I understand that, but from Apple's point of view, how many people who need a PCIe slot for a Blackmagic Decklink card are out there? I don't think any of us who are "anti-xMac" would mind if Apple added that to the line; we're just expressing our interpretation of why Apple has not done it - and that sums up to: the vast majority of potential switchers do not need or want expandability if it means higher cost and no included monitor. Sure, they may be "used" to a two-part computer, but once they see the iMac they do not necessarily see anything that they are missing with that design. All they have to do is test drive it and they are not thinking about a second hard drive or changing out the video card.
I was thinking more $1299 or $1499 for a 2.4ghz Conroe in the "standard" configuration.
I can see a 2.93Ghz X6800 Core 2 Extreme for $1799 undercutting Dell by $100 but still keeping iMac sales safe from cannibilization. Should be a half decent gamer platform as well.
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The Mini and iMac fill that area well enough. The problem is that Apple's offerings are too upscale for the intended audience. The ironic part, is that Apple has one of the cheapest dual core desktops out there. Half, if not more of all desktop sales are in the Celeron/Sempron class.
I think the counter argument is that upscale is what Apple is about and that's the demographic they target. They can provide the best bang for the buck in some products but they will still be upscale products.
Hence no REAL argument about a potential Conroe box but I'd expect it to be a Core 2 Extreme and only one model. Arguably more folks would buy a Core 2 Extreme box than current Pro models but perhaps a dual core, high Ghz Conroe (vs slightly slower Kentsfield) is enough of a difference from higher priced octo cloverton Pros.
I'd still think they'd stick a single 3Ghz Woodcrest at the bottom end as easier to do but I'm not going to argue that too much.
My question to whomever suggested such pricing is, why on earth would Apple price a "tower" with iMac performance and features for $300 more?
Because its
a) A "prosumer" machine and they can charge more.
b) Faster than the iMac
c) They don't get a monitor sale out of the deal
d) They need to make up whatever loss of synergy with their laptop lines when they sell fewer iMacs (ie few mobile part purchases = lower volume discounts).
e) $1,299 is likely a pipe dream and $1,499 unlikely but possible as a cube.
A $1,499 Core 2 E6700 Cube is reasonably priced (unlike the first cube), wouldn't kill the iMac (and wouldn't matter that much if it did), still not compete with Dell/HP/Gateway towers directly and has that one important slot for upgradable video (likely one that was passively cooled stock), can fit a regular 10KRPM drive (but likely they would pick a really quiet 7200 drive).
But they could as easily go with a Merom as well...but at least you'd have a slot.
As long as we're doing pipe dreams my pipe dream Apple product isn't a tower mac but a docking station with a couple PCIe slots and a drive bay for the MBP.
Give me that and I see almost zero need for a tower. Even better if it were a tablet but I could live with a MBP model with a docking adapter on the bottom.
A lightweight merom 12" MBP or 11" iTablet connected to a pair of 24" ACDs via a decent vid card in the docking station and I don't really care if it only has a GMA950 natively.
I can also live with relatively poor battery life and external optical drive now that there's a magsafe airline adaptor.
Should there be a plain old Macintosh again? Yes and here's a few reasons why.
1. To really go after switchers, got them looking w/ the Intel chips and entry level mini's. However, they need some meat to chew on, iMac's will sell to some the rest are looking for towers. So sell them towers.
2. Gamers, currently Apple has no system worth a real gamer's second look. Sorry those quad Xeons might look nice, but w/o SLI support they are ho hum at best. Put 2 PCIe slots in w/ SLI support (10.5?) and if they don't use a second video card the second slot still works fine as a standard PCIe slot. Gamers may not be huge marketshare but they do tend to keep up on what's new/good hardwarewise and therefore are listened to by computer illiterates.
3. Myself and many others who've posted here, we simply want a desktop system w/ room to add hd/cdrom/video/other pci card in the price range of $999-$2000. They could start at $1299 even however the point is we're not interested in an AIO or a mini. People like me used to be able to wait til the $1699-$1999 towers came down a bit on ebay or simply buy them new, now however w/ the switch to Intel we're out of luck til those Xeons come waaaay down. Or more likely, buying/building a pc and either getting a hacked OSX to work on it or just living w/ windows.
To sum it up Apple could be selling more systems than they do now, more importantly since they're the only Mac system vendors they should have more variety w/o going into Dell's 'a system for everyone..if you can find it' mentality. Of course they could always license OSX to another system builder for select systems (towers and specialized laptops). Before you say they'd never do that again I'd like to point out three things real quick; iPod (mp3 player???), the Mac mini (sub $500 system until the Intel switch), and the Intel switch. All those things were scoffed at as possibilities by Mac users until they happened.
I understand that, but from Apple's point of view, how many people who need a PCIe slot for a Blackmagic Decklink card are out there? I don't think any of us who are "anti-xMac" would mind if Apple added that to the line; we're just expressing our interpretation of why Apple has not done it.
I do have a couple of options outside of buying the Mac Pro.
My current PM G5 set up works fine right now. It is getting a little long in the tooth and I would like to begin looking for something new. But if I have too, I'm sure what I have will be viable for another year or two before I notice its getting too slow.
Or I could put up $1500 to $1800 and buy a used but newer and faster PM G5. I could even get one that has a couple of years of AppleCare left on it. I could use that as my desktop for the next three to four years.
Neither of these option puts my money directly into Apple increasing their quarterly sales or market share.
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I can see a 2.93Ghz X6800 Core 2 Extreme for $1799 undercutting Dell by $100 but still keeping iMac sales safe from cannibilization.
This one of the real keys. This is Dell and HP weakness. They cannot compete on price in the high end.
. . . I don't think any of us who are "anti-xMac" would mind if Apple added that to the line; we're just expressing our interpretation of why Apple has not done it . . .
I think you summarize your side of the discussion well, which defends Apple for not having a low or mid price range tower, as I see it. The other side criticizes Apple for the same reason, saying such a tower is important, even vital to a good strategy for growth.
Then we have a sub-discussion about the iMac. Certainly, Apple is working on the next iMac already, and I don't think anyone expects it to be dropped, or even thinks it should be dropped. Some of us, like me, would like to see a major change in the iMac however.
And finally we have yet another sub-discussion about the Mac Mini. Should Apple keep it pretty much as is, completely redesign it, or totally replace it with another product, like a very low cost tower?
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. . . the vast majority of potential switchers do not need or want expandability if it means higher cost and no included monitor. Sure, they may be "used" to a two-part computer, but once they see the iMac they do not necessarily see anything that they are missing with that design. . .
As I said before, the price would be higher only if a switcher chose a higher performance tower, or one with more features. For the same performance and features of the iMac, the cost of a tower without display should be less. The only argument I've heard against this pricing is base on the fear that such a tower would reduce iMac sales too much. So, Apple should not give customers a choice, but I believe this is bad advice.
To get switchers, give them what they want, or are "used to," as much as possible. With a Mac mini tower, smaller than the Mac Pro, switchers can have the hardware they want. It doesn't have to make sense if they simply want it. This is no time to put unnecessary obstacles in their way.
So let's take the worst case scenario, that a Mac mini tower clobbers iMac sales, reduces them to 25 percent of their former level. Is that bad enough? To listen to some, it would be a disaster, because a tower sale might not be a display sale too.
Not so, IMHO. Apple can tweak the prices so profit on both the mini tower and iMac are the same. (Remember, I had the price of a tower just a tad bit lower than an iMac of similar performance and features.) As long as the sales of both the iMac and tower combined does not drop, Apple's profit will not drop. To the contrary, Apple's profit on total sales of the two Macs will go up, if it attracts more switches. Mac users who switch over to the tower from the iMac will make no difference. However, Mac users who now go to eBay to find the tower they want are still more potential customers. I see absolutely no down side.
Regarding Apple cinema displays, every new tower sale is potentially even more profit for Apple. With so many benefits of building a mini tower, what can be Apple's reason for not doing so? If it is to artificially keep iMac sales high, Apple is shooting itself in the foot. Otherwise, Apple is simply tardy at getting around to it. If Apple delays beyond the right time, it is being tardy according to my dictionary. (Just trying to keep semantics snipers away.)
iMac sales really aren't all that great. Apple's desktops aren't brining people to the Mac, the laptops are. Not because of some portable revolution, but because while Apple specifically targets prosumers in the laptop market, they ignore them in the desktop market. Like I've said before, where the Prosumer goes, so does the people he/she advises.
The other side criticizes Apple for the same reason, saying such a tower is important, even vital to a good strategy for growth.
Despite the fact that Apple is enjoying nice growth without said "vital" tower...
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Then we have a sub-discussion about the iMac. Certainly, Apple is working on the next iMac already, and I don't think anyone expects it to be dropped, or even thinks it should be dropped.
Except that a low cost tower would likely reduce iMac sales to the point where it should be dropped.
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The only argument I've heard against this pricing is base on the fear that such a tower would reduce iMac sales too much. So, Apple should not give customers a choice, but I believe this is bad advice.
That's not the only argument that has been advanced, this is a mischaracterization.
In no particular order off the top of my head:
Apple is a high end brand and should provide high end products. Low end products hurt the branding.
Apple makes more money (per unit) that way without needing to support tons of low end product and thier customers.
Apple enjoys synergy between its laptop and desktop lines leading to lower costs for the important mobile lineup where apple is more competitive.
Apple makes less money even if it maintains margins on less expensive equipment. You have to increase sales dramatically just to break even and then you have more support costs because you have more customers.
Apple doesn't automatically get a monitor sale from a headless mac design.
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So let's take the worst case scenario, that a Mac mini tower clobbers iMac sales, reduces them to 25 percent of their former level. Is that bad enough? To listen to some, it would be a disaster, because a tower sale might not be a display sale too.
If you reduce iMac sales to under 100K units per quarter you might as well kill all but 20" from the line up. Which is the point of why I equate the xMac with elimination of the iMac.
AIOs are niche for better or worse.
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Not so, IMHO. Apple can tweak the prices so profit on both the mini tower and iMac are the same. (Remember, I had the price of a tower just a tad bit lower than an iMac of similar performance and features.) As long as the sales of both the iMac and tower combined does not drop, Apple's profit will not drop.
True. But given there are no $399-$799 iMacs this has not been the bulk of the disagreement.
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To the contrary, Apple's profit on total sales of the two Macs will go up, if it attracts more switches. Mac users who switch over to the tower from the iMac will make no difference. However, Mac users who now go to eBay to find the tower they want are still more potential customers. I see absolutely no down side.
The downside is that a tower comparatively spec'd to the iMac sucks in comparison to similar offerings by Dell/HP/Gateway at your pricing of "just a tad lower". Given the same form factor these are more easily compared against one another.
An example is the Dimension E520 with a 2.13Ghz E6400, 1 GB RAM, 160GB HD, 256MB X1300 Pro is $934 with a 19" monitor in comparison to the "just a tad lower" than $1199 17" 2.0Ghz iMac or "just a tad lower" than $1499 20" 2.16Ghz iMac.
The comparable Gateway DX420S is $1099 but with a GeForce 7600GS Dual DVI - Dual Link with HDCP (cool) and TV out and a 19" monitor.
You don't typically compare the E520 or DX420s with the iMac 20" because, well, one is an AIO and the other is a tower.
To a switcher the most obvious thing is that this prettier Mac tower (sans monitor) is $100-$500 more expensive than the uglier Dell tower that comes with a 19" monitor. This confirms the common belief that "Macs cost more for the same thing" without the corresponding "Macs are cooler" benefit of the AIO.
Possibly this works as a cube but that doesn't have the same expansion capability as a tower.
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Regarding Apple cinema displays, every new tower sale is potentially even more profit for Apple. With so many benefits of building a mini tower, what can be Apple's reason for not doing so?
Obviously because Apple is composed of idiots...
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If it is to artificially keep iMac sales high, Apple is shooting itself in the foot. Otherwise, Apple is simply tardy at getting around to it. If Apple delays beyond the right time, it is being tardy according to my dictionary. (Just trying to keep semantics snipers away.)
So much for not responding. Grow up.
In any case, this is more of the same "I'm not calling Apple complacent/doomed/whatever except when I am" type of argument from you. You're again implying that Apple is complacent/unwilling to change by calling the lack of a "Magic Bullet Tower Mac That Instantly Catapaults Apple into the Big Leagues" tardy.
Even if Apple needed to introduce a low cost tower (which is the debate) you don't think that maybe transitioning their entire product line to Intel in 2006 is enough churn in the product line that continuing to call it "tardy" is nothing more than a temper tantrum from someone that can't be satisfied no matter how well Apple does?
And I will ask again, who in their right mind would pay $1299 for a "tower" with no monitor when they can get an iMac WITH monitor for $999?
It would need faster processor than you could get in the iMac. Say starting at 2.4 ghz and go up to 2.6. It would need less expandability than a Mac Pro so as to not eat into pro sales. Once the pros move to quad chips it would be easy to separate the lines based on performance and features.
Apple is a high end brand and should provide high end products. Low end products hurt the branding.
So you're saying Apple should also get rid of the Mac Mini, 17 and 20 inch iMacs and the Macbooks? Since these are all low end products...
I think you wanted to say "Apple is a STYLISH brand and should provide stylish products..blah blah blah."
What you seem to have missed is that stylish is entirely possible with a mini-tower.
As to the rest of your 'points'. You have no numbers to back up your assertion that using more expensive laptop parts in desktops actually saves Apple money by lowering their costs on their laptops. For all we know Apple could be getting higher margins on their desktops without increasing the cost per system on their laptops.
Additionally since they're already supporting low end products and their buyers they're obviously making enough off low end products to justify low end products.
Again you don't have numbers to back up just how much if any increase in sales would be needed to break even let alone to justify using dramaticly.
Yet the point isn't that they'd have to sell as many monitors as towers, it's that when they did they'd increase margins over and above an iMac. Would the iMac become obsolete with a tower, unlikely it's obvious there's enough people who prefer that form factor to keep making them.
The problem you have with the Dimension and the iMac are that people are NOT seeing one as an AIO and one as a tower plus monitor. They're seeing both as a computer for x price and x + $200-$400 price. They already see Apple as being more expensive and buy either because of style or operating system. Therefore a stylish desktop/mid-tower/whatever would have the same effect with one major difference. It would sell to people who will not or cannot buy an AIO.
While many of you may have been satisfied with just the logic of my last posting, others may be skeptical. So here are a few calculations.
We do not have Apple's cost of materials, so we make some guesses. If you do not like my guesses, put in your own numbers. When you do the calculations, the results will be the same. For every iMac that does not get sold because a Mac mini tower was purchased in it's place, Apple makes the same dollar profit.
What this shows is that the fear of canalization is unfounded. It makes no difference to Apple's bottom line which Mac a customer buys, of the two. Also, if a Mac mini tower sale does not result in an Apple display sale, Apple's profit remains the same. One more mythical lose of profit that doom and gloom sayers bring up. The facts are just the opposite. If a mini tower sale does include an Apple display sale, it is simply MORE profit for Apple -- never less.
Now the calculations. Let's say the LCD panel and associated circuitry cost Apple $75. Otherwise, let's say manufacturing cost of the iMac and tower of comparable performance and features is the same. The iMac has some more expensive components, like a laptop drive and lower power CPU. The tower has a more costly power supply and case. Let say these are a draw and cancel each other out.
Now let's look at the $1199 iMac, which might cost 363.33 dollars to make, assuming a 3.3 times markup. The unburdened dollar profit on the iMac would be $835.67.
To find the manufacturing cost of the tower, we subtract $75 from the iMac cost, which says Apple pays $288.33 to build it. For Apple to make the same unburdened dollar profit, the mini tower would sell for $1124. It is really that simple. Put in your own numbers if you like.
The answer can be arrived at even easier, but I think it helps to break it out with manufacturing cost for each product. Whether Apple sells an iMac for $1199 or a comparable tower for $1124, it makes no difference in Apple's income statement.
Considering any added Apple display sales do to mini tower sales means still more profit for Apple. And, what about any extra switcher? It can only mean more profit. As I said earlier. I see no down side to building a mini tower and pricing it in this way. Earlier I suggest Apple might sell the tower for $25 to $50 less than a comparable iMac. If Apple did so, it would make still more profit on the tower.
Some of you may question the 3.3 times markup. I worked for a company once that had a 4.0 times market. There is no magic number for it, and it varies by industry and markets. It looks like a lot of profit, but a company has many other expenses. Apple needs a high unburdened profit so when all bills are paid, the financial statement shows a good profit.
Conclusion? All the talk about canalization of iMac sales and loss of Apple display sales is just FUD. Give the customer a better choice of what to buy and Apple can only profit from it, and grow faster. No down side folks.
Luckily the logic board is failing on my last month of Apple Care.
A 1.25ghz g4? That is the one I have. The lower memory slot is burned out and I'm limited to 1gig of ram now.
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From what I've read there is little heat difference between Merom and Yohan. How could Conroe be more powerful than both and not produce significantly more heat? And why would Apple need to be concerned about power usage in a desktop?
Actually there is another point I left out. But lets discuss heat first. Merom and Conroe are the exact same process, same design, etc. There is very little difference between the two. The main difference is the bus speed (power conservation), voltage usage, pin count, and ram type (because of the fsb). Conroe is a VERY cool running chip. You can actually run it full blast without a fan on a heatsink and only see 1 degree difference after four hours. The iMac case is perfectly fine for conroe. Something else occured to me as I was replying. Apple had Yonah in the iMac originally. That is a 479 pin count. Merom is a drop in replacement for Yonah, Conroe is not. If they wanted to put conroe it, it would have required a new mobo design. Besides that, there isn't a lot of room for a power supply in the iMac. That puts a strain on how much power they can pump out of that powersupply. You can make any powersupply pump out any amount of watts, but it is harder to make it reliable / steady voltages with small areas.
But yes, the main differences between Merom and Conroe is Voltage and FSB. Otherwise it's pretty much the same.
Vinea actually made a good point with selling more desktops with mobile parts to get their prices down for laptops. Not sure how much that comes into play, but it's something to think about.
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The iMac is a fine machine. I drool over it when I visit friends who own one. If I didn't need at least one PCI slot. The iMac would be perfectly fine for me.
I think there is no need to shun the iMac just because you want a midlevel tower. They both are two machines that would serve two different purpose.
The iMac is a great machine. It really is. But there is a place for another machine as you say.
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I currently own a Power Mac. But I doubt I will get a Mac Pro. I don't need all four PCI slots, I don't need four hard drive pays, and I certainly will not use 16GB of RAM. I will rarely give all four CPU's a workout. The two optical bays are the new feature I would find most useful.
I'm the market for a smaller dual core midlevel tower. I need at least one PCI slot for my Blackmagic Decklink card.
The iMac does not fill this need and the Mac Pro is way more than I need.
So you're saying Apple should also get rid of the Mac Mini, 17 and 20 inch iMacs and the Macbooks? Since these are all low end products...
No, their low end entry is above the $500 cutline that analysts usually use for the budget/entry line. Prices for PCs there start a little above $250.
$999 for the cheapest iMac is certainly not low end. Neither is the MacBook.
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I think you wanted to say "Apple is a STYLISH brand and should provide stylish products..blah blah blah."
Nope. I said what I meant. The low end Apple products are priced where everyone else's upper mid-range typically sits except for the Mini.
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What you seem to have missed is that stylish is entirely possible with a mini-tower.
There are some towers that aren't too bad. Certainly the Mac Pro is stylish in the industrial sense. The Cube is stylish but really...it's an 8" cube. So a simple and elegant slim-tower design can be done. A squat mini-tower less so proportionally.
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As to the rest of your 'points'. You have no numbers to back up your assertion that using more expensive laptop parts in desktops actually saves Apple money by lowering their costs on their laptops. For all we know Apple could be getting higher margins on their desktops without increasing the cost per system on their laptops.
If we take Intel at their word that no one gets special discounting and all discounting is based soley on volume then we can guess that 1.5M parts generates more discounts than 1M parts. We do know they are buying more Meroms than they would otherwise be with a Conroe desktop lineup. Likewise the Mobile 945GM Express parts being used in the iMacs.
Same for memory.
Absolute numbers would be difficult to come by but I don't think there should be much disagreement with the general idea. Here is a general link that indicates that Intel has stopped special pricing and gone to just volume discounts (there are plenty more from the same time period):
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It appears to indicate that their key challenger, Dell, will not be getting special volume discounts from Intel.
Many believe cut-throat pricing advertised by Dell and other direct marketers were supplemented by large volume discounts those companies were negotiating with Intel. They are hoping that changes will eliminate some of the pricing advantage those companies were enjoying.
"I think this will be positive for the channel," said one system builder. "It looks like everyone will be treated equally."
Several system builders said they had little insight into the kind of volume negotiations that go on between Intel and its top-tier partners.
But one system builder believed those deals are negotiated on a contract basis and that some top-tier buyers were purchasing more CPUs than they could sell to get a better discount and then dumping the surplus on the grey market.
"Say they are negotiating for a-half million processors for US$50 each, they will say, 'what if we take one million,' even though they know up front they won't use those chips," he said.
Apple's current strategy plays well into the known Intel pricing policy. Especially since Apple isn't using Intel's marketing dollars.
From the article Apple may still be getting a sweet-heart "meet-comp" deal but if so its also more palatable for Intel's other customers if they are within a certain product segment. An all Merom/Woodcrest deal annoys Dell/HP/Gateway less than a sweetheart deal that includes Conroes where their bread and butter machines live.
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Additionally since they're already supporting low end products and their buyers they're obviously making enough off low end products to justify low end products.
Except their "low end" products aren't low end. Their bread and butter machines (the iMac) range from $999 to $1994. Somewhere I read (and linked in this thread) Apple's average unit price was $1400 or so. That's bleeding amazing for the current computer market and being the 4th ranked US seller.
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Again you don't have numbers to back up just how much if any increase in sales would be needed to break even let alone to justify using dramaticly.
It's on page 20...just kidding, I have no clue what page it's on but it is on a page in this thread. The short form is that even if you maintain margins making 28% on a $399 Mac Tower ($111.72) for every $1499 iMac 20" ($419.72)...which appears most popular on Amazon...you have to sell about four times as many of the cheap towers to make the same revenue.
Then you have to support 4 customers instead of one.
Vary the tower price around the $399-$1299 price points to get the breakeven points but the common prices are $499, $799 and $999 in the previous discussions. Add projected monitor sales as desired.
Apple must have done this math and with better metrics than you and I would have access to. They know their monitor sell rate in comparison to industry so they can compute their monitor conversion rates. They also have historical data from the 90s when they sold headless Performas...and I think (but not sure) with their ADB connectors.
Now with DVI...
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Yet the point isn't that they'd have to sell as many monitors as towers, it's that when they did they'd increase margins over and above an iMac.
Depends on the price points. Sure, if they price as the latest Snoopy proposal (a tad under current iMac pricing) then yes, they make more profit. The downside is that their lines are more comparable to Dell/HP/Gateway offerings (Tower vs Tower instead of Tower vs AIO) AND the comparisons would suck.
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Would the iMac become obsolete with a tower, unlikely it's obvious there's enough people who prefer that form factor to keep making them.
Eh...maybe but the proponents for the Tower say that's the dominant form for computers and AIOs are niche and replete with drawbacks. I agree with that statement with the caveat that AIOs are more stylish (which I think they don't disagree) and harder to compare directly with towers which hides the Apple margins in the mid range market (which they may or may not agree) and allows them to beat Dell on prices in the workstation market.
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The problem you have with the Dimension and the iMac are that people are NOT seeing one as an AIO and one as a tower plus monitor. They're seeing both as a computer for x price and x + $200-$400 price. They already see Apple as being more expensive and buy either because of style or operating system. Therefore a stylish desktop/mid-tower/whatever would have the same effect with one major difference. It would sell to people who will not or cannot buy an AIO.
Show me a stylish tower with more sex appeal than the iMacs and I might be inclined to agree. Of course that's a subjective assessment but while the AIO form factor doesn't completely negate the price disadvantage I'm going to assert that it helps. Its obvious that the iMac costs more and performs less but its also obvious that the form factor is distinctly different. Same for the mini.
That mitigates the price difference and reinforces that Apple, as a brand, is distinctive and elite. Therefore worth the $$$. Style over substance.
Folks that cannot buy an AIO, laptop or Mac Pro are under served but its not a demographic that Apple seems to care about AND given their current performance it hasn't hurt them all that much. As a smaller company that competes against the entire Windows world they have to choose their battles and thus far, IMHO, they have choosen very well and haven't competed against Dell/HP/etc's strengths but in areas where Apple can dominate.
While many of you may have been satisfied with just the logic of my last posting, others may be skeptical. So here are a few calculations.
We do not have Apple's cost of materials, so we make some guesses. If you do not like my guesses, put in your own numbers. When you do the calculations, the results will be the same. For every iMac that does not get sold because a Mac mini tower was purchased in it's place, Apple makes the same dollar profit.
This is a different price point that argued before. If you are willing to abandon the $399-$499 tower argument that's fine.
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What this shows is that the fear of canalization is unfounded.
Cannibilization will still occur. It simply wont matter to the bottom line (as it would with $399-$799 towers). The downside is comparisons between Apple desktops and Dell desktops become trivial and with Apple looking bad. Something you don't address with this price scheme.
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It makes no difference to Apple's bottom line which Mac a customer buys, of the two.
Strawman. Never argued that point against $1200 towers.
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Also, if a Mac mini tower sale does not result in an Apple display sale, Apple's profit remains the same. One more mythical lose of profit that doom and gloom sayers bring up. The facts are just the opposite. If a mini tower sale does include an Apple display sale, it is simply MORE profit for Apple -- never less.
Only because you just raised the price of your $799 tower to $1200-$1400.
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Now the calculations.
Its simpler to use the 28% gross margins number and drop the price accordingly if you wish to maintain margins.
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Whether Apple sells an iMac for $1199 or a comparable tower for $1124, it makes no difference in Apple's income statement.
Except that your $1124 tower ($314) also replaces the $1499 ($419) and $1999 iMacs ($599) for reduced revenues of $100-$300 per unit. Far less than what it would be for your previously postulated $399-$799 towers and more easily made up by monitor sales.
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I see no down side to building a mini tower and pricing it in this way.
Because you choose to ignore that these towers suck in price comparisons with Dell.
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Conclusion? All the talk about canalization of iMac sales and loss of Apple display sales is just FUD.
No, the cannibalization of iMac sales is very important at the previously discussed $399-$799 price points you have since abandoned (but I doubt Mr. H has) and those losses could not easily be made back up by the high-priced monitor lineup that Apple has which caters to graphics users (hence the high price for typically better color rendition than most desktop users need).
Instead you've substituted towers that cost several hundred dollars more than their comparable competition which EVERY review would likely trash. Currently the reviews have been positive because Apple offerings compare well vs their Windows counterparts on a cost basis (laptops and workstations) OR differ enough in form factors that reviews treat them as "those Mac AIO things that suck for gaming but look nice...if I were an effete mochachino drinking non-gamer I might buy one".
Do you really think the Apple brand would be enhanced by reviews that read "those overpriced Mac towers perform well but cost several hundred dollars more than a machine you can buy from Dell"?
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Give the customer a better choice of what to buy and Apple can only profit from it, and grow faster. No down side folks.
Damn right! Your costings are way off. You must have missed the fact that we know Apple's gross margins on computers are around the 28% point. I suggest that the method I used in this post provides a more realistic idea as to the component + build costs of the iMac. But that's beside the point.
I understand your proposal that the gross margin of the mini tower could be increased such that the absolute $ profit is the same as that achieved by the iMac, but, as Vinea points out, you then ignore the fact that price comparisons to the competition would then be seriously dire.
Even maintaning 28% margins, the price comparison won't be favourable, but much easier to justify IMHO when accounting for the added value of OS X, iLife and the Apple brand.
$399-$799 price points you have since abandoned (but I doubt Mr. H has)
Indeed I haven't. Neither you nor anyone else said anything to convince me that they would cannibalise sales of the iMac any more significantly than the current Mac Mini.
I have already suggested that my proposal would impact negatively on revenue and earnings for the first year or so, but in a minor fashion, and then start to impact positively. I don't believe iMac cannibalisation would be so severe that there would be no point producing it any more.
I have no interest in trying to convince you that the $399 - $799 models I propose (which would have laptop CPU and RAM, don't forget) wouldn't severely cannibalise iMac sales. We already know the situation. You think cannibalisation would happen to a significant degree, I don't.
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I was thinking more $1299 or $1499 for a 2.4ghz Conroe in the "standard" configuration.
I can see a 2.93Ghz X6800 Core 2 Extreme for $1799 undercutting Dell by $100 but still keeping iMac sales safe from cannibilization. Should be a half decent gamer platform as well.
The Mini and iMac fill that area well enough. The problem is that Apple's offerings are too upscale for the intended audience. The ironic part, is that Apple has one of the cheapest dual core desktops out there. Half, if not more of all desktop sales are in the Celeron/Sempron class.
I think the counter argument is that upscale is what Apple is about and that's the demographic they target. They can provide the best bang for the buck in some products but they will still be upscale products.
Hence no REAL argument about a potential Conroe box but I'd expect it to be a Core 2 Extreme and only one model. Arguably more folks would buy a Core 2 Extreme box than current Pro models but perhaps a dual core, high Ghz Conroe (vs slightly slower Kentsfield) is enough of a difference from higher priced octo cloverton Pros.
I'd still think they'd stick a single 3Ghz Woodcrest at the bottom end as easier to do but I'm not going to argue that too much.
Vinea
My question to whomever suggested such pricing is, why on earth would Apple price a "tower" with iMac performance and features for $300 more?
Because its
a) A "prosumer" machine and they can charge more.
b) Faster than the iMac
c) They don't get a monitor sale out of the deal
d) They need to make up whatever loss of synergy with their laptop lines when they sell fewer iMacs (ie few mobile part purchases = lower volume discounts).
e) $1,299 is likely a pipe dream and $1,499 unlikely but possible as a cube.
A $1,499 Core 2 E6700 Cube is reasonably priced (unlike the first cube), wouldn't kill the iMac (and wouldn't matter that much if it did), still not compete with Dell/HP/Gateway towers directly and has that one important slot for upgradable video (likely one that was passively cooled stock), can fit a regular 10KRPM drive (but likely they would pick a really quiet 7200 drive).
But they could as easily go with a Merom as well...but at least you'd have a slot.
Vinea
Give me that and I see almost zero need for a tower. Even better if it were a tablet but I could live with a MBP model with a docking adapter on the bottom.
A lightweight merom 12" MBP or 11" iTablet connected to a pair of 24" ACDs via a decent vid card in the docking station and I don't really care if it only has a GMA950 natively.
I can also live with relatively poor battery life and external optical drive now that there's a magsafe airline adaptor.
Vinea
1. To really go after switchers, got them looking w/ the Intel chips and entry level mini's. However, they need some meat to chew on, iMac's will sell to some the rest are looking for towers. So sell them towers.
2. Gamers, currently Apple has no system worth a real gamer's second look. Sorry those quad Xeons might look nice, but w/o SLI support they are ho hum at best. Put 2 PCIe slots in w/ SLI support (10.5?) and if they don't use a second video card the second slot still works fine as a standard PCIe slot. Gamers may not be huge marketshare but they do tend to keep up on what's new/good hardwarewise and therefore are listened to by computer illiterates.
3. Myself and many others who've posted here, we simply want a desktop system w/ room to add hd/cdrom/video/other pci card in the price range of $999-$2000. They could start at $1299 even however the point is we're not interested in an AIO or a mini. People like me used to be able to wait til the $1699-$1999 towers came down a bit on ebay or simply buy them new, now however w/ the switch to Intel we're out of luck til those Xeons come waaaay down. Or more likely, buying/building a pc and either getting a hacked OSX to work on it or just living w/ windows.
To sum it up Apple could be selling more systems than they do now, more importantly since they're the only Mac system vendors they should have more variety w/o going into Dell's 'a system for everyone..if you can find it' mentality. Of course they could always license OSX to another system builder for select systems (towers and specialized laptops). Before you say they'd never do that again I'd like to point out three things real quick; iPod (mp3 player???), the Mac mini (sub $500 system until the Intel switch), and the Intel switch. All those things were scoffed at as possibilities by Mac users until they happened.
I understand that, but from Apple's point of view, how many people who need a PCIe slot for a Blackmagic Decklink card are out there? I don't think any of us who are "anti-xMac" would mind if Apple added that to the line; we're just expressing our interpretation of why Apple has not done it.
I do have a couple of options outside of buying the Mac Pro.
My current PM G5 set up works fine right now. It is getting a little long in the tooth and I would like to begin looking for something new. But if I have too, I'm sure what I have will be viable for another year or two before I notice its getting too slow.
Or I could put up $1500 to $1800 and buy a used but newer and faster PM G5. I could even get one that has a couple of years of AppleCare left on it. I could use that as my desktop for the next three to four years.
Neither of these option puts my money directly into Apple increasing their quarterly sales or market share.
I can see a 2.93Ghz X6800 Core 2 Extreme for $1799 undercutting Dell by $100 but still keeping iMac sales safe from cannibilization.
This one of the real keys. This is Dell and HP weakness. They cannot compete on price in the high end.
. . . I don't think any of us who are "anti-xMac" would mind if Apple added that to the line; we're just expressing our interpretation of why Apple has not done it . . .
I think you summarize your side of the discussion well, which defends Apple for not having a low or mid price range tower, as I see it. The other side criticizes Apple for the same reason, saying such a tower is important, even vital to a good strategy for growth.
Then we have a sub-discussion about the iMac. Certainly, Apple is working on the next iMac already, and I don't think anyone expects it to be dropped, or even thinks it should be dropped. Some of us, like me, would like to see a major change in the iMac however.
And finally we have yet another sub-discussion about the Mac Mini. Should Apple keep it pretty much as is, completely redesign it, or totally replace it with another product, like a very low cost tower?
. . . the vast majority of potential switchers do not need or want expandability if it means higher cost and no included monitor. Sure, they may be "used" to a two-part computer, but once they see the iMac they do not necessarily see anything that they are missing with that design. . .
As I said before, the price would be higher only if a switcher chose a higher performance tower, or one with more features. For the same performance and features of the iMac, the cost of a tower without display should be less. The only argument I've heard against this pricing is base on the fear that such a tower would reduce iMac sales too much. So, Apple should not give customers a choice, but I believe this is bad advice.
To get switchers, give them what they want, or are "used to," as much as possible. With a Mac mini tower, smaller than the Mac Pro, switchers can have the hardware they want. It doesn't have to make sense if they simply want it. This is no time to put unnecessary obstacles in their way.
So let's take the worst case scenario, that a Mac mini tower clobbers iMac sales, reduces them to 25 percent of their former level. Is that bad enough? To listen to some, it would be a disaster, because a tower sale might not be a display sale too.
Not so, IMHO. Apple can tweak the prices so profit on both the mini tower and iMac are the same. (Remember, I had the price of a tower just a tad bit lower than an iMac of similar performance and features.) As long as the sales of both the iMac and tower combined does not drop, Apple's profit will not drop. To the contrary, Apple's profit on total sales of the two Macs will go up, if it attracts more switches. Mac users who switch over to the tower from the iMac will make no difference. However, Mac users who now go to eBay to find the tower they want are still more potential customers. I see absolutely no down side.
Regarding Apple cinema displays, every new tower sale is potentially even more profit for Apple. With so many benefits of building a mini tower, what can be Apple's reason for not doing so? If it is to artificially keep iMac sales high, Apple is shooting itself in the foot. Otherwise, Apple is simply tardy at getting around to it. If Apple delays beyond the right time, it is being tardy according to my dictionary. (Just trying to keep semantics snipers away.)
iMac sales really aren't all that great.
Measured against what?
624,000 desktop systems for $869 million in revenue is far more revenue than Dell or HP average over the same number of desktop sales.
Also factor in Apple had not had any significant updates to its laptops in three years. So there was pent up demand.
edit:
I don't have time to find all the number right now. But if you take an average 624,000 desktop sales across both Dell and HP lines.
Apple made more profit than both combined.
The other side criticizes Apple for the same reason, saying such a tower is important, even vital to a good strategy for growth.
Despite the fact that Apple is enjoying nice growth without said "vital" tower...
Then we have a sub-discussion about the iMac. Certainly, Apple is working on the next iMac already, and I don't think anyone expects it to be dropped, or even thinks it should be dropped.
Except that a low cost tower would likely reduce iMac sales to the point where it should be dropped.
The only argument I've heard against this pricing is base on the fear that such a tower would reduce iMac sales too much. So, Apple should not give customers a choice, but I believe this is bad advice.
That's not the only argument that has been advanced, this is a mischaracterization.
In no particular order off the top of my head:
So let's take the worst case scenario, that a Mac mini tower clobbers iMac sales, reduces them to 25 percent of their former level. Is that bad enough? To listen to some, it would be a disaster, because a tower sale might not be a display sale too.
If you reduce iMac sales to under 100K units per quarter you might as well kill all but 20" from the line up. Which is the point of why I equate the xMac with elimination of the iMac.
AIOs are niche for better or worse.
Not so, IMHO. Apple can tweak the prices so profit on both the mini tower and iMac are the same. (Remember, I had the price of a tower just a tad bit lower than an iMac of similar performance and features.) As long as the sales of both the iMac and tower combined does not drop, Apple's profit will not drop.
True. But given there are no $399-$799 iMacs this has not been the bulk of the disagreement.
To the contrary, Apple's profit on total sales of the two Macs will go up, if it attracts more switches. Mac users who switch over to the tower from the iMac will make no difference. However, Mac users who now go to eBay to find the tower they want are still more potential customers. I see absolutely no down side.
The downside is that a tower comparatively spec'd to the iMac sucks in comparison to similar offerings by Dell/HP/Gateway at your pricing of "just a tad lower". Given the same form factor these are more easily compared against one another.
An example is the Dimension E520 with a 2.13Ghz E6400, 1 GB RAM, 160GB HD, 256MB X1300 Pro is $934 with a 19" monitor in comparison to the "just a tad lower" than $1199 17" 2.0Ghz iMac or "just a tad lower" than $1499 20" 2.16Ghz iMac.
The comparable Gateway DX420S is $1099 but with a GeForce 7600GS Dual DVI - Dual Link with HDCP (cool) and TV out and a 19" monitor.
You don't typically compare the E520 or DX420s with the iMac 20" because, well, one is an AIO and the other is a tower.
To a switcher the most obvious thing is that this prettier Mac tower (sans monitor) is $100-$500 more expensive than the uglier Dell tower that comes with a 19" monitor. This confirms the common belief that "Macs cost more for the same thing" without the corresponding "Macs are cooler" benefit of the AIO.
Possibly this works as a cube but that doesn't have the same expansion capability as a tower.
Regarding Apple cinema displays, every new tower sale is potentially even more profit for Apple. With so many benefits of building a mini tower, what can be Apple's reason for not doing so?
Obviously because Apple is composed of idiots...
If it is to artificially keep iMac sales high, Apple is shooting itself in the foot. Otherwise, Apple is simply tardy at getting around to it. If Apple delays beyond the right time, it is being tardy according to my dictionary. (Just trying to keep semantics snipers away.)
So much for not responding. Grow up.
In any case, this is more of the same "I'm not calling Apple complacent/doomed/whatever except when I am" type of argument from you. You're again implying that Apple is complacent/unwilling to change by calling the lack of a "Magic Bullet Tower Mac That Instantly Catapaults Apple into the Big Leagues" tardy.
Even if Apple needed to introduce a low cost tower (which is the debate) you don't think that maybe transitioning their entire product line to Intel in 2006 is enough churn in the product line that continuing to call it "tardy" is nothing more than a temper tantrum from someone that can't be satisfied no matter how well Apple does?
Suck on those semantics.
Vinea
Measured against what?
624,000 desktop systems for $869 million in revenue is far more revenue than Dell or HP average over the same number of desktop sales.
Also factor in Apple had not had any significant updates to its laptops in three years. So there was pent up demand.
edit:
I don't have time to find all the number right now. But if you take an average 624,000 desktop sales across both Dell and HP lines.
Apple made more profit than both combined.
Porsche vs Toyota
Vinea
And I will ask again, who in their right mind would pay $1299 for a "tower" with no monitor when they can get an iMac WITH monitor for $999?
It would need faster processor than you could get in the iMac. Say starting at 2.4 ghz and go up to 2.6. It would need less expandability than a Mac Pro so as to not eat into pro sales. Once the pros move to quad chips it would be easy to separate the lines based on performance and features.
Apple is a high end brand and should provide high end products. Low end products hurt the branding.
So you're saying Apple should also get rid of the Mac Mini, 17 and 20 inch iMacs and the Macbooks? Since these are all low end products...
I think you wanted to say "Apple is a STYLISH brand and should provide stylish products..blah blah blah."
What you seem to have missed is that stylish is entirely possible with a mini-tower.
As to the rest of your 'points'. You have no numbers to back up your assertion that using more expensive laptop parts in desktops actually saves Apple money by lowering their costs on their laptops. For all we know Apple could be getting higher margins on their desktops without increasing the cost per system on their laptops.
Additionally since they're already supporting low end products and their buyers they're obviously making enough off low end products to justify low end products.
Again you don't have numbers to back up just how much if any increase in sales would be needed to break even let alone to justify using dramaticly.
Yet the point isn't that they'd have to sell as many monitors as towers, it's that when they did they'd increase margins over and above an iMac. Would the iMac become obsolete with a tower, unlikely it's obvious there's enough people who prefer that form factor to keep making them.
The problem you have with the Dimension and the iMac are that people are NOT seeing one as an AIO and one as a tower plus monitor. They're seeing both as a computer for x price and x + $200-$400 price. They already see Apple as being more expensive and buy either because of style or operating system. Therefore a stylish desktop/mid-tower/whatever would have the same effect with one major difference. It would sell to people who will not or cannot buy an AIO.
Four. Five if you count the eMac.
I mean designs that apple has never released. How many different prototypes that were produced that never made the cut.
We do not have Apple's cost of materials, so we make some guesses. If you do not like my guesses, put in your own numbers. When you do the calculations, the results will be the same. For every iMac that does not get sold because a Mac mini tower was purchased in it's place, Apple makes the same dollar profit.
What this shows is that the fear of canalization is unfounded. It makes no difference to Apple's bottom line which Mac a customer buys, of the two. Also, if a Mac mini tower sale does not result in an Apple display sale, Apple's profit remains the same. One more mythical lose of profit that doom and gloom sayers bring up. The facts are just the opposite. If a mini tower sale does include an Apple display sale, it is simply MORE profit for Apple -- never less.
Now the calculations. Let's say the LCD panel and associated circuitry cost Apple $75. Otherwise, let's say manufacturing cost of the iMac and tower of comparable performance and features is the same. The iMac has some more expensive components, like a laptop drive and lower power CPU. The tower has a more costly power supply and case. Let say these are a draw and cancel each other out.
Now let's look at the $1199 iMac, which might cost 363.33 dollars to make, assuming a 3.3 times markup. The unburdened dollar profit on the iMac would be $835.67.
To find the manufacturing cost of the tower, we subtract $75 from the iMac cost, which says Apple pays $288.33 to build it. For Apple to make the same unburdened dollar profit, the mini tower would sell for $1124. It is really that simple. Put in your own numbers if you like.
The answer can be arrived at even easier, but I think it helps to break it out with manufacturing cost for each product. Whether Apple sells an iMac for $1199 or a comparable tower for $1124, it makes no difference in Apple's income statement.
Considering any added Apple display sales do to mini tower sales means still more profit for Apple. And, what about any extra switcher? It can only mean more profit. As I said earlier. I see no down side to building a mini tower and pricing it in this way. Earlier I suggest Apple might sell the tower for $25 to $50 less than a comparable iMac. If Apple did so, it would make still more profit on the tower.
Some of you may question the 3.3 times markup. I worked for a company once that had a 4.0 times market. There is no magic number for it, and it varies by industry and markets. It looks like a lot of profit, but a company has many other expenses. Apple needs a high unburdened profit so when all bills are paid, the financial statement shows a good profit.
Conclusion? All the talk about canalization of iMac sales and loss of Apple display sales is just FUD. Give the customer a better choice of what to buy and Apple can only profit from it, and grow faster. No down side folks.
15" Aluminum G4. I got it in December 2003.
Luckily the logic board is failing on my last month of Apple Care.
A 1.25ghz g4? That is the one I have. The lower memory slot is burned out and I'm limited to 1gig of ram now.
From what I've read there is little heat difference between Merom and Yohan. How could Conroe be more powerful than both and not produce significantly more heat? And why would Apple need to be concerned about power usage in a desktop?
Actually there is another point I left out. But lets discuss heat first. Merom and Conroe are the exact same process, same design, etc. There is very little difference between the two. The main difference is the bus speed (power conservation), voltage usage, pin count, and ram type (because of the fsb). Conroe is a VERY cool running chip. You can actually run it full blast without a fan on a heatsink and only see 1 degree difference after four hours. The iMac case is perfectly fine for conroe. Something else occured to me as I was replying. Apple had Yonah in the iMac originally. That is a 479 pin count. Merom is a drop in replacement for Yonah, Conroe is not. If they wanted to put conroe it, it would have required a new mobo design. Besides that, there isn't a lot of room for a power supply in the iMac. That puts a strain on how much power they can pump out of that powersupply. You can make any powersupply pump out any amount of watts, but it is harder to make it reliable / steady voltages with small areas.
But yes, the main differences between Merom and Conroe is Voltage and FSB. Otherwise it's pretty much the same.
Vinea actually made a good point with selling more desktops with mobile parts to get their prices down for laptops. Not sure how much that comes into play, but it's something to think about.
The iMac is a fine machine. I drool over it when I visit friends who own one. If I didn't need at least one PCI slot. The iMac would be perfectly fine for me.
I think there is no need to shun the iMac just because you want a midlevel tower. They both are two machines that would serve two different purpose.
The iMac is a great machine. It really is. But there is a place for another machine as you say.
I currently own a Power Mac. But I doubt I will get a Mac Pro. I don't need all four PCI slots, I don't need four hard drive pays, and I certainly will not use 16GB of RAM. I will rarely give all four CPU's a workout. The two optical bays are the new feature I would find most useful.
I'm the market for a smaller dual core midlevel tower. I need at least one PCI slot for my Blackmagic Decklink card.
The iMac does not fill this need and the Mac Pro is way more than I need.
Exactly.
So you're saying Apple should also get rid of the Mac Mini, 17 and 20 inch iMacs and the Macbooks? Since these are all low end products...
No, their low end entry is above the $500 cutline that analysts usually use for the budget/entry line. Prices for PCs there start a little above $250.
$999 for the cheapest iMac is certainly not low end. Neither is the MacBook.
I think you wanted to say "Apple is a STYLISH brand and should provide stylish products..blah blah blah."
Nope. I said what I meant. The low end Apple products are priced where everyone else's upper mid-range typically sits except for the Mini.
What you seem to have missed is that stylish is entirely possible with a mini-tower.
There are some towers that aren't too bad. Certainly the Mac Pro is stylish in the industrial sense. The Cube is stylish but really...it's an 8" cube. So a simple and elegant slim-tower design can be done. A squat mini-tower less so proportionally.
As to the rest of your 'points'. You have no numbers to back up your assertion that using more expensive laptop parts in desktops actually saves Apple money by lowering their costs on their laptops. For all we know Apple could be getting higher margins on their desktops without increasing the cost per system on their laptops.
If we take Intel at their word that no one gets special discounting and all discounting is based soley on volume then we can guess that 1.5M parts generates more discounts than 1M parts. We do know they are buying more Meroms than they would otherwise be with a Conroe desktop lineup. Likewise the Mobile 945GM Express parts being used in the iMacs.
Same for memory.
Absolute numbers would be difficult to come by but I don't think there should be much disagreement with the general idea. Here is a general link that indicates that Intel has stopped special pricing and gone to just volume discounts (there are plenty more from the same time period):
It appears to indicate that their key challenger, Dell, will not be getting special volume discounts from Intel.
Many believe cut-throat pricing advertised by Dell and other direct marketers were supplemented by large volume discounts those companies were negotiating with Intel. They are hoping that changes will eliminate some of the pricing advantage those companies were enjoying.
"I think this will be positive for the channel," said one system builder. "It looks like everyone will be treated equally."
Several system builders said they had little insight into the kind of volume negotiations that go on between Intel and its top-tier partners.
But one system builder believed those deals are negotiated on a contract basis and that some top-tier buyers were purchasing more CPUs than they could sell to get a better discount and then dumping the surplus on the grey market.
"Say they are negotiating for a-half million processors for US$50 each, they will say, 'what if we take one million,' even though they know up front they won't use those chips," he said.
http://www.crn.com.au/story.aspx?CIID=39077&r=rstory
Apple's current strategy plays well into the known Intel pricing policy. Especially since Apple isn't using Intel's marketing dollars.
From the article Apple may still be getting a sweet-heart "meet-comp" deal but if so its also more palatable for Intel's other customers if they are within a certain product segment. An all Merom/Woodcrest deal annoys Dell/HP/Gateway less than a sweetheart deal that includes Conroes where their bread and butter machines live.
Additionally since they're already supporting low end products and their buyers they're obviously making enough off low end products to justify low end products.
Except their "low end" products aren't low end. Their bread and butter machines (the iMac) range from $999 to $1994. Somewhere I read (and linked in this thread) Apple's average unit price was $1400 or so. That's bleeding amazing for the current computer market and being the 4th ranked US seller.
Again you don't have numbers to back up just how much if any increase in sales would be needed to break even let alone to justify using dramaticly.
It's on page 20...just kidding, I have no clue what page it's on but it is on a page in this thread. The short form is that even if you maintain margins making 28% on a $399 Mac Tower ($111.72) for every $1499 iMac 20" ($419.72)...which appears most popular on Amazon...you have to sell about four times as many of the cheap towers to make the same revenue.
Then you have to support 4 customers instead of one.
Vary the tower price around the $399-$1299 price points to get the breakeven points but the common prices are $499, $799 and $999 in the previous discussions. Add projected monitor sales as desired.
Apple must have done this math and with better metrics than you and I would have access to. They know their monitor sell rate in comparison to industry so they can compute their monitor conversion rates. They also have historical data from the 90s when they sold headless Performas...and I think (but not sure) with their ADB connectors.
Now with DVI...
Yet the point isn't that they'd have to sell as many monitors as towers, it's that when they did they'd increase margins over and above an iMac.
Depends on the price points. Sure, if they price as the latest Snoopy proposal (a tad under current iMac pricing) then yes, they make more profit. The downside is that their lines are more comparable to Dell/HP/Gateway offerings (Tower vs Tower instead of Tower vs AIO) AND the comparisons would suck.
Would the iMac become obsolete with a tower, unlikely it's obvious there's enough people who prefer that form factor to keep making them.
Eh...maybe but the proponents for the Tower say that's the dominant form for computers and AIOs are niche and replete with drawbacks. I agree with that statement with the caveat that AIOs are more stylish (which I think they don't disagree) and harder to compare directly with towers which hides the Apple margins in the mid range market (which they may or may not agree) and allows them to beat Dell on prices in the workstation market.
The problem you have with the Dimension and the iMac are that people are NOT seeing one as an AIO and one as a tower plus monitor. They're seeing both as a computer for x price and x + $200-$400 price. They already see Apple as being more expensive and buy either because of style or operating system. Therefore a stylish desktop/mid-tower/whatever would have the same effect with one major difference. It would sell to people who will not or cannot buy an AIO.
Show me a stylish tower with more sex appeal than the iMacs and I might be inclined to agree. Of course that's a subjective assessment but while the AIO form factor doesn't completely negate the price disadvantage I'm going to assert that it helps. Its obvious that the iMac costs more and performs less but its also obvious that the form factor is distinctly different. Same for the mini.
That mitigates the price difference and reinforces that Apple, as a brand, is distinctive and elite. Therefore worth the $$$. Style over substance.
Folks that cannot buy an AIO, laptop or Mac Pro are under served but its not a demographic that Apple seems to care about AND given their current performance it hasn't hurt them all that much. As a smaller company that competes against the entire Windows world they have to choose their battles and thus far, IMHO, they have choosen very well and haven't competed against Dell/HP/etc's strengths but in areas where Apple can dominate.
Vinea
While many of you may have been satisfied with just the logic of my last posting, others may be skeptical. So here are a few calculations.
We do not have Apple's cost of materials, so we make some guesses. If you do not like my guesses, put in your own numbers. When you do the calculations, the results will be the same. For every iMac that does not get sold because a Mac mini tower was purchased in it's place, Apple makes the same dollar profit.
This is a different price point that argued before. If you are willing to abandon the $399-$499 tower argument that's fine.
What this shows is that the fear of canalization is unfounded.
Cannibilization will still occur. It simply wont matter to the bottom line (as it would with $399-$799 towers). The downside is comparisons between Apple desktops and Dell desktops become trivial and with Apple looking bad. Something you don't address with this price scheme.
It makes no difference to Apple's bottom line which Mac a customer buys, of the two.
Strawman. Never argued that point against $1200 towers.
Also, if a Mac mini tower sale does not result in an Apple display sale, Apple's profit remains the same. One more mythical lose of profit that doom and gloom sayers bring up. The facts are just the opposite. If a mini tower sale does include an Apple display sale, it is simply MORE profit for Apple -- never less.
Only because you just raised the price of your $799 tower to $1200-$1400.
Now the calculations.
Its simpler to use the 28% gross margins number and drop the price accordingly if you wish to maintain margins.
Whether Apple sells an iMac for $1199 or a comparable tower for $1124, it makes no difference in Apple's income statement.
Except that your $1124 tower ($314) also replaces the $1499 ($419) and $1999 iMacs ($599) for reduced revenues of $100-$300 per unit. Far less than what it would be for your previously postulated $399-$799 towers and more easily made up by monitor sales.
I see no down side to building a mini tower and pricing it in this way.
Because you choose to ignore that these towers suck in price comparisons with Dell.
Conclusion? All the talk about canalization of iMac sales and loss of Apple display sales is just FUD.
No, the cannibalization of iMac sales is very important at the previously discussed $399-$799 price points you have since abandoned (but I doubt Mr. H has) and those losses could not easily be made back up by the high-priced monitor lineup that Apple has which caters to graphics users (hence the high price for typically better color rendition than most desktop users need).
Instead you've substituted towers that cost several hundred dollars more than their comparable competition which EVERY review would likely trash. Currently the reviews have been positive because Apple offerings compare well vs their Windows counterparts on a cost basis (laptops and workstations) OR differ enough in form factors that reviews treat them as "those Mac AIO things that suck for gaming but look nice...if I were an effete mochachino drinking non-gamer I might buy one".
Do you really think the Apple brand would be enhanced by reviews that read "those overpriced Mac towers perform well but cost several hundred dollars more than a machine you can buy from Dell"?
Give the customer a better choice of what to buy and Apple can only profit from it, and grow faster. No down side folks.
Ad hominem attack deleted - JL
Vinea
Some of you may question the 3.3 times markup.
Damn right! Your costings are way off. You must have missed the fact that we know Apple's gross margins on computers are around the 28% point. I suggest that the method I used in this post provides a more realistic idea as to the component + build costs of the iMac. But that's beside the point.
I understand your proposal that the gross margin of the mini tower could be increased such that the absolute $ profit is the same as that achieved by the iMac, but, as Vinea points out, you then ignore the fact that price comparisons to the competition would then be seriously dire.
Even maintaning 28% margins, the price comparison won't be favourable, but much easier to justify IMHO when accounting for the added value of OS X, iLife and the Apple brand.
$399-$799 price points you have since abandoned (but I doubt Mr. H has)
Indeed I haven't. Neither you nor anyone else said anything to convince me that they would cannibalise sales of the iMac any more significantly than the current Mac Mini.
I have already suggested that my proposal would impact negatively on revenue and earnings for the first year or so, but in a minor fashion, and then start to impact positively. I don't believe iMac cannibalisation would be so severe that there would be no point producing it any more.
I have no interest in trying to convince you that the $399 - $799 models I propose (which would have laptop CPU and RAM, don't forget) wouldn't severely cannibalise iMac sales. We already know the situation. You think cannibalisation would happen to a significant degree, I don't.