Nobody is looking to caniblize the iMac's sale. We're looking to caniblize sales from the PC ranks in the mid to upper end of the consumer market and the low end of the professional market. The iMac isn't going to get it done.
Virtually nothing in the above post addresses the huge disparity in market share increases in Apple's laptop sales as opposed to the stagnant sales of their desktop market.
No it tries to explain why Apple desktop are wimpy AIOs and SFF computers based on laptop parts.
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One might argue there was a large pent up demand for Apple laptops, but this flys in the face of the fact that the Intel versions were available before the large increases in sales the last two quarters.
One might argue that the back to school(college) crowd seems hell bent on buying laptops from Apple for some peculiar reason over desktops.
The peculiar reason being its hard to lug your alienware tower and 30" monitor to the library?
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Or, one might argue that Apple laptops fulfill most peoples expectations in a laptop and they have switched to Mac OS X, but few switchers have found the same attributes in Apple's desktop line-up.
But just noting Apple's stragegy does not explain this disparity in market share numbers between Apple's laptops and desktops.
Because there's very little difference in price between a $999 iMac and a $1099 MacBook? Okay, so one has a 17" and the other a 13" but you can take MacBook with you. Itls also a bit of a nasty jump for a gamer from the $1199 17" w X1600 and a $1999 15" MBP.
As far as competitive with other desktop offerings its hard for Merom based machines to compete with Conroe based machines. Hence the sleek profiles that makes it harder to compare with towers. If these laptop based desktops are helping Apple win in the laptop market then playing with this formula risks both doesn't it?
Is there a compelling reason to mess with 31.2% gross margins, record revenue of $7B and earnings of $1B, 28% growth in year ago qtr? To chase desktop share? Against Dell and HP?
FIRST OFF. Anyone who thinks there is going to be a 699/799 tower can forget that wet dream right now.
Mkay. Like I said in a more reasonable discussion several pages back I don't see any great debate if anyone thinks apple might offer a $1699 C2D extreme version of the Mac Pro.
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On a personal note. Vinea I respect your opinion, but it seems lately you attack every single person. Can't you be a bit nicer?
Sure thing. I'll even work in the sarcasm tho' that's gonna be hard. And yes you are correct on burners, HDD, keyboard, etc. Forgot about those. But unfortunately not memory, CPU, MB, etc.
No it tries to explain why Apple desktop are wimpy AIOs and SFF computers based on laptop parts.
The peculiar reason being its hard to lug your alienware tower and 30" monitor to the library?
Because there's very little difference in price between a $999 iMac and a $1099 MacBook? Okay, so one has a 17" and the other a 13" but you can take MacBook with you. Itls also a bit of a nasty jump for a gamer from the $1199 17" w X1600 and a $1999 15" MBP.
As far as competitive with other desktop offerings its hard for Merom based machines to compete with Conroe based machines. Hence the sleek profiles that makes it harder to compare with towers. If these laptop based desktops are helping Apple win in the laptop market then playing with this formula risks both doesn't it?
Is there a compelling reason to mess with 31.2% gross margins, record revenue of $7B and earnings of $1B, 28% growth in year ago qtr? To chase desktop share? Against Dell and HP?
Vinea
You still have not explained in any way shape or form why Apple laptop sales have captured market share and the desktops haven't. You're trying to use "proposed possible" arguments that I posted as rebuttal.
You still insist on using what you think Apple's strategy is to explain why Apple's desktop sales are stagnant as opposed to the increase in market share Apple's laptops.
You keep dancing around the topic, using "Apple's market strategy" or "price points" or "profit margins". The fact of the matter is that Apple's laptops are increasing in market share and they are because there are switchers to the Mac OS, but only in laptops. There is not an equivalent increase in switchers to Apple desktops.... because......... come on admit it....... Apple doesn't offer what people percieve as value for their money in current desktops. The mini Mac and the iMac are niche products, good value for their money if you are in that niche market and the Mac Pros are prohibitively expensive and most consumers will not even entertain the thought of buying one.
Apple by using this product matrix is turning people away.
Is there a compelling reason to mess with 31.2% gross margins, record revenue of $7B and earnings of $1B, 28% growth in year ago qtr? To chase desktop share? Against Dell and HP?
Those aren't just Mac numbers. The 31% margin was for overall sales not Macs. Perhaps Mac margins are higher, perhaps not. Revenue was greatly influenced by iPod sales and not driven by Mac sales alone. The 28% growth in Mac sales, while repectable in the PC industry, was actaully a disappointment and the stock took a hit over it.
While you are quite unimpressed by market share, I think it's a bit more important than you give credit. While Apple make many 'critical' apps for the platform additional market share means more developer interest. We can all agree that's a positive for Apple and users.
While I don't suggest that Apple chase MS with unprofitable products many have shown it possible to expand the desk top product offerings with profitable machines. While I don't have the data to back it up, I doubt Dell and HP have sales as skewed as Apple which sell 9 laptops for every 6 desktops. They're getting close to 2 to 1 in that ratio! Perhaps desktop sales for Mac Pros will improve when CS3 is released but that won't help iMac and mini much. What would a new desktop product 'cannabalize'? Truth is that desk top sales are weak. There's nothing to protect.
You still have not explained in any way shape or form why Apple laptop sales have captured market share and the desktops haven't. You're trying to use "proposed possible" arguments that I posted as rebuttal.
There is a lot of evidence as to why. You just don't want to see it. Its clearly known and understood that laptops are out selling desktops across the entire computer industry. Mobile communication devices are outselling both desktops and laptops. Which is why the iPhone is important to Apple's future.
The next time you walk into Circuit City or Best Buy. Pay close attention to the computer section. You will see laptops up front and in prominent display with many options and brands. The desktops are on a back or side section with fewer options.
Without their enterprise sales, if you can find evidence that Dell and HP desktop sales have not steeply fallen to increased laptop sales in the same consumer market than Apple sells. Then I will agree that Apple might have a desktop problem.
There is a lot of evidence as to why. You just don't want to see it. Its clearly known and understood that laptops are out selling desktops across the entire computer industry. Mobile communication devices are outselling both desktops and laptops. Which is why the iPhone is important to Apple's future.
I agree that the future is mobile devices and such but aren't you throwing dirt on the desk top a little early? I would love to see numbers of desk top sales vs. laptops for the industry. That would probably go a long way to settling this debate.
I'm not kicking dirt on the desktop, ComputerWorld is.
Is the desktop dead?
By Robert L. Mitchell on Tue, 12/12/2006 - 9:28am
A year ago in Computerworld we examined the reasons why laptops were taking over in business (see Decline of the Desktop). This year laptops aren't just on a roll with business users - consumers are scooping them up in droves as well. According to an NPD Group study cited in Business Week (see Desktops are So Twentieth Century) sales of desktop computers are down 5% while notebook sales rose 35% over a 12-month period ending in October, 2006. For the week after Thanksgiving, laptop sales were up 25% over the same week in 2005, while desktop sales fell 2%, according to sales tracking numbers from Current Analysis.
Is the desktop dead? Perhaps not, but for the average consumer it's on life support. One analyst quoted in the Business Week story predicts that the desktop will soon be marginalized to the very high end and low end of the market.
You upsell from a $599 mini to a $499 tower as some folks proposed? Okay its an upsell to a $699 tower...unless you are a $799 mini.
You cannibalize iMacs unless you sell an ACD as well. Lemme see...a $699/$799 tower with Conroe and PICe slots vs a $999 Merom AIO with GMA graphics. Lemme think if we're going to lose any iMac sales...
Yes indeedy cannibalize is a negative term for good reason.
One model upsells a $100-$200. The other is cannibalized by $100 to $0.
Right...because $999-$1999 is less than $699-$799.
Its not a + until after doubling your desktop sales. Its a - until then.
During all the time it took you to write these, it never occurred to you that I was probably talking of something more expensive and/or having better absolute profit margin than the iMac, when I used the term "upsell"?
For the record, I'm thinking of something midway between the mini and Mac Pro in all regards.
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- cannibalized Mac Pro sales if you stick a high end Conroe in there.
I kind of wrote that in the message you quoted.
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It does little for Mac Pro parts since the Mac pro uses workstation parts.
Expansion cards.
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More software from what? An extra 400K desktop sales?
Increased marketshare. Duh.
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You're kidding right? You just converted $279-$559 gross margins/unit into $223 gross margins/unit on EVERY sale of the tower except those to switchers, mini purchasers and those that buy a $699 20" ACD instead of ordering a $251 20" WS or $649 24" WS Dell monitor. Lemme think a moment...do I want to spend $50 more and get a 4" smaller monitor?
Or HEY...I could get a $699 Conroe box running OSX and a $1300 30" UltraSharp from Dell for the same price as a 24" iMac! With SLOTS! Woot.
Displays are irrelevant. This is about the mini, the Mac Pro, and the gaping hole in between. Headless machines. You know, the kind you buy if you have a display.
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You DONT think you need ANY switchers? Riiiight. And absolutely no cannibalization will occur...these are all UPSELLS!
Except for the part where I wrote "cannibalization of the Mac Pro".
Sure, big boxes are cheap. But laptops with names like Ferrari are all the rage
Pity the poor desktop computer. It sparked a revolution 25 years ago, but these days most consumers get about as excited by their home PC as they do by a lawn mower.
Contrast that with the passion people bring to their laptops. Thanks to plunging prices, even budget-minded road warriors are flocking to sporty new notebook designs with names like Ferrari and Aurora. Manufacturers, borrowing a page from Apple Computer Inc. (AAPL ), are decking out portable models with nifty touches. Hewlett-Packard Co.'s (HPQ ) Imprint Finish lets users personalize the look of a laptop cover, while Dell Inc.'s (DELL ) XPS M2010 folds up to look like a briefcase. "It's trendier to have a laptop," says Elizabeth Autumn, 39, a research associate with GovernanceMetrics International who tapped away on a Toshiba (TOSBF ) in a New York Starbucks (SBUX ) one recent afternoon. "Smaller is cuter and more manageable; I carry it around like it's my baby."
With overall PC sales expected to slow sharply next year, the biggest action is shifting to the smallest machines. Just look at the numbers. Current Analysis, a research firm that tracks PC sales, found that revenue from laptop sales at major retailers it surveyed climbed 25% in the week that ended Nov. 25 from the same week the year before. Consumers seized deals such as the ones offered on Black Friday, the busiest shopping day of the year, at three of the biggest computer chains--Best Buy (BBY ), Circuit City (CC ), and CompUSA. They advertised notebooks for under $400.
And desktop PCs? In the same week, desktop sales fell 2%. The actual number of desktops sold in the year through October dropped 5%, according to researcher NPD Group Inc. Notebook shipments were up 35% during that period. "Desktops are in trouble," says Samir Bhavnani, research director at Current Analysis. "They are going to get marginalized to the very high end and the very low end of the market."
Think of the desktop market as gamers and grandmas. PC gamers remain a lucrative market segment, buying expensive computers to better blast aliens in head-to-head online competition. The elderly and all others who simply want to read e-mail and hit the occasional Web site are generally content with low-cost, limited-function desktops.
Analysts don't expect a big sales boost from the pending release of Windows Vista, the operating system from Microsoft Corp. (MSFT ). After many delays, Vista's consumer version becomes available on Jan. 30. But most consumers don't even realize that Vista is pending, and some of Microsoft's partners believe it will take well into 2007 for significant sales to register. Worldwide shipments of PCs--desktop and notebooks--are expected to grow only 8% next year, to 230 million units, vs. the 15% annual pace of the past three years, according to researcher IDC (IDC ).
The shift in buying patterns makes sense if you think about how people use computers. Many households in developed countries now own two or three. But even in hot markets such as China and India, notebook growth outpaces that of desktops: In Asia, shipments leaped 38% from the previous year, vs. 9.7% for desktops.
In some ways, the shift to laptops is welcome news for computer makers. Long squeezed by desktops' shrinking margins, they have a bit more breathing room with laptops. Notebooks deliver net profit margins of about 8%, twice that of desktops. What's more, consumers tend to replace laptops with greater frequency, buying a new one every three years compared with the nearly five it takes to ditch a desktop.
Who might suffer? The folks who make accessories such as keyboards or monitors, for one. There's not much need for them with a laptop. Some peripheral makers, such as Logitech (LOGI ), already have expanded their product lines in recent years to insulate themselves. Aside from gamers and grannies, it seems no one wants to get tied to the desktop.
There is no argument that portables will gain a lot of ground, and can fullfill the needs of MANY users. However, portable laptops can NOT fullfill every use in the world. It will be a long time until they can, if they ever can.
For instance: How about running dual 20, 24, or hell even 30" displays. Many many professionals require such a need (i'm currently working off of a 15" book with a 20" samsung and it's not enough), while other professionals need 4, 6, 8 displays to pull off what they need to do without slowing their work habits. A laptop will not fullfill these needs.
Large amounts of ram. Currently the most a macbookpro can do is 3 gigs (why it can't do 4 i don't remember), and a mac pro can do 16. Scientific programs require a lot of ram. You won't be able to stick 8 ram modules in a laptop any time soon.
Heat disappation... Professionals use and abuse their computers. 3D animators, Programmers, graphic designers, video compositors, etc, etc all need their computers to be running top notch at all times. A laptop isn't designed to keep up with these paces. The recommended use on a 2.5" harddrive is no more than 8 hours a day 5 days a week. Where as a 3.5" has a rating closer to 22 hours a day 7 days a week. When you have these tiny parts inside it can mean a recipe for disaster. My harddrive in my book is getting louder and louder every day. I woke up this morning to a grinding noise. It's surely going out. It's what I get for working on it 12-16 hour days for the last 18 months.
There is a swarm to laptops because they are convenient for the average user. But there will always be a demand for desktops.
The 28% growth in Mac sales, while repectable in the PC industry, was actaully a disappointment and the stock took a hit over it.
I'm thinking that everyone that banked on Apple hitting $90 took their profits. Buy on rumor, sell on news. While analysts were dissapointed with unit growth Apple also hit most projected price points...so the logical response is to take profit and look for other opportunities. Good iPhone sales are now priced into that mid-upper $80 price. Apple has nowhere to go but down vs expectations.
At least until the next rumor based pump.
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While you are quite unimpressed by market share, I think it's a bit more important than you give credit. While Apple make many 'critical' apps for the platform additional market share means more developer interest. We can all agree that's a positive for Apple and users.
I am impressed with market share when we compare apples to apples (heh). The dominance of Dell/HP/Windows are without question in the overall market. However Apple doesn't compete in the total market but in the edu, home and DCC markets. Significant slippage in share in these areas is a cause for concern. Fluctuations of the total market share is less positive or negative so long as total sales volumes are healthy. 1.6M units seem healthy in comparison to some historical numbers.
Show me that you can maintain 31% gross margins, increase total revenue and increase market share at the same time and I might be more favorable to the cheap tower concept.
In any case Apple added an estimated 2-5M active users of OSX in 2006 while having an average sell price of $1500. Not so shabby.
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While I don't suggest that Apple chase MS with unprofitable products many have shown it possible to expand the desk top product offerings with profitable machines.
Who gets 27-31% gross margins in the entry to mid range tower markets ($399-$799).
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While I don't have the data to back it up, I doubt Dell and HP have sales as skewed as Apple which sell 9 laptops for every 6 desktops. They're getting close to 2 to 1 in that ratio!
Effectively Apple sells mobile laptops and less mobile laptops with the exception of the Mac Pro. The question is so what? That's to Apple's advantage or more accurately mitigates some of Apple's disadvantage.
Dell has 17% worldwide share in notebooks. They have even more growth (36% unit growth) in the laptop market. Their desktop revenue declined 3% even though unit sales were up 4%. They see a continuing shift to mobilty (stated in the quarterly presentation powerpoint).
Its somewhat sketchy but I'm guessing something like 2-4M of Dell's 10M/qtr unit sale are laptops.
So thank goodness almost every one of the 1.6M unit sales helps Apple keep the macbook in spitting distance of mid range Dell and HP laptop models while maintaining margins.
Laptops are the only place that you make those kinds of magins on that high a unit price with that kind of volume.
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Perhaps desktop sales for Mac Pros will improve when CS3 is released but that won't help iMac and mini much. What would a new desktop product 'cannabalize'? Truth is that desk top sales are weak. There's nothing to protect.
Yes CS3 should help Mac Pro sales.
You aren't protecting desktop sales. You're protecting 31% gross margins and a $1500 average sale price. This is why I think a $1699 C2D Extreme Mac Pro is a possibility. This is why I don't think a $799 C2D Desktop is a possibility or good for Apple.
You need to sell 2 for every cannibalized product, whether laptop or desktop just to break even. And you still have to show that Apple can sell a $799 C2D desktop at 27-31% margins in the face of Dell/HP/etc in a market where unit sales increase while revenue decreases.
Tim Cook on pricing more aggressively to gain share:
"We grew at three times the market. Underneath that, if you look in some specific markets, like the U.S., we grew at 31 percent versus market growth of 3 percent, which is substantially above. Portables grew at 65 percent versus IDC?s forecast at 23 percent. This is also now eight of the last nine quarters that the Mac has outgrown the market, so I do not see ? I believe we have very, very competitive product offerings that are delivering substantially above market growth. We have no reason to change."
There you go.
I don't know how folks can really believe that Apple could try do that much better on the share front and not screw up something in the process. 1.85M sales would have been great but Apple's guidance was below the 1.6M it got. They expected to drop in Q1 not effectively hold steady vs the edu season.
For instance: How about running dual 20, 24, or hell even 30" displays. Many many professionals require such a need (i'm currently working off of a 15" book with a 20" samsung and it's not enough), while other professionals need 4, 6, 8 displays to pull off what they need to do without slowing their work habits. A laptop will not fullfill these needs.
I got a MBP so I could drive a 30" ACD for demos. I mistakenly bought the 17" so I could do demo's without another monitor. I now wish I had the 15". The 17" doesn't fit anywhere...especially the most common hotel room safes.
Everything else is true...although kinda high end.
There is a swarm to laptops because they are convenient for the average user. But there will always be a demand for desktops.
I've never said there would be no demand for desktops. Of course there is demand for them. My point is in cold factual numbers. From 2005 to 2006 laptop sales are up 35%, desktop sales are down 5%. Which is mirrored in Apple's sales numbers.
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However, portable laptops can NOT fullfill every use in the world
The article I posted says desktops will primarily sell to the gamers and the grannies. The very high to the very low end. The middle will mostly buy laptops.
But I myself I like my PowerMac. If I had to pick only one between the two. I feel like I could live without a desktop before I could live without a laptop. But I like having a desktop at home because sitting stationary at home it does have advantages over a laptop.
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Currently the most a macbookpro can do is 3 gigs (why it can't do 4 i don't remember),
Because of Intel's chipset. Santa Rosa will address 4 GB.
During all the time it took you to write these, it never occurred to you that I was probably talking of something more expensive and/or having better absolute profit margin than the iMac, when I used the term "upsell"?
Mkay. You don't like everyone else's suggested price points to gain share. You number is what? Because your message was terse enough that you don't mention and if you read my message you can see that I used values commonly repeated in this 36 page thread.
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For the record, I'm thinking of something midway between the mini and Mac Pro in all regards.
Midway between the $599 mini and the $2499 mac pro is $950 assuming all regards includes price. Wouldn't want to fail reading comprehension again.
So...its better than $799 but still less than the iMac in terms of both total price and absolute profit. So replace $233 with $256. But I'm sure I read that wrong and you don't mean all regards because that still doesn't work. Nor does simply cutting the Mac Pro price in half really. $1249 certainly works better but its still not an upsell for most iMacs...
So to "upsell" an iMac for which the mid-priced model is $1499 (which dovetails nicely with Apple's reported average unit price of $1500) you're talking about what?
A $1599 Mac Pro C2D Extreme or perhaps a $1599 Mac Pro Woodcrest when the rest of the line moves to Kentfield.
I've said several times this is a possibility and most folks agree.
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I kind of wrote that in the message you quoted.
Yes you did.
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Expansion cards.
Again true. That's such a grand Apple moneymaker too.
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Increased marketshare. Duh.
First, increased market share from what? You wrote that you don't believe you need switchers to make this work. No switchers = no increased market share.
Second you haven't shown you'll get increased marketshare in any meaningful number.
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Displays are irrelevant. This is about the mini, the Mac Pro, and the gaping hole in between. Headless machines. You know, the kind you buy if you have a display.
For which today you are forced to buy an iMac or a Mini. If you buy this instead of an iMac you just cannibalized a $999-$2499 iMac sale into a $950 sale. If you buy this instead of a mini you have indeed upsold to a more epensive machine.
At the cost of trashing the iMac line because buying a display and a $950 tower is STILL cheaper than buying an iMac at every single iMac price point except the very base iMac (the GMA one).
Unless your price point is the $1599 one in which case I'm gonna say you aren't going to see that explosion of market share. And upselling from a $799 mini to the $1599 machine is pretty danged tough. $950 I can see as an "upsell" but that scenario isn't that much better than the $799 price I used.
And even $950 isn't going to cause that explosion in share since you're competing directly against something like the 1.86Ghz C2D Dimension E520 with 1Gb ram, 320GB HDD, GeForce 7300LE and a free 19" monitor (no monitor is $739).
Care to spec your "midway between the mini and Mac Pro in all regards" machine? With a 31% margin?
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Except for the part where I wrote "cannibalization of the Mac Pro".
And all the iMacs.
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You. Fail. At. Reading.
And. You. Fail. At. Writing. Logical. Arguments. And. Responding. To. Them. But. I. Have. To. Say. You. Have. This. One. Word. Sentence. Thing. Down. Pat.
You also don't address where destroying iMac sales (even via "upsells") wont hurt the cost of mobility parts which is a) where the market is heading and b) where Apple is doing pretty well.
From £795 - £1195 allows them for a Consumer range of towers for grannies and gamers.
Certainly acheivable price wise if the Mac Pro top of the lines are using quad and octos (soon...?)
Core Duo Extreme maybe. But Conroe, certainly a possibility.
Desktops. It's a declining but still very significant market. It would round out Apple's desktop line. Because it sure isn't balanced at the moment.
I'd like to see all the iMacs under £1200. And the Mac 'Pro' Tower reach as low at £795. Conroe speed and quality of GPU being significant differentiators.
And a gaddamn 17 inch LCD to offer cheaper bundles for their Mac Mini and Consumer towers. And a slimmer form for the Consumer tower.
Comments
Nobody is looking to caniblize the iMac's sale. We're looking to caniblize sales from the PC ranks in the mid to upper end of the consumer market and the low end of the professional market. The iMac isn't going to get it done.
And neither is the Mac Pro in its current form.
I respect your opinion, but it seems lately you attack every single person.
That's discrimination against married people.
Virtually nothing in the above post addresses the huge disparity in market share increases in Apple's laptop sales as opposed to the stagnant sales of their desktop market.
No it tries to explain why Apple desktop are wimpy AIOs and SFF computers based on laptop parts.
One might argue there was a large pent up demand for Apple laptops, but this flys in the face of the fact that the Intel versions were available before the large increases in sales the last two quarters.
One might argue that the back to school(college) crowd seems hell bent on buying laptops from Apple for some peculiar reason over desktops.
The peculiar reason being its hard to lug your alienware tower and 30" monitor to the library?
Or, one might argue that Apple laptops fulfill most peoples expectations in a laptop and they have switched to Mac OS X, but few switchers have found the same attributes in Apple's desktop line-up.
But just noting Apple's stragegy does not explain this disparity in market share numbers between Apple's laptops and desktops.
Because there's very little difference in price between a $999 iMac and a $1099 MacBook? Okay, so one has a 17" and the other a 13" but you can take MacBook with you. Itls also a bit of a nasty jump for a gamer from the $1199 17" w X1600 and a $1999 15" MBP.
As far as competitive with other desktop offerings its hard for Merom based machines to compete with Conroe based machines. Hence the sleek profiles that makes it harder to compare with towers. If these laptop based desktops are helping Apple win in the laptop market then playing with this formula risks both doesn't it?
Is there a compelling reason to mess with 31.2% gross margins, record revenue of $7B and earnings of $1B, 28% growth in year ago qtr? To chase desktop share? Against Dell and HP?
Vinea
FIRST OFF. Anyone who thinks there is going to be a 699/799 tower can forget that wet dream right now.
Mkay. Like I said in a more reasonable discussion several pages back I don't see any great debate if anyone thinks apple might offer a $1699 C2D extreme version of the Mac Pro.
On a personal note. Vinea I respect your opinion, but it seems lately you attack every single person. Can't you be a bit nicer?
Sure thing. I'll even work in the sarcasm tho' that's gonna be hard. And yes you are correct on burners, HDD, keyboard, etc. Forgot about those. But unfortunately not memory, CPU, MB, etc.
Vinea
No it tries to explain why Apple desktop are wimpy AIOs and SFF computers based on laptop parts.
The peculiar reason being its hard to lug your alienware tower and 30" monitor to the library?
Because there's very little difference in price between a $999 iMac and a $1099 MacBook? Okay, so one has a 17" and the other a 13" but you can take MacBook with you. Itls also a bit of a nasty jump for a gamer from the $1199 17" w X1600 and a $1999 15" MBP.
As far as competitive with other desktop offerings its hard for Merom based machines to compete with Conroe based machines. Hence the sleek profiles that makes it harder to compare with towers. If these laptop based desktops are helping Apple win in the laptop market then playing with this formula risks both doesn't it?
Is there a compelling reason to mess with 31.2% gross margins, record revenue of $7B and earnings of $1B, 28% growth in year ago qtr? To chase desktop share? Against Dell and HP?
Vinea
You still have not explained in any way shape or form why Apple laptop sales have captured market share and the desktops haven't. You're trying to use "proposed possible" arguments that I posted as rebuttal.
You still insist on using what you think Apple's strategy is to explain why Apple's desktop sales are stagnant as opposed to the increase in market share Apple's laptops.
You keep dancing around the topic, using "Apple's market strategy" or "price points" or "profit margins". The fact of the matter is that Apple's laptops are increasing in market share and they are because there are switchers to the Mac OS, but only in laptops. There is not an equivalent increase in switchers to Apple desktops.... because......... come on admit it....... Apple doesn't offer what people percieve as value for their money in current desktops. The mini Mac and the iMac are niche products, good value for their money if you are in that niche market and the Mac Pros are prohibitively expensive and most consumers will not even entertain the thought of buying one.
Apple by using this product matrix is turning people away.
Is there a compelling reason to mess with 31.2% gross margins, record revenue of $7B and earnings of $1B, 28% growth in year ago qtr? To chase desktop share? Against Dell and HP?
Those aren't just Mac numbers. The 31% margin was for overall sales not Macs. Perhaps Mac margins are higher, perhaps not. Revenue was greatly influenced by iPod sales and not driven by Mac sales alone. The 28% growth in Mac sales, while repectable in the PC industry, was actaully a disappointment and the stock took a hit over it.
While you are quite unimpressed by market share, I think it's a bit more important than you give credit. While Apple make many 'critical' apps for the platform additional market share means more developer interest. We can all agree that's a positive for Apple and users.
While I don't suggest that Apple chase MS with unprofitable products many have shown it possible to expand the desk top product offerings with profitable machines. While I don't have the data to back it up, I doubt Dell and HP have sales as skewed as Apple which sell 9 laptops for every 6 desktops. They're getting close to 2 to 1 in that ratio! Perhaps desktop sales for Mac Pros will improve when CS3 is released but that won't help iMac and mini much. What would a new desktop product 'cannabalize'? Truth is that desk top sales are weak. There's nothing to protect.
You still have not explained in any way shape or form why Apple laptop sales have captured market share and the desktops haven't. You're trying to use "proposed possible" arguments that I posted as rebuttal.
There is a lot of evidence as to why. You just don't want to see it. Its clearly known and understood that laptops are out selling desktops across the entire computer industry. Mobile communication devices are outselling both desktops and laptops. Which is why the iPhone is important to Apple's future.
The next time you walk into Circuit City or Best Buy. Pay close attention to the computer section. You will see laptops up front and in prominent display with many options and brands. The desktops are on a back or side section with fewer options.
Without their enterprise sales, if you can find evidence that Dell and HP desktop sales have not steeply fallen to increased laptop sales in the same consumer market than Apple sells. Then I will agree that Apple might have a desktop problem.
There is a lot of evidence as to why. You just don't want to see it. Its clearly known and understood that laptops are out selling desktops across the entire computer industry. Mobile communication devices are outselling both desktops and laptops. Which is why the iPhone is important to Apple's future.
I agree that the future is mobile devices and such but aren't you throwing dirt on the desk top a little early? I would love to see numbers of desk top sales vs. laptops for the industry. That would probably go a long way to settling this debate.
Is the desktop dead?
By Robert L. Mitchell on Tue, 12/12/2006 - 9:28am
A year ago in Computerworld we examined the reasons why laptops were taking over in business (see Decline of the Desktop). This year laptops aren't just on a roll with business users - consumers are scooping them up in droves as well. According to an NPD Group study cited in Business Week (see Desktops are So Twentieth Century) sales of desktop computers are down 5% while notebook sales rose 35% over a 12-month period ending in October, 2006. For the week after Thanksgiving, laptop sales were up 25% over the same week in 2005, while desktop sales fell 2%, according to sales tracking numbers from Current Analysis.
Is the desktop dead? Perhaps not, but for the average consumer it's on life support. One analyst quoted in the Business Week story predicts that the desktop will soon be marginalized to the very high end and low end of the market.
You upsell from a $599 mini to a $499 tower as some folks proposed? Okay its an upsell to a $699 tower...unless you are a $799 mini.
You cannibalize iMacs unless you sell an ACD as well. Lemme see...a $699/$799 tower with Conroe and PICe slots vs a $999 Merom AIO with GMA graphics. Lemme think if we're going to lose any iMac sales...
Yes indeedy cannibalize is a negative term for good reason.
One model upsells a $100-$200. The other is cannibalized by $100 to $0.
Right...because $999-$1999 is less than $699-$799.
Its not a + until after doubling your desktop sales. Its a - until then.
During all the time it took you to write these, it never occurred to you that I was probably talking of something more expensive and/or having better absolute profit margin than the iMac, when I used the term "upsell"?
For the record, I'm thinking of something midway between the mini and Mac Pro in all regards.
- cannibalized Mac Pro sales if you stick a high end Conroe in there.
I kind of wrote that in the message you quoted.
It does little for Mac Pro parts since the Mac pro uses workstation parts.
Expansion cards.
More software from what? An extra 400K desktop sales?
Increased marketshare. Duh.
You're kidding right? You just converted $279-$559 gross margins/unit into $223 gross margins/unit on EVERY sale of the tower except those to switchers, mini purchasers and those that buy a $699 20" ACD instead of ordering a $251 20" WS or $649 24" WS Dell monitor. Lemme think a moment...do I want to spend $50 more and get a 4" smaller monitor?
Or HEY...I could get a $699 Conroe box running OSX and a $1300 30" UltraSharp from Dell for the same price as a 24" iMac! With SLOTS! Woot.
Displays are irrelevant. This is about the mini, the Mac Pro, and the gaping hole in between. Headless machines. You know, the kind you buy if you have a display.
You DONT think you need ANY switchers? Riiiight. And absolutely no cannibalization will occur...these are all UPSELLS!
Except for the part where I wrote "cannibalization of the Mac Pro".
You. Fail. At. Reading.
Sure, big boxes are cheap. But laptops with names like Ferrari are all the rage
Pity the poor desktop computer. It sparked a revolution 25 years ago, but these days most consumers get about as excited by their home PC as they do by a lawn mower.
Contrast that with the passion people bring to their laptops. Thanks to plunging prices, even budget-minded road warriors are flocking to sporty new notebook designs with names like Ferrari and Aurora. Manufacturers, borrowing a page from Apple Computer Inc. (AAPL ), are decking out portable models with nifty touches. Hewlett-Packard Co.'s (HPQ ) Imprint Finish lets users personalize the look of a laptop cover, while Dell Inc.'s (DELL ) XPS M2010 folds up to look like a briefcase. "It's trendier to have a laptop," says Elizabeth Autumn, 39, a research associate with GovernanceMetrics International who tapped away on a Toshiba (TOSBF ) in a New York Starbucks (SBUX ) one recent afternoon. "Smaller is cuter and more manageable; I carry it around like it's my baby."
With overall PC sales expected to slow sharply next year, the biggest action is shifting to the smallest machines. Just look at the numbers. Current Analysis, a research firm that tracks PC sales, found that revenue from laptop sales at major retailers it surveyed climbed 25% in the week that ended Nov. 25 from the same week the year before. Consumers seized deals such as the ones offered on Black Friday, the busiest shopping day of the year, at three of the biggest computer chains--Best Buy (BBY ), Circuit City (CC ), and CompUSA. They advertised notebooks for under $400.
And desktop PCs? In the same week, desktop sales fell 2%. The actual number of desktops sold in the year through October dropped 5%, according to researcher NPD Group Inc. Notebook shipments were up 35% during that period. "Desktops are in trouble," says Samir Bhavnani, research director at Current Analysis. "They are going to get marginalized to the very high end and the very low end of the market."
Think of the desktop market as gamers and grandmas. PC gamers remain a lucrative market segment, buying expensive computers to better blast aliens in head-to-head online competition. The elderly and all others who simply want to read e-mail and hit the occasional Web site are generally content with low-cost, limited-function desktops.
Analysts don't expect a big sales boost from the pending release of Windows Vista, the operating system from Microsoft Corp. (MSFT ). After many delays, Vista's consumer version becomes available on Jan. 30. But most consumers don't even realize that Vista is pending, and some of Microsoft's partners believe it will take well into 2007 for significant sales to register. Worldwide shipments of PCs--desktop and notebooks--are expected to grow only 8% next year, to 230 million units, vs. the 15% annual pace of the past three years, according to researcher IDC (IDC ).
The shift in buying patterns makes sense if you think about how people use computers. Many households in developed countries now own two or three. But even in hot markets such as China and India, notebook growth outpaces that of desktops: In Asia, shipments leaped 38% from the previous year, vs. 9.7% for desktops.
In some ways, the shift to laptops is welcome news for computer makers. Long squeezed by desktops' shrinking margins, they have a bit more breathing room with laptops. Notebooks deliver net profit margins of about 8%, twice that of desktops. What's more, consumers tend to replace laptops with greater frequency, buying a new one every three years compared with the nearly five it takes to ditch a desktop.
Who might suffer? The folks who make accessories such as keyboards or monitors, for one. There's not much need for them with a laptop. Some peripheral makers, such as Logitech (LOGI ), already have expanded their product lines in recent years to insulate themselves. Aside from gamers and grannies, it seems no one wants to get tied to the desktop.
http://www.businessweek.com/print/ma...50.htm?chan=gl
There is no argument that portables will gain a lot of ground, and can fullfill the needs of MANY users. However, portable laptops can NOT fullfill every use in the world. It will be a long time until they can, if they ever can.
For instance: How about running dual 20, 24, or hell even 30" displays. Many many professionals require such a need (i'm currently working off of a 15" book with a 20" samsung and it's not enough), while other professionals need 4, 6, 8 displays to pull off what they need to do without slowing their work habits. A laptop will not fullfill these needs.
Large amounts of ram. Currently the most a macbookpro can do is 3 gigs (why it can't do 4 i don't remember), and a mac pro can do 16. Scientific programs require a lot of ram. You won't be able to stick 8 ram modules in a laptop any time soon.
Heat disappation... Professionals use and abuse their computers. 3D animators, Programmers, graphic designers, video compositors, etc, etc all need their computers to be running top notch at all times. A laptop isn't designed to keep up with these paces. The recommended use on a 2.5" harddrive is no more than 8 hours a day 5 days a week. Where as a 3.5" has a rating closer to 22 hours a day 7 days a week. When you have these tiny parts inside it can mean a recipe for disaster. My harddrive in my book is getting louder and louder every day. I woke up this morning to a grinding noise. It's surely going out. It's what I get for working on it 12-16 hour days for the last 18 months.
There is a swarm to laptops because they are convenient for the average user. But there will always be a demand for desktops.
The 28% growth in Mac sales, while repectable in the PC industry, was actaully a disappointment and the stock took a hit over it.
I'm thinking that everyone that banked on Apple hitting $90 took their profits. Buy on rumor, sell on news. While analysts were dissapointed with unit growth Apple also hit most projected price points...so the logical response is to take profit and look for other opportunities. Good iPhone sales are now priced into that mid-upper $80 price. Apple has nowhere to go but down vs expectations.
At least until the next rumor based pump.
While you are quite unimpressed by market share, I think it's a bit more important than you give credit. While Apple make many 'critical' apps for the platform additional market share means more developer interest. We can all agree that's a positive for Apple and users.
I am impressed with market share when we compare apples to apples (heh). The dominance of Dell/HP/Windows are without question in the overall market. However Apple doesn't compete in the total market but in the edu, home and DCC markets. Significant slippage in share in these areas is a cause for concern. Fluctuations of the total market share is less positive or negative so long as total sales volumes are healthy. 1.6M units seem healthy in comparison to some historical numbers.
Show me that you can maintain 31% gross margins, increase total revenue and increase market share at the same time and I might be more favorable to the cheap tower concept.
In any case Apple added an estimated 2-5M active users of OSX in 2006 while having an average sell price of $1500. Not so shabby.
While I don't suggest that Apple chase MS with unprofitable products many have shown it possible to expand the desk top product offerings with profitable machines.
Who gets 27-31% gross margins in the entry to mid range tower markets ($399-$799).
While I don't have the data to back it up, I doubt Dell and HP have sales as skewed as Apple which sell 9 laptops for every 6 desktops. They're getting close to 2 to 1 in that ratio!
Effectively Apple sells mobile laptops and less mobile laptops with the exception of the Mac Pro. The question is so what? That's to Apple's advantage or more accurately mitigates some of Apple's disadvantage.
Dell has 17% worldwide share in notebooks. They have even more growth (36% unit growth) in the laptop market. Their desktop revenue declined 3% even though unit sales were up 4%. They see a continuing shift to mobilty (stated in the quarterly presentation powerpoint).
Its somewhat sketchy but I'm guessing something like 2-4M of Dell's 10M/qtr unit sale are laptops.
So thank goodness almost every one of the 1.6M unit sales helps Apple keep the macbook in spitting distance of mid range Dell and HP laptop models while maintaining margins.
Laptops are the only place that you make those kinds of magins on that high a unit price with that kind of volume.
Perhaps desktop sales for Mac Pros will improve when CS3 is released but that won't help iMac and mini much. What would a new desktop product 'cannabalize'? Truth is that desk top sales are weak. There's nothing to protect.
Yes CS3 should help Mac Pro sales.
You aren't protecting desktop sales. You're protecting 31% gross margins and a $1500 average sale price. This is why I think a $1699 C2D Extreme Mac Pro is a possibility. This is why I don't think a $799 C2D Desktop is a possibility or good for Apple.
You need to sell 2 for every cannibalized product, whether laptop or desktop just to break even. And you still have to show that Apple can sell a $799 C2D desktop at 27-31% margins in the face of Dell/HP/etc in a market where unit sales increase while revenue decreases.
Tim Cook on pricing more aggressively to gain share:
"We grew at three times the market. Underneath that, if you look in some specific markets, like the U.S., we grew at 31 percent versus market growth of 3 percent, which is substantially above. Portables grew at 65 percent versus IDC?s forecast at 23 percent. This is also now eight of the last nine quarters that the Mac has outgrown the market, so I do not see ? I believe we have very, very competitive product offerings that are delivering substantially above market growth. We have no reason to change."
There you go.
I don't know how folks can really believe that Apple could try do that much better on the share front and not screw up something in the process. 1.85M sales would have been great but Apple's guidance was below the 1.6M it got. They expected to drop in Q1 not effectively hold steady vs the edu season.
Vinea
For instance: How about running dual 20, 24, or hell even 30" displays. Many many professionals require such a need (i'm currently working off of a 15" book with a 20" samsung and it's not enough), while other professionals need 4, 6, 8 displays to pull off what they need to do without slowing their work habits. A laptop will not fullfill these needs.
I got a MBP so I could drive a 30" ACD for demos. I mistakenly bought the 17" so I could do demo's without another monitor. I now wish I had the 15". The 17" doesn't fit anywhere...especially the most common hotel room safes.
Everything else is true...although kinda high end.
Vinea
There is a swarm to laptops because they are convenient for the average user. But there will always be a demand for desktops.
I've never said there would be no demand for desktops. Of course there is demand for them. My point is in cold factual numbers. From 2005 to 2006 laptop sales are up 35%, desktop sales are down 5%. Which is mirrored in Apple's sales numbers.
However, portable laptops can NOT fullfill every use in the world
The article I posted says desktops will primarily sell to the gamers and the grannies. The very high to the very low end. The middle will mostly buy laptops.
But I myself I like my PowerMac. If I had to pick only one between the two. I feel like I could live without a desktop before I could live without a laptop. But I like having a desktop at home because sitting stationary at home it does have advantages over a laptop.
Currently the most a macbookpro can do is 3 gigs (why it can't do 4 i don't remember),
Because of Intel's chipset. Santa Rosa will address 4 GB.
During all the time it took you to write these, it never occurred to you that I was probably talking of something more expensive and/or having better absolute profit margin than the iMac, when I used the term "upsell"?
Mkay. You don't like everyone else's suggested price points to gain share. You number is what? Because your message was terse enough that you don't mention and if you read my message you can see that I used values commonly repeated in this 36 page thread.
For the record, I'm thinking of something midway between the mini and Mac Pro in all regards.
Midway between the $599 mini and the $2499 mac pro is $950 assuming all regards includes price. Wouldn't want to fail reading comprehension again.
So...its better than $799 but still less than the iMac in terms of both total price and absolute profit. So replace $233 with $256. But I'm sure I read that wrong and you don't mean all regards because that still doesn't work. Nor does simply cutting the Mac Pro price in half really. $1249 certainly works better but its still not an upsell for most iMacs...
So to "upsell" an iMac for which the mid-priced model is $1499 (which dovetails nicely with Apple's reported average unit price of $1500) you're talking about what?
A $1599 Mac Pro C2D Extreme or perhaps a $1599 Mac Pro Woodcrest when the rest of the line moves to Kentfield.
I've said several times this is a possibility and most folks agree.
I kind of wrote that in the message you quoted.
Yes you did.
Expansion cards.
Again true. That's such a grand Apple moneymaker too.
Increased marketshare. Duh.
First, increased market share from what? You wrote that you don't believe you need switchers to make this work. No switchers = no increased market share.
Second you haven't shown you'll get increased marketshare in any meaningful number.
Displays are irrelevant. This is about the mini, the Mac Pro, and the gaping hole in between. Headless machines. You know, the kind you buy if you have a display.
For which today you are forced to buy an iMac or a Mini. If you buy this instead of an iMac you just cannibalized a $999-$2499 iMac sale into a $950 sale. If you buy this instead of a mini you have indeed upsold to a more epensive machine.
At the cost of trashing the iMac line because buying a display and a $950 tower is STILL cheaper than buying an iMac at every single iMac price point except the very base iMac (the GMA one).
Unless your price point is the $1599 one in which case I'm gonna say you aren't going to see that explosion of market share. And upselling from a $799 mini to the $1599 machine is pretty danged tough. $950 I can see as an "upsell" but that scenario isn't that much better than the $799 price I used.
And even $950 isn't going to cause that explosion in share since you're competing directly against something like the 1.86Ghz C2D Dimension E520 with 1Gb ram, 320GB HDD, GeForce 7300LE and a free 19" monitor (no monitor is $739).
Care to spec your "midway between the mini and Mac Pro in all regards" machine? With a 31% margin?
Except for the part where I wrote "cannibalization of the Mac Pro".
And all the iMacs.
You. Fail. At. Reading.
And. You. Fail. At. Writing. Logical. Arguments. And. Responding. To. Them. But. I. Have. To. Say. You. Have. This. One. Word. Sentence. Thing. Down. Pat.
You also don't address where destroying iMac sales (even via "upsells") wont hurt the cost of mobility parts which is a) where the market is heading and b) where Apple is doing pretty well.
Vinea
Certainly acheivable price wise if the Mac Pro top of the lines are using quad and octos (soon...?)
Core Duo Extreme maybe. But Conroe, certainly a possibility.
Desktops. It's a declining but still very significant market. It would round out Apple's desktop line. Because it sure isn't balanced at the moment.
I'd like to see all the iMacs under £1200. And the Mac 'Pro' Tower reach as low at £795. Conroe speed and quality of GPU being significant differentiators.
And a gaddamn 17 inch LCD to offer cheaper bundles for their Mac Mini and Consumer towers. And a slimmer form for the Consumer tower.
Lemon Bon Bon
From £795 - £1195 allows them for a Consumer range of towers for grannies and gamers.
Lemon Bon Bon
I have no problems with a $1500-$2400 range for desktops. I dunno that you'll see much additional market share but that's okay.
Vinea
The iMac covers the grannies just fine. What could be more simple than the AIO.
The MP covers the gamers. Although I can understand their complaint for more graphic card choices.
I'd like to see all the iMacs under £1200
Unless its more expensive in the UK, in the US the 24" iMac is £1017.
The MP covers the gamers. Although I can understand their complaint for more graphic card choices.
While its not a slouch I do understand why gamers would much prefer a C2D Extreme rig.
But heck...its likely cheaper to buy a refurb mini to do iLife/whatever and a solid gaming rig than a $1600 prosumer C2D Extreme Mac Pro.
Vinea