAY, knock yourself out trying to sell a $2000 Mac to the Asian market when they can build an equivalent PC for about $1200 and something *good enough* for about $500.
It's absolutely not impossible for Apple, HP or others to make a $2000 Mac with a top of the line G5 processor in it.:
If Apple cannot now (or in the conceiveable future) build a top of the line G5 box that is comparable to a Wintel box (in both price and performance), then Apple made the wrong choice moving to IBM instead of Intel or AMD.
If Apple cannot now (or in the conceiveable future) build a top of the line G5 box that is comparable to a Wintel box (in both price and performance), then Apple made the wrong choice moving to IBM instead of Intel or AMD.
Raw computational power isn't the only factor that goes into choosing between a Mac or PC. There's OS X, the hardware design, specific app performance, security via obscurity, etc...
However, the key global markets I'm thinking of mostly care about price...
If Apple cannot now (or in the conceiveable future) build a top of the line G5 box that is comparable to a Wintel box (in both price and performance), then Apple made the wrong choice moving to IBM instead of Intel or AMD.
ANYWAY, knock yourself out trying to sell a $2000 Mac to the Asian market when they can build an equivalent PC for about $1200 and something *good enough* for about $500.
Sigh, I never said anything about Asia - I originally answered this:
Quote:
Originally posted by Eugene
1) The HP boxes would have to cut massive corners because they'd still be more expensive than whitebox and even brandname x86 PCs.
And where do you get the $250+ price on the PPC970?
You are absolutely correct. When comparing PowerMac G5's to other workstation class computers (Dell Precision 450 or HP xw600, or even the dual AMD Opteron from XiComputer) the PowerMac G5 are most time cheaper than those other workstations (although the PowerMac doesn't have a workstation class video card).
However, we are discussing Apple's current mareket share numbers and future growth (we all want growth right?).
Consumers have no use for workstation class computers. Consumers do have a use for fast cheap computer that allows them to do everthing they want to do while offering expandablity (i.e., additional or new harddrives, optical drives, internal PCI cards, etc.).
If Apple continues and force its customers (and potential customers) to either buy a workstation class computer or the iMac/eMac because they cannot produce a G5 desktop computer that can compete against the consumer PC platform (P3, P4, Celeron, Althon, etc.) then Apple made a bad decision moving towards IBM. Plain and simple.
Raw computational power isn't the only factor that goes into choosing between a Mac or PC. There's OS X, the hardware design, specific app performance, security via obscurity, etc...
However, the key global markets I'm thinking of mostly care about price...
Increasing market share means bringing new people to the Macintosh platform.
Nearly all of my friends really are interested in the Mac platform. They love all those things you mentioned. They really like iLife suite as well. But guess what? None of them own Macs. Nor are any of them going to buy a Mac anytime soon. Why? COST. COST. COST.
I can't tell you the number of times I have personally seen people in the Apple store in Buffalo walk in look at the G5's look at the cost, click on a few things and then leave. Apple at that very moment LOST a customer for good.
Now if this trend continues in 2004 (with the next PM revision or iMac 3 annoucement or whatever), Apple will continue and sell less and less computers. And their market share will continue and decline. At what point do you scrunitize Apple's decision to move to IBM instead of Intel/AMD?
I personally, was hoping to see these products instead of Apple's current offering:
PowerMac - Workstation - Dual Xeon or Dual Opteron
PowerMac - Prosumer - Single Althon64 or P4
PowerMac - Consumer - Althon or Celeron
All enclosed in one award winning tower design. All price competitively with current Intel/AMD PCs offered by Dell, HP, Gateway, etc.
Only then would customers be able to look at a Mac and and Dell and notice the differences in industrial design, Mac OS X, iLife, security, etc. I bet you won't be worried about market share numbers for very long.
While I truely believe the G5 is an amazing chip, I am not sure it will save Apple's desktop line.
Now if this trend continues in 2004 (with the next PM revision or iMac 3 annoucement or whatever), Apple will continue and sell less and less computers.
The current trend is that Apple sell more computers. Please remember that the market share number, we discuss, includee two quarters with virtually no Power Mac sales (Q103 and Q203).
1) You walk into a CompUSA. What do you see? There's a bunch of Wintel machines. There's some Apple machines. There's hardware peripherals for both the Wintel and Apple machines. Printers and monitors work with both platforms (usually).
But as you get ready to make your purchase, you can't help but notice that there's a single wall of Apple software, and 10-20 ROWS of Wintel software.
Are you REALLY prepared to pay twice as much for something that supports less than half the software?
2) You're responsible for purchasing new hardware for your department. Through careful analysis, you've determined that you can CUT IT COSTS significantly by investing in an apple solution for 100 of your employees.
But your daily tracking and accounting software is PC-only software. And everyone's timekeeping software is PC-only. There are alternatives in the Macintosh world, but they will not integrate into the network that the rest of the company (and HR) uses.
In order to create in-house software that is compatible with the rest of the network infrastructure, you'll have to find experienced software engineers who can create and integrate an OSX software solution. How many will you need? Will it negate the IT savings?
Maybe you should just stick with a PC/Wintel solution?
The Point
Folks, the point of this market share thing is NOT to try to guess what sort of numerical magic some financial wizard used to get the 3% number(s). The point is that MORE market presence is what Apple needs for sofware development companies to move to the OSX platform.
When software houses are convinced that Apple is a stable, powerful market presence, they'll shell out the cash for 'hybrid' development of commonly-used software titles. The availability of these titles will encourage potential buyers (private and business) to choose the Apple product over the Wintel product--adding MORE to Apple's presence.
And so on.
And so on.
What History Shows Us
Since 1984, Apple has INNOVATED, BEAUTIFIED, ADVERTISED, and PRIDED its way toward increasing market presence.
Now, take a moment to think about where Apple Computer is today. They're profitable. They have name recognition. They are the pinnacle of style.
But in 20 years, have they EVER superseded the PC/Wintel machine in terms of total sales?
In 20 years, have they EVER had more software compatible with their platform than the PC/Wintel platform?
After 20 years in education, do they have more presence in elementary education than the PC/Wintel platform? In secondary? In collegiate?
After 20 years, does the Macintosh have more presence in business than the PC/Wintel machine?
Point, the Second
Most, if not ALL of the answers are a resounding NO.
So, it may just be that INNOVATION, BEAUTIFICATION, ADVERTISING, and PRIDE are great methods for a company to become insanely-profitable. But they won't convince users of other computing platform to switch to yours.
Point, the Third
Perhaps it's time to change the strategy?
What makes the Macintosh so great? What makes 'fanatics' defend it against the 'masses'?
The OS. Plain and simple.
If you can get someone to try out Mac OSX for a week, then you increase (exponentially) your chances of making a lifetime customer out of them. In other words, you want 'the masses' to try out the one thing that makes your product superior to the competition.
Currently, Apple encourages customers to purchase a machine by:
1) marketing a music device that works with a competing platform.
2) creating boutique stores in higher-class malls and neighborhoods.
3) advertising on TV during the Superbowl and some primetime shows.
4) e-mailing current Apple customers.
5) having a 1/4 presence in every CompUSA store in the country.
With the exception of #2 and #5, does anyone else notice that NONE of these methods encourage NEW sales by trying out the OS? Does anyone else notice that #2 really isn't going to encourage a lower-income segment of the market to even TRY the Macintosh OS?
My Suggestion
Compete.
Do whatever it takes to get a Macintosh into the hands of every man, woman, and child on the face of the earth.
Be dirty-handed.
Be evil.
Break laws.
Break knees!
Point being, if you REALLY want that market presence, you're going to have to go door-to-door to convince 15-year Wintel users that they've got better choices out there.
What's the best way to do this? I dunno.
If I did, I'd be working at Apple Marketing right now.
Well, I like the post above. (Sounded passionate!)
I don't think Apple has a killer computer at a killer price. (That doesn't necessarily mean a beige Wallmart linux box for £299...)
The iPod is a killer product but it is affordable. Any idiot can figure out how to use one.
To me, Apple need to replace the eMac and create the consumer equivalent of the G5 Tower.
£650 (UK eMac price? Thereabouts.)
I think Apple can do better than a flickery CRT and a lard-assed marshmallow design. Drop kick the CRT and make a gorgeous £495 Cube with a 2 G5 with a cheaper motherboard in it.
Back to Hmurchison's compelling Dell-Buster. No, Apple don't have to be Dell. But we know Apple doesn't do loss-leaders. So the eMac does make a profit and it would make more of a profit it it didn't have a CRT in it.
Brad posts an insightful argument into Apple's fiscal position. Fine. I see that. But Apple still have to compete. How long can they keep offering outdated G4 consumer desktops which are performing poorly in quarterly sales? (Come on, folks, latops are growing in % of sales but how much of this is down to iMac 2 and eMac offering out of date kit for premium prices?) Desktop to desktop. There's something wrong in the PowerMac G5 almost outselling the iMac2 and eMac combined! Clearly highlighting a weakness in Apple's desktop strategy. A winning latop line doesn't mask Apple's below average consumer desktops, it just highlights it.
Apple. They don't compete directly with the PC market but aren't immune from the 'sweet spot' average computer buying price, right Fred Anderson?
And WHAT are Apple going to do about that to drive growth and increased sales?
The iMac 2 and the G4 are in a cul-de-sac. And there's no way out. It's time for the new kid in town for both the iMac 2 and the outdated eMac (the poorest product in Apple's hardware line.)
Answer? Well, a redesign of both. Drop the G4 as soon as possible. G5 into both machines simultaneously. G5 iMac 3 and mini-tower-Cube the eMac.
I think Apple create their own problems. Brilliant. But often flawed or hamfisted in approach. It's obvious what the consumer desktop line needs.
I think the iPod offers a ray of light.
Wasn't it Apple that created the Mac? The great selling Apple II? The 5 million busting iMac? The Mac OS? 'X'? Surely Apple can yet again redefine the computer in a way that replicated the iPod's spectacular growth, energy and PC mind-share penetration. Everybody loves the iPod.
If Apple could replicate the iPod as a 'Mac' computer...
We'd be talking 'growth' and onto 70% dominaton of the market...
I think Apple can do better than a flickery CRT and a lard-assed marshmallow design. Drop kick the CRT and make a gorgeous £495 Cube with a 2 G5 with a cheaper motherboard in it.
I think Apple can do better than a flickery CRT and a lard-assed marshmallow design. Drop kick the CRT and make a gorgeous £495 Cube with a 2 G5 with a cheaper motherboard in it.
.
.
.
Brad posts an insightful argument into Apple's fiscal position. Fine. I see that. But Apple still have to compete. How long can they keep offering outdated G4 consumer desktops which are performing poorly in quarterly sales? (Come on, folks, latops are growing in % of sales but how much of this is down to iMac 2 and eMac offering out of date kit for premium prices?) Desktop to desktop. There's something wrong in the PowerMac G5 almost outselling the iMac2 and eMac combined! Clearly highlighting a weakness in Apple's desktop strategy. A winning latop line doesn't mask Apple's below average consumer desktops, it just highlights it.
Apple. They don't compete directly with the PC market but aren't immune from the 'sweet spot' average computer buying price, right Fred Anderson?
And WHAT are Apple going to do about that to drive growth and increased sales?
The iMac 2 and the G4 are in a cul-de-sac. And there's no way out. It's time for the new kid in town for both the iMac 2 and the outdated eMac (the poorest product in Apple's hardware line.)
Answer? Well, a redesign of both. Drop the G4 as soon as possible. G5 into both machines simultaneously. G5 iMac 3 and mini-tower-Cube the eMac.
I think Apple create their own problems. Brilliant. But often flawed or hamfisted in approach. It's obvious what the consumer desktop line needs.
Comments
Let's look at some real numbers compared to these made-up ones everyone seems to be agreeing are the best.
Originally posted by hmurchison
eMac- Drop the entry down to $699 Top unit $999
iMac- 17" $1299 20" $1999
Powermac Express- Tower single G5 $1299. Plastic Case
Powermac - All Duals $1699 and up
I won't touch on the rest of hmurichson's post, just this part.
Apple's gross profit margin is 26.7 percent. I don't feel like trying to find more specific numbers for the different models because this is sufficient enough to make my point.
Take the 1.6 Ghz single G5 tower, for example. Current price: US$1799.00. Profit: 1799.00*0.267 = US$480.33. Cost to Apple: 1799.00*0.733 = US$1348.67. Your price: US$1299.00. So, your "Powermac Express" may sell, yes, but would mean Apple loses US$49.67 per unit. Apple may cut these losses by using cheaper plastic cases, as you mentioned, but let's not forget the initial R&D costs of designing a new case. You and I both know there's not a snowball's chance that Apple would drop the G5 into a generic ATX case. For one, it'd be way too hot.
The iMac, starting at 17" by your proposal, is currently priced at: US$1799.00, same as with the above G5. Your price: US$1299.00. So, again, Apple loses US$49.67 per unit.
The eMac change is the only one that might work. Current price: US$799.00. Profit: 799.00*0.267 = US$213.33. Cost to Apple: 213.33*0.733 = US$585.67. Your price: US$699.00. In this case, Apple would earn US$113.33 per unit.
Let's look at this in a more generic sense. The 17" iMac will make a fine example. It costs US$1799.00. Say we here agree the price should be dropped by US$200.00, knowing that Apple will still be profiting a good bit. Profit before the drop is US$480.33. Profit after the drop is US$280.33. Now, we all know that if Apple starts reporting reduced profits in quarters to come, the real economists will start to worry. In order to maintain the same gross profit, assuming production costs are constant, Apple has to sell 71% more iMacs.
The same logic applies across all lines. Cut prices by a little and you have to sell a lot more to make up for it.
Apple's really in a no-win situation right now regarding any sort of price war. The only way out now is through innovation. Entice PC users with the lovely iPod, iPod Mini, and iTunes and get them to switch over to a Mac. Keep the killer pro titles like FInal Cut and DVD Studio rolling out. Keep updating the great consumer apps like iLife with GarageBand, iPhoto, and iDVD. Bring more updates to Mac OS X itself to make it irresistible to Windows and Linux users. Find ways of convincing network admins and corporations that Xserve is just as economically feasible as a home-built PC.
Apple can only win by improving the whole package, not by cutting prices.
Someone else mentioned that people will buy the same computers they use at work, I believe this is true, the first people I ever met who used macs also used them at work and whenever I talk to people about buying copmuters they always look at what dell has to offer (thats what we use at work). People supposedly want to be able to work at home with their computers (kinda like "you" wanted a computer to do homework when you were a kid).
Of course it doesnt occur to them that Office runs nativley on Mac because "they dont do graphics and stuff". Really mac needs to get more of their computers into the hands of computers.
I think the eMac is ugly and personally will never buy another computer with a CRT. I would definately buy a headless computer with eMac specs. Apple could definatley turn the eMac into a viable loss leader product that people could simply change out their old computer with. The purchase of an AIO leaves many non famliy types with two computers in their house, makes perfect sense to geeks but not ordinary people. They know their current PC can be upgraded (the person who sold it to them said so, the person also mentioned macs couldnt be) and one day might just take it to the PC shop for the upgrades. People who cant be bothered with upgrading also cannot be bothered changing over all their software and games to the mac (yes consumers play games... it might not be the focus of their computer purchase but how many people call you up wondering why their new game doesnt work with their el cheapo integrated graphics, after they figure out the 3d card thing they are sold on PC upgradabillity - its not so scary).
So to counter this, I suggest... a new widget... more powerful in the consumers eye than anything before... A headless eMac... with TV tuner... and 100% compatible with the PS2. There's your Commodore 64 for the new millenium.
So, what if Apple built a bMac and nobody cared? They'd look really stupid, and they'd probably lose ground. I think the iMac is a defensible sale as an enterprise desktop - it has advantages and disadvantages relative to the usual, and the biggest disadvantage (other than software compatibility) is price. If the demand for a desktop that is not an iMac is there, Apple can supply it with a much lower chance that they'll release an expensive flop and get laughed at. Apple does not want their first significant foray into enterprise to be a failure.
Brad's post is good, but it's worth remembering that Apple's average margin is 26.7%. The lower-line the machine is, the lower the margin is. At the outset, Apple earned less than 10% on the LCD iMac. That's why they had to bump the price up when RAM prices increased. I imagine that their margins are better than 10% now, but they're not 25%. Even the "cash cow" iPod has an average 20% margin. The high-margin products are the professional lines, and specifically the PowerMac.
Just to make things more interesting, Fred Anderson just got done saying that Apple is positioning the PowerMac aggressively price-wise in order to sell more units. That drives down their average margin, which analysts and stockholders don't like to see, and it reduces Apple's ability to shave margins on the consumer lines - those now have to hold steady to prevent Apple's average margin from eroding further. Apple doesn't have a lot of room to move here. They haven't in years. That's why they tend to move conservatively.
Originally posted by Brad
Armchair economists unite!
Let's look at some real numbers compared to these made-up ones everyone seems to be agreeing are the best.
I won't touch on the rest of hmurichson's post, just this part.
Apple's gross profit margin is 26.7 percent. I don't feel like trying to find more specific numbers for the different models because this is sufficient enough to make my point.
And Apple's margin comes from Powerbooks and g5s...not imacs and emacs... So it is in Apple's best interest to get the pro machines prices where they would fly off the shelves and still have high margin. The cost of components is lowering a lot, so it is possible for price drops. By next quarter apple will sell at 1.1 ipods per mac sold, and average profit on ipods is $150...which couyld make up for slightly lower prices.
Apple really, really wants people buying PowerBooks and PowerMacs. As of last quarter, the PowerBook is outperforming Apple's expectations, and the PowerMacs are within Apple's expectations (but tending toward the low side). This is not what Apple wants.
I see the PowerMac's current "slump" as an indication of the trend I've been arguing for (and while this might seem like my ego coloring my perception, keep in mind that I'm used to being wrong when trying to predict Apple!). There was a rush of demand among people who really did need that kind of juice, and a lot of other people are looking at that great big tower with its scorching CPUs and thinking, "well, gee, I don't need all that." Apple may have put itself in the interesting position of placing a machine that's more than people need at a price point they've traditionally been willing to spend, which ironically puts an enormous price pressure on every other line! The more aggressively Apple tries to push this firebreathing beast of a machine, the more people will buy PowerBooks. In fact, I think the most urgent reason to update the iMac, now that it's gone upscale, is to catch those people who want something with the power of a pro workstation without the big honking tower. Because, let's face it, most of Apple's traditional pro market can use PowerBooks as workstations right now. Some of them are using eMacs as production machines! (Alternately, Apple can move the iMac back down to the low end and put something else in the space it's currently occupying.)
Long term, though, even that's not going to be a growing niche. More and more people want portables. Fortunately, Apple's offerings in the portable arena are strong, but they might end up having to concentrate even more on their portable offerings as time goes on.
Originally posted by Eugene
Um, no, I'm comparing a Celeron to an equivalent of a bargain bin Mac for the developing countries in Asia, South America and elsewhere. You know a $400-500 PC that will be plenty fast enough for Friendster, web browsing and e-mail. A 2.4 GHz Celeron is a speedy chip.
And yes, I've seen the price of a 3.2 GHz P4, and of a 2.2 GHz Athlon 64. Are you sure you want to see the price of a 3.2 GHz P4?
Right now I can get a Dell Dimension 8300 with:
3.2 GHz P4
1 GB RAM
120 GB S-ATA HDD
8x DVD+RW drive
128 MB Radeon 9800 Pro
SoundBlaster Audigy 2
3-port FireWire PCI card
Gigabit ethernet
etc.
for guess what? $2000. That's a Dell mind you. A whitebox PC would be even cheaper. An equally configured Athlon 64 2.2 GHz from HP is $1800...Yep, as cheap as a 1.6 GHz G5 tower with less RAM, HDD space, a slower DVD burner, a much slower GeForce FX 5200...
I could build the above 3.2 GHz P4 for $1600 and an Athlon 64 2.2 GHz for even less ordering parts through a reputable online PC shop like NewEgg.com.
It's me who should be rolling the eyes.
I'm talking about the price of the processor itself - not a computer!!
It's absolutely not impossible for Apple, HP or others to make a $2000 Mac with a top of the line G5 processor in it.:
Originally posted by JLL
I'm talking about the price of the processor itself - not a computer!!
It's absolutely not impossible for Apple, HP or others to make a $2000 Mac with a top of the line G5 processor in it.:
Remember when I wrote this?
PPC is cheaper how?
A 2.4 GHz Celeron is $70 retail
A board for that Celeron is $40 retail
1 GHz MPC7457s are still around $140 each in quantity.
Custom boards? How much would those cost?
Cheap G5s maybe? Hah! For $70? ROFL! AMD's budget chips are even cheaper
You responded to it.
A 1 GHz MPC7457 is $140 in bulk.
A 1.6 GHz PPC970 is +$250 in bulk
Is a mobo for that 970 or 7457 going to cost $40?
The Dell Dimension I configured is top of the line. Substitute the 1.6 GHz G5 and mobo for the 3.2 GHz P4 and mobo and you have abou the same pricepoint. I wouldn't want to see the bake-offs for that though.
ANYWAY, knock yourself out trying to sell a $2000 Mac to the Asian market when they can build an equivalent PC for about $1200 and something *good enough* for about $500.
Originally posted by JLL
It's absolutely not impossible for Apple, HP or others to make a $2000 Mac with a top of the line G5 processor in it.:
If Apple cannot now (or in the conceiveable future) build a top of the line G5 box that is comparable to a Wintel box (in both price and performance), then Apple made the wrong choice moving to IBM instead of Intel or AMD.
Originally posted by Dave K.
If Apple cannot now (or in the conceiveable future) build a top of the line G5 box that is comparable to a Wintel box (in both price and performance), then Apple made the wrong choice moving to IBM instead of Intel or AMD.
Raw computational power isn't the only factor that goes into choosing between a Mac or PC. There's OS X, the hardware design, specific app performance, security via obscurity, etc...
However, the key global markets I'm thinking of mostly care about price...
Originally posted by Dave K.
If Apple cannot now (or in the conceiveable future) build a top of the line G5 box that is comparable to a Wintel box (in both price and performance), then Apple made the wrong choice moving to IBM instead of Intel or AMD.
Check the price of a dual Xeon machine.
Originally posted by Eugene
ANYWAY, knock yourself out trying to sell a $2000 Mac to the Asian market when they can build an equivalent PC for about $1200 and something *good enough* for about $500.
Sigh, I never said anything about Asia - I originally answered this:
Originally posted by Eugene
1) The HP boxes would have to cut massive corners because they'd still be more expensive than whitebox and even brandname x86 PCs.
And where do you get the $250+ price on the PPC970?
Originally posted by JLL
Check the price of a dual Xeon machine.
You are absolutely correct. When comparing PowerMac G5's to other workstation class computers (Dell Precision 450 or HP xw600, or even the dual AMD Opteron from XiComputer) the PowerMac G5 are most time cheaper than those other workstations (although the PowerMac doesn't have a workstation class video card).
However, we are discussing Apple's current mareket share numbers and future growth (we all want growth right?).
Consumers have no use for workstation class computers. Consumers do have a use for fast cheap computer that allows them to do everthing they want to do while offering expandablity (i.e., additional or new harddrives, optical drives, internal PCI cards, etc.).
If Apple continues and force its customers (and potential customers) to either buy a workstation class computer or the iMac/eMac because they cannot produce a G5 desktop computer that can compete against the consumer PC platform (P3, P4, Celeron, Althon, etc.) then Apple made a bad decision moving towards IBM. Plain and simple.
Originally posted by Eugene
Raw computational power isn't the only factor that goes into choosing between a Mac or PC. There's OS X, the hardware design, specific app performance, security via obscurity, etc...
However, the key global markets I'm thinking of mostly care about price...
Increasing market share means bringing new people to the Macintosh platform.
Nearly all of my friends really are interested in the Mac platform. They love all those things you mentioned. They really like iLife suite as well. But guess what? None of them own Macs. Nor are any of them going to buy a Mac anytime soon. Why? COST. COST. COST.
I can't tell you the number of times I have personally seen people in the Apple store in Buffalo walk in look at the G5's look at the cost, click on a few things and then leave. Apple at that very moment LOST a customer for good.
Now if this trend continues in 2004 (with the next PM revision or iMac 3 annoucement or whatever), Apple will continue and sell less and less computers. And their market share will continue and decline. At what point do you scrunitize Apple's decision to move to IBM instead of Intel/AMD?
I personally, was hoping to see these products instead of Apple's current offering:
PowerMac - Workstation - Dual Xeon or Dual Opteron
PowerMac - Prosumer - Single Althon64 or P4
PowerMac - Consumer - Althon or Celeron
All enclosed in one award winning tower design. All price competitively with current Intel/AMD PCs offered by Dell, HP, Gateway, etc.
Only then would customers be able to look at a Mac and and Dell and notice the differences in industrial design, Mac OS X, iLife, security, etc. I bet you won't be worried about market share numbers for very long.
While I truely believe the G5 is an amazing chip, I am not sure it will save Apple's desktop line.
I hope I am wrong.
Originally posted by Dave K.
Now if this trend continues in 2004 (with the next PM revision or iMac 3 annoucement or whatever), Apple will continue and sell less and less computers.
The current trend is that Apple sell more computers. Please remember that the market share number, we discuss, includee two quarters with virtually no Power Mac sales (Q103 and Q203).
Forget about methods of statistics.
Let's just use COMMON SENSE for a moment.
1) You walk into a CompUSA. What do you see? There's a bunch of Wintel machines. There's some Apple machines. There's hardware peripherals for both the Wintel and Apple machines. Printers and monitors work with both platforms (usually).
But as you get ready to make your purchase, you can't help but notice that there's a single wall of Apple software, and 10-20 ROWS of Wintel software.
Are you REALLY prepared to pay twice as much for something that supports less than half the software?
2) You're responsible for purchasing new hardware for your department. Through careful analysis, you've determined that you can CUT IT COSTS significantly by investing in an apple solution for 100 of your employees.
But your daily tracking and accounting software is PC-only software. And everyone's timekeeping software is PC-only. There are alternatives in the Macintosh world, but they will not integrate into the network that the rest of the company (and HR) uses.
In order to create in-house software that is compatible with the rest of the network infrastructure, you'll have to find experienced software engineers who can create and integrate an OSX software solution. How many will you need? Will it negate the IT savings?
Maybe you should just stick with a PC/Wintel solution?
The Point
Folks, the point of this market share thing is NOT to try to guess what sort of numerical magic some financial wizard used to get the 3% number(s). The point is that MORE market presence is what Apple needs for sofware development companies to move to the OSX platform.
When software houses are convinced that Apple is a stable, powerful market presence, they'll shell out the cash for 'hybrid' development of commonly-used software titles. The availability of these titles will encourage potential buyers (private and business) to choose the Apple product over the Wintel product--adding MORE to Apple's presence.
And so on.
And so on.
What History Shows Us
Since 1984, Apple has INNOVATED, BEAUTIFIED, ADVERTISED, and PRIDED its way toward increasing market presence.
Now, take a moment to think about where Apple Computer is today. They're profitable. They have name recognition. They are the pinnacle of style.
But in 20 years, have they EVER superseded the PC/Wintel machine in terms of total sales?
In 20 years, have they EVER had more software compatible with their platform than the PC/Wintel platform?
After 20 years in education, do they have more presence in elementary education than the PC/Wintel platform? In secondary? In collegiate?
After 20 years, does the Macintosh have more presence in business than the PC/Wintel machine?
Point, the Second
Most, if not ALL of the answers are a resounding NO.
So, it may just be that INNOVATION, BEAUTIFICATION, ADVERTISING, and PRIDE are great methods for a company to become insanely-profitable. But they won't convince users of other computing platform to switch to yours.
Point, the Third
Perhaps it's time to change the strategy?
What makes the Macintosh so great? What makes 'fanatics' defend it against the 'masses'?
The OS. Plain and simple.
If you can get someone to try out Mac OSX for a week, then you increase (exponentially) your chances of making a lifetime customer out of them. In other words, you want 'the masses' to try out the one thing that makes your product superior to the competition.
Currently, Apple encourages customers to purchase a machine by:
1) marketing a music device that works with a competing platform.
2) creating boutique stores in higher-class malls and neighborhoods.
3) advertising on TV during the Superbowl and some primetime shows.
4) e-mailing current Apple customers.
5) having a 1/4 presence in every CompUSA store in the country.
With the exception of #2 and #5, does anyone else notice that NONE of these methods encourage NEW sales by trying out the OS? Does anyone else notice that #2 really isn't going to encourage a lower-income segment of the market to even TRY the Macintosh OS?
My Suggestion
Compete.
Do whatever it takes to get a Macintosh into the hands of every man, woman, and child on the face of the earth.
Be dirty-handed.
Be evil.
Break laws.
Break knees!
Point being, if you REALLY want that market presence, you're going to have to go door-to-door to convince 15-year Wintel users that they've got better choices out there.
What's the best way to do this? I dunno.
If I did, I'd be working at Apple Marketing right now.
My $0.02 (and then some),
-theMagius
I don't think Apple has a killer computer at a killer price. (That doesn't necessarily mean a beige Wallmart linux box for £299...)
The iPod is a killer product but it is affordable. Any idiot can figure out how to use one.
To me, Apple need to replace the eMac and create the consumer equivalent of the G5 Tower.
£650 (UK eMac price? Thereabouts.)
I think Apple can do better than a flickery CRT and a lard-assed marshmallow design. Drop kick the CRT and make a gorgeous £495 Cube with a 2 G5 with a cheaper motherboard in it.
Back to Hmurchison's compelling Dell-Buster. No, Apple don't have to be Dell. But we know Apple doesn't do loss-leaders. So the eMac does make a profit and it would make more of a profit it it didn't have a CRT in it.
Brad posts an insightful argument into Apple's fiscal position. Fine. I see that. But Apple still have to compete. How long can they keep offering outdated G4 consumer desktops which are performing poorly in quarterly sales? (Come on, folks, latops are growing in % of sales but how much of this is down to iMac 2 and eMac offering out of date kit for premium prices?) Desktop to desktop. There's something wrong in the PowerMac G5 almost outselling the iMac2 and eMac combined! Clearly highlighting a weakness in Apple's desktop strategy. A winning latop line doesn't mask Apple's below average consumer desktops, it just highlights it.
Apple. They don't compete directly with the PC market but aren't immune from the 'sweet spot' average computer buying price, right Fred Anderson?
And WHAT are Apple going to do about that to drive growth and increased sales?
The iMac 2 and the G4 are in a cul-de-sac. And there's no way out. It's time for the new kid in town for both the iMac 2 and the outdated eMac (the poorest product in Apple's hardware line.)
Answer? Well, a redesign of both. Drop the G4 as soon as possible. G5 into both machines simultaneously. G5 iMac 3 and mini-tower-Cube the eMac.
I think Apple create their own problems. Brilliant. But often flawed or hamfisted in approach. It's obvious what the consumer desktop line needs.
I think the iPod offers a ray of light.
Wasn't it Apple that created the Mac? The great selling Apple II? The 5 million busting iMac? The Mac OS? 'X'? Surely Apple can yet again redefine the computer in a way that replicated the iPod's spectacular growth, energy and PC mind-share penetration. Everybody loves the iPod.
If Apple could replicate the iPod as a 'Mac' computer...
We'd be talking 'growth' and onto 70% dominaton of the market...
Lemon Bon Bon
Originally posted by Lemon Bon Bon
I think Apple can do better than a flickery CRT and a lard-assed marshmallow design. Drop kick the CRT and make a gorgeous £495 Cube with a 2 G5 with a cheaper motherboard in it.
You are joking right?
Originally posted by Lemon Bon Bon
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I think Apple can do better than a flickery CRT and a lard-assed marshmallow design. Drop kick the CRT and make a gorgeous £495 Cube with a 2 G5 with a cheaper motherboard in it.
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Brad posts an insightful argument into Apple's fiscal position. Fine. I see that. But Apple still have to compete. How long can they keep offering outdated G4 consumer desktops which are performing poorly in quarterly sales? (Come on, folks, latops are growing in % of sales but how much of this is down to iMac 2 and eMac offering out of date kit for premium prices?) Desktop to desktop. There's something wrong in the PowerMac G5 almost outselling the iMac2 and eMac combined! Clearly highlighting a weakness in Apple's desktop strategy. A winning latop line doesn't mask Apple's below average consumer desktops, it just highlights it.
Apple. They don't compete directly with the PC market but aren't immune from the 'sweet spot' average computer buying price, right Fred Anderson?
And WHAT are Apple going to do about that to drive growth and increased sales?
The iMac 2 and the G4 are in a cul-de-sac. And there's no way out. It's time for the new kid in town for both the iMac 2 and the outdated eMac (the poorest product in Apple's hardware line.)
Answer? Well, a redesign of both. Drop the G4 as soon as possible. G5 into both machines simultaneously. G5 iMac 3 and mini-tower-Cube the eMac.
I think Apple create their own problems. Brilliant. But often flawed or hamfisted in approach. It's obvious what the consumer desktop line needs.
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Lemon Bon Bon
My thoughts exactly.