Yes. Can you show that Apple competes in any way within the sub-$500 market? In demographics, market segment or price?
Quote:
So, whilst the Mini is not a member of the "budget PC" group, surely you accept that someone who is considering a $499 PC might look at a $599 PC and think the extra $100 is worth it? So a $599 PC can compete against budget PCs. This is what Snoopy is getting at.
Except that market segment is price dominated hence the sub-$300 pricing in the entry models. $599 is twice the price of the entry model. When the discussion is on "what the customer wants" in this market segment its lower cost.
Sure, someone at the upper end of the entry market could consider the mini but it is NOT the same as saying that Apple is engaged in that market.
Quote:
There are several reasons why this hasn't worked in the past:
1.) When the Mac platform was PPC, Apple had to do all the engineering themselves. They designed motherboard chipsets and motherboards, the former of which is especially time consuming and expensive. This had an impact on achievable price/performance of the cheaper machines and achievable margins.
And arguably the 2006 market is more price competitive than 1996.
Quote:
2.) The range of PPC chips available to them then was far smaller than the range of Intel chips available now. Again, this had an impact on price/performance and margins.
The MC68LC040 were still available for the lower end models and there was a decent range of lower performing chips from the 68K family. Pricing I dunno. The Color Classic was $1400 and used a 68030. The LC III sold for $750 (headless mac in pizza box FF) in 1993. For 1993 this was pretty cheap even for PCs. I bought one of the first P90s for around $3K.
Quote:
3.) As well as offering "cheaper" Macs, the line-up was also a lot more complex. This meant that customers didn't know which machine to choose and most of the time Apple didn't even know what to recommend.
True.
Quote:
I think it's dumb to ignore 51% of a market in which you compete. Apple, now that they are on the Intel hardware platform, can build profitable $399/499 computers. Yes, they will be less powerful than the Windows counterparts, but they would be significantly less ugly and run OS X.
And I say there really isn't a compelling reason for Apple to pursue this market. As shown earlier Apple has a 16% share installed base and is selling 1M+ units a quarter. The software market is viable. In this environment the BMW/Mercedes analogies DO work.
Quote:
Short-term hit for long-term gain.
Doesn't seem that way to me. They appear to have structured to leverage their desktop sales to maximize their competitive advantage in laptops. A market that is growing much faster than desktops especially in the market segments they compete in (edu and home).
What you are advocating is dilution of strategy and effort (which is winning at the moment) to pursue a market lost a decade ago. The opportunity costs are not negligible and you seem to underestimate the infrastructure costs of greatly increasing share.
You think the Genius bar is busy now? Flood the market with $399 low profit macs. There is an increased cost as you increase volume for support but you make less $$$ per unit.
Tell me why that's so great again? It seems like short-term hit for little or no long term gain. The risks are high.
Quote:
If Apple offered a $399 or $499 PC, they wouldn't be entering a "pricing battle" with Dell et al. The Apple offering would have lower price/performance than the direct Windows counterparts. The draw would be form-factor elegance and OS X. Lowering the cost of entry for the Mac platform is not the same as a price war with PC makers.
And form factor elegance appears to appeal to a market segement willing to pay more money but is of little importance to those in the value/entry market.
So you're saying that BMW could sell a lot more cars if they priced them like Corollas except the buyers of Corollas tend to care more about cost and gas economy than style or performance.
The rejoinder is so what? You tarnish the brand which currently is a high end brand by charging too little for the product. This is why BMW's lower segment sells under a different name. Even there the Mini Coopers start at $18K.
It's all well and good that Apple is not going to battle others on price, but it's totally wrong to stay out of a whole market to avoid competition. That's defensive. You don't win in the technology market by being defensive.
What you call defensive I call picking battles where you can crush your enemies and take control of that segment. Apple dominates the AIO segment. Apple dominates the MP3 market. Apple appears to look for markets it can control. SFF is debatable but the mini has a huge footprint there.
Laptops and Workstations are high margin markets that competitors depend on for their own profit margins. Apple isn't dominating them but it is able to compete with companies larger that also enjoys vertical integration capabilities.
Do you believe that Apple can dominate the sub-$500 market? Or the tower market?
How about the miniscule tablet market? Can you see an Apple offering that transforms a niche market into the next growth segment?
Quote:
Certainly not by looking for excuses for shortcomings. That's something people do before they grow up. This is Apple we're talking about - the OS is key. There's no need to apologize when your box costs $200 more than something that only runs Windows and looks ugly.
OS isn't key. Apple has proven that in the 80s and 90s where the technological advantages of MacOS over Win 3.1 are MUCH larger than Tiger over XP or Leopard over Vista. Windows is in the "good enough" category.
Quote:
An introduction of an xMac doesn't take away from the strength of the other machines. If things are as you suggest and their form factor and other characteristics make them worth the price, they will be fine. If not, some of those sales will convert into xMac sales and they get more first-time buyers.
Arguably they are getting sufficient first time buyers from laptop sales which is in a high growth segment. Why compete for a segment that is showing softness in growth with lots of aggressive competitors?
Why invest in segments when the ROI could be so much better in other areas? This is called the opportunity cost and involves BOTH money capital and branding capital.
Apple's strength is vision. Why play to a strategy that doesn't require any?
And for that $1700, you'll have a machine marginally faster than a $600 Mac Mini. For the same price you have have a 2.4 or 2.6ghz Conroe. Xeon's big advantage is in high end multi-threaded environments. Per mhz, it's about as fast as conroe.
Which ignores the fact that you claim that this machine can't exist at all.
Quote:
If by most apps, you mean Final, Cut Logic, and the like, yes. Most consumer applications or light professional apps are single or dual threaded. Having more than two cores actually changes things a little bit when it comes to programing. There is a good reason xeon workstations aren't selling like hotcakes on the PC side and it isn't user ignorance.
Given that the entire product lines of Intel and AMD are moving to multiple cores one might assume that programmers...who unlike many disciplines must learn things on a regular basis...will learn how to program differently. Stop learning as a developer and you're management.
Not to mention that MS, Apple and Intel will be providing IDE, compiler and tool support to develop for multi-core machines. For example DTrace provides much more visibility into program and kernel behavior than we had before.
As far as Xeons, they sell better now that they can beat Opteron machines.
People seem to think Apple is doing fine because they recently hit 6% marketshare. Yet if you really look at the numbers they could be at 9% in both desktop and laptops. Currently these two segments are nearly even in sales 49% to 50% for the rest of the industry, for Apple it is split 33% to 67%. This shows that Apple has about 9% of the laptop marketshare but only 4% of the desktops. Therefore it's obvious at least to me something is wrong with their desktop lineup.
Personally I believe Apple already knows this and is working on something, whether it's a Mac midtower or something else altogether is yet to be seen.
People seem to think Apple is successful because they are. What you are missing is that Apple isn't competing in the 51% of the desktop market that is sub-$500 nor does it compete in the business market or the mid-tower markets. That 4% desktop share is at the most profitable segements.
So it competes in is the high margin segments and its the #4 PC maker in the US. It makes $564M on $4.8B revenue in comparison to Gateway making $50M on $919M revenue. Even cutting Apple revenue and profits in half (for iPods) shows that greater market share is not the path to profits. Apple EPS beats those of Dell, HP and Gateway.
People seem to think Apple is successful because they are. What you are missing is that Apple isn't competing in the 51% of the desktop market that is sub-$500 nor does it compete in the business market or the mid-tower markets. That 4% desktop share is at the most profitable segements.
So it competes in is the high margin segments and its the #4 PC maker in the US. It makes $564M on $4.8B revenue in comparison to Gateway making $50M on $919M revenue. Even cutting Apple revenue and profits in half (for iPods) shows that greater market share is not the path to profits. Apple EPS beats those of Dell, HP and Gateway.
Vinea
Thank you! Apple has a very profitable business (at the moment), though it sounds as if people tend to forget that, or have some greater knowledge about Apple than Apple does. I'm sure they're thinkin' about what to do next. Sometimes it sounds as if people think they got here out of dumb luck. I'm even pretty sure they've looked at the market segment for the mid-tower, and they have things they may and may not do under certain circumstances, but they HAVE thought about it. Otherwise they wouldn't be making so much dough.
Yes. Can you show that Apple competes in any way within the sub-$500 market? In demographics, market segment or price?
Clearly Apple do not currently offer any machines below $599. My point was that you were implying that sub $500 and SFF are necessarily mutually exclusive. This is not the case. The cheapest G4 mini was $499.
Quote:
Originally Posted by vinea
As shown earlier Apple has a 16% share installed base
? Where was that shown?
Quote:
Originally Posted by vinea
The software market is viable.
Hardware, software and service support could all be better.
Quote:
Originally Posted by vinea
What you are advocating is dilution of strategy and effort (which is winning at the moment) to pursue a market lost a decade ago. The opportunity costs are not negligible and you seem to underestimate the infrastructure costs of greatly increasing share.
Yes, I realise that share increases mean increased support costs. The big market share gains should occur around the time that Apple's campus is consolidated and they are able to grow effectively.
Quote:
Originally Posted by vinea
You think the Genius bar is busy now? Flood the market with $399 low profit macs.
We don't all live in the U.S. you know. Most countries don't have any Apple Stores. In the U.S. Apple are working on adding 40 a year.
Quote:
Originally Posted by vinea
Tell me why that's so great again? It seems like short-term hit for little or no long term gain.
To increase market share making the platform more attractive to hardware and software developers and service providers, making the platform more attractive to users, which increases market share etc. etc.. I think if they can reach 10% global market share extremely interesting things happen. They could then aim for 15%, and if they reach that, then licence OS X to third parties.
Quote:
Originally Posted by vinea
The risks are high.
Indeed. Apple have been playing it safe since 1997. Back then it was necessary for the company to survive. I say now that the company is healthy it's time to take some risks to deliver serious long-term gain.
Quote:
Originally Posted by vinea
And form factor elegance appears to appeal to a market segement willing to pay more money but is of little importance to those in the value/entry market.
I think it's a mistake to assume that just because someone isn't willing/cannot afford to spend more than a certain amount on a computer that they do not value elegance at all. Anyway, I think the bigger draw is OS X.
First off, put back what else I said -- that the Mini's price is low enough, so that a fair number of those in the entry level market buy it. Mr. H. suggested a Venn diagram, which may make discussion clearer. We may dissect a market in many ways, but usually it's either by product features or customer needs.
The problem is that the industry has a definition for the term. That way when folks are talking about this particular subject they are all on the same page. Also your initial assertion was this term was something specific to me. It isn't. Saying that Apple competes in the entry market means it is competing for sales of X. Except that Apple isn't competing for sales of X.
Quote:
The set of all sub-$500 towers sells to many markets. Imagine this circle, which represents low priced towers, intersecting many circles of customers, such as schools, business offices, first time buyers, and others.
Yes, and these circles are called education market, business market, etc. Apple competes in the edu market with laptops and the eMac. The mini, like the Mac Pro, will make sales in the edu market but that's not the segment it primarily serves. The mini is a low cost entry point for the Apple line but isn't competing in the entry level/budget market.
Apple makes sales to the business market but like the gamer market this is not an area that Apple competes in. Sales in those markets are welcome but Apple expends relatively little effort in those segments.
Quote:
This is where the cheap towers go, or who buys them. There is another circle for the SFF. It intersects some of the same customer circles as does the cheap tower circle, but the intersections have different populations. That is, cheap towers may be more popular than SFFs in some markets, but not in others.
Folks looking for SFF computers aren't looking for cheap towers because its a different need. Hence the design and pricing is different. When you build a SFF computer you MIGHT get sales in the entry market but its rare as its not the market you serve.
The customer demographic is different...they are looking for different things and are willing to trade price and expansion for size.
Quote:
What then do first time buyers buy? What product categories does their market circle intersect? Likely it intersects cheap towers, SFF, and low-end laptops the most, but also AIO, mid-range towers and to a lesser extent other products.
First time buyers appear to be a diffuse lot but likely appear the edu and home markets most.
Quote:
I was simply illustrating why it is more important for a company to understand the needs and wants of customers, rather than how well various categories of products are selling today. It helps a company plan tomorrow's product mix.
No you were making an unfounded assertion to cover a mistake. There is no evidence that Ford or Olds thought of themselves as "personal transportation" provides over "motor vehicle" manufacturers. Certainly every company tries to understand their customer base.
What makes you think that Apple has been negligent enough not to do this and decide that the demographics for gamers, mid-towers and cheap towers aren't worth pursuing?
Quote:
Yep. It stands for small form factor, an acronym I had not heard before. It is a product that sells into several different markets, however.
Bold assertion for someone unaware that the market existed at all before this thread. Perhaps you would be kind enough to show a link to a page where you learned more about the SFF market and whom it serves? Certainly it serves several sub-markets but these are related to the form factor: media PCs and LAN party gamers. It even serves (at least the mini did) high density server farms but that one is pretty far out there. I know of only a couple examples of that.
Notice that entry level budget computers isn't in that mix? Even the barebone kits often cost more than an entire computer in that other market. The entry level budget market is defined by a group of customers that are price dominated. The SFF market is defined by a group of customers that are size dominated. The design of systems that meet these needs are orthogonal. Designing for size to be competitive in the SFF market necessitates a higher price than is competitive in the entry budget market.
People seem to think Apple is successful because they are. What you are missing is that Apple isn't competing in the 51% of the desktop market that is sub-$500 nor does it compete in the business market or the mid-tower markets. That 4% desktop share is at the most profitable segements.
So it competes in is the high margin segments and its the #4 PC maker in the US. It makes $564M on $4.8B revenue in comparison to Gateway making $50M on $919M revenue. Even cutting Apple revenue and profits in half (for iPods) shows that greater market share is not the path to profits. Apple EPS beats those of Dell, HP and Gateway.
This argument totally assumes that if Apple had $399/499 - $1599 towers everyone would buy those instead of iMacs and Mac Pros. i.e. that these machines would heavily cannibalise more expensive models.
O.K., we get it. You don't need to say it over and over several different ways. You think the machines would heavily cannibalise iMacs and Mac Pros. I don't.
If the machines don't heavily cannibalise other models, then Apple revenues would increase, and so would their profits. Granted, the operating margin would fall a bit, but so what? If they want more than 5% global market share, that's what they're going to have to do.
Once market share starts going up and marginalisation of the platform abates, the whole platform becomes more attractive to purchasers, increasing sales of all machines, expensive iMacs and Mac Pros included.
Clearly Apple do not currently offer any machines below $599. My point was that you were implying that sub $500 and SFF are necessarily mutually exclusive. This is not the case. The cheapest G4 mini was $499.
Didn't we have this $1 argument several pages ago?
Quote:
? Where was that shown?
As in the press release why a company elected to enter the Apple market. Hopefully for their investors their research wasn't bogus.
Quote:
Hardware, software and service support could all be better.
They are better than Dell, HP and Gateway on a EPS level. You know its really amazing that folks in this thread appear to think this is 1996 and Apple is struggling.
Quote:
Yes, I realise that share increases mean increased support costs. The big market share gains should occur around the time that Apple's campus is consolidated and they are able to grow effectively.
So you're saying that their manufacturing, tranportation and customer support infrastructure can scale to Dell or HP size with the same current efficiencies (or better)?
The risk, which pro-share folks seem to ignore, is that Jobs and Apple management will be no more successful at the market share strategy than Gateway's management. They could gain share and end up with Gateway performance. Jobs' track record pre-return in that kind of strategy wasn't too compelling either.
No thanks.
Quote:
We don't all live in the U.S. you know. Most countries don't have any Apple Stores. In the U.S. Apple are working on adding 40 a year.
The point is that Apple places stores in high value regions and these are sufficient to meet a good segment of their users. Apple is a US centric company and world vs US share numbers seem to support that.
Quote:
To increase market share making the platform more attractive to hardware and software developers and service providers, making the platform more attractive to users, which increases market share etc. etc.. I think if they can reach 10% global market share extremely interesting things happen. They could then aim for 15%, and if they reach that, then licence OS X to third parties.
Speculation without much supporting evidence. Again this is the underpants gnome business model:
1) Increase Share!
2) ???
3) Profit!
Ignoring that Apple is a successful and profitable company with good development support, increasing share (both actual and mindshare) and able to guide their own destiny. Also ignoring the disadvantages of 10%-15% GLOBAL share which requires either competition in low-margin growth markets (India and China) or total domination of 1st world markets (ain't happening).
Quote:
Indeed. Apple have been playing it safe since 1997. Back then it was necessary for the company to survive. I say now that the company is healthy it's time to take some risks to deliver serious long-term gain.
And my contention is not to invest in mature markets but take risk in developing emerging markets. iTV, iTablet, etc.
Quote:
I think it's a mistake to assume that just because someone isn't willing/cannot afford to spend more than a certain amount on a computer that they do not value elegance at all. Anyway, I think the bigger draw is OS X.
Again, someone needs to show me why OSX is more compelling today against XP/Vista than MacOS was vs Windows 1.0 or 3.1.
Thank you! Apple has a very profitable business (at the moment), though it sounds as if people tend to forget that, or have some greater knowledge about Apple than Apple does. I'm sure they're thinkin' about what to do next. Sometimes it sounds as if people think they got here out of dumb luck. I'm even pretty sure they've looked at the market segment for the mid-tower, and they have things they may and may not do under certain circumstances, but they HAVE thought about it. Otherwise they wouldn't be making so much dough.
I don't think people think apple got to where they are because of dumb luck. It was WISE to trim the product line and to start with few options. It was necessary to rebuild the company. It was a streamlined business decision. The problem with this decision is it doesn't compensate high growth. From the DirectTV commercial "CHOICES JERRY, PEOPLE WANT CHOICES". We have presented many people that want at least another choice. As someone stated earlier, it's impossible to please everyone. Very true. But at least please a majority that want a mid-tower / mid-line conroe solution. In all honesty, what does creating another computer entail. New motherboard (which intel has plenty of) to be compatible with Conroe, New case design, one of the current graphic cards (7600gt or 7300gt or x1900xt), and testing. We've gone through the argument a dozen times in this tread that it will eat into current line... which can't really be proven without launching this computer. People feel very strong on each side of the pole. I myself feel it has NOTHING to do with the iMac nor Mac Pro. Mac Pro is a work station. iMac is a consumer ma / pa computer. There are plenty of gamers and power users out there that want neither a Mac Pro OR an iMac. I know I'm not alone. I've been talking to people in my Mac User Group for a LONG time about this very thing (since the g5 came out). There should be another computer. Quench my thirst Apple.
They are better than Dell, HP and Gateway on a EPS level. You know its really amazing that folks in this thread appear to think this is 1996 and Apple is struggling.
Not once have I suggested that Apple is struggling. Support for the platform outside the U.S. could be a lot better. As a non-U.S. resident, that's something I'd like to see.
Quote:
Originally Posted by vinea
So you're saying that their manufacturing, tranportation and customer support infrastructure can scale to Dell or HP size with the same current efficiencies (or better)?
Do it at the right pace, and why the hell not? You just need to make sure you've the right people on the board and in upper management. Hell, poach people from Dell and HP.
Quote:
Originally Posted by vinea
Speculation without much supporting evidence. Again this is the underpants gnome business model:
1) Increase Share!
2) ???
3) Profit!
This is a gross misrepresentation. Are you actually saying that if Apple increased their global market share to 10% by introducing $399/499 to $1999 "mini tower" computers with 28% gross margins that their revenues and profits would not be higher than they are today? I am not advocating chasing market share by slashing margins, and nor can you pretend that if the "mini tower" appeared, only the $399/499 model would sell and that sales of iMacs and Mac Pros would cease. You gleefully ignore these points.
Obviously, it is not a given that Apple could reach 10% market share with the help of the "mini tower". My point is that if it did happen, their revenues and profits would be higher than they are now.
Quote:
Originally Posted by vinea
iTV
It'll be fun to see how this pans out. Hope they can make a success of it unlike Airport Express.
Quote:
Originally Posted by vinea
Again, someone needs to show me why OSX is more compelling today against XP/Vista than MacOS was vs Windows 1.0 or 3.1.
This argument totally assumes that if Apple had $399/499 - $1599 towers everyone would buy those instead of iMacs and Mac Pros. i.e. that these machines would heavily cannibalise more expensive models.
O.K., we get it. You don't need to say it over and over several different ways. You think the machines would heavily cannibalise iMacs and Mac Pros. I don't.
If we all got it the thread would have ended a dozen pages ago. You wish me to stop questioning your assertion that $399-$999 towers won't have a significant impact on AIO sales and that additional sales is certain WHILE you continue to make those unfounded assertions.
No.
Quote:
If the machines don't heavily cannibalise other models, then Apple revenues would increase, and so would their profits. Granted, the operating margin would fall a bit, but so what? If they want more than 5% global market share, that's what they're going to have to do.
Again, you need to show that 5% global share is likely given that the emerging growth markets are China and India with indigenous production capability. You also need to show that 5% share is required for a healthy, profitable and successful Apple and that current Apple management can get you from here to there.
If M. Dell was CEO of Apple I'd say you have a case. He's not. Jobs is not interchangable neither is the corporate culture. Two points you have steadfastly ignored. What in Steve Jobs professional history makes you believe he can successfully implement a market share strategy? It sure wasn't his original performance at Apple or NeXT.
Quote:
Once market share starts going up and marginalisation of the platform abates, the whole platform becomes more attractive to purchasers, increasing sales of all machines, expensive iMacs and Mac Pros included.
You'll have to show that the platform is marginalized first. OSX still enjoys fairly wide support from the major software makers (adobe, oracle, etc). Heck, you still get MS Office. The primary arena where Macs are marginalized is gaming.
The problem is that the industry has a definition for the term. That way when folks are talking about this particular subject they are all on the same page. Also your initial assertion was this term was something specific to me. It isn't. Saying that Apple competes in the entry market means it is competing for sales of X. Except that Apple isn't competing for sales of X.
Vinea
Normal consumers don't split hairs like that. The Mac Mini is close enough in price to the sub 500 level (used to be 499.99), that MANY consider this apple competing in the sub 500 market. Others (yourself included), feel the Mac Mini is an SFF computer and is kind of in it's own market. No matter how you slice it, It's considered Apple's budget computer. Some may look at this as a pc with an OS X tax. In the end all that matters is this machine is considered the bottom of the line Apple computer that gets switchers from the PC sub 500 market. Which it does. I've witnessed it many times. Is it an SFF computer? yah. Is it close to a budget computer? definitely. Apple may not be intentionally competing in the sub 500 market, but the way the prices are set up, in a way they are.
You know, a basic assumption you guys seem to be making is that all the "potential switchers" out there are looking for an xMac. There is no proof for this. The anecdotal "evidence" you usually quote is that their are all cheap towers on the PC side, so therefore they want what they're "used to." Well, I say that people who are looking for what they're used to aren't considering Macs by any stretch of the imagination because the difference the functional difference between using OS X and Win is a lot bigger than the difference between using an AIO and a tower.
Potential switchers are people who's imagination is caught by Apple's products. OS X certainly quailfies as imagination catching. So do the iMac, mini, and to a lesser extent the laptops for their small size, built-in camera, etc. The Mac Pro qualifies for it's extreme power and awesome internal design. The xMac-doesn't qualify, unless it were a Cube. In which case it would fail for the same reason as the first Cube-too expensive for it's competitors..
If we all got it the thread would have ended a dozen pages ago. You wish me to stop questioning your assertion that $399-$999 towers won't have a significant impact on AIO sales and that additional sales is certain WHILE you continue to make those unfounded assertions.
No.
I just don't see why we need to talk about the same thing over and over. Other parts of the discussion have moved on and proved interesting and engaging (to me at least).
I don't see why we can't just say that I and others think the "mini tower" wouldn't heavily cannibalise iMacs and Mac Pros and you and others think it would. Without releasing the machine, there is absolutely no way of telling who is right, so why don't we leave that part of the discussion behind?
Not once have I suggested that Apple is struggling. Support for the platform outside the U.S. could be a lot better. As a non-U.S. resident, that's something I'd like to see.
You describe the platform as marginalized and question the long term viability of the platform because of share numbers. Does that describe confidence in a company or belief that it is struggling?
The business picture is certainly brighter but your basis for the need to grow share to 10-15% globally is based on those repeated assertions.
Quote:
Do it at the right pace, and why the hell not? You just need to make sure you've the right people on the board and in upper management. Hell, poach people from Dell and HP.
Care to address if you think JOBS is capable or willing to execute such a strategy?
Quote:
This is a gross misrepresentation. Are you actually saying that if Apple increased their global market share to 10% by introducing $399/499 to $1999 "mini tower" computers with 28% gross margins that their revenues and profits would not be higher than they are today?
Show me a computer company with 10% global market share making 28% gross margins.
Quote:
I am not advocating chasing market share by slashing margins, and nor can you pretend that if the "mini tower" appeared, only the $399/499 model would sell and that sales of iMacs and Mac Pros would cease. You gleefully ignore these points.
They wouldn't entirely cease but given the performance of the Sony AIOs (that don't totally suck unlike the Gateway ones) the sales will be very marginal. Mac Pros wont be as heavily impacted but should feel some effects.
Would only the $399 or $499 models sell? Of course not. But like Dell, HP and Gateway a large segment of the sales (like maybe 51%?) will be in these units.
Quote:
Obviously, it is not a given that Apple could reach 10% market share with the help of the"mini tower". My point is that if it did happen, their revenues and profits would be higher than they are now.
Given your criteria that Apple can reach 10% market share and maintain 28% gross margins yes, they would make more money. In fact they would be so wildly successful they would make Google and MS look like pikers.
Quote:
It'll be fun to see how this pans out. Hope they can make a success of it unlike Airport Express.
Its called risk vs rewards. Who dominates the set top is still undecided.
The desktop market was decided a couple decades ago. Unseating MS in the PC arena is going to be about as likely as unseating IBM in the mainframe arena, DEC in the mini-computer arena (now defunct and replaced by unix servers). Sun is about the only one "dethroned" and I don't think it really dominated the unix workstation market as clearly as IBM, MS and DEC had their respective segments.
If Apple wants to dominate something there has to be a paradigm shift away from the desktop. THIS is why MS is spending like mad on any emerging technology segment and they are paranoid.
Quote:
Malware and a general growing resentment of XP.
Something MS is trying to resolve with Vista. In any case the OS is below the radar for most folks and they have 2 decades getting used to the MS way. XP resentment is most visible in the geek crowds...less so in the general populace.
What in Steve Jobs professional history makes you believe he can successfully implement a market share strategy?
The iPod?
Quote:
Originally Posted by vinea
You'll have to show that the platform is marginalized first. OSX still enjoys fairly wide support from the major software makers (adobe, oracle, etc). Heck, you still get MS Office. The primary arena where Macs are marginalized is gaming.
Your problem here is that you live in the U.S. (or at least, I assume you do?)
Do you have any idea how low awareness of OS X is in the U.K. for example? If Apple had 10% market share, it'd be different.
I just don't see why we need to talk about the same thing over and over. Other parts of the discussion have moved on and proved interesting and engaging (to me at least).
I don't see why we can't just say that I and others think the "mini tower" wouldn't heavily cannibalise iMacs and Mac Pros and you and others think it would. Without releasing the machine, there is absolutely no way of telling who is right, so why don't we leave that part of the discussion behind?
As I said, don't make those same arguments and I don't have to roll out the same rejoinders. Its not like I'm bringing it up out of thin air. Nor have you manage to refute those arguments by showing real world examples of the feasiblity of what you state.
At least you've moved away from saying that you can make $399 Conroe xMacs based on Mini pricing and deducting from there...
There are many points you don't address but come back to that same basic argument...$399 xMacs would sell. Yes, they would. The DOWNSIDES are those I list. If Apple captures 10% global market share while maintain 28% margins they make lots of money. Yes, they would. Never mind you can't show an example of a company that does that...
You describe the platform as marginalized and question the long term viability of the platform because of share numbers. Does that describe confidence in a company or belief that it is struggling?
The business picture is certainly brighter but your basis for the need to grow share to 10-15% globally is based on those repeated assertions.
You misunderstand me. I think for the platform to have long-term viability they need anything above or equal to 3% market share in the U.S. But that if they could acheive 10% global market share with 28% gross margins on their machines they would be, as you said, wildly successful.
The mini-tower isn't the only requirement to reach the 10% goal. An ultra-portable MacBook Pro, 15" and 17" screen options on all MacBook (pro and non-pro) models (i.e. stop tying screen size with other features such as CPU speed and GPU memory), and a cheaper MacBook entry point (Celeron M 430 instead of Core Duo and other reduced specs. for $799/899 price target) would really help (IMHO).
Comments
Ever heard of a Venn Diagram?
Yes. Can you show that Apple competes in any way within the sub-$500 market? In demographics, market segment or price?
So, whilst the Mini is not a member of the "budget PC" group, surely you accept that someone who is considering a $499 PC might look at a $599 PC and think the extra $100 is worth it? So a $599 PC can compete against budget PCs. This is what Snoopy is getting at.
Except that market segment is price dominated hence the sub-$300 pricing in the entry models. $599 is twice the price of the entry model. When the discussion is on "what the customer wants" in this market segment its lower cost.
Sure, someone at the upper end of the entry market could consider the mini but it is NOT the same as saying that Apple is engaged in that market.
There are several reasons why this hasn't worked in the past:
1.) When the Mac platform was PPC, Apple had to do all the engineering themselves. They designed motherboard chipsets and motherboards, the former of which is especially time consuming and expensive. This had an impact on achievable price/performance of the cheaper machines and achievable margins.
And arguably the 2006 market is more price competitive than 1996.
2.) The range of PPC chips available to them then was far smaller than the range of Intel chips available now. Again, this had an impact on price/performance and margins.
The MC68LC040 were still available for the lower end models and there was a decent range of lower performing chips from the 68K family. Pricing I dunno. The Color Classic was $1400 and used a 68030. The LC III sold for $750 (headless mac in pizza box FF) in 1993. For 1993 this was pretty cheap even for PCs. I bought one of the first P90s for around $3K.
3.) As well as offering "cheaper" Macs, the line-up was also a lot more complex. This meant that customers didn't know which machine to choose and most of the time Apple didn't even know what to recommend.
True.
I think it's dumb to ignore 51% of a market in which you compete. Apple, now that they are on the Intel hardware platform, can build profitable $399/499 computers. Yes, they will be less powerful than the Windows counterparts, but they would be significantly less ugly and run OS X.
And I say there really isn't a compelling reason for Apple to pursue this market. As shown earlier Apple has a 16% share installed base and is selling 1M+ units a quarter. The software market is viable. In this environment the BMW/Mercedes analogies DO work.
Short-term hit for long-term gain.
Doesn't seem that way to me. They appear to have structured to leverage their desktop sales to maximize their competitive advantage in laptops. A market that is growing much faster than desktops especially in the market segments they compete in (edu and home).
What you are advocating is dilution of strategy and effort (which is winning at the moment) to pursue a market lost a decade ago. The opportunity costs are not negligible and you seem to underestimate the infrastructure costs of greatly increasing share.
You think the Genius bar is busy now? Flood the market with $399 low profit macs. There is an increased cost as you increase volume for support but you make less $$$ per unit.
Tell me why that's so great again? It seems like short-term hit for little or no long term gain. The risks are high.
If Apple offered a $399 or $499 PC, they wouldn't be entering a "pricing battle" with Dell et al. The Apple offering would have lower price/performance than the direct Windows counterparts. The draw would be form-factor elegance and OS X. Lowering the cost of entry for the Mac platform is not the same as a price war with PC makers.
And form factor elegance appears to appeal to a market segement willing to pay more money but is of little importance to those in the value/entry market.
So you're saying that BMW could sell a lot more cars if they priced them like Corollas except the buyers of Corollas tend to care more about cost and gas economy than style or performance.
The rejoinder is so what? You tarnish the brand which currently is a high end brand by charging too little for the product. This is why BMW's lower segment sells under a different name. Even there the Mini Coopers start at $18K.
Vinea
It's all well and good that Apple is not going to battle others on price, but it's totally wrong to stay out of a whole market to avoid competition. That's defensive. You don't win in the technology market by being defensive.
What you call defensive I call picking battles where you can crush your enemies and take control of that segment. Apple dominates the AIO segment. Apple dominates the MP3 market. Apple appears to look for markets it can control. SFF is debatable but the mini has a huge footprint there.
Laptops and Workstations are high margin markets that competitors depend on for their own profit margins. Apple isn't dominating them but it is able to compete with companies larger that also enjoys vertical integration capabilities.
Do you believe that Apple can dominate the sub-$500 market? Or the tower market?
How about the miniscule tablet market? Can you see an Apple offering that transforms a niche market into the next growth segment?
Certainly not by looking for excuses for shortcomings. That's something people do before they grow up. This is Apple we're talking about - the OS is key. There's no need to apologize when your box costs $200 more than something that only runs Windows and looks ugly.
OS isn't key. Apple has proven that in the 80s and 90s where the technological advantages of MacOS over Win 3.1 are MUCH larger than Tiger over XP or Leopard over Vista. Windows is in the "good enough" category.
An introduction of an xMac doesn't take away from the strength of the other machines. If things are as you suggest and their form factor and other characteristics make them worth the price, they will be fine. If not, some of those sales will convert into xMac sales and they get more first-time buyers.
Arguably they are getting sufficient first time buyers from laptop sales which is in a high growth segment. Why compete for a segment that is showing softness in growth with lots of aggressive competitors?
Why invest in segments when the ROI could be so much better in other areas? This is called the opportunity cost and involves BOTH money capital and branding capital.
Apple's strength is vision. Why play to a strategy that doesn't require any?
Vinea
And for that $1700, you'll have a machine marginally faster than a $600 Mac Mini. For the same price you have have a 2.4 or 2.6ghz Conroe. Xeon's big advantage is in high end multi-threaded environments. Per mhz, it's about as fast as conroe.
Which ignores the fact that you claim that this machine can't exist at all.
If by most apps, you mean Final, Cut Logic, and the like, yes. Most consumer applications or light professional apps are single or dual threaded. Having more than two cores actually changes things a little bit when it comes to programing. There is a good reason xeon workstations aren't selling like hotcakes on the PC side and it isn't user ignorance.
Given that the entire product lines of Intel and AMD are moving to multiple cores one might assume that programmers...who unlike many disciplines must learn things on a regular basis...will learn how to program differently. Stop learning as a developer and you're management.
Not to mention that MS, Apple and Intel will be providing IDE, compiler and tool support to develop for multi-core machines. For example DTrace provides much more visibility into program and kernel behavior than we had before.
As far as Xeons, they sell better now that they can beat Opteron machines.
Vinea
People seem to think Apple is doing fine because they recently hit 6% marketshare. Yet if you really look at the numbers they could be at 9% in both desktop and laptops. Currently these two segments are nearly even in sales 49% to 50% for the rest of the industry, for Apple it is split 33% to 67%. This shows that Apple has about 9% of the laptop marketshare but only 4% of the desktops. Therefore it's obvious at least to me something is wrong with their desktop lineup.
Personally I believe Apple already knows this and is working on something, whether it's a Mac midtower or something else altogether is yet to be seen.
People seem to think Apple is successful because they are. What you are missing is that Apple isn't competing in the 51% of the desktop market that is sub-$500 nor does it compete in the business market or the mid-tower markets. That 4% desktop share is at the most profitable segements.
So it competes in is the high margin segments and its the #4 PC maker in the US. It makes $564M on $4.8B revenue in comparison to Gateway making $50M on $919M revenue. Even cutting Apple revenue and profits in half (for iPods) shows that greater market share is not the path to profits. Apple EPS beats those of Dell, HP and Gateway.
Vinea
People seem to think Apple is successful because they are. What you are missing is that Apple isn't competing in the 51% of the desktop market that is sub-$500 nor does it compete in the business market or the mid-tower markets. That 4% desktop share is at the most profitable segements.
So it competes in is the high margin segments and its the #4 PC maker in the US. It makes $564M on $4.8B revenue in comparison to Gateway making $50M on $919M revenue. Even cutting Apple revenue and profits in half (for iPods) shows that greater market share is not the path to profits. Apple EPS beats those of Dell, HP and Gateway.
Vinea
Thank you! Apple has a very profitable business (at the moment), though it sounds as if people tend to forget that, or have some greater knowledge about Apple than Apple does. I'm sure they're thinkin' about what to do next. Sometimes it sounds as if people think they got here out of dumb luck. I'm even pretty sure they've looked at the market segment for the mid-tower, and they have things they may and may not do under certain circumstances, but they HAVE thought about it. Otherwise they wouldn't be making so much dough.
Yes. Can you show that Apple competes in any way within the sub-$500 market? In demographics, market segment or price?
Clearly Apple do not currently offer any machines below $599. My point was that you were implying that sub $500 and SFF are necessarily mutually exclusive. This is not the case. The cheapest G4 mini was $499.
As shown earlier Apple has a 16% share installed base
? Where was that shown?
The software market is viable.
Hardware, software and service support could all be better.
What you are advocating is dilution of strategy and effort (which is winning at the moment) to pursue a market lost a decade ago. The opportunity costs are not negligible and you seem to underestimate the infrastructure costs of greatly increasing share.
Yes, I realise that share increases mean increased support costs. The big market share gains should occur around the time that Apple's campus is consolidated and they are able to grow effectively.
You think the Genius bar is busy now? Flood the market with $399 low profit macs.
We don't all live in the U.S. you know. Most countries don't have any Apple Stores. In the U.S. Apple are working on adding 40 a year.
Tell me why that's so great again? It seems like short-term hit for little or no long term gain.
To increase market share making the platform more attractive to hardware and software developers and service providers, making the platform more attractive to users, which increases market share etc. etc.. I think if they can reach 10% global market share extremely interesting things happen. They could then aim for 15%, and if they reach that, then licence OS X to third parties.
The risks are high.
Indeed. Apple have been playing it safe since 1997. Back then it was necessary for the company to survive. I say now that the company is healthy it's time to take some risks to deliver serious long-term gain.
And form factor elegance appears to appeal to a market segement willing to pay more money but is of little importance to those in the value/entry market.
I think it's a mistake to assume that just because someone isn't willing/cannot afford to spend more than a certain amount on a computer that they do not value elegance at all. Anyway, I think the bigger draw is OS X.
First off, put back what else I said -- that the Mini's price is low enough, so that a fair number of those in the entry level market buy it. Mr. H. suggested a Venn diagram, which may make discussion clearer. We may dissect a market in many ways, but usually it's either by product features or customer needs.
The problem is that the industry has a definition for the term. That way when folks are talking about this particular subject they are all on the same page. Also your initial assertion was this term was something specific to me. It isn't. Saying that Apple competes in the entry market means it is competing for sales of X. Except that Apple isn't competing for sales of X.
The set of all sub-$500 towers sells to many markets. Imagine this circle, which represents low priced towers, intersecting many circles of customers, such as schools, business offices, first time buyers, and others.
Yes, and these circles are called education market, business market, etc. Apple competes in the edu market with laptops and the eMac. The mini, like the Mac Pro, will make sales in the edu market but that's not the segment it primarily serves. The mini is a low cost entry point for the Apple line but isn't competing in the entry level/budget market.
Apple makes sales to the business market but like the gamer market this is not an area that Apple competes in. Sales in those markets are welcome but Apple expends relatively little effort in those segments.
This is where the cheap towers go, or who buys them. There is another circle for the SFF. It intersects some of the same customer circles as does the cheap tower circle, but the intersections have different populations. That is, cheap towers may be more popular than SFFs in some markets, but not in others.
Folks looking for SFF computers aren't looking for cheap towers because its a different need. Hence the design and pricing is different. When you build a SFF computer you MIGHT get sales in the entry market but its rare as its not the market you serve.
The customer demographic is different...they are looking for different things and are willing to trade price and expansion for size.
What then do first time buyers buy? What product categories does their market circle intersect? Likely it intersects cheap towers, SFF, and low-end laptops the most, but also AIO, mid-range towers and to a lesser extent other products.
First time buyers appear to be a diffuse lot but likely appear the edu and home markets most.
I was simply illustrating why it is more important for a company to understand the needs and wants of customers, rather than how well various categories of products are selling today. It helps a company plan tomorrow's product mix.
No you were making an unfounded assertion to cover a mistake. There is no evidence that Ford or Olds thought of themselves as "personal transportation" provides over "motor vehicle" manufacturers. Certainly every company tries to understand their customer base.
What makes you think that Apple has been negligent enough not to do this and decide that the demographics for gamers, mid-towers and cheap towers aren't worth pursuing?
Yep. It stands for small form factor, an acronym I had not heard before. It is a product that sells into several different markets, however.
Bold assertion for someone unaware that the market existed at all before this thread. Perhaps you would be kind enough to show a link to a page where you learned more about the SFF market and whom it serves? Certainly it serves several sub-markets but these are related to the form factor: media PCs and LAN party gamers. It even serves (at least the mini did) high density server farms but that one is pretty far out there. I know of only a couple examples of that.
Notice that entry level budget computers isn't in that mix? Even the barebone kits often cost more than an entire computer in that other market. The entry level budget market is defined by a group of customers that are price dominated. The SFF market is defined by a group of customers that are size dominated. The design of systems that meet these needs are orthogonal. Designing for size to be competitive in the SFF market necessitates a higher price than is competitive in the entry budget market.
Vinea
People seem to think Apple is successful because they are. What you are missing is that Apple isn't competing in the 51% of the desktop market that is sub-$500 nor does it compete in the business market or the mid-tower markets. That 4% desktop share is at the most profitable segements.
So it competes in is the high margin segments and its the #4 PC maker in the US. It makes $564M on $4.8B revenue in comparison to Gateway making $50M on $919M revenue. Even cutting Apple revenue and profits in half (for iPods) shows that greater market share is not the path to profits. Apple EPS beats those of Dell, HP and Gateway.
This argument totally assumes that if Apple had $399/499 - $1599 towers everyone would buy those instead of iMacs and Mac Pros. i.e. that these machines would heavily cannibalise more expensive models.
O.K., we get it. You don't need to say it over and over several different ways. You think the machines would heavily cannibalise iMacs and Mac Pros. I don't.
If the machines don't heavily cannibalise other models, then Apple revenues would increase, and so would their profits. Granted, the operating margin would fall a bit, but so what? If they want more than 5% global market share, that's what they're going to have to do.
Once market share starts going up and marginalisation of the platform abates, the whole platform becomes more attractive to purchasers, increasing sales of all machines, expensive iMacs and Mac Pros included.
Clearly Apple do not currently offer any machines below $599. My point was that you were implying that sub $500 and SFF are necessarily mutually exclusive. This is not the case. The cheapest G4 mini was $499.
Didn't we have this $1 argument several pages ago?
? Where was that shown?
As in the press release why a company elected to enter the Apple market. Hopefully for their investors their research wasn't bogus.
Hardware, software and service support could all be better.
They are better than Dell, HP and Gateway on a EPS level. You know its really amazing that folks in this thread appear to think this is 1996 and Apple is struggling.
Yes, I realise that share increases mean increased support costs. The big market share gains should occur around the time that Apple's campus is consolidated and they are able to grow effectively.
So you're saying that their manufacturing, tranportation and customer support infrastructure can scale to Dell or HP size with the same current efficiencies (or better)?
The risk, which pro-share folks seem to ignore, is that Jobs and Apple management will be no more successful at the market share strategy than Gateway's management. They could gain share and end up with Gateway performance. Jobs' track record pre-return in that kind of strategy wasn't too compelling either.
No thanks.
We don't all live in the U.S. you know. Most countries don't have any Apple Stores. In the U.S. Apple are working on adding 40 a year.
The point is that Apple places stores in high value regions and these are sufficient to meet a good segment of their users. Apple is a US centric company and world vs US share numbers seem to support that.
To increase market share making the platform more attractive to hardware and software developers and service providers, making the platform more attractive to users, which increases market share etc. etc.. I think if they can reach 10% global market share extremely interesting things happen. They could then aim for 15%, and if they reach that, then licence OS X to third parties.
Speculation without much supporting evidence. Again this is the underpants gnome business model:
1) Increase Share!
2) ???
3) Profit!
Ignoring that Apple is a successful and profitable company with good development support, increasing share (both actual and mindshare) and able to guide their own destiny. Also ignoring the disadvantages of 10%-15% GLOBAL share which requires either competition in low-margin growth markets (India and China) or total domination of 1st world markets (ain't happening).
Indeed. Apple have been playing it safe since 1997. Back then it was necessary for the company to survive. I say now that the company is healthy it's time to take some risks to deliver serious long-term gain.
And my contention is not to invest in mature markets but take risk in developing emerging markets. iTV, iTablet, etc.
I think it's a mistake to assume that just because someone isn't willing/cannot afford to spend more than a certain amount on a computer that they do not value elegance at all. Anyway, I think the bigger draw is OS X.
Again, someone needs to show me why OSX is more compelling today against XP/Vista than MacOS was vs Windows 1.0 or 3.1.
IMHO the biggest draw of Apple is the branding.
Vinea
Thank you! Apple has a very profitable business (at the moment), though it sounds as if people tend to forget that, or have some greater knowledge about Apple than Apple does. I'm sure they're thinkin' about what to do next. Sometimes it sounds as if people think they got here out of dumb luck. I'm even pretty sure they've looked at the market segment for the mid-tower, and they have things they may and may not do under certain circumstances, but they HAVE thought about it. Otherwise they wouldn't be making so much dough.
I don't think people think apple got to where they are because of dumb luck. It was WISE to trim the product line and to start with few options. It was necessary to rebuild the company. It was a streamlined business decision. The problem with this decision is it doesn't compensate high growth. From the DirectTV commercial "CHOICES JERRY, PEOPLE WANT CHOICES". We have presented many people that want at least another choice. As someone stated earlier, it's impossible to please everyone. Very true. But at least please a majority that want a mid-tower / mid-line conroe solution. In all honesty, what does creating another computer entail. New motherboard (which intel has plenty of) to be compatible with Conroe, New case design, one of the current graphic cards (7600gt or 7300gt or x1900xt), and testing. We've gone through the argument a dozen times in this tread that it will eat into current line... which can't really be proven without launching this computer. People feel very strong on each side of the pole. I myself feel it has NOTHING to do with the iMac nor Mac Pro. Mac Pro is a work station. iMac is a consumer ma / pa computer. There are plenty of gamers and power users out there that want neither a Mac Pro OR an iMac. I know I'm not alone. I've been talking to people in my Mac User Group for a LONG time about this very thing (since the g5 came out). There should be another computer. Quench my thirst Apple.
They are better than Dell, HP and Gateway on a EPS level. You know its really amazing that folks in this thread appear to think this is 1996 and Apple is struggling.
Not once have I suggested that Apple is struggling. Support for the platform outside the U.S. could be a lot better. As a non-U.S. resident, that's something I'd like to see.
So you're saying that their manufacturing, tranportation and customer support infrastructure can scale to Dell or HP size with the same current efficiencies (or better)?
Do it at the right pace, and why the hell not? You just need to make sure you've the right people on the board and in upper management. Hell, poach people from Dell and HP.
Speculation without much supporting evidence. Again this is the underpants gnome business model:
1) Increase Share!
2) ???
3) Profit!
This is a gross misrepresentation. Are you actually saying that if Apple increased their global market share to 10% by introducing $399/499 to $1999 "mini tower" computers with 28% gross margins that their revenues and profits would not be higher than they are today? I am not advocating chasing market share by slashing margins, and nor can you pretend that if the "mini tower" appeared, only the $399/499 model would sell and that sales of iMacs and Mac Pros would cease. You gleefully ignore these points.
Obviously, it is not a given that Apple could reach 10% market share with the help of the "mini tower". My point is that if it did happen, their revenues and profits would be higher than they are now.
iTV
It'll be fun to see how this pans out. Hope they can make a success of it unlike Airport Express.
Again, someone needs to show me why OSX is more compelling today against XP/Vista than MacOS was vs Windows 1.0 or 3.1.
Malware and a general growing resentment of XP.
This argument totally assumes that if Apple had $399/499 - $1599 towers everyone would buy those instead of iMacs and Mac Pros. i.e. that these machines would heavily cannibalise more expensive models.
O.K., we get it. You don't need to say it over and over several different ways. You think the machines would heavily cannibalise iMacs and Mac Pros. I don't.
If we all got it the thread would have ended a dozen pages ago. You wish me to stop questioning your assertion that $399-$999 towers won't have a significant impact on AIO sales and that additional sales is certain WHILE you continue to make those unfounded assertions.
No.
If the machines don't heavily cannibalise other models, then Apple revenues would increase, and so would their profits. Granted, the operating margin would fall a bit, but so what? If they want more than 5% global market share, that's what they're going to have to do.
Again, you need to show that 5% global share is likely given that the emerging growth markets are China and India with indigenous production capability. You also need to show that 5% share is required for a healthy, profitable and successful Apple and that current Apple management can get you from here to there.
If M. Dell was CEO of Apple I'd say you have a case. He's not. Jobs is not interchangable neither is the corporate culture. Two points you have steadfastly ignored. What in Steve Jobs professional history makes you believe he can successfully implement a market share strategy? It sure wasn't his original performance at Apple or NeXT.
Once market share starts going up and marginalisation of the platform abates, the whole platform becomes more attractive to purchasers, increasing sales of all machines, expensive iMacs and Mac Pros included.
You'll have to show that the platform is marginalized first. OSX still enjoys fairly wide support from the major software makers (adobe, oracle, etc). Heck, you still get MS Office. The primary arena where Macs are marginalized is gaming.
Vinea
The problem is that the industry has a definition for the term. That way when folks are talking about this particular subject they are all on the same page. Also your initial assertion was this term was something specific to me. It isn't. Saying that Apple competes in the entry market means it is competing for sales of X. Except that Apple isn't competing for sales of X.
Vinea
Normal consumers don't split hairs like that. The Mac Mini is close enough in price to the sub 500 level (used to be 499.99), that MANY consider this apple competing in the sub 500 market. Others (yourself included), feel the Mac Mini is an SFF computer and is kind of in it's own market. No matter how you slice it, It's considered Apple's budget computer. Some may look at this as a pc with an OS X tax. In the end all that matters is this machine is considered the bottom of the line Apple computer that gets switchers from the PC sub 500 market. Which it does. I've witnessed it many times. Is it an SFF computer? yah. Is it close to a budget computer? definitely. Apple may not be intentionally competing in the sub 500 market, but the way the prices are set up, in a way they are.
Potential switchers are people who's imagination is caught by Apple's products. OS X certainly quailfies as imagination catching. So do the iMac, mini, and to a lesser extent the laptops for their small size, built-in camera, etc. The Mac Pro qualifies for it's extreme power and awesome internal design. The xMac-doesn't qualify, unless it were a Cube. In which case it would fail for the same reason as the first Cube-too expensive for it's competitors..
If we all got it the thread would have ended a dozen pages ago. You wish me to stop questioning your assertion that $399-$999 towers won't have a significant impact on AIO sales and that additional sales is certain WHILE you continue to make those unfounded assertions.
No.
I just don't see why we need to talk about the same thing over and over. Other parts of the discussion have moved on and proved interesting and engaging (to me at least).
I don't see why we can't just say that I and others think the "mini tower" wouldn't heavily cannibalise iMacs and Mac Pros and you and others think it would. Without releasing the machine, there is absolutely no way of telling who is right, so why don't we leave that part of the discussion behind?
Not once have I suggested that Apple is struggling. Support for the platform outside the U.S. could be a lot better. As a non-U.S. resident, that's something I'd like to see.
You describe the platform as marginalized and question the long term viability of the platform because of share numbers. Does that describe confidence in a company or belief that it is struggling?
The business picture is certainly brighter but your basis for the need to grow share to 10-15% globally is based on those repeated assertions.
Do it at the right pace, and why the hell not? You just need to make sure you've the right people on the board and in upper management. Hell, poach people from Dell and HP.
Care to address if you think JOBS is capable or willing to execute such a strategy?
This is a gross misrepresentation. Are you actually saying that if Apple increased their global market share to 10% by introducing $399/499 to $1999 "mini tower" computers with 28% gross margins that their revenues and profits would not be higher than they are today?
Show me a computer company with 10% global market share making 28% gross margins.
I am not advocating chasing market share by slashing margins, and nor can you pretend that if the "mini tower" appeared, only the $399/499 model would sell and that sales of iMacs and Mac Pros would cease. You gleefully ignore these points.
They wouldn't entirely cease but given the performance of the Sony AIOs (that don't totally suck unlike the Gateway ones) the sales will be very marginal. Mac Pros wont be as heavily impacted but should feel some effects.
Would only the $399 or $499 models sell? Of course not. But like Dell, HP and Gateway a large segment of the sales (like maybe 51%?) will be in these units.
Obviously, it is not a given that Apple could reach 10% market share with the help of the"mini tower". My point is that if it did happen, their revenues and profits would be higher than they are now.
Given your criteria that Apple can reach 10% market share and maintain 28% gross margins yes, they would make more money. In fact they would be so wildly successful they would make Google and MS look like pikers.
It'll be fun to see how this pans out. Hope they can make a success of it unlike Airport Express.
Its called risk vs rewards. Who dominates the set top is still undecided.
The desktop market was decided a couple decades ago. Unseating MS in the PC arena is going to be about as likely as unseating IBM in the mainframe arena, DEC in the mini-computer arena (now defunct and replaced by unix servers). Sun is about the only one "dethroned" and I don't think it really dominated the unix workstation market as clearly as IBM, MS and DEC had their respective segments.
If Apple wants to dominate something there has to be a paradigm shift away from the desktop. THIS is why MS is spending like mad on any emerging technology segment and they are paranoid.
Malware and a general growing resentment of XP.
Something MS is trying to resolve with Vista. In any case the OS is below the radar for most folks and they have 2 decades getting used to the MS way. XP resentment is most visible in the geek crowds...less so in the general populace.
Today there is also Linux to contend with.
Vinea
What in Steve Jobs professional history makes you believe he can successfully implement a market share strategy?
The iPod?
You'll have to show that the platform is marginalized first. OSX still enjoys fairly wide support from the major software makers (adobe, oracle, etc). Heck, you still get MS Office. The primary arena where Macs are marginalized is gaming.
Your problem here is that you live in the U.S. (or at least, I assume you do?)
Do you have any idea how low awareness of OS X is in the U.K. for example? If Apple had 10% market share, it'd be different.
I just don't see why we need to talk about the same thing over and over. Other parts of the discussion have moved on and proved interesting and engaging (to me at least).
I don't see why we can't just say that I and others think the "mini tower" wouldn't heavily cannibalise iMacs and Mac Pros and you and others think it would. Without releasing the machine, there is absolutely no way of telling who is right, so why don't we leave that part of the discussion behind?
As I said, don't make those same arguments and I don't have to roll out the same rejoinders. Its not like I'm bringing it up out of thin air. Nor have you manage to refute those arguments by showing real world examples of the feasiblity of what you state.
At least you've moved away from saying that you can make $399 Conroe xMacs based on Mini pricing and deducting from there...
There are many points you don't address but come back to that same basic argument...$399 xMacs would sell. Yes, they would. The DOWNSIDES are those I list. If Apple captures 10% global market share while maintain 28% margins they make lots of money. Yes, they would. Never mind you can't show an example of a company that does that...
Vinea
The iPod?
You have a point there. Of course, arguably the MP3 player field wasn't dominated by an entrenched heavyweight at the time.
Vinea
You describe the platform as marginalized and question the long term viability of the platform because of share numbers. Does that describe confidence in a company or belief that it is struggling?
The business picture is certainly brighter but your basis for the need to grow share to 10-15% globally is based on those repeated assertions.
You misunderstand me. I think for the platform to have long-term viability they need anything above or equal to 3% market share in the U.S. But that if they could acheive 10% global market share with 28% gross margins on their machines they would be, as you said, wildly successful.
The mini-tower isn't the only requirement to reach the 10% goal. An ultra-portable MacBook Pro, 15" and 17" screen options on all MacBook (pro and non-pro) models (i.e. stop tying screen size with other features such as CPU speed and GPU memory), and a cheaper MacBook entry point (Celeron M 430 instead of Core Duo and other reduced specs. for $799/899 price target) would really help (IMHO).