why Apple should LOWER its prices (market share)

Posted:
in General Discussion edited January 2014
http://forums.appleinsider.com/showt...threadid=39143



I wanted to offer a counterpoint to the above thread and argue reasons why Apple should lower all of their prices in order to increase its market share.

http://www.macobserver.com/article/2004/01/15.15.shtml



A recent article on Appleinsider's front page suggested that Apple would lower the prices of the iPod's to increase marketshare while making up for the loss in profit margins on volume. This makes perfect sense, and while Apple has considerably lowered its prices over the years (remember when a powerbook cost 6k?), I don't think that they have done so aggressively enough. I argue that this, while not being the only factor, is a major reason why Apple's marketshare has decreased in comparison to other PC vendors.



Pro/Con Arguments concerning Marketshare:



People have cogently argued that Apple's marketshare is not as important as their other numbers (profit margins, yearly profits, etc.) In the end, however, the achilles heel of this argument is that the two are interconnected, meaning that Apple's diminishing market share invariably places increasing demans on its profit margins. Can Apple's sales/market share continue to decline and the company remain profitable? That's what the company has been doing for the previous 10+ years but at at some point, the marketshare numbers could get so low that profit margins will not be able to make up the difference. There is only so much money a company can squeeze out of a diminishing customber base.



So, in my opinion, Apple should sacrifice it's profit margins now and make up the difference in volume (ie. increasing market share). How can it do this?



1) Lower prices signinficantly to bring its products to comparable price points with its competitors. Before all of you jump down my throat with the usual "Macs are not more expensive than PCs" tirades let me save you the trouble. You and I may think that, but the average Joe Blow walking into Best-Buy or some other generic PC store doesn't. Price is only one consideration, but people in these type of forums fail to realize it is ofen the most important one. So I'm talking about the tangible, concrete price, not price abstractions that are factored into the sticker price after the product is purchased (Total Cost of Ownership). 90% of people do not factor these considerations into the final price, they are not geeks/computer savants hanging out in these forums , and since perception is reality, the reality is that to most people Macs are more expensive. Don't project your computer intellingence onto the general population. Most people don't know what the hell TCO is. Besides, why would any consumer argue for higher prices (which, if you think about it, the argument that Apple's prices are already competitive could be interpreted as)?



2) Availability:



As mentioned earlier, since price is not the only determining factor there are some things that even lower prices will not ammend (remember Webojects used to cost 10k, the price decrease by itself did little to increase its sales). Some people are not going to buy Macs no matter what the price-points for various reasons (everyone they know uses PCs, think that Macs have less software, games, irrational hatred for all things Mac,...) That said, Apple should increase the number of outlets/stores that sell Macs. I dont' know if this is even possible with third party vendors since Apple is trying to do this with its own stores. The problem with the Apple store strategy is that once again, they preach mostly to the converted (ie. Mac fans). Apple should have a presence in as many venues as possible so that its products are exposed to as many consumers as possible.



If I ran Apple, my new Mac prices (new, future hardware).

Dual 2.6- $2599 (better $1999, this will not happen)

Dual 2.4- $1799 ($1499)

Dual 2.0- $1299 ($999)



Imacs

G5 1.6 17" ($799)

G5 1.8 17" ($999)

G5 2.0 17" ($1199)

G5 20" (add $300 to above)



Powerbooks (high-end to low-model, $1999-799)



I know you're going to kill me for these prices, so feel free to supply your own.
«13

Comments

  • Reply 1 of 58
    piotpiot Posts: 1,346member
    Quote:

    Originally posted by Neruda

    [

    There is only so much money a company can squeeze out of a diminishing customber base.





    Diminishing market share does NOT equal diminishing customber base.



    Apple could (and hopefully will) sell more computers each year while still losing market share.



    That said, I understand your theory, but just how much money do you want Apple to lose in order to gain an extra 0.1% share.



    (Very rough calculation) A 10% reduction in the price of all Apple systems would need a nearly 60% increase in sales to achieve the same profit.



    Want to revise your 'new' price list?
  • Reply 2 of 58
    torifiletorifile Posts: 4,024member
    Didn't we talk about this already? Do we really need a new thread about it?
  • Reply 3 of 58
    nerudaneruda Posts: 427member
    Quote:

    Originally posted by piot

    Diminishing market share does NOT equal diminishing customber base.



    True, theoretically speaking, market share could diminish while at the same time Apple increases its customer base. This is not happening, however. Total number of units sold are down from last year and down SIGNIFICANTLY since Apple's heyday (6+million units sold/year).





    That said, I understand your theory, but just how much money do you want Apple to lose in order to gain an extra 0.1% share.



    I didn't say that I wanted Apple to loose money to increase markeshare, I said that they should make up losses in profit margins by increasing volume sales. Whether or not this works or Apple loses money doing this is debatable. Their shrinking market share is not.



    (Very rough calculation) A 10% reduction in the price of all Apple systems would need a nearly 60% increase in sales to achieve the same profit.



    Rough calculation, granted, but where are you getting these numbers from? Apple's profit margins (last I heard) on PMG5 were in the 26% range. Lower this by six percent and they would not need a 60% increase in sales to make this up.



    Want to revise your 'new' price list? [/B][/QUOTE]



    Others on this forum are more knowlegeable than I am about this things, I'll wait to see what revisions are suggested.



    The less people have to pay for Macs, the better. I'll ask again, what consummer would ask to pay more?
  • Reply 4 of 58
    hmurchisonhmurchison Posts: 12,294member
    Quote:

    Dual 2.6- $2599 (better $1999, this will not happen)

    Dual 2.4- $1799 ($1499)

    Dual 2.0- $1299 ($999)



    Far too optimistic. The assumption that even Mac users make is that by default Apple is more expensive.



    You're simply not going to find dual processor computers as low as $1299. Apples motherboard would be $300-500 if you bought if from Tyan or Supermicro. The Procs would be $300^ there simply isn't room to price these computers that low.



    I do not think pricing is the largest obstacle to Apple adoption the iPod proves that. It's about the software that runs on the computers.
  • Reply 5 of 58
    nerudaneruda Posts: 427member
    Quote:

    Originally posted by torifile

    Didn't we talk about this already?



    Yes, we did. There are other threads on this topic, but no one is forcing you to read/post to them If you don't want to add anything to this particular discussion other than the fact that there are other discussions, JUST SKIP IT, or then again, don't.



    Quote:

    [B]Do we really need a new thread about it?[B]



    You would problably say no, I obviously thought yes. Now back to the topic, please.
  • Reply 6 of 58
    nerudaneruda Posts: 427member
    Quote:

    Originally posted by hmurchison

    Far too optimistic. The assumption that even Mac users make is that by default Apple is more expensive.





    The assumption that Macs are more expensive is just that, an assumption, but it is one that often plays a crucial role in people's purchasing decisions. The surest way that Apple is going to combat this assumtion is not by TCO analysis, but by significantly reducing their prices, IMO.



    Also, I agree that these price points are probably too optimistic, but the point that I was trying to make with the iPods is that Apple is considering lowering profit margins for the sake of maintaining/growing marketshare. In light of disappointing/decreasing sales of G5s and other sections of the product line, Apple should act more aggressively and extend this approach with other products.



    Yes, Apple could probably remain profitable with its current business model, but it is increasingly limiting itself to smaller and smaller niche markets. This is a danger (Sun,SGI...) and there are negative consequences to this (software development, etc).



    Since you are right about these prices being too optimistic, what would be your price points?
  • Reply 7 of 58
    amorphamorph Posts: 7,112member
    I don't think price is the main obstacle facing Macs. I think the fact that most people rule them out implicitly is the biggest obstacle.



    If the problem of Mac pricing is a "perception" problem, how will lowering prices help? Apple's prices are fairly aggressive when you compare feature-for-feature, and nobody seems to have noticed that much more significant transition.



    And why focus on PowerMacs? Those aren't consumer machines. You can have a higher profit margin on professional hardware because professional hardware is used to make money, so it pays for itself: An extra few hundred dollars is a day's work, or even a few hours' work. No big deal.



    If you look at Apple's pricing, you have to consider two things: Price is not the major issue, compatibility is, and; Apple's profits compared to their revenues. Profit-wise, they don't have a lot of room to move before they're losing money. Many of their quarterly profits have been generated by interest on their cash reserve (which is why it's there, and why they can't dip into it). If they lower prices, they need more demand, but if price is not the major factor in considering a Mac - if the failure to consider a Mac in the first place is the problem - then lower prices will translate directly into lost profits.



    I'm not saying that Apple is unable to do anything, only that any move they make in the direction of trading margin for market share has to be done carefully and conservatively, because they don't have a lot of room to maneuver. I'd argue that this is precisely what they are doing. Certainly, it's the tack that Apple CFO Fred Anderson has taken in the last few analyst calls. He's been talking about 1-2% margin hits, but that's about how much room Apple has.



    Apple has a couple of other possible options: First, making sure that their products hit attractive prices without impacting margins. The iMac is failing to do this, and failing to sell; the PowerBook, on the other hand, is flying out the door despite being more expensive in real terms. Second, get people to consider Apple computers at all. This is iPod's mission. Whether it works is an open question, but it's certainly safer than disrupting Apple's carefully balanced income-to-expense ratio. Even if the iPod fails as a trojan horse, it's one more income stream that gives Apple more room to play with their hardware margins.
  • Reply 8 of 58
    homhom Posts: 1,098member
    Quote:

    Originally posted by Neruda

    The assumption that Macs are more expensive is just that, an assumption, but it is one that often plays a crucial role in people's purchasing decisions. The surest way that Apple is going to combat this assumtion is not by TCO analysis, but by significantly reducing their prices, IMO.



    So, if Macs are comparably priced the answer is to undercut the competition or to market the hell out of what they have and debunk the myth?



    hmurchison nailed it on the head when he said:

    Quote:

    I do not think pricing is the largest obstacle to Apple adoption the iPod proves that. It's about the software that runs on the computers.



    When given a chance to compete on a level playing field Apple kicks ass. However there is 20 years of baggage attached to the Mac platform and slashing prices will reenforce the notion that Apple is going out of business.
  • Reply 9 of 58
    I <3 Amorph.



    He says it so well. Thank you for putting into words my exact thoughts.
  • Reply 10 of 58
    Quote:

    Originally posted by Amorph

    I don't think price is the main obstacle facing Macs. I think the fact that most people rule them out implicitly is the biggest obstacle.



    If the problem of Mac pricing is a "perception" problem, how will lowering prices help? Apple's prices are fairly aggressive when you compare feature-for-feature, and nobody seems to have noticed that much more significant transition.



    And why focus on PowerMacs? Those aren't consumer machines. You can have a higher profit margin on professional hardware because professional hardware is used to make money, so it pays for itself: An extra few hundred dollars is a day's work, or even a few hours' work. No big deal.



    If you look at Apple's pricing, you have to consider two things: Price is not the major issue, compatibility is, and; Apple's profits compared to their revenues. Profit-wise, they don't have a lot of room to move before they're losing money. Many of their quarterly profits have been generated by interest on their cash reserve (which is why it's there, and why they can't dip into it). If they lower prices, they need more demand, but if price is not the major factor in considering a Mac - if the failure to consider a Mac in the first place is the problem - then lower prices will translate directly into lost profits.



    I'm not saying that Apple is unable to do anything, only that any move they make in the direction of trading margin for market share has to be done carefully and conservatively, because they don't have a lot of room to maneuver. I'd argue that this is precisely what they are doing. Certainly, it's the tack that Apple CFO Fred Anderson has taken in the last few analyst calls. He's been talking about 1-2% margin hits, but that's about how much room Apple has.



    Apple has a couple of other possible options: First, making sure that their products hit attractive prices without impacting margins. The iMac is failing to do this, and failing to sell; the PowerBook, on the other hand, is flying out the door despite being more expensive in real terms. Second, get people to consider Apple computers at all. This is iPod's mission. Whether it works is an open question, but it's certainly safer than disrupting Apple's carefully balanced income-to-expense ratio. Even if the iPod fails as a trojan horse, it's one more income stream that gives Apple more room to play with their hardware margins.




    Lots of people I know now love Macs: the applications, OS X, the look, the "style," but it always always ALWAYS comes down to "they're more expensive." It's no longer about perception for a lot of people, but it's still about price.
  • Reply 11 of 58
    nerudaneruda Posts: 427member
    Quote:

    Originally posted by Amorph

    I don't think price is the main obstacle facing Macs. I think the fact that most people rule them out implicitly is the biggest obstacle.



    Exactly, so what can Apple do about this? As a former PC user I know that there are a lot of intangibles built into Macs that make them worth their price (hardware/software integration, OSX, security, easy of use....) but as history has shown, technological superiority does not necessarily equal market success.





    Quote:

    If the problem of Mac pricing is a "perception" problem, how will lowering prices help?



    By bringing prices closer to competitor's prices (a major factor that dissuades people from bying Macs).



    Quote:

    Apple's prices are fairly aggressive when you compare feature-for-feature, and nobody seems to have noticed that much more significant transition.



    OS X alone is more than worth it, so yes, I agree, Apple is competitive on a feature-for-feature basis, but one of the points of my original post is that these considerations are not a factor in the average consummer's purchasing decision.



    Quote:

    And why focus on PowerMacs? Those aren't consumer machines. You can have a higher profit margin on professional hardware because professional hardware is used to make money, so it pays for itself: An extra few hundred dollars is a day's work, or even a few hours' work. No big deal.



    Powermacs aren't consumer machines, but I still think that Apple should lower prices across all lines. Yes, in the long run Macs are probably better from a TCO standpoint (see my point above).



    Quote:

    If you look at Apple's pricing, you have to consider two things: Price is not the major issue, compatibility is



    While I agree that both price and compatability are factors, I would say that PRICE is a bigger obstacle.





    Quote:

    If they lower prices, they need more demand, but if price is not the major factor in considering a Mac - if the failure to consider a Mac in the first place is the problem - then lower prices will translate directly into lost profits.



    It is a precarious situation, the price-demand cenario that you mentioned above. But something needs to be done. From a personal standpoint, I know that the potential demand amongst Windows users is there, but the price consideration is always the limiting factor.





    Quote:

    I'm not saying that Apple is unable to do anything, only that any move they make in the direction of trading margin for market share has to be done carefully and conservatively, because they don't have a lot of room to maneuver.



    Agreed. But if Apple is not careful about this, they might become the next SGI. Apple has acknowledged, to some degree, that they must increase their market share (Fred Anderson has commented on this).



    On another note, Apple's diminishing marketshare IS NOT GOOD from an investor's point of view, regardless of the recent upswing in the stock price.



    [edited by Brad to fix all the broken vB tags]
  • Reply 12 of 58
    torifiletorifile Posts: 4,024member
    Neruda, I don't agree that we need another thread on this, but could you at least fix the formatting of your previous post so at least it's readable? Thx.
  • Reply 13 of 58
    nerudaneruda Posts: 427member
    Quote:

    Originally posted by Jim Paradise

    Lots of people I know now love Macs: the applications, OS X, the look, the "style," but it always always ALWAYS comes down to "they're more expensive." It's no longer about perception for a lot of people, but it's still about price.



    Exactly! This is the point that I think most people on these boads and Mac fans in general are failing to grasp. Just because WE know the benefits of owning a Mac, doesn't mean that a) general consumers know this, or b) that these benefits are enough to overcome the perceived "expensive" prices of Macs.



    I can give so many examples of this, but this one will do:

    My fiancee's sister needed to buy a laptop for college. I explained all of the benefits of owning a Powerbook or an Ibook, but then the quesiton of price came up, and on that basis alone, her father bought her an AMD/XP notebook. Interestingly enough, she's had so many problems with this notebook that she wants to sell it and buy an ibook, but that's another topic



    This has happened many, many, many times. One of the biggest obstacles to owning a Mac that mentioned in non-Mac forums (slashdot, geeks) is always price.
  • Reply 14 of 58
    concordconcord Posts: 312member
    Quote:

    Originally posted by Amorph:

    I don't think price is the main obstacle facing Macs. I think the fact that most people rule them out implicitly is the biggest obstacle.



    I do think that price does play a role but I agree that for most people - Macs are simply never considered. Familiarity, ubiquity, software investment, momentum of the industry and so on. Is is possible to change it anymore? I don't know, but I do know it's only going to get harder every year. I suspect many Mac users forget the sheer ubiquity of PCs out there.

    Quote:

    I'm not saying that Apple is unable to do anything, only that any move they make in the direction of trading margin for market share has to be done carefully and conservatively, because they don't have a lot of room to maneuver.



    If Apple wants to remain in the business of selling computers they're going to have to do something radical to turn around those unit sales figures. When you're selling 40% fewer computers now than you were 8-9 years ago and all you're doing is bleeding a little more each year, it'll kill you eventually. At least in that market. The G5 sales are *already* cooling off, and that worries me...



    The last thing I want to see is Apple becoming a company that does nothing but crank out the gadget du jour.



    Any radical suggestions out there?



    C.
  • Reply 15 of 58
    jadejade Posts: 379member
    Here are some feature to feature comaprisons of the competition. You be the judge.



    HP Pavillion A450e

    AMD Athlon(TM) 64 3200+

    Microsoft(R) Windows(R) XP Professional Edition

    256 MB DDR / PC3200 (1 DIMM)

    80 GB 7200 rpm Ultra DMA Hard Drive

    Primary CD/DVD Drive

    4X DVD+RW/+R drive (DVD writer & CD-writer combo

    1 USB 2.0, 1 Firewire, ArcSoft, 7-in-1 reader

    Graphics Card

    64MB NVIDIA GeForce4 MX(TM) 440-8X w/TV-out

    Integrated 5.1 Capable Sound w/ front audio ports

    HP pavilion vf17 17" LCD flat panel display (actually very user friendly to adjust, similar to imac)

    Altec-Lansing 221 2.1 Speakers

    HP Internet Keyboard, HP Optical Mouse

    Microsoft(R) Works 7.0/Money 2004/MSN Encarta Plus





    *HP software bundle includes:

    HP Image Zone

    Symantec Norton Antivirus 2003 (includes 60 days of complimentary live updates)

    RecordNow! (in models with CD writer or DVD writer)

    InterVideo® WinDVD® SE (in models with DVD drive)

    MUSICMATCH® Jukebox

    RealOne? Player

    ArcSoft ShowBiz Video Editor

    ArcSoft® ShowBiz DVD (in models with DVD writer)

    Microsoft Windows MovieMaker 2.0

    Intuit Quicken New User's Edition 2003

    Adobe® Acrobat Reader





    Price $1495 (not included $100 rebate)





    So for $300 cheaper than the imac you get TV-out. A 64 bit processor, and the rest of the specs are similar, but HP is offering a free upgrade to 512 RAM.



    And for comparison check out the Sony I configured:



    PCV-RS500C Series

    Microsoft® Windows® XP Professional

    Intel® Pentium® 4 Processor 2.80C GHz supporting Hyper-Threading

    512 MB DDR-SDRAM (DDR333, 256 MBx2)

    120 GB Hard Disk Drive

    ATi Radeon 9200 (128MB)

    DVD+-RW Drive

    CD-ROM Drive

    Microsoft Works 7.0 with Office 2003 Business Trial Edition

    VAIO Creation Suite VIDEO Software:

    Video PLUS Package

    VAIO Creation Suite PHOTO Software:

    Photo PLUS Package

    VAIO Creation Suite MUSIC Software:

    Music PLUS Package

    Accessories:

    SDM-HS73/L - HS-model 17" Flat Panel LCD



    total $1674



    So not only does this include twice the RAM, twice the VRAM and 50% more Hard drive space. It also includes Photoshop Elements (a step up from iphoto), Abode Premier LE (like imovie), Sony''s click to DVD, and SonicStage Mastering Studio and Screenblast Acid LE (never used them but functionally equivalent to garageband). And you save $125 on the deal.





    Neruda: your prices are too low for dual processor g5s. Those can stay expensive...most people don't really need two processors, and if you need them you can pay for it.



    The problem is to pick your own monitor for your mac the point of entry is far too high, and under spec-ed. To purchase and all-in-one means paying a lot for little expandipility and poor specs compared with other computers in the same price range.



    I like other people think a mini-tower should replace/supplement the emac. The imacs need to come down in price at least 20% or the 17" imac needs to get more ram/hard drive/vRAM at the same price points.



    Apple doesn't need to get to the cheap PC price range, but needs more attractive compared to the competiton specs and pricing.





    pricing I like:



    15" imac/256/combo/80/ $999

    17" imac/512/super/80 $1499

    20" imac/512/8x super/160gb $1899



    new icube all g5, single processor

    256/combo/80 hd $799

    512/4x super/80/ $1299

    512/8x super/160/128MB VRAM $1599



    powermacs all dual

    1999-2999





    The price jumps are a little high, but the entire lineup is more rounded from $799-1899 for consumers. And a similar range for the pros to current pricing.
  • Reply 16 of 58
    jadejade Posts: 379member
    Apple is doing really well with OS X, a whole new market of people is making there way to Apple or thyinking about. A couple of years ago I was chatting with my companies IT guy about how I wanted one of those nifty tibooks. He said, yeah those are really cool, and a unix based OS seemes great but those are really expensive. And the same thing is out there in PC land...most consumers going to Best Buy/Compusa etc are looking for a new computer in the $100-1500 price range. Unfortunately for Apple they leave with an HP, Sony, eMachine, Gateway or Dell because you get a lot more for the money.



    Although most video/picture/music-y people looking to intergrate their digital hub love ilife and OS X, they aren't willing to put up an extra $500 for the privilege. (And still end up with less RAM and Hard drive and VRAM than the models they were looking at)



    WE are moving into a time where everyone has a digital camera, video camera, mp3 player and everything else. And they want it to be easy to integrate. And many long time PC users are seriously thinking about making the switch even though the software is limited and the are PC entrenched. Actually switcher is the wrong word...more and more people are becoming adders. There is a lot of momentum towards a platform agnostic society (more web based programs and wi fi not being device dependant) All trnds that favor the masas adoption of Apple products, but Apple is still unable to convert the mindshare to marketshare.



    While working in a big box retialer that carried Apple products, the biggest obstacle I heard was price. Not software (unless it was a gamer) or compatibility (once office was out of the way the main uses were covered, and it was for home). The problem was the point of entry was too high (or unattractive to flat screen craving upgraders. I couldn't give someone a good explanation for why the Sony across the aisle was $400 cheaper and had 2x the RAM and hard drive space. Don't be surprised that the Apples lost.
  • Reply 17 of 58
    amorphamorph Posts: 7,112member
    Quote:

    Originally posted by Neruda

    Exactly, so what can Apple do about this? As a former PC user I know that there are a lot of intangibles built into Macs that make them worth their price (hardware/software integration, OSX, security, easy of use....) but as history has shown, technological superiority does not necessarily equal market success.



    That's why iPod's out there. It lets people see the "intangible" Apple experience for themselves, and to see that it works just fine with their PC, and the obvious hope is that with the Mac, as with the iPod, you pay a little more but you get a lot more.



    Quote:

    By bringing prices closer to competitor's prices (a major factor that dissuades people from bying Macs).



    But with a couple of exceptions, they're pretty close already if you go feature for feature (and that includes features, like motherboard bandwidth and case quality that don't make spec sheets).



    Since Apple's a systems integrator they can't out-Dell Dell. Their whole strategy is based on adding value. They can't offer a stripped-down machine, because then it won't be a Mac. It wouldn't do all the things and run all the applications that Apple says Macs can do.



    It's true that that creates an imbalance, where Dell offers some crap for $400 (including rebates, 90% of which are never redeemed), but the machine that most people end up buying is priced right where Apple is selling. Especially after those people forget about the rebates, or submit them only to have them declined because of some technicality. Or else, they spend less and get something that really is only useful for light browsing, email and Word - not coincidentally, the three main security vulnerabilities in Windows. Whoops.



    Quote:

    OS X alone is more than worth it, so yes, I agree, Apple is competitive on a feature-for-feature basis, but one of the points of my original post is that these considerations are not a factor in the average consummer's purchasing decision.



    Macs aren't a factor in the average consumer's purchasing decisions. Apple has to bring people around to its way of offering machines - when they say an eMac is $799, they mean the whole machine is $799, no rebates, no gotchas, and it has all kinds of stuff onboard which all works out of the box - and, again, that's what iPod's for. Because Apple can't take Dell on head to head for a number of reasons, and frankly I'm just as glad that they aren't as bad about deceiving customers as Dell can be.



    Quote:

    Powermacs aren't consumer machines, but I still think that Apple should lower prices across all lines.



    Well, again, relative to what? How many dual-processor, 64-bit UNIX workstations with massive system bandwidth, peerless internal accessibility, SATA, and RAM expandability up to 8GB can you find for $3K?



    Quote:

    While I agree that both price and compatability are factors, I would say that PRICE is a bigger obstacle.



    As long as we can agree that they're both significant factors. I insist on compatibility because the (mostly older) people I know still don't think that Macs can get on the Internet, do email or run Word - so they aren't an option at any price. But regardless of which is bigger, addressing one without the other won't get Apple anywhere.



    One thing I'm interested in: There's a tremendous preoccupation with desktops here, especially when prices come up, but it looks to me like the notebooks are the great switcher machines, and it's pretty hard to complain about the iBook's price these days.



    Quote:

    It is a precarious situation, the price-demand cenario that you mentioned above. But something needs to be done. From a personal standpoint, I know that the potential demand amongst Windows users is there, but the price consideration is always the limiting factor.



    This is partly because the Macs aren't being appreciated at their full value. That's not a flame: What's reducing the acceptable cost is the risk involved. What if they don't like it? Since it's a risk, or an experiment, they aren't willing to take the plunge at the cost of a complete system. They want some toy for $300 that they can play with to see if they like the platform first; or a version of OS X that runs on PCs so that the cost of entry is only $129. But, again, Apple can't really offer that. If the curious PC users have desktops, they can look at iBooks. Then they still have their PC, and the Mac fills a new role that they didn't have filled before. That lessens the perceived risk somewhat.



    Quote:

    But if Apple is not careful about this, they might become the next SGI.



    SGI went to the dogs when they embarked on that ill-advised strategy to build their platform around Windows NT.



    Quote:

    Apple has acknowledged, to some degree, that they must increase their market share (Fred Anderson has commented on this).



    On another note, Apple's diminishing marketshare IS NOT GOOD from an investor's point of view, regardless of the recent upswing in the stock price.




    Both of these are true, but on the other hand lower margins are NOT GOOD from an investor's point of view (you can hear Fred Anderson commenting on that, too), and quarterly losses aren't either. Apple is moving conservatively, and trying to think outside the box (using the iPod as a trojan horse, for example). This is about all they can do, because they don't have a lot of room to maneuver, and they're still up against a lot of misconceptions. People who are curious about my iPod still ask me "but you need a Mac to use it, right?"
  • Reply 18 of 58
    It seems Apple is not making any headroom in the market share space. I believe the combination of lower prices and substantial advertising may increase market share.



    Also, if Apple doesn't keep growing with the market, market share will diminish, and once it falls below a point, 3rd party software/hardware manufacturers will look ath the Mac market, and think not to bother with it, as the Mac market is so small that no substantial profits can be made. It would be very hard for Apple to recover from this state.



    Ergo, they must not let market share decrease, and the combination of:

    ? Good substantial GLOBAL advertising.

    ? Price decreases.

    ? Common Apple myths addressed.

    will increase market share, somewhat.



    The iPod/iTunes 'Trojan Horse' campaign will work to some extent, but more needs to be done on Apple's behalf. e.g. Dropping the 'Mac' name altogether...? (Just an idea).



    My $0.02. m.
  • Reply 19 of 58
    nerudaneruda Posts: 427member
    Quote:

    While working in a big box retialer that carried Apple products, the biggest obstacle I heard was price. Not software (unless it was a gamer) or compatibility (once office was out of the way the main uses were covered, and it was for home). The problem was the point of entry was too high (or unattractive to flat screen craving upgraders. I couldn't give someone a good explanation for why the Sony across the aisle was $400 cheaper and had 2x the RAM and hard drive space. Don't be surprised that the Apples lost. [/B]



    This is the point I'm making Jade, and a relative lack of knowledge on the consumer side negates any comparison of Mac/PC specs. How many people came in with such detailed research/spec information as you have given in your previous post when they came in to buy a computer? Zero? 1-2%? The point is that MOST people are not as informed, so no matter how great you tell them a Mac is, they'll choose the cheaper PC.



    Amorph:

    1) Yes, NT was part SGI's downfall, the other, absurdly priced hardware in comparison the the competition, IMO.



    Amorph:Merovingian



    2) By posing the following questions I do not mean to rhetorically imply that either of you have made these assertions, but in mentioning "the intagible Apple experience" in relation to the iPod's ability to expose non-Mac users to Apple's technology (Trojan Horse, as Merovingian put it) do you really think that Apple can rely on the iPod to a) expose non-Mac people to Apple technolgy as a means to increase sales in other sections of the product line, or b) to increase its overall marketshare? While I applaud any sucess that Apple has in any segment of its product line, I think that the answer to both considerations is mostly negative. What doe the iPod teach Windows people about OS X, it is instructive about Apple's quality/superb design, but people can buy the windows version. Does anyone know the breakdown of Windows/Mac iPods that Apple is selling? This would be good to know. So what can Apple do: it has been inferred that price and education are two potential solutions-- we may disagree on the price consideration, but Apple is doing a terrible job on the latter. Terrible. When the hell is Apple going to actively advertise OS X instead of hoping that people acquire positive information about it through what is practically osmosis?



    http://premium.money.cnn.com/pr/subs...0404/index.htm



    "Meanwhile, Apple's share of the worldwide personal-computer market has shrunk to 2 percent from 3.2 percent five years ago. What's more, despite their soaring sales, iPods are depressing profitability because of their lower profit margin. The result: While Apple's sales of $6.2 billion last fiscal year were nearly unchanged from 1999, profits plummeted 90 percent to $69 million, from $601 million four years ago. It's unclear what Jobs can do or plans to do to turn around Apple's fortunes -- he refused to talk to MONEY about its future."



    What I find most distressing about this are NOT the declining financial numbers, but the comment (which I agree with and which is a tangential reason for starting this thread) but that it is "unclear what Jobs can do or plans to do to turn around Apple's fortunes". Isn't it unclear? If not, what exactly is Apple doing to ameliorate the problems that have been discussed in this thread and others?
  • Reply 20 of 58
    amorphamorph Posts: 7,112member
    Quote:

    Originally posted by Merovingian



    Also, if Apple doesn't keep growing with the market, market share will diminish, and once it falls below a point, 3rd party software/hardware manufacturers will look ath the Mac market, and think not to bother with it, as the Mac market is so small that no substantial profits can be made. It would be very hard for Apple to recover from this state.




    Absolute market size matters, because you don't sell to percentages; you sell to people. The number of Mac users is steadily increasing.



    Developers who are too stupid to realize that will just be depriving themselves of sales, with the attendent consequences. From where I sit, the developer situation looks much, much better than it did in the twilight days of OS 9. The WWDC last year was Apple's largest ever.



    Quote:

    The iPod/iTunes 'Trojan Horse' campaign will work to some extent, but more needs to be done on Apple's behalf. e.g. Dropping the 'Mac' name altogether...? (Just an idea).





    "This is not your father's Oldsmobile" didn't work for Oldsmobile. Hiding the brand name on their last models didn't work either. The last thing on Earth you want to do is appear embarrassed about your marque. That isn't going to attract anyone.



    Harping on the iMac misses the point, because Apple has made an unprecedented acknowledgement that it's not there price-wise. Give them a few weeks and let's see if the huge product line revision doesn't solve that problem.



    For the rest, I'd love them to have more of a presence in Mac-poor Iowa, for selfish reasons, but I can't blame Apple for going after the "low-hanging fruit" (Anderson's phrase, I believe), and selling into markets where Apple already has a significant presence. If you see a lot of Macs around, the decision to buy a Mac isn't so hard. Apple's up against potent network effects. The sort of steady progress that Steve was hoping for (1% market share per year) ain't gonna happen. Apple's going to have to fight for every sale until they reach some inflection point, at which point they'll start making real progress.



    That said, I'm really looking forward to the rumored university campus Apple Stores. For selfish reasons, of course, but given that Macs are selling at unprecedented rates to colleges and universities and their students it makes a lot of sense. The more low-hanging fruit they pluck, the more fruit will hang low.
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