$1299 gets you a pretty good Mac with a Flat Panel no less.
Matsu's problem is not that he's asking for a cheap Mac. They "do" exist. It's that he's asking for Powermacs to occupy this space when iMacs fit in just fine. Having 970s in Powermacs should allow Apple to boost the low end accordingly. Funny how with Macs you pay more for the Big Box which is in contrast to PC's where you pay more for "not" choosing the Big Box.
...I think what he is asking for is a headless mac that doesn't cost $1500. There is no reason why Apple couldn't cram the insides of an iMac in a small case with a PCI slot and an AGP slot and sell it for $799. But, they are being assholes and make you buy the whole GD computer, monitor and all. Want to upgrade it? Tough cookies, you'll just have to buy a new one. Want to upgrade to a bigger monitor? No go. Stuck with that $1299 computer with the 1024x768 screen.
Its silly. Apple NEEDS to make a $799 or $899 mini-tower for the masses. I'm tired of paying the Apple tax, too. They make one expandable Mac in the whole lineup (minus the Xserve). Come one Apple, quit being so GD arrogant and give us what we want.
For me, the importance of the PPC 970 and the high-spec chipset that I believe will accompany it, is that it will provide a very significant advance in the computing experience. That's what I expect from a new computer, and historically that has happened about every three years, when it was therefore time to get a new one. But with the malaise of the G4's progress, three years has not made that much difference. The current machines are better of course but not that much better than a good old set-up. I can do my work OK so I wait, and wait. A doubling of the G4's performance will however be enough for me to want to get my wallet out, and the advantages may be more pronounced than that.
OK, so why not just go out and buy a fast PC? Again, it's the computing experience. It's a bit frustrating using the old Mac in terms of speed, but I also use a colleague's top-model Wintel sometimes and I find that experience quite ugly and far more frustrating, despite the fast chip. I use my Mac all day every day - if I had to use XP I would look seriously at a change of career. The Mac aesthetic is that significant to me. Call me a "fan-boy" if you want, Matsu. If Apple compromised their philosophy of the aesthetic and 'just works' computing experience, they would lose all their customers, who are Apple customers for just that reason. Apple knows their market and if they dropped those people they'd be just another PC maker losing money.
It's not really a question of cost either, IMHO, in the professional field - 3 grand is not a lot for the main tool of my trade that lasts several years. Nevertheless to get a new model, it's got to have significant advantages over the old. I'm impatient for that to happen, so I'm excited about the prospect of getting a new and much better Mac this autumn, which will certainly be the case if the PPC 970 rumours prove out. And I personally know many others who feel likewise.
GIant bloody fallacy number one, Apple spends more on R&D. They simply DON'T. I've broken this down too many times to count, go back and look it up -- Apple's cost versus a dell will never account for more than maybe 50 bucks (talking R&D) and only because they sell less machines, DELL spends MORE than Apple overall.
Don't know where you get your numbers from, but here are the facts:
Apple (SEC Filings, year end Sept)
Year Revenue ($m) R&D ($m) %
2000 7,983 380 4.7%
2001 5,363 441 8.2%
2002 5,742 446 7.7%
Dell (SEC Filings, year end Feb)
Year Revenue ($m) R&D ($m) %
2000 25,265 568 2.2%
2001 31,888 482 1.5%
2002 31,168 452 1.4%
- Dell invests around 1.5% of its revenue in R&D - Apple invests around 8%
- In absolute terms, in 2002 Dell spent $452m versus Apple $446m (a difference of $6 million or around 1.3%). Bear in mind that Dell generates around 5.4x as much revenue as Apple
- Dell's R&D expenditure has declined by 20.4% since 2000 - Apple's R&D has increased by 17.3%
While you are correct that Dell spends more on R&D ($6m in 2002), when you take into account the relative size of Apple and Dell's businesses, Apple WAY outinvests Dell (by an order of 5.4x).
Apple has to be in the ballpark, they don't have to be cheaper, intangibles can count, but they can't justify enormous price increases.
I think Uncle Steve is very good at telling people what they want to hear - or at least putting as positive a spin on Apple's weaknesses as possible.
I don't really think he likes the idea of "Boutique Computing", but for the last little while, there was no way Apple could stay alive if they didn't put a value premium on their OS and design - and to protect that value premium, market the intangible AS-IF it really was far-far more valuable than a faster yet comparably priced windows machine.
I'm sure all those at Apple know this isn't quite the case - no doubt it has value, but that much value? - but what else are they gonna say? Also, for some people, those who are actually quite frightened of computers yet want to do some incredible things, like edit video for home use, the Apple solution - despite the fact it may not be as fast - is certainly much easier, and from an over-all work flow and what-you-can-do situation, actually is faster than dealing with XP.
The truth however is, playing to this crowd forever with slower machines, is like playing not to loose rather than to win ... and the bigger problem is, while the competition might not be able to choke you out now, it's only a matter of time ... fortunately, I also think Apple knows this too.
I think, that once we have the 970, Apple will probably charge a premium for it, but by then, Apple will be able to have comparable speed to the Wintel world, but far superior software ... In which case, the value proposition for the whole Apple platform, especially in certain key markets, begins to far exceed merely a "playing not to loose position" ...
And what's especially exciting here is, for the office environment, who really cares how fast you can run MS Word? Yet for the creative environment, the very beachhead which Apple depends on, how fast you can run iMovie, FCP - and how well the software integrates, which will also be a major selling point in the future thanks to things like CORE Audio - makes a huge difference.
I also think, with the 970, Apple is going to remind the world that,yes, they very much are a Unix platform - at which point the scientific community is about to become the next niche enraptured by Apple's curves. This is also a community where the the ability to run MS word is nice, but what really matters is BLAST , imaging or folding speed ... not exactly premium Windows real-estate.
What's especially interesting is that, the next wave of computing seems to be moving into 3D media, audio and video content creation, a space that Apple is uniquely qualified by software to dominate - but up till the 970, just didn't have the necessary umph under the hood to really make a difference. Microsoft will try to compete as best they can in this space, but likely will never be able to keep up with Apple, instead, they'll focus on keeping the business community in their grip with .net
We've never really been in this situation before, but of the two, I think Microsoft's trying to grab the corporate world with .net is a bigger gamble than Apple trying to grab the creative/scientific world with 970's, Unix and great software.
"Hey, I've already got Word, why do I need this .net stuff?"
I think one point that Matsu is trying to make is that Apple needs computers that will attract new customers.
They probably have the percentage of market share that they are going to get with AIO designs, and that would climb higher if they put more competative processors in the iMac and eMac and or could trim a bit more off the price. They have an established market for the Power Mac as well, again this would climb with better price/performance ratios. Apple's portable offerings (2 iBook screen sizes + 3 PB screen sizes = 5 offerings) are a good deal, covering the portable market quite well.
What Apple is missing is a lower cost non-AIO computer, which is what the majoriaty of computer buyers, both corperate and consumer, purchase. Like it or not, Apple will not attract large percentages of these consumers with eMacs and iMacs at their current price performance ratios. There is probably a good percentage that wont buy AIO's anyway becouse they want at least the perception of expandability or the flexability of upgrading limited systems such as the graphics cards. At the same time, they dont want to invest the money in a $1500 computer when they can get one that offers them the same flexability for $1000 or less. (remember that a lot of these consumers already have monitorss).
Apple has a world class OS, and produces the Cadilac of the computer market. Their market share is pretty small, and they have stated they want it to grow. To do this they are going to have to offer a better price/performance ratio in thier current computers to entice people and buisness who already own Macs to buy new ones, and get the "fence setters" to look more seriously at the Mac. However, that is not enough. What they need to do is have a computer that will attract people who would have never considered buying a Mac in the first place, at a price that will get them to "look" at the Mac. The OS and "style" is not enough to do this.
BTW- I am a designer. I own a Cube, and would like to buy a new Mac. I work on a dual 1Ghz (OS 9.2). For a home computer it is hard to fit the $1500+ needed to purchase one in my budget. I like the design of the iMac, but would prefer a larger screen, and an upgradable graphics card (as QE shows us, this is a nece feature to have to keep an older computer up to date).
PS: The OS might be superior to all its competition, but if the consumer and IT departments dont use it and or have a reason to "learn" it then they wont buy it. The OS might be the reason that a lot of us Mac people would never consider buying a PC, but it is also the reason some on the PC side would not consider buying a Mac. Apple needs incentives to get people to look seriously at the Mac platform for their next purchase. That is what the iSoftware is about as well as the Switcher campaign.
Its silly. Apple NEEDS to make a $799 or $899 mini-tower for the masses. I'm tired of paying the Apple tax, too. They make one expandable Mac in the whole lineup (minus the Xserve).
Come on Apple, quit being so GD arrogant and give us what we want.
It's true, if they had a headless iMac, I wouldn't have had to purchase all those PowerMacs for our office. I could have saved a shedload of money instead of spending it on Apple products. (Like so many offices, we aren't concerned about speed, but screen real estate is important.)
Not only that, but when I polled about 20-odd of my Wintel-using business friends (yes, I befriend Windows users), and approximately 0% (to the nearest percent) stated that a headless Mac offering would influence their purchasing decisions, because they couldn't purchase Macs for other reasons.
If Apple would get off its butt and carefully execute a well-designed, worthwhile "headless iMac" strategy, they could get "killer-sales". It could kill high margin PowerMac sales, kill Apple's bottom line, and kill Apple's long term prospects.
Is it an Apple tax? Yes. Does it keep Apple alive? Yes! Home users get cheaper iMac systems and business users (who can afford higher prices) purchase the more expensive systems.
It's true, if they had a headless iMac, I wouldn't have had to purchase all those PowerMacs for our office. I could have saved a shedload of money instead of spending it on Apple products. (Like so many offices, we aren't concerned about speed, but screen real estate is important.)
Not only that, but when I polled about 20-odd of my Wintel-using business friends (yes, I befriend Windows users), and approximately 0% (to the nearest percent) stated that a headless Mac offering would influence their purchasing decisions, because they couldn't purchase Macs for other reasons.
If Apple would get off its butt and carefully execute a well-designed, worthwhile "headless iMac" strategy, they could get "killer-sales". It could kill high margin PowerMac sales, kill Apple's bottom line, and kill Apple's long term prospects.
Is it an Apple tax? Yes. Does it keep Apple alive? Yes! Home users get cheaper iMac systems and business users (who can afford higher prices) purchase the more expensive systems.
....is this some sort of commune? Are we supposed to contribute to Apple's well-being? This is supposed to be a mere exchange of goods and services for money. If Apple doesn't deliver, then it needs to get out of the hardware business. I don't know how a $799 minitower and a $399 15" LCD cuts into Apple's margins. Same $1199, only you don't have the cost of developing the lump-stick-square iMac.
Apple can build and sell a $899 iBook with a 12" screen and make a profit. They can sell a $999 eMac with a 17" CRT and make a profit. Why can't they simply remove the monitors included with such products and shave $100 off each and sell them as towers? $799 G3, $899 G4?
Where would Apple be losing margin and revenue in that situation? It might even make them MORE attractive given that I know several people with useless iMacs becasue either their anaog video board is fried or their ethernet ports died. Instead of paying $400 to be repaired they could simply plug in a PCI card or replace their monitor. Its a big issue in schools. Its a big issue in coporate environments.
Of course none of them would consider buying a mac for other reasons, Apple just seems to out do itself looking for ways to supply those other reasons.
People WILL NOT buy a more expensive machine at a steep premium because of a handicapped lower range (which in the case of the iMac is also nowhere near "affordable"home computer, nor is it in the case of the eMac).
The apologists continue to operate under the assumption that Apple is somehow insulated against the rest of the market. THEY AREN'T. No affordable mac tower in this aisle, no problem, affordable, expandable, high performing and RELIABLE (don't believe the mac FUD) PC towers right here across the way.
What you describe can only work in an insular philosophy that assumes mac heads will pay more because mac is the only option for them. That thinking has now distilled the mac community down to the most ardent supporters, which is why you seldom hear different in the mac web, but it is not a philosophy under which the company grow, only a way to keep making money as you shrink. Shrink too much, and that will fail too.
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part 2
PS, why is this concept so difficult for people to understand. DELL spends more. In all three of the quoted years, 12 quarters, DELL has spent more. What they spend as a percentage means nothing, having done this once, I'll do it again, since the concept is so damn difficult for some to grasp. Dell also pays money for an OS and software which for Apple is part of the overall R&D.
So, despite the favorable Apple slant you've tried to put on the expenditures, we'll just use those figures to illustrate the point.
1.5% of 1000USD, 15 dollars.
8% of 1000USD, 80 dollars (including OS and apps, NO LICENSING FEES factored into costs!!!)
There's absolutely no reason why a mac should cost more than $65 more than a comparable PC. But it gets better, any PC has an serious M$ tax to pay, Windows plus "Works" (word plus an appleworks equivalent) rising to as much as an Office standard licence. That's anywhere from another 25-175 USD in costs per machine. Cost difference erased, where's Apple's excuse now?
OH, and the PPC is also much cheaper than the upper range X86 CPU's, yet another savings.
All told, and there are good looks at this if you check around, Apple might have 30-80 dollars more cost to build the average machine, than a DELL (who benefits from huge volume but does not benefit as dramatically as one might think, remember that Apple too benefits from huge volumes on pretty much generic components.
Given that metric, which ignores completely the fact that x86 box makers MUST pay M$ licensing fees, Apple might realistically get away with charging about 10-15% more than equivalent x86 machinery. About 100 more for consumer grade stuff, and about 200-400 more for professional grade stuff to the extreme high end.
If all Apple's R&D doesn't lead them to be able to make machins at lower cost, then they have to rethink their R&D expenditures.
No, Apple has to charge enough to keep alive. You are welcome to buy elsewhere.
By the way, how many Gateway machines do you own? They sell systems in your price range and they are now going through their third re-org. And they are also dropping consumer sales like a hot rock, because they couldn't make enough of a margin at the price points you insist Apple should be selling Macs. They bled money using the very strategy you insist Apple has to follow to the point where the company is on the verge of collapse.
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What you describe can only work in an insular philosophy that assumes mac heads will pay more because mac is the only option for them.
No, we pay more because we get more value for the dollar. if you can't understand the Mac's value proposition, you are are (again) welcome to buy elsewhere.
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PS, why is this concept so difficult for people to understand. DELL spends more.
Because they don't. They spend about the same in real dollars (or as near as makes no difference) as Apple does.
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What they spend as a percentage means nothing, having done this once, I'll do it again, since the concept is so damn difficult for some to grasp. Dell also pays money for an OS and software which for Apple is part of the overall R&D.
It does matter what they spend as a percentage of revenue. This is how these things are measured in the real world. And no, Dell doesn't pay a cent for OS software. They pass on the cost directly to you, the consumer.
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There's absolutely no reason why a mac should cost more than $65 more than a comparable PC.
That's close. The problem is finding a comparable PC. And when you do, you find that prices are comparable as well.
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All told, and there are good looks at this if you check around, Apple might have 30-80 dollars more cost to build the average machine, than a DELL (who benefits from huge volume but does not benefit as dramatically as one might think, remember that Apple too benefits from huge volumes on pretty much generic components.
You're wrong. Dell has some of the lowest manufacturing and inventory costs in the industry. That's what they are famous for and why it is so hard to compete on price with them.
Apple's COS (cost of goods sold) is much higher than Dell's even before you add in R&D or administrative and marketing costs.
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Apple might realistically get away with charging about 10-15% more than equivalent x86 machinery.
And as I have said, when you actually compare machines that are equivalent, you find that Apple's price points are not at all out of line of the industy's.
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If all Apple's R&D doesn't lead them to be able to make machins at lower cost, then they have to rethink their R&D expenditures.
On the contrary. You don't invest R&D in reducing manufacturing costs, that process is well understood. You invest R&D to continue to develop products and services that increase the value of your products. Even Dell knows this.
Yes, just like you have to pay to keep any other company alive. Companies can only continue to exist as long as they are making money (eventually).
Apple has been doing everything it can to survive in an environment where it has a severe processor performance problem and is in the middle of massive OS upgrade. All the clamouring in the world for a cheap low-end headless Mac won't change the facts -- Apple is selling enough with its current lineup at high margins to scrape by. If they came out with a low margin, low cost headless iMac it would seriously canabilize the sales of their high margin machines and they would make less money than before. Even worse they would get stuck with huge quantities of low end machines that they will be unable to sell, and that will blow their revenues instantly. At the current point in time Apple is simply unable to deliver the machine that you are talking about. Apple knows this and they've been working towards a solution for a long time now...
When the 970-based towers arrive the situation changes considerably. There is suddenly no worry about canabilization because the 970 is clearly superiour in clock rate, per-cycle performance, bandwidth, and it is 64-bit. This ensures that the higher margin products will continue to sell (and may experience considerable growth). The Motorola 7457 is expected sometime this fall, possibly a little earlier for Apple, and it promises to make the G4 faster, lower power and quite possibly lower cost -- which makes it ideal for building a small, cheap, low margin headless box. At that point I think there is a good possibility that we'll see such a machine from Apple, whether it be a cube, a slab, or a mini-tower. The LCD iMac will probably continue to exist because I think Apple still has a market for that kind of AIO machine.
To the majority of the target markets for the iMac (headless or not), clockrate doesn't matter, and being sold a slick Apple machine running MacOS X will win out over getting a few more MHz, especially if the AppleStore people are accomplished at counter-acting the MHz-Myth and the 7457 allows the speeds to creep up half a GHz or so (its easier to persuade people that MHz doesn't matter when you're not quite as far behind). Matsu, of course, doesn't fall into this camp... fortunately for Apple Matsu isn't most of the market. We'll have to see how low the 970 pricing is to see if Matsu's disposition will become a little more cheery.
...they do cost alot i'll admit, but i def think its worth it
matsu, can you reply to my post about pricing...because it seems to be pretty equal for everything but imac's. i dont like the imac or the emac...yes they do suck and are expensive i cant do anything about that, but the G4's and laptops are good deals
Apple computers are perceived as too expensive for their price performance by most computer purchasers, this is very evident when looking at Apple sales.
Apple has stated that they are shooting for 5% market share. In light of this statement, all arguments describing the current status of Apple computers are irrelevant and I'm sure Apple knows this.
The introduction of IBM's 970 and ??? will change the price performance perception. The question remains, "how will Apple begin to achieve anything close to 5% market share?".
Most of the computers sold are NOT AIO wonders, they are modestly priced with acceptable price performance with reasonable expansion capabilities - read standard AGP slot and a couple PCI slots. If I were responsible for attaining 5% market share @ Apple the answer would be excruciatingly obvious.
A monitor-less computer, with a standard AGP slot, a PCI(-X) slot or 2(remembering that Apple builds in a lot on the motherboard-Firewire blah blah), and a processor capable of handling iApps. at pleasant speeds(re: a 1.2GHz 970 would do nicely). All for about $699 - $799. Price just my fanatasy.
OK, so why not just go out and buy a fast PC? Again, it's the computing experience. It's a bit frustrating using the old Mac in terms of speed, but I also use a colleague's top-model Wintel sometimes and I find that experience quite ugly and far more frustrating, despite the fast chip. I use my Mac all day every day - if I had to use XP I would look seriously at a change of career. The Mac aesthetic is that significant to me. Call me a "fan-boy" if you want, Matsu. If Apple compromised their philosophy of the aesthetic and 'just works' computing experience, they would lose all their customers, who are Apple customers for just that reason. Apple knows their market and if they dropped those people they'd be just another PC maker losing money.
"It's not really a question of cost either, IMHO, in the professional field - 3 grand is not a lot for the main tool of my trade that lasts several years. Nevertheless to get a new model, it's got to have significant advantages over the old. I'm impatient for that to happen, so I'm excited about the prospect of getting a new and much better Mac this autumn, which will certainly be the case if the PPC 970 rumours prove out. And I personally know many others who feel likewise.
All I can say is , "Yes, yes, yes." You've nailed it, and the cogent argument from Programmer seals the deal. Thank God for the nuanced emotional response by Jupiter and the rationality that always comes from the Programmer-Man. Apple is holding its own during a difficult stretch but the future for users and shareholders is bright. If I had any spare scratch, I'd buy stock in the company today.
...."It's not really a question of cost either, IMHO, in the professional field - 3 grand is not a lot for the main tool of my trade that lasts several years......
If I had any spare scratch, I'd buy stock in the company today.
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Bought high in Nashville
Your right and every one is making very valid points. However, Apple's stated goal is 5% market share and $3000 computers will not get them there and I don't believe $1500 dollar low end towers nor AIO's will either.
by the way, I do own Apple stock, at the displeasure of my financial advisor, and I do believe Apple is in for much better days.
There's absolutely no reason why a mac should cost more than $65 more than a comparable PC. But it gets better, any PC has an serious M$ tax to pay, Windows plus "Works" (word plus an appleworks equivalent) rising to as much as an Office standard licence. That's anywhere from another 25-175 USD in costs per machine. Cost difference erased, where's Apple's excuse now?
That's about $130 per unit difference right there.
The "Apple Tax" is basically the amount of money per unit spent by Apple on R&D. Personally, I think it is money well spent and am more than willing to pay it.
Please provide some backup for your assertions on what MS charges its OEMs for Windows and "Works". I have heard indirectly that these costs are actually quite low, particularly for "favored" vendors (such as Dell - I understand charges go up in a hurry for those who don't toe the MS line). I could accept $25, but $175 seems rather steep.
Comments
Originally posted by hmurchison
$1299 gets you a pretty good Mac with a Flat Panel no less.
Matsu's problem is not that he's asking for a cheap Mac. They "do" exist. It's that he's asking for Powermacs to occupy this space when iMacs fit in just fine. Having 970s in Powermacs should allow Apple to boost the low end accordingly. Funny how with Macs you pay more for the Big Box which is in contrast to PC's where you pay more for "not" choosing the Big Box.
...I think what he is asking for is a headless mac that doesn't cost $1500. There is no reason why Apple couldn't cram the insides of an iMac in a small case with a PCI slot and an AGP slot and sell it for $799. But, they are being assholes and make you buy the whole GD computer, monitor and all. Want to upgrade it? Tough cookies, you'll just have to buy a new one. Want to upgrade to a bigger monitor? No go. Stuck with that $1299 computer with the 1024x768 screen.
Its silly. Apple NEEDS to make a $799 or $899 mini-tower for the masses. I'm tired of paying the Apple tax, too. They make one expandable Mac in the whole lineup (minus the Xserve). Come one Apple, quit being so GD arrogant and give us what we want.
OK, so why not just go out and buy a fast PC? Again, it's the computing experience. It's a bit frustrating using the old Mac in terms of speed, but I also use a colleague's top-model Wintel sometimes and I find that experience quite ugly and far more frustrating, despite the fast chip. I use my Mac all day every day - if I had to use XP I would look seriously at a change of career. The Mac aesthetic is that significant to me. Call me a "fan-boy" if you want, Matsu. If Apple compromised their philosophy of the aesthetic and 'just works' computing experience, they would lose all their customers, who are Apple customers for just that reason. Apple knows their market and if they dropped those people they'd be just another PC maker losing money.
It's not really a question of cost either, IMHO, in the professional field - 3 grand is not a lot for the main tool of my trade that lasts several years. Nevertheless to get a new model, it's got to have significant advantages over the old. I'm impatient for that to happen, so I'm excited about the prospect of getting a new and much better Mac this autumn, which will certainly be the case if the PPC 970 rumours prove out. And I personally know many others who feel likewise.
Originally posted by Matsu
GIant bloody fallacy number one, Apple spends more on R&D. They simply DON'T. I've broken this down too many times to count, go back and look it up -- Apple's cost versus a dell will never account for more than maybe 50 bucks (talking R&D) and only because they sell less machines, DELL spends MORE than Apple overall.
Apple (SEC Filings, year end Sept)
Year Revenue ($m) R&D ($m) %
2000 7,983 380 4.7%
2001 5,363 441 8.2%
2002 5,742 446 7.7%
Dell (SEC Filings, year end Feb)
Year Revenue ($m) R&D ($m) %
2000 25,265 568 2.2%
2001 31,888 482 1.5%
2002 31,168 452 1.4%
- Dell invests around 1.5% of its revenue in R&D - Apple invests around 8%
- In absolute terms, in 2002 Dell spent $452m versus Apple $446m (a difference of $6 million or around 1.3%). Bear in mind that Dell generates around 5.4x as much revenue as Apple
- Dell's R&D expenditure has declined by 20.4% since 2000 - Apple's R&D has increased by 17.3%
While you are correct that Dell spends more on R&D ($6m in 2002), when you take into account the relative size of Apple and Dell's businesses, Apple WAY outinvests Dell (by an order of 5.4x).
Great technology does not come cheap.
Originally posted by Matsu
Apple has to be in the ballpark, they don't have to be cheaper, intangibles can count, but they can't justify enormous price increases.
I think Uncle Steve is very good at telling people what they want to hear - or at least putting as positive a spin on Apple's weaknesses as possible.
I don't really think he likes the idea of "Boutique Computing", but for the last little while, there was no way Apple could stay alive if they didn't put a value premium on their OS and design - and to protect that value premium, market the intangible AS-IF it really was far-far more valuable than a faster yet comparably priced windows machine.
I'm sure all those at Apple know this isn't quite the case - no doubt it has value, but that much value? - but what else are they gonna say? Also, for some people, those who are actually quite frightened of computers yet want to do some incredible things, like edit video for home use, the Apple solution - despite the fact it may not be as fast - is certainly much easier, and from an over-all work flow and what-you-can-do situation, actually is faster than dealing with XP.
The truth however is, playing to this crowd forever with slower machines, is like playing not to loose rather than to win ... and the bigger problem is, while the competition might not be able to choke you out now, it's only a matter of time ... fortunately, I also think Apple knows this too.
I think, that once we have the 970, Apple will probably charge a premium for it, but by then, Apple will be able to have comparable speed to the Wintel world, but far superior software ... In which case, the value proposition for the whole Apple platform, especially in certain key markets, begins to far exceed merely a "playing not to loose position" ...
And what's especially exciting here is, for the office environment, who really cares how fast you can run MS Word? Yet for the creative environment, the very beachhead which Apple depends on, how fast you can run iMovie, FCP - and how well the software integrates, which will also be a major selling point in the future thanks to things like CORE Audio - makes a huge difference.
I also think, with the 970, Apple is going to remind the world that,yes, they very much are a Unix platform - at which point the scientific community is about to become the next niche enraptured by Apple's curves. This is also a community where the the ability to run MS word is nice, but what really matters is BLAST , imaging or folding speed ... not exactly premium Windows real-estate.
What's especially interesting is that, the next wave of computing seems to be moving into 3D media, audio and video content creation, a space that Apple is uniquely qualified by software to dominate - but up till the 970, just didn't have the necessary umph under the hood to really make a difference. Microsoft will try to compete as best they can in this space, but likely will never be able to keep up with Apple, instead, they'll focus on keeping the business community in their grip with .net
We've never really been in this situation before, but of the two, I think Microsoft's trying to grab the corporate world with .net is a bigger gamble than Apple trying to grab the creative/scientific world with 970's, Unix and great software.
"Hey, I've already got Word, why do I need this .net stuff?"
They probably have the percentage of market share that they are going to get with AIO designs, and that would climb higher if they put more competative processors in the iMac and eMac and or could trim a bit more off the price. They have an established market for the Power Mac as well, again this would climb with better price/performance ratios. Apple's portable offerings (2 iBook screen sizes + 3 PB screen sizes = 5 offerings) are a good deal, covering the portable market quite well.
What Apple is missing is a lower cost non-AIO computer, which is what the majoriaty of computer buyers, both corperate and consumer, purchase. Like it or not, Apple will not attract large percentages of these consumers with eMacs and iMacs at their current price performance ratios. There is probably a good percentage that wont buy AIO's anyway becouse they want at least the perception of expandability or the flexability of upgrading limited systems such as the graphics cards. At the same time, they dont want to invest the money in a $1500 computer when they can get one that offers them the same flexability for $1000 or less. (remember that a lot of these consumers already have monitorss).
Apple has a world class OS, and produces the Cadilac of the computer market. Their market share is pretty small, and they have stated they want it to grow. To do this they are going to have to offer a better price/performance ratio in thier current computers to entice people and buisness who already own Macs to buy new ones, and get the "fence setters" to look more seriously at the Mac. However, that is not enough. What they need to do is have a computer that will attract people who would have never considered buying a Mac in the first place, at a price that will get them to "look" at the Mac. The OS and "style" is not enough to do this.
BTW- I am a designer. I own a Cube, and would like to buy a new Mac. I work on a dual 1Ghz (OS 9.2). For a home computer it is hard to fit the $1500+ needed to purchase one in my budget. I like the design of the iMac, but would prefer a larger screen, and an upgradable graphics card (as QE shows us, this is a nece feature to have to keep an older computer up to date).
PS: The OS might be superior to all its competition, but if the consumer and IT departments dont use it and or have a reason to "learn" it then they wont buy it. The OS might be the reason that a lot of us Mac people would never consider buying a PC, but it is also the reason some on the PC side would not consider buying a Mac. Apple needs incentives to get people to look seriously at the Mac platform for their next purchase. That is what the iSoftware is about as well as the Switcher campaign.
Originally posted by ast3r3x
~4000 posts and still got alot to say matsu
More like 1 post repeated 4000 times...
Its silly. Apple NEEDS to make a $799 or $899 mini-tower for the masses. I'm tired of paying the Apple tax, too. They make one expandable Mac in the whole lineup (minus the Xserve).
Come on Apple, quit being so GD arrogant and give us what we want.
It's true, if they had a headless iMac, I wouldn't have had to purchase all those PowerMacs for our office. I could have saved a shedload of money instead of spending it on Apple products. (Like so many offices, we aren't concerned about speed, but screen real estate is important.)
Not only that, but when I polled about 20-odd of my Wintel-using business friends (yes, I befriend Windows users), and approximately 0% (to the nearest percent) stated that a headless Mac offering would influence their purchasing decisions, because they couldn't purchase Macs for other reasons.
If Apple would get off its butt and carefully execute a well-designed, worthwhile "headless iMac" strategy, they could get "killer-sales". It could kill high margin PowerMac sales, kill Apple's bottom line, and kill Apple's long term prospects.
Is it an Apple tax? Yes. Does it keep Apple alive? Yes! Home users get cheaper iMac systems and business users (who can afford higher prices) purchase the more expensive systems.
Originally posted by Tom West
It's true, if they had a headless iMac, I wouldn't have had to purchase all those PowerMacs for our office. I could have saved a shedload of money instead of spending it on Apple products. (Like so many offices, we aren't concerned about speed, but screen real estate is important.)
Not only that, but when I polled about 20-odd of my Wintel-using business friends (yes, I befriend Windows users), and approximately 0% (to the nearest percent) stated that a headless Mac offering would influence their purchasing decisions, because they couldn't purchase Macs for other reasons.
If Apple would get off its butt and carefully execute a well-designed, worthwhile "headless iMac" strategy, they could get "killer-sales". It could kill high margin PowerMac sales, kill Apple's bottom line, and kill Apple's long term prospects.
Is it an Apple tax? Yes. Does it keep Apple alive? Yes! Home users get cheaper iMac systems and business users (who can afford higher prices) purchase the more expensive systems.
....is this some sort of commune? Are we supposed to contribute to Apple's well-being? This is supposed to be a mere exchange of goods and services for money. If Apple doesn't deliver, then it needs to get out of the hardware business. I don't know how a $799 minitower and a $399 15" LCD cuts into Apple's margins. Same $1199, only you don't have the cost of developing the lump-stick-square iMac.
Apple can build and sell a $899 iBook with a 12" screen and make a profit. They can sell a $999 eMac with a 17" CRT and make a profit. Why can't they simply remove the monitors included with such products and shave $100 off each and sell them as towers? $799 G3, $899 G4?
Where would Apple be losing margin and revenue in that situation? It might even make them MORE attractive given that I know several people with useless iMacs becasue either their anaog video board is fried or their ethernet ports died. Instead of paying $400 to be repaired they could simply plug in a PCI card or replace their monitor. Its a big issue in schools. Its a big issue in coporate environments.
You fanboys need to lay off the kool-aid.
Of course none of them would consider buying a mac for other reasons, Apple just seems to out do itself looking for ways to supply those other reasons.
People WILL NOT buy a more expensive machine at a steep premium because of a handicapped lower range (which in the case of the iMac is also nowhere near "affordable"home computer, nor is it in the case of the eMac).
The apologists continue to operate under the assumption that Apple is somehow insulated against the rest of the market. THEY AREN'T. No affordable mac tower in this aisle, no problem, affordable, expandable, high performing and RELIABLE (don't believe the mac FUD) PC towers right here across the way.
What you describe can only work in an insular philosophy that assumes mac heads will pay more because mac is the only option for them. That thinking has now distilled the mac community down to the most ardent supporters, which is why you seldom hear different in the mac web, but it is not a philosophy under which the company grow, only a way to keep making money as you shrink. Shrink too much, and that will fail too.
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part 2
PS, why is this concept so difficult for people to understand. DELL spends more. In all three of the quoted years, 12 quarters, DELL has spent more. What they spend as a percentage means nothing, having done this once, I'll do it again, since the concept is so damn difficult for some to grasp. Dell also pays money for an OS and software which for Apple is part of the overall R&D.
So, despite the favorable Apple slant you've tried to put on the expenditures, we'll just use those figures to illustrate the point.
1.5% of 1000USD, 15 dollars.
8% of 1000USD, 80 dollars (including OS and apps, NO LICENSING FEES factored into costs!!!)
There's absolutely no reason why a mac should cost more than $65 more than a comparable PC. But it gets better, any PC has an serious M$ tax to pay, Windows plus "Works" (word plus an appleworks equivalent) rising to as much as an Office standard licence. That's anywhere from another 25-175 USD in costs per machine. Cost difference erased, where's Apple's excuse now?
OH, and the PPC is also much cheaper than the upper range X86 CPU's, yet another savings.
All told, and there are good looks at this if you check around, Apple might have 30-80 dollars more cost to build the average machine, than a DELL (who benefits from huge volume but does not benefit as dramatically as one might think, remember that Apple too benefits from huge volumes on pretty much generic components.
Given that metric, which ignores completely the fact that x86 box makers MUST pay M$ licensing fees, Apple might realistically get away with charging about 10-15% more than equivalent x86 machinery. About 100 more for consumer grade stuff, and about 200-400 more for professional grade stuff to the extreme high end.
If all Apple's R&D doesn't lead them to be able to make machins at lower cost, then they have to rethink their R&D expenditures.
Originally posted by Matsu
So we have to pay to keep Apple alive?
No, Apple has to charge enough to keep alive. You are welcome to buy elsewhere.
By the way, how many Gateway machines do you own? They sell systems in your price range and they are now going through their third re-org. And they are also dropping consumer sales like a hot rock, because they couldn't make enough of a margin at the price points you insist Apple should be selling Macs. They bled money using the very strategy you insist Apple has to follow to the point where the company is on the verge of collapse.
What you describe can only work in an insular philosophy that assumes mac heads will pay more because mac is the only option for them.
No, we pay more because we get more value for the dollar. if you can't understand the Mac's value proposition, you are are (again) welcome to buy elsewhere.
PS, why is this concept so difficult for people to understand. DELL spends more.
Because they don't. They spend about the same in real dollars (or as near as makes no difference) as Apple does.
What they spend as a percentage means nothing, having done this once, I'll do it again, since the concept is so damn difficult for some to grasp. Dell also pays money for an OS and software which for Apple is part of the overall R&D.
It does matter what they spend as a percentage of revenue. This is how these things are measured in the real world. And no, Dell doesn't pay a cent for OS software. They pass on the cost directly to you, the consumer.
There's absolutely no reason why a mac should cost more than $65 more than a comparable PC.
That's close. The problem is finding a comparable PC. And when you do, you find that prices are comparable as well.
All told, and there are good looks at this if you check around, Apple might have 30-80 dollars more cost to build the average machine, than a DELL (who benefits from huge volume but does not benefit as dramatically as one might think, remember that Apple too benefits from huge volumes on pretty much generic components.
You're wrong. Dell has some of the lowest manufacturing and inventory costs in the industry. That's what they are famous for and why it is so hard to compete on price with them.
Apple's COS (cost of goods sold) is much higher than Dell's even before you add in R&D or administrative and marketing costs.
Apple might realistically get away with charging about 10-15% more than equivalent x86 machinery.
And as I have said, when you actually compare machines that are equivalent, you find that Apple's price points are not at all out of line of the industy's.
If all Apple's R&D doesn't lead them to be able to make machins at lower cost, then they have to rethink their R&D expenditures.
On the contrary. You don't invest R&D in reducing manufacturing costs, that process is well understood. You invest R&D to continue to develop products and services that increase the value of your products. Even Dell knows this.
Matsu, you clearly haven't done your homework.
Originally posted by Matsu
So we have to pay to keep Apple alive?
Yes, just like you have to pay to keep any other company alive. Companies can only continue to exist as long as they are making money (eventually).
Apple has been doing everything it can to survive in an environment where it has a severe processor performance problem and is in the middle of massive OS upgrade. All the clamouring in the world for a cheap low-end headless Mac won't change the facts -- Apple is selling enough with its current lineup at high margins to scrape by. If they came out with a low margin, low cost headless iMac it would seriously canabilize the sales of their high margin machines and they would make less money than before. Even worse they would get stuck with huge quantities of low end machines that they will be unable to sell, and that will blow their revenues instantly. At the current point in time Apple is simply unable to deliver the machine that you are talking about. Apple knows this and they've been working towards a solution for a long time now...
When the 970-based towers arrive the situation changes considerably. There is suddenly no worry about canabilization because the 970 is clearly superiour in clock rate, per-cycle performance, bandwidth, and it is 64-bit. This ensures that the higher margin products will continue to sell (and may experience considerable growth). The Motorola 7457 is expected sometime this fall, possibly a little earlier for Apple, and it promises to make the G4 faster, lower power and quite possibly lower cost -- which makes it ideal for building a small, cheap, low margin headless box. At that point I think there is a good possibility that we'll see such a machine from Apple, whether it be a cube, a slab, or a mini-tower. The LCD iMac will probably continue to exist because I think Apple still has a market for that kind of AIO machine.
To the majority of the target markets for the iMac (headless or not), clockrate doesn't matter, and being sold a slick Apple machine running MacOS X will win out over getting a few more MHz, especially if the AppleStore people are accomplished at counter-acting the MHz-Myth and the 7457 allows the speeds to creep up half a GHz or so (its easier to persuade people that MHz doesn't matter when you're not quite as far behind). Matsu, of course, doesn't fall into this camp... fortunately for Apple Matsu isn't most of the market. We'll have to see how low the 970 pricing is to see if Matsu's disposition will become a little more cheery.
Originally posted by TJM
More like 1 post repeated 4000 times...
haha...
"apple computers cost to much!"
...they do cost alot i'll admit, but i def think its worth it
matsu, can you reply to my post about pricing...because it seems to be pretty equal for everything but imac's. i dont like the imac or the emac...yes they do suck and are expensive i cant do anything about that, but the G4's and laptops are good deals
Apple has stated that they are shooting for 5% market share. In light of this statement, all arguments describing the current status of Apple computers are irrelevant and I'm sure Apple knows this.
The introduction of IBM's 970 and ??? will change the price performance perception. The question remains, "how will Apple begin to achieve anything close to 5% market share?".
Most of the computers sold are NOT AIO wonders, they are modestly priced with acceptable price performance with reasonable expansion capabilities - read standard AGP slot and a couple PCI slots. If I were responsible for attaining 5% market share @ Apple the answer would be excruciatingly obvious.
A monitor-less computer, with a standard AGP slot, a PCI(-X) slot or 2(remembering that Apple builds in a lot on the motherboard-Firewire blah blah), and a processor capable of handling iApps. at pleasant speeds(re: a 1.2GHz 970 would do nicely). All for about $699 - $799. Price just my fanatasy.
Ignore lists.... Guess who was the first person I added to it?
OK, so why not just go out and buy a fast PC? Again, it's the computing experience. It's a bit frustrating using the old Mac in terms of speed, but I also use a colleague's top-model Wintel sometimes and I find that experience quite ugly and far more frustrating, despite the fast chip. I use my Mac all day every day - if I had to use XP I would look seriously at a change of career. The Mac aesthetic is that significant to me. Call me a "fan-boy" if you want, Matsu. If Apple compromised their philosophy of the aesthetic and 'just works' computing experience, they would lose all their customers, who are Apple customers for just that reason. Apple knows their market and if they dropped those people they'd be just another PC maker losing money.
"It's not really a question of cost either, IMHO, in the professional field - 3 grand is not a lot for the main tool of my trade that lasts several years. Nevertheless to get a new model, it's got to have significant advantages over the old. I'm impatient for that to happen, so I'm excited about the prospect of getting a new and much better Mac this autumn, which will certainly be the case if the PPC 970 rumours prove out. And I personally know many others who feel likewise.
All I can say is , "Yes, yes, yes." You've nailed it, and the cogent argument from Programmer seals the deal. Thank God for the nuanced emotional response by Jupiter and the rationality that always comes from the Programmer-Man. Apple is holding its own during a difficult stretch but the future for users and shareholders is bright. If I had any spare scratch, I'd buy stock in the company today.
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Bought high in Nashville
Originally posted by keyboardf12
You know what i _reaaaaaallly like about the new BB system...
Ignore lists.... Guess who was the first person I added to it?
Me?
I meant Mr. Matsu, who to me at least, sounds like a broken record...
Originally posted by Sybaritic
Jupiter writes:
...."It's not really a question of cost either, IMHO, in the professional field - 3 grand is not a lot for the main tool of my trade that lasts several years......
If I had any spare scratch, I'd buy stock in the company today.
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Bought high in Nashville
Your right and every one is making very valid points. However, Apple's stated goal is 5% market share and $3000 computers will not get them there and I don't believe $1500 dollar low end towers nor AIO's will either.
by the way, I do own Apple stock, at the displeasure of my financial advisor, and I do believe Apple is in for much better days.
Originally posted by Matsu
There's absolutely no reason why a mac should cost more than $65 more than a comparable PC. But it gets better, any PC has an serious M$ tax to pay, Windows plus "Works" (word plus an appleworks equivalent) rising to as much as an Office standard licence. That's anywhere from another 25-175 USD in costs per machine. Cost difference erased, where's Apple's excuse now?
Using McCrab's R&D numbers above:
Apple
R&D (2002): $446 million
Units sold (2002): 3 million Source
R&D per unit sold: about $150
Dell
R&D (2002): $452 million
Units sold (2002): 20 million Source
R&D per unit sold: about $20
That's about $130 per unit difference right there.
The "Apple Tax" is basically the amount of money per unit spent by Apple on R&D. Personally, I think it is money well spent and am more than willing to pay it.
Please provide some backup for your assertions on what MS charges its OEMs for Windows and "Works". I have heard indirectly that these costs are actually quite low, particularly for "favored" vendors (such as Dell - I understand charges go up in a hurry for those who don't toe the MS line). I could accept $25, but $175 seems rather steep.
Originally posted by Programmer
Me?
Yeah you're posts are too helpful and well thought out damn it