I'm not going to bother to be nice, because this is ridiculous.
Sure, it's fun to speculate on this and that, but some of you need to actually find something else to think about besides apple. get a hobby. please! for the love of god!
and do any of you honestly think steve jobs should step down? please? think about that? where the living h*ll would we be without him? and who should replace him if he did step down? YOU?!
if apple decided tonight to do all of the moronic things that people here suggest, they would be out of business by the end of the week.
OK first off the iMac is not a Cube with a monitor. I mean...it is in the sense that the Cube and the iMac base probably cost the same for Apple to produce, but they weren't developed on the same R&D dollar. Take the two apart and look - they aren't the same machine.
Also - just because Apple only barely makes a profit with a 30% margin on HW doesn't mean they would lose money if they lowered prices. Do you think just maybe more people would buy Macs if they were cheaper? If Apple dropped their margin by 1/4, and then sold 25% more machines, their net profit would be the same. And they'd have the advantage of higher revenue/unit sales, and a bigger market share. More people to buy OS updates, more people to buy iPods, etc. Lowering their margins could be a smart move.
Personally I want to see Apple expand into more markets. They've been doing that well this year with FCP3, DVD Studio Pro, iPod, etc. I would hope they'd use this extra money to lower margins on the HW, to try to increase market share. Economies of scale could help Apple in all sorts of ways if they could get their market share to even 5-7%(vs. less than 3% right now), not the least of which being Motorola might have more incentive to spend some cash on PPC development if they could sell more of them to Apple.
lets just recap some of Apple's latest hardware offerrings compared to older ones...
ibook (white) blew away the original with design and features
powerbook ti blew away the original g3 in power and design
imac g4 blows away the g3 imac with power, monitor, design
ipod blows away competing mp3 players on elegance of design, size and function
see a pattern developing here?? it's been a great past 12 months for NEW Apple hardware with only one older model remaining...
i truly believe that the powermac g4+/g5 will ???? away the current quicksilver...
they know towers are old and need a revamp.. they know people are bitchin and moanin... just give em a little more time... I doubt we'll be disappointed..
I too am yearning for a new tower to replace my ancient beige g3... next model for sure, whether it's a dual g4+ or single g5... patience...
<strong> Also - just because Apple only barely makes a profit with a 30% margin on HW doesn't mean they would lose money if they lowered prices. Do you think just maybe more people would buy Macs if they were cheaper? If Apple dropped their margin by 1/4, and then sold 25% more machines, their net profit would be the same. And they'd have the advantage of higher revenue/unit sales, and a bigger market share. </strong><hr></blockquote>
People who have never taken a business class are always making this same assertion -- cut the profits by X percent, which will automatically lead to an increase in sales of X (the same) percent, meaning the net profits would be the same.... (and the other assertion that always follows is that Apple would ACTUALLY end up ahead because even if you're only making the same profit, selling more stuff to get that same profit is better, right?)
The problem with all of the above is that it's simply WRONG. The math doesn't work, as has been demonstrated again and again on these forums and elsewhere. If it worked, Apple would do it. Here's a quick example of how this works, using some numbers that roughly approximate Apple's quarterly numbers just reported, but for simplicity's sake the example assumes only one product.
................30% margin ...... 1/4 decrease in margin
revenue ........1,200,000,000 .... 1,355,000,000
qty sold .......800,000 .......... 1,000,000
price each .....1,500 ............ 1,355
cost each ......1,050 ............ 1,050
profit each ....450 .............. 305
gp% ............30.0% ............ 22.5%
total gp$ ......360,000,000 ...... 305,000,000
fixed costs ....322,000,000 .......322,000,000
net profit .....38,000,000 ........(17,000,000)
I hope this formats OK. Anyway, you can see that by decreasing gross profits by 1/4 (reducing from 30% to 22.5% margin), and even assuming that you can sell 25% more units to compensate, you go from making a net profit of $38M this quarter, to posting a NET LOSS Of $17M this quarter.
This kind of "cut rate" operating style only works if you're Dell. If you're any one of the dozens (hundreds?) of other budget PC companies that have tried to play that game, it doesn't work because you can't increase sales volume to compensate for shrinking margins, and you go the way of Package Bell and (soon enough) Gateway.
It simply isn't an option for Apple to try to play Dell's game. If you're comparing Dell machines to Apple machines and wondering why the price difference, there are lots of reasons for it. The biggest reason is that Apple must bear nearly ALL the hardware and software development costs for the machines they create. Dell just buys parts from third parties and bolts it together, then installs somebody else's OS and software on it.</strong><hr></blockquote>
We are all aware of Apple's huge reponsibilities and huge costs that they are struggling under for the betterment of the world.
What irks more or less EVERYONE who has a problem with Apple's products/pricing structure is that they fail to see some golden grail in Apple's products. Apple has high R&D costs because they need to develop strange motherboard designs to accomodate their industrial design. They recoup this investment by putting crappy, outdated components in their machines and by gouging their customers.
They are selling style over substance. That may be OK for the non-computer owning consumer market (that they STILL don't seem to be tapping) but for their hard-core market (graphics pros) they have their priorities backwards.
When Apple sat down to design the new iMac, the first thng they did was make a drawing of it. Then they tried for 2 years to retrofit a motherboard design into the case they decided on. They let THAT determine the price and specs they could afford to put into it. Result: a nice looking, overpriced, underspecced machine, i.e. classic Apple.
Apple will never compete with Dell on price/performance, that is true. That is why they will never have a respectable/sustainable share of the market. The average computer buyer decides on perfomance, then price, then upgradability, then maybe warranty options. Brand loyalty counts for next to nothing. Design counts for next to nothing.
The people who don't have a computer yet, don't really want one. A Mac is still a computer. You still have to "install" software, "repair" your hard disk, "configure" your internet settings, "trash preferences files", deal with "startup disks", "force quit" applications, "organize" your files.
Where is the crushing advantage to owning a Mac?
Answer: unless you count industrial design a crushing advantage, there is none. User experience is marginally better, but not 2x better like the price should let you expect. That's the extent of it, sadly.
Funny how us Mac-heads never considered industrial design a priority back when Apple was selling beige boxes. Back then it was the OS experience that was the big advantage. Our priorities shift to match whatever Apple does. That is why they call us Apple Apologists. Whatever they do wrong, we find a way to say "but X is not important anyway, because what's really important is Y" The problem is that in the course of a few months, X and Y can invert. The result is basically we defend and support Apple "just because", which is, in fact, pathetic.
If Apple want to charge grossly premium prices, they must produce a grossly premium product, which right now is debatable.
fair enough - I didn't think through it carefully and see that you can't just decrease profits by 1/4 and increase quantity by 1/4. the new gp% will be .75 what the old one was, but the old qty sold will be .8 of what the new one is.
still, if you were able to increase sales by 30% then it would work. it's not as if profit is always better than sales.
and again, this doesn't take into account economies of scale. if Apple can ship more machines, many of the components would come down in price, and they could also make up money in other places(software/accessory sales)
Comments
Sure, it's fun to speculate on this and that, but some of you need to actually find something else to think about besides apple. get a hobby. please! for the love of god!
and do any of you honestly think steve jobs should step down? please? think about that? where the living h*ll would we be without him? and who should replace him if he did step down? YOU?!
if apple decided tonight to do all of the moronic things that people here suggest, they would be out of business by the end of the week.
Also - just because Apple only barely makes a profit with a 30% margin on HW doesn't mean they would lose money if they lowered prices. Do you think just maybe more people would buy Macs if they were cheaper? If Apple dropped their margin by 1/4, and then sold 25% more machines, their net profit would be the same. And they'd have the advantage of higher revenue/unit sales, and a bigger market share. More people to buy OS updates, more people to buy iPods, etc. Lowering their margins could be a smart move.
Personally I want to see Apple expand into more markets. They've been doing that well this year with FCP3, DVD Studio Pro, iPod, etc. I would hope they'd use this extra money to lower margins on the HW, to try to increase market share. Economies of scale could help Apple in all sorts of ways if they could get their market share to even 5-7%(vs. less than 3% right now), not the least of which being Motorola might have more incentive to spend some cash on PPC development if they could sell more of them to Apple.
ibook (white) blew away the original with design and features
powerbook ti blew away the original g3 in power and design
imac g4 blows away the g3 imac with power, monitor, design
ipod blows away competing mp3 players on elegance of design, size and function
see a pattern developing here?? it's been a great past 12 months for NEW Apple hardware with only one older model remaining...
i truly believe that the powermac g4+/g5 will ???? away the current quicksilver...
they know towers are old and need a revamp.. they know people are bitchin and moanin... just give em a little more time... I doubt we'll be disappointed..
I too am yearning for a new tower to replace my ancient beige g3... next model for sure, whether it's a dual g4+ or single g5... patience...
<strong> Also - just because Apple only barely makes a profit with a 30% margin on HW doesn't mean they would lose money if they lowered prices. Do you think just maybe more people would buy Macs if they were cheaper? If Apple dropped their margin by 1/4, and then sold 25% more machines, their net profit would be the same. And they'd have the advantage of higher revenue/unit sales, and a bigger market share. </strong><hr></blockquote>
People who have never taken a business class are always making this same assertion -- cut the profits by X percent, which will automatically lead to an increase in sales of X (the same) percent, meaning the net profits would be the same.... (and the other assertion that always follows is that Apple would ACTUALLY end up ahead because even if you're only making the same profit, selling more stuff to get that same profit is better, right?)
The problem with all of the above is that it's simply WRONG. The math doesn't work, as has been demonstrated again and again on these forums and elsewhere. If it worked, Apple would do it. Here's a quick example of how this works, using some numbers that roughly approximate Apple's quarterly numbers just reported, but for simplicity's sake the example assumes only one product.
................30% margin ...... 1/4 decrease in margin
revenue ........1,200,000,000 .... 1,355,000,000
qty sold .......800,000 .......... 1,000,000
price each .....1,500 ............ 1,355
cost each ......1,050 ............ 1,050
profit each ....450 .............. 305
gp% ............30.0% ............ 22.5%
total gp$ ......360,000,000 ...... 305,000,000
fixed costs ....322,000,000 .......322,000,000
net profit .....38,000,000 ........(17,000,000)
I hope this formats OK. Anyway, you can see that by decreasing gross profits by 1/4 (reducing from 30% to 22.5% margin), and even assuming that you can sell 25% more units to compensate, you go from making a net profit of $38M this quarter, to posting a NET LOSS Of $17M this quarter.
This kind of "cut rate" operating style only works if you're Dell. If you're any one of the dozens (hundreds?) of other budget PC companies that have tried to play that game, it doesn't work because you can't increase sales volume to compensate for shrinking margins, and you go the way of Package Bell and (soon enough) Gateway.
[ 01-17-2002: Message edited by: sizzle chest ]</p>
<strong>
It simply isn't an option for Apple to try to play Dell's game. If you're comparing Dell machines to Apple machines and wondering why the price difference, there are lots of reasons for it. The biggest reason is that Apple must bear nearly ALL the hardware and software development costs for the machines they create. Dell just buys parts from third parties and bolts it together, then installs somebody else's OS and software on it.</strong><hr></blockquote>
We are all aware of Apple's huge reponsibilities and huge costs that they are struggling under for the betterment of the world.
What irks more or less EVERYONE who has a problem with Apple's products/pricing structure is that they fail to see some golden grail in Apple's products. Apple has high R&D costs because they need to develop strange motherboard designs to accomodate their industrial design. They recoup this investment by putting crappy, outdated components in their machines and by gouging their customers.
They are selling style over substance. That may be OK for the non-computer owning consumer market (that they STILL don't seem to be tapping) but for their hard-core market (graphics pros) they have their priorities backwards.
When Apple sat down to design the new iMac, the first thng they did was make a drawing of it. Then they tried for 2 years to retrofit a motherboard design into the case they decided on. They let THAT determine the price and specs they could afford to put into it. Result: a nice looking, overpriced, underspecced machine, i.e. classic Apple.
Apple will never compete with Dell on price/performance, that is true. That is why they will never have a respectable/sustainable share of the market. The average computer buyer decides on perfomance, then price, then upgradability, then maybe warranty options. Brand loyalty counts for next to nothing. Design counts for next to nothing.
The people who don't have a computer yet, don't really want one. A Mac is still a computer. You still have to "install" software, "repair" your hard disk, "configure" your internet settings, "trash preferences files", deal with "startup disks", "force quit" applications, "organize" your files.
Where is the crushing advantage to owning a Mac?
Answer: unless you count industrial design a crushing advantage, there is none. User experience is marginally better, but not 2x better like the price should let you expect. That's the extent of it, sadly.
Funny how us Mac-heads never considered industrial design a priority back when Apple was selling beige boxes. Back then it was the OS experience that was the big advantage. Our priorities shift to match whatever Apple does. That is why they call us Apple Apologists. Whatever they do wrong, we find a way to say "but X is not important anyway, because what's really important is Y" The problem is that in the course of a few months, X and Y can invert. The result is basically we defend and support Apple "just because", which is, in fact, pathetic.
If Apple want to charge grossly premium prices, they must produce a grossly premium product, which right now is debatable.
gp%/qty sold = new gp%/new qty sold
fair enough - I didn't think through it carefully and see that you can't just decrease profits by 1/4 and increase quantity by 1/4. the new gp% will be .75 what the old one was, but the old qty sold will be .8 of what the new one is.
still, if you were able to increase sales by 30% then it would work. it's not as if profit is always better than sales.
and again, this doesn't take into account economies of scale. if Apple can ship more machines, many of the components would come down in price, and they could also make up money in other places(software/accessory sales)