This is NOT good. I repeat, NOT good. Thus begins the slow, downward spiral to mediocrity. Do the previous posters really think Apple can produce cheap PCs like Dell without sacrificing quality, customer service, and margins? If so then you live in a fantasy world. Just imagine what a $500 Macbook would look like. It would look like an Acer of course. I'm sorry but even Jon Ive can't make a silk purse out of a sow's ear. The drive for market share also drives down margins as Michael Dell has found out the hard way. You have to keep selling more and more just to break even.
I hope the "we want cheap Macs" crowd doesn't get their wish any time soon. I would rather see Apple stop making Macs altogether before producing drab, black plastic abominations. Leave the trailer park market segment to Dell and the design-impaired nerd crowd.
like my wife's iphone and will probably get one this year for myself, but mac's are overpriced
99% the exact same hardware as PC's except they cost more. they are even made by the same companies in asia that make PC's
the difference is the price of OS X Apple charges.
MS charges you less for an OEM copy of windows and Apple is the exact opposite.
it's not like the old days when computers cost a lot of money and you bought one to last. technology moves fast, computers are cheap, cell phones are cheap and it makes sense to buy something cheaper and dump it in 2-3 years and buy the new thing that's out.
most people don't care that an imac has a better quality LCD than a Dell and that you have to upgrade the LCD on the Dell to get the same one. most people will never notice the difference
My estimation is that Apple will provide a lower entry point for the consumer products and have all component upgrades trickle down through the highest entry point for the Macbook and iMac. Margins will be nearly-sustained by delivering a product containing lowest-tiered components.
This will contribute to staving off market base deterioration while potentially aiding more interested "switchers" into purchasing into the Mac platform.
When the economic conditions improve and buyers become less price sensitive Apple can drop this lowest entry point, moving back to its previous pricing model and increase its profitability (not in terms of margin, in terms of $$)
Just wondering why, in the article, this is linked to a 2008 news release of the back-to-school promotion? While this is likely for 2009, it's not official.
MS charges you less for an OEM copy of windows and Apple is the exact opposite.
How much is Apple charging you, say for a 5 license family edition, of a new OS versus Microsoft? Microsoft's cost of entry is low bundled with a computer but Apple's solidly ahead when it comes to upgrading future computers IMO.
I think some moderate pricing concessions are smart right now. Apple needs to grow market share for future performance across the board.
1) The trouble with 'pricing concessions' is you can't make it go the other way when the economy improves.
2) Can you explain why "Apple needs to grow market share for future performance across the board"? What is wrong or suboptimal with their performance now?
So the much rumored Newton-like web tablet is "a project which is taking considerably longer to complete than once anticipated."
If you don't read carefully you could easily go away thinking that Apple is having a hard time getting this thing off the ground, when they haven't even acknowledged that anyone has yet to pick up a soldering iron.
I'm skeptical because they already said this the last time round. Apple specifically said they were cutting margins. It may have been due to the recession that they changed their minds but I'd say right now that their prices are way too high. A move to cut prices will only bring them into normal pricing range, which is still high in these times when products should be priced below normal.
Instead of £949 for a dual core with a 20" screen and integrated graphics, it should be £799.
Instead of £929 for the aluminum Macbook, it should be £799. and the white one at £599.
The Macbook Air should be £999 instead of £1271.
The MBP should be £1299 instead of £1369.
The Mini should be £399 but could be £449 instead of £499.
The Mac Pro entry level should be £1499 not £1899 but I doubt that will change.
Price drops are always good but inflating your prices first and then dropping them doesn't really change much. Even with these changes, they are still a target of Microsoft's advertising.
Apple currently don't have a quad core processor under £1900 whereas you can buy a PC quad for £500 - that's bordering on 1/4 the price. I don't think cutting prices on the current model spec by a small amount will do much to change their reputation of having few options and high prices for those options unless they address both those points.
For example, not always using the highest spec parts in their machines for that target market. Some people might not need an iMac with 2.66GHz processors so drop $110 off the price and sell one with 2.26GHz and aim to push the entry point below $1000.
The PC industry understands that people who pay for cheap machines can generally get by with lower performance. At every update, Apple pushes the latest hardware at the same or higher pricing and seems to ignore people's needs.
I'm personally against Celeron processors a lot but they are still $70-80 instead of $250-300. People who do the basic laptop stuff like browsing, email, word processing etc will get by with a 1.7GHz Celeron if they managed with 1.5GHz and less powerbooks coupled with 9400M graphics. Shaving $200 off the bottom end for people who want a well-built computer and don't care about the highest performance would be a good move.
This is NOT good. I repeat, NOT good. Thus begins the slow, downward spiral to mediocrity. Do the previous posters really think Apple can produce cheap PCs like Dell without sacrificing quality, customer service, and margins? If so then you live in a fantasy world. Just imagine what a $500 Macbook would look like. It would look like an Acer of course. I'm sorry but even Jon Ive can't make a silk purse out of a sow's ear. The drive for market share also drives down margins as Michael Dell has found out the hard way. You have to keep selling more and more just to break even.
I hope the "we want cheap Macs" crowd doesn't get their wish any time soon. I would rather see Apple stop making Macs altogether before producing drab, black plastic abominations. Leave the trailer park market segment to Dell and the design-impaired nerd crowd.
I think you're overstating the case. Apple is not going to become 'cheap' any time soon.
Apple is just gonna apply educational discount to all computers and stop giving further educational discount to students. That's how they make it look like they lowered prices when in reality they didn't.
Dropping prices doesn't necessarily mean sacrificing margins. If Apple can get lower component prices from their suppliers they can cut prices without altering margins.
Based purely on observations as a customer and reading Apple financial reports I surmise that the following is the normal case in the PC world:
1. Apple negotiates long term supply contracts at a favorable, but fixed price. Thus the price of a given Mac remains the same for as long as a year, until Apple replaces it with a new model.
2. PC makers negotiate shorter supply contracts from multiple sources and play them against each other to get the best possible deal. As component prices drop (as they always do) the PC makers cut their retail prices accordingly. If they didn't their competitors would undercut them and steal sales.
So over time a Mac that was a pretty good deal when it first came out starts to look increasingly over-priced compared with similar hardware in a black case.
If Apple has decided to start playing the HP/Dell/Acer/Toshiba/etc. game of short term supply contracts they could conceivably take advantage of the drop in component prices and thus be able to lower the retail price of their Macs without it affecting margins.
The current economic climate seems ripe for someone with a huge pile of cash like Apple to approach struggling component makers and make them an offer they can't refuse.
This is NOT good. I repeat, NOT good. Thus begins the slow, downward spiral to mediocrity. Do the previous posters really think Apple can produce cheap PCs like Dell without sacrificing quality, customer service, and margins? If so then you live in a fantasy world. Just imagine what a $500 Macbook would look like. It would look like an Acer of course. I'm sorry but even Jon Ive can't make a silk purse out of a sow's ear. The drive for market share also drives down margins as Michael Dell has found out the hard way. You have to keep selling more and more just to break even.
I hope the "we want cheap Macs" crowd doesn't get their wish any time soon. I would rather see Apple stop making Macs altogether before producing drab, black plastic abominations. Leave the trailer park market segment to Dell and the design-impaired nerd crowd.
OHHHH! So NOW they're taking this shit seriously. Thanks Apple.
PS: F U
I thought this guy was banned not too long ago for seriously shooting his mouth off? Guess he didn't use that time wisely to think things through has he?
But if true... an iMac running around the $799 - $850 price point, and lower Mac Mini prices $100 across the board... then Apple has something for budget buyers.
Apple knows better than to cheapen up their products too much - both in price and quality.
iLife alone is worth nearly a $100 in the Mac world... and would probably take $200 - $300 in the Windoze world to (poorly) replicate.
I think this is getting carried away here. It's unlikely Apple is going to drop the price of what is already their lowest cost computer by $100. Education discounts are only half of that amount on the mini.
As for iLife, there's no way many people would actually pay $100 for that software suite. iTunes is free, iPhoto has replacements that are free (though not as good) either from camera makers or Picasa, few people use Garage Band. iMovie would be the one that has the most true value. But most important, Apple only charges $79.
like my wife's iphone and will probably get one this year for myself, but mac's are overpriced
99% the exact same hardware as PC's except they cost more. they are even made by the same companies in asia that make PC's
the difference is the price of OS X Apple charges.
MS charges you less for an OEM copy of windows and Apple is the exact opposite.
it's not like the old days when computers cost a lot of money and you bought one to last. technology moves fast, computers are cheap, cell phones are cheap and it makes sense to buy something cheaper and dump it in 2-3 years and buy the new thing that's out.
most people don't care that an imac has a better quality LCD than a Dell and that you have to upgrade the LCD on the Dell to get the same one. most people will never notice the difference
Right, if you don't see the value in well put together hardware (just find me a PC from any manufacturer for ANY price that has a nice, sturdy, quiet work of art case, power supply, and cooling soluton as my Mac Pro), then you are not the target audience for Apple.
1) The trouble with 'pricing concessions' is you can't make it go the other way when the economy improves.
Exactly. Apple isn't going to completely realign (or even partially realign) its product mix due to temporary economic conditions. It's not like Taco Bell offering a 99¢ taco for people who are going down-market on their eating out this year. If Apple moves its pricing structure downwards, it will reflect competition and cost of materials, not the recession.
Quote:
2) Can you explain why "Apple needs to grow market share for future performance across the board"? What is wrong or suboptimal with their performance now?
Not much. Apple has become very good at addressing the market they know how to address. A lot of companies would certainly like to figure out how to be so suboptimal!
As for iLife, there's no way many people would actually pay $100 for that software suite. iTunes is free, iPhoto has replacements that are free (though not as good) either from camera makers or Picasa, few people use Garage Band. iMovie would be the one that has the most true value. But most important, Apple only charges $79.
In his defense he did say that replacements would be poor replications and Picasa is surely a poor replication of iPhoto, GarageBand is similar to something like Fruityloops and iMovie 09 is becoming the movie editor for the masses. I still think iLife is the best suite out there and I want to see more innovation applied to it.
It's hard but Apple gives people the tools to be creative which is basically swimming upstream because we are condititioned to be consumers but not creators by default.
I think this article is ever so ham-handedly trying to hint at changes to the marketing of the products, not Apple reducing their margins (which would lead to exactly what you are afraid of).
...
Makes no f-ing sense at all. What is "the MacBook line" when you take out the pro models?
Isn't that just "the MacBook"???
...
Well, there is the MacBook Air. ...
Actually, I could not agree with you more. Apparently Apple has something up its sleeve. The OP doesn't know what it might be. He also has no clue how business works.
It is a pipe dream that reducing Apple's prices will significantly increase its marketshare.
It is a pipe dream that Apple can sell lower-priced product without sacrificing quality.
The Wintel manufacturers operate on a different business model than the Mac.
The Wintel manufacturers are only marginally profitable if at all.
The key to Apple's success is category-breaking products. At $800 for the 8 GB model, the iPhone was the most expensive phone to customers on the market in June 2007. It flew off the shelves. AT&T dramatically increased its subsidy, but the iPhone's unsubsidized price remains high.
We have a dramatically different economy now than we had in 2007. Price can't be so high that potential customers can't afford Apple's products. However, customers have shown themselves to be willing to buy products that are worth the money. If the product is not desirable, then customers won't buy no matter how low the price.
If netbooks are so crappy, then they will only serve to lower people's opinion of windows, and make it more likely that they get a Mac when the netbook finally karks it.
Windows already has a low opinion. It's just accepted that way by the masses. The same can be said (in the US) about the cell phone market too before Apple came into the game.
If Apple plays their card right and introduces a quality product that is reasonably priced it, they will take the market too.
I agree with Cook. The current netbook market is utter crap. I've used the machines, and my company even bought a few thinking they were a good deal for the mobile force. They ended up gathering dust on a shelf due to the crappy quality and performance. That's what happens when people focus only on low-cost.
Apple is excellent at a high-quality user experience. Make a table/netbook with an expanded iPhone/Touch OS or streamlined OS/X that would be used for regular Internet/Email/WP and maybe photo-album stuff, I could think of a lot of people that would want that.
Comments
This is NOT good. I repeat, NOT good. Thus begins the slow, downward spiral to mediocrity. Do the previous posters really think Apple can produce cheap PCs like Dell without sacrificing quality, customer service, and margins? If so then you live in a fantasy world. Just imagine what a $500 Macbook would look like. It would look like an Acer of course. I'm sorry but even Jon Ive can't make a silk purse out of a sow's ear. The drive for market share also drives down margins as Michael Dell has found out the hard way. You have to keep selling more and more just to break even.
I hope the "we want cheap Macs" crowd doesn't get their wish any time soon. I would rather see Apple stop making Macs altogether before producing drab, black plastic abominations. Leave the trailer park market segment to Dell and the design-impaired nerd crowd.
like my wife's iphone and will probably get one this year for myself, but mac's are overpriced
99% the exact same hardware as PC's except they cost more. they are even made by the same companies in asia that make PC's
the difference is the price of OS X Apple charges.
MS charges you less for an OEM copy of windows and Apple is the exact opposite.
it's not like the old days when computers cost a lot of money and you bought one to last. technology moves fast, computers are cheap, cell phones are cheap and it makes sense to buy something cheaper and dump it in 2-3 years and buy the new thing that's out.
most people don't care that an imac has a better quality LCD than a Dell and that you have to upgrade the LCD on the Dell to get the same one. most people will never notice the difference
Apple rumors are a dime a dozen.
Actually, due to Apple's premium pricing, wouldn't it be more like 3 for $1?
This will contribute to staving off market base deterioration while potentially aiding more interested "switchers" into purchasing into the Mac platform.
When the economic conditions improve and buyers become less price sensitive Apple can drop this lowest entry point, moving back to its previous pricing model and increase its profitability (not in terms of margin, in terms of $$)
Just wondering why, in the article, this is linked to a 2008 news release of the back-to-school promotion? While this is likely for 2009, it's not official.
That's probably why they are called rumors.
MS charges you less for an OEM copy of windows and Apple is the exact opposite.
How much is Apple charging you, say for a 5 license family edition, of a new OS versus Microsoft? Microsoft's cost of entry is low bundled with a computer but Apple's solidly ahead when it comes to upgrading future computers IMO.
I think some moderate pricing concessions are smart right now. Apple needs to grow market share for future performance across the board.
1) The trouble with 'pricing concessions' is you can't make it go the other way when the economy improves.
2) Can you explain why "Apple needs to grow market share for future performance across the board"? What is wrong or suboptimal with their performance now?
If you don't read carefully you could easily go away thinking that Apple is having a hard time getting this thing off the ground, when they haven't even acknowledged that anyone has yet to pick up a soldering iron.
Instead of £949 for a dual core with a 20" screen and integrated graphics, it should be £799.
Instead of £929 for the aluminum Macbook, it should be £799. and the white one at £599.
The Macbook Air should be £999 instead of £1271.
The MBP should be £1299 instead of £1369.
The Mini should be £399 but could be £449 instead of £499.
The Mac Pro entry level should be £1499 not £1899 but I doubt that will change.
Price drops are always good but inflating your prices first and then dropping them doesn't really change much. Even with these changes, they are still a target of Microsoft's advertising.
Apple currently don't have a quad core processor under £1900 whereas you can buy a PC quad for £500 - that's bordering on 1/4 the price. I don't think cutting prices on the current model spec by a small amount will do much to change their reputation of having few options and high prices for those options unless they address both those points.
For example, not always using the highest spec parts in their machines for that target market. Some people might not need an iMac with 2.66GHz processors so drop $110 off the price and sell one with 2.26GHz and aim to push the entry point below $1000.
The PC industry understands that people who pay for cheap machines can generally get by with lower performance. At every update, Apple pushes the latest hardware at the same or higher pricing and seems to ignore people's needs.
I'm personally against Celeron processors a lot but they are still $70-80 instead of $250-300. People who do the basic laptop stuff like browsing, email, word processing etc will get by with a 1.7GHz Celeron if they managed with 1.5GHz and less powerbooks coupled with 9400M graphics. Shaving $200 off the bottom end for people who want a well-built computer and don't care about the highest performance would be a good move.
This is NOT good. I repeat, NOT good. Thus begins the slow, downward spiral to mediocrity. Do the previous posters really think Apple can produce cheap PCs like Dell without sacrificing quality, customer service, and margins? If so then you live in a fantasy world. Just imagine what a $500 Macbook would look like. It would look like an Acer of course. I'm sorry but even Jon Ive can't make a silk purse out of a sow's ear. The drive for market share also drives down margins as Michael Dell has found out the hard way. You have to keep selling more and more just to break even.
I hope the "we want cheap Macs" crowd doesn't get their wish any time soon. I would rather see Apple stop making Macs altogether before producing drab, black plastic abominations. Leave the trailer park market segment to Dell and the design-impaired nerd crowd.
I think you're overstating the case. Apple is not going to become 'cheap' any time soon.
Based purely on observations as a customer and reading Apple financial reports I surmise that the following is the normal case in the PC world:
1. Apple negotiates long term supply contracts at a favorable, but fixed price. Thus the price of a given Mac remains the same for as long as a year, until Apple replaces it with a new model.
2. PC makers negotiate shorter supply contracts from multiple sources and play them against each other to get the best possible deal. As component prices drop (as they always do) the PC makers cut their retail prices accordingly. If they didn't their competitors would undercut them and steal sales.
So over time a Mac that was a pretty good deal when it first came out starts to look increasingly over-priced compared with similar hardware in a black case.
If Apple has decided to start playing the HP/Dell/Acer/Toshiba/etc. game of short term supply contracts they could conceivably take advantage of the drop in component prices and thus be able to lower the retail price of their Macs without it affecting margins.
The current economic climate seems ripe for someone with a huge pile of cash like Apple to approach struggling component makers and make them an offer they can't refuse.
This is NOT good. I repeat, NOT good. Thus begins the slow, downward spiral to mediocrity. Do the previous posters really think Apple can produce cheap PCs like Dell without sacrificing quality, customer service, and margins? If so then you live in a fantasy world. Just imagine what a $500 Macbook would look like. It would look like an Acer of course. I'm sorry but even Jon Ive can't make a silk purse out of a sow's ear. The drive for market share also drives down margins as Michael Dell has found out the hard way. You have to keep selling more and more just to break even.
I hope the "we want cheap Macs" crowd doesn't get their wish any time soon. I would rather see Apple stop making Macs altogether before producing drab, black plastic abominations. Leave the trailer park market segment to Dell and the design-impaired nerd crowd.
Yes, indeed.
OHHHH! So NOW they're taking this shit seriously. Thanks Apple.
PS: F U
I thought this guy was banned not too long ago for seriously shooting his mouth off? Guess he didn't use that time wisely to think things through has he?
Kasper.... are you catching wind of this?
Apple rumors are a dime a dozen.
But if true... an iMac running around the $799 - $850 price point, and lower Mac Mini prices $100 across the board... then Apple has something for budget buyers.
Apple knows better than to cheapen up their products too much - both in price and quality.
iLife alone is worth nearly a $100 in the Mac world... and would probably take $200 - $300 in the Windoze world to (poorly) replicate.
I think this is getting carried away here. It's unlikely Apple is going to drop the price of what is already their lowest cost computer by $100. Education discounts are only half of that amount on the mini.
As for iLife, there's no way many people would actually pay $100 for that software suite. iTunes is free, iPhoto has replacements that are free (though not as good) either from camera makers or Picasa, few people use Garage Band. iMovie would be the one that has the most true value. But most important, Apple only charges $79.
like my wife's iphone and will probably get one this year for myself, but mac's are overpriced
99% the exact same hardware as PC's except they cost more. they are even made by the same companies in asia that make PC's
the difference is the price of OS X Apple charges.
MS charges you less for an OEM copy of windows and Apple is the exact opposite.
it's not like the old days when computers cost a lot of money and you bought one to last. technology moves fast, computers are cheap, cell phones are cheap and it makes sense to buy something cheaper and dump it in 2-3 years and buy the new thing that's out.
most people don't care that an imac has a better quality LCD than a Dell and that you have to upgrade the LCD on the Dell to get the same one. most people will never notice the difference
Right, if you don't see the value in well put together hardware (just find me a PC from any manufacturer for ANY price that has a nice, sturdy, quiet work of art case, power supply, and cooling soluton as my Mac Pro), then you are not the target audience for Apple.
1) The trouble with 'pricing concessions' is you can't make it go the other way when the economy improves.
Exactly. Apple isn't going to completely realign (or even partially realign) its product mix due to temporary economic conditions. It's not like Taco Bell offering a 99¢ taco for people who are going down-market on their eating out this year. If Apple moves its pricing structure downwards, it will reflect competition and cost of materials, not the recession.
2) Can you explain why "Apple needs to grow market share for future performance across the board"? What is wrong or suboptimal with their performance now?
Not much. Apple has become very good at addressing the market they know how to address. A lot of companies would certainly like to figure out how to be so suboptimal!
As for iLife, there's no way many people would actually pay $100 for that software suite. iTunes is free, iPhoto has replacements that are free (though not as good) either from camera makers or Picasa, few people use Garage Band. iMovie would be the one that has the most true value. But most important, Apple only charges $79.
In his defense he did say that replacements would be poor replications and Picasa is surely a poor replication of iPhoto, GarageBand is similar to something like Fruityloops and iMovie 09 is becoming the movie editor for the masses. I still think iLife is the best suite out there and I want to see more innovation applied to it.
It's hard but Apple gives people the tools to be creative which is basically swimming upstream because we are condititioned to be consumers but not creators by default.
...
I think this article is ever so ham-handedly trying to hint at changes to the marketing of the products, not Apple reducing their margins (which would lead to exactly what you are afraid of).
...
Makes no f-ing sense at all. What is "the MacBook line" when you take out the pro models?
Isn't that just "the MacBook"???
...
Well, there is the MacBook Air. ...
Actually, I could not agree with you more. Apparently Apple has something up its sleeve. The OP doesn't know what it might be. He also has no clue how business works.
- It is a pipe dream that reducing Apple's prices will significantly increase its marketshare.
- It is a pipe dream that Apple can sell lower-priced product without sacrificing quality.
- The Wintel manufacturers operate on a different business model than the Mac.
- The Wintel manufacturers are only marginally profitable if at all.
The key to Apple's success is category-breaking products. At $800 for the 8 GB model, the iPhone was the most expensive phone to customers on the market in June 2007. It flew off the shelves. AT&T dramatically increased its subsidy, but the iPhone's unsubsidized price remains high.We have a dramatically different economy now than we had in 2007. Price can't be so high that potential customers can't afford Apple's products. However, customers have shown themselves to be willing to buy products that are worth the money. If the product is not desirable, then customers won't buy no matter how low the price.
If netbooks are so crappy, then they will only serve to lower people's opinion of windows, and make it more likely that they get a Mac when the netbook finally karks it.
Windows already has a low opinion. It's just accepted that way by the masses. The same can be said (in the US) about the cell phone market too before Apple came into the game.
If Apple plays their card right and introduces a quality product that is reasonably priced it, they will take the market too.
I agree with Cook. The current netbook market is utter crap. I've used the machines, and my company even bought a few thinking they were a good deal for the mobile force. They ended up gathering dust on a shelf due to the crappy quality and performance. That's what happens when people focus only on low-cost.
Apple is excellent at a high-quality user experience. Make a table/netbook with an expanded iPhone/Touch OS or streamlined OS/X that would be used for regular Internet/Email/WP and maybe photo-album stuff, I could think of a lot of people that would want that.
The next 12 months will be really cool to see.