What if, after coming out with 970 Powermacs with a new case, Apple sold G4 Powermacs with the current case for less than $1000? Then, you would get a really fast but expensive high end, and also a really cheap, upgradeable low end.
What if, after coming out with 970 Powermacs with a new case, Apple sold G4 Powermacs with the current case for less than $1000? Then, you would get a really fast but expensive high end, and also a really cheap, upgradeable low end.
What if, after coming out with 970 Powermacs with a new case, Apple sold G4 Powermacs with the current case for less than $1000? Then, you would get a really fast but expensive high end, and also a really cheap, upgradeable low end.
Well if they currently have a 25% margin on the low-end ~$1500 PowerMac at the moment (I don't know if they do -- does anybody?), then $1000 would be a 33% reduction in price resulting in an 8% loss per unit. That wouldn't be too smart, would it?
The iMac fares somewhat better -- $1800 less the cost of the 17" LCD panel (say $500?) in a cheaper case. The arrival of the 7457 will hopefully improve yields and thus reduce the cost of the G4. The iMac's form-factor probably means they can't use the cheapest parts for things like power supplies and hard disks so a more standard case design might allow costs to be pushed farther down. Cut the margins down to ~10% to hit the low end... sub-$1000 for a >1 GHz should be doable.
I have to agree... I would really like to see a headless iMac, even if it is in the same price range. I bought one of the original 15" LCD's, and really the only complaint I have is the monitor size. I had a 19" CRT with my old computer and i really miss the size.
Not being able to upgrade that one feature is the only real drawback to the design for me... for what it is. My old computer I upgraded for about an added 3 years of life, for a total of about 8 years. But that's all it could handle. This one I'll need to replace after 3 to 4 years... no upgrade possible. With this machine, I believe, I would have to change video cards, too, if it were possible to upgrade the monitor. So my wish list for the new iMac line would change the design slightly to accomidate....
Upgrade Monitor and Graphics Card (8x AGP Slot)
With Firewire I haven't needed a PCI slot with this machine. On my old box I used one of the three PCI's for USB and Firewire capabilities and one for a graphics card. The only other thing I would use a PCI slot for is Professional Audio Input or SCSI. The new iMac really isn't that market share. But everyone, I believe, would like the ability to change monitor size and capabilities as easily as upgrading RAM. Even at current prices (minus the monitor) I would buy another iMac for my household, as well as a new 970 tower for my professional usage.
I will point out that with all the claims about how Apple must be competitive with Dell, it should be pointed out that nobody in the PC world is competitive with Dell, either. (Or they are, and are losing their shirt.)
IBM basically abandoned the desktop market as beyond salvation. HPaq is losing money in the PC division hand over fist. Gateway is going under for the third time.
The reality is that unless you have a product that you can charge a 20-30% premium over the base Dell price (think what Sony, Toshiba, etc. are trying for), then you are not going to survive in the PC market.
In the end, there will be the whitebox market for the supercheap, the Dell market, and perhaps the premium box market.
If PC's become entirely a commodity market, then there will be the same premium market for PCs that there is for say high voltage electricity cable (i.e. none). It will also mean, that like any other commodity, the only real metric of value will be the price. Dell is depending on it. As Amorph said, their R+D is devoted to only one thing, keeping the price down. They sure as heck don't invest in the user experience. And to be honest, it looks like, for the Wintel world, they guessed right. Only MS can significantly change the user experience, and they do it for everyone equally.
Anyway, if Apple can be competitive with the premium brands of the Wintel world, I will be very happy. I'd love to have them be competitive with Dell, but I'd hate to see them gamble the company on trying it. Everybody else (who doesn't have to spend a penny on user experience) who has tried it is going under.
Well if they currently have a 25% margin on the low-end ~$1500 PowerMac at the moment (I don't know if they do -- does anybody?), ....
I'd have to track this down to provide a link, but Fred Anderson did say at one point that the 'margin' for _each_line_ is aimed at being 27%ish.
That is, the cheapest iMac doesn't have a 27% margin, and the most expensive iMac doesn't have a 27% margin, it's only when you run it across the iMacs sold that the margin _averages_ 27%.
Though that fluctuates some, and is _somewhat_ different by product line also. And I can beleive that the 'plan' is in somewhat of a shambles with the PowerMacs being outsold by home tonsillectomy kits.
The SEC filings and the papers I get from Apple as a shareholder do not seem to provide enough information to give a per-line margin calculation.
So what that means is I don't think the margin on the $1500 MDD machine is 27%. It _should_ be lower, if they're following their avowed planning. Each line is designed to get people upgrading to the next model - the lowest priced iMac is _not_ the best selling model. (The lowest priced PowerMac _was_ when it was a dual... and note that the Dual867 stopped pretty fast.)
....I don't want Apple to compete with Dell. Dell's boxes start at $400. I have a dead HP and a dead Shuttle SV25 both sitting here in pieces. Both motherboards crapped out. Thats what cheap gets ya. But I think a 100% increase in cost is reasonable for Apple's entry level machine. I'm not asking for a $399 e-Machines. I believe Apple can make a quality product and still maintain high margins at a $800-900 price point.
Face it, the PowerMacs are selling like crap. So how could selling a midrange consumer tower possibly do any more damage than has already been done? You can defend Apple all you want on this, but the market is speaking. Quit trying to force configurations on the customers.
Um, what's left of the market is waiting for budgets and personnel to stop getting cut, Quark, and one of: A small, quiet but reasonably powerful workstation, or a balls-out Pentium crushing monster. A midrange G4 tower would interest a few hobbyists, but the PowerMac isn't selling well for reasons that don't have a lot to do with its cost of entry. The simple fact is that for anyone who uses their machine to earn income, $500 here or $1000 there is a perfectly reasonable investment if it means that you get that much more work done. If a machine with a $1K premium saves you about a week of work over the course of its life as a primary workstation then it's paid for itself.
All a midrange PowerMac would do is muddy the lineup. What the PowerMac needs is power; the rest (Quark, unemployment and budget constraints) is out of Apple's control. If Apple is going to release a midrange thing, it would be more along the lines of the Cube (only with a 970), which, if it was reasonably priced, would get snapped up by audio engineers, DTP and Photoshop users, and people looking for higher-end office computers.
Expandability is craved by hardcore gamers, old school IT techs (who, I note, have not had enough of a voice to prevente Dell from shipping onboard Ethernet in just about everything) and hobbyists. I'm not going to say that those aren't legitimate markets, but they're not very big. I wouldn't expect more than a slight uptick in market share if a machine like this was released, accompanied by a fair amount of consumer confusion.
Well, if the 'cost of entry' isn't stopping Apple getting customers then how come apple themselves cut price of their 'power'Macs (by 200£ on the low end and 700£ on the top end)? And have indicated they will do so again.
You're articulate Amorph. I'll give you that
But you're dead WRONG(!) on the cheaper tower. You were proven WRONG when Apple cut the price by 200£. And you'll be proven wrong again if Apple cut prices further. I don't think it muddies the product line at all. The only problem with the Cube was it plain old vanilla wasn't cheap enough. Sure, Amorph could afford one (and I hope you're still enjoying it... ) BUT alot couldn't. And that wasn't for not wanting one. Now, Apple can merely extend their tower line down an extra couple of models or introduce a new mini-tower. Personally, I think Apple's desktop line is crying out for something. I don't think cheaper towers will affect those who want an iMac2 either. There's clearly a need for a cheaper tower...or people like Mooseman wouldn't be gagging for one...and he explained his case better than I did mine. As for me or anybody else projecting are wishes, let's face it, aint that we we're here?
When Apple themselves come out and say they have to address the 'power'Mac issue, they are clearly admitting that cost and performance do matter. We're no longer living in the days of a £4k or £3k towers. (And if Apple fancy doing that with the 970 launch they'll only dampen a sure fire seller like they did with the iMac2's steep price...)
Mooseman just about sums up the frustration felt by buyers such as myself. I think it's well possible for a sub K Apple tower. Hell, they're only 10% away now! That's less than their legendary margins. So why are we arguing about it? Go on Apple, just do it. I'm fed up with this one. It's just such a no-brainer. Keep it single cpu and the rest can single, dual, dual from there. Four standard tower configs. From just under a k to about 2K. How hard can that be?
Most decent PC towers can be got for a grand. You don't have to spend thousands anymore. Apple are facing up to this reality (fingers crossed as he says this...) can Amorph?
So not big that Apple, previously oblivious to this market, has started paying attention to this market (they even have there own games site at Apple if you've been, you've been, right?). Gee, they're quick to point out Quake framerates on their top tower (which is crushed by most 1K towers or less I might add...)
A market that rivals movie sales in size. If 'hardcore' gaming is such a niche market, then why are Sony, M$ and Nintendo in it for the long haul?
There's a strong case for a cheaper tower with an option to stick a decent graphics card in it. Apple (chief niche chaser...) can chase even more of this 'niche' (worth billions) market. Which would make more sense than chasing the music player market before Apple started doing that...
I'd venture that the 'ipod market' is worth considerably less than the 'hardcore' gamers market.
So why are Apple chasing that? Sorry, I forgot, because it's a niche market. (S'funny how alot of people ridiculed that before Apple launched ipod and started selling truckloads...)
You know Amorph, for such a clearly intelligent guy, I find myself vexed (but not too much... ) by your positiion on the Apple 'mini-tower'/games issue. You're not playing devils advocate secretly wishing it to come true now, eh?
It's just such a no-brainer. Keep it single cpu and the rest can single, dual, dual from there. Four standard tower configs. From just under a k to about 2K. How hard can that be?
Most decent PC towers can be got for a grand. You don't have to spend thousands anymore. Apple are facing up to this reality (fingers crossed as he says this...) can Amorph?
You are not making any sense at all. EVERY manufacter from Dell to Gateway to whoever has Computers over $2k
It would require Apple to "have no brain" to squeeze their lineup between 1-2k. That simply makes no sense.
It's not about being the cheapest. That is not what Apples about nor have they EVER been that way. Back when they could have saved a few bucks by dumping the auto eject floppy for the cheapo push button models they refused. Apple is a company that has a base technology set that they refuse to go under. They will not drop the price for people who cannot or will not allow themselve to afford a Powermac. You want expandability...you want the most speed you buy a Powermac or you go enjoy Bill Gates creation.
Prices are set by the market. The market doesn't care if you make a mint or lose your shorts on the product. It will only pay what it is worth at that moment. Power Mac prices are down because the product does not merit higher prices.
But Apple computers do merit prices higher than PCs.
In the enterprise, Macs cost about $170 a year to support, according to Apple. The Gartner group released a study in June 2002 that showed that PCs in the enterprise market cost $510 a year to support.
That means for every year that a business owns a PC, it pays (on average) $510 to simply keep that PC in use.
Let's say I buy a dual 1.42 G4 for $2,899 (1GB total RAM + $2,699 base model). We'll ignore tax since the rate would be the same for any computer. I keep the G4 for five years. My support costs will be $170X5 = $850, according to Apple. Cost of purchase+support = $3,749
Let's buy a $699 Dell PC with comparable RAM, HD, DVD-R, Win XP Pro, and the slowest P4 available (2ghz) = $1448. This includes built-in video (not Radeon 9000, like the Mac). But I'm not going to add the cost of the video card. Let's subtract the $100 rebate and we start with a $1,348 purchase cost for the PC. I keep it for five years (I doubt it, but I might). My support costs, according to Gartner are $510X5 = $2,550. Cost of purchase+support = $3,898.
If you keep them only four years, then the PC beats the Mac by about $200.
This assumes that the PC will last as long as the Mac.
Total cost of ownership is a sensible thing and has thus little to to with reality!
Out there in the real world, if I buy a PC it is far more easy to get illigal copies of software than for a Mac this lowers the cost of having a PC. People bying a PC does not expect to get viruses and strange hardware conflicts and do not calculate support costs into buying a computer.
Apple does not have to compete with Dell but they should be comparable with Sony and other premium brands. A top of the line Sony Vaio tower has a faster CPU than a G4, FW and USB ports also at the front, multi channel sound and stuff currently not aviable from Apple. If Apple had parity in features and performance, they would sell well.
The fact that Apple tower sales has dropped dramatically over the G4 era reflect the percived value of these towers, among Apple customers, compared with previous G3 towers and with Windows towers.
If Apple can make towers that feture wise are on par or better than win boxes and use CPUs that gives them performance on par or even better than the Intel/AMD the tide away from the towers will turn.
A market that rivals movie sales in size. If 'hardcore' gaming is such a niche market, then why are Sony, M$ and Nintendo in it for the long haul?
First up you need to distinguish between the console market and the computer market because they are very different. Home consoles aren't designed to specifically target hardcore gamers either they are designed to target the home entertainment market.
Secondly the game industry as a whole challenges the movie industry (why wouldn't it? It's much better value for money in terms of entertainment really.) but console game revenues out pace PC game revenues by a factor of 4 (from memory). Further more PC game sales, and PCs are the traditional home for the hardcore gamer, are seeing decreasing games sales while consoles continue to see growth.
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Originally posted by Lemon Bon Bon
There's a strong case for a cheaper tower with an option to stick a decent graphics card in it. Apple (chief niche chaser...) can chase even more of this 'niche' (worth billions) market.
If you speak to the people over at ATI and NVIDIA they will tell you that the hardcore gaming market accounts for very little of their major income sources. In fact if you speak to most major computer producers they'll back that one up. The big income makers for graphic card companies are the more economical cards further down the line and the OEM contracts that they get for them.
For computer manufacturers the money has and always will be the enterprise markets. The only people that think the hardcore gamer market is the centre of the IT world are gamers themselves.
That isn't to say Apple shouldn't develop gaming technology for their computers for the average person but to chase the "hardcore" gaming market specifically is a waste of time because that group isn't leaving the Wintel world anytime soon. And gamer worth a cent is going to go where the library of games are and the mac platform simply doesn't have it. Apple would be better served creating offerings that are more appealing to the enterprise markets and trying to finally get themselves taken seriously (their advertising needs to change first though).
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Originally posted by Lemon Bon Bon
Which would make more sense than chasing the music player market before Apple started doing that... I'd venture that the 'ipod market' is worth considerably less than the 'hardcore' gamers market.
So why are Apple chasing that? Sorry, I forgot, because it's a niche market. (S'funny how alot of people ridiculed that before Apple launched ipod and started selling truckloads...)
The music player market is definitely not a niche market and definitely worth billions (consider worldwide sales of mp3 players alone exceed 40 million and that doesn't include the people who still buy discmans).
The iPod itself is a marvel of low cost design and engineering and if it serves to attract consumers to the platform then it's a far more valuable area to invest than "hardcore" gaming.
The cost of ownership numbers are certainly skewed and probably have more to do with IT depts running away with the budget because no one knows exactly what they're up to, rather than the inherent reliability of the platform. The whining around the net from IT people suggests that this little problem is finally getting adressed in the form of long overdue IT cutbacks and wage controls.
"According to Apple..." what exactly does Apple account for? I'd rather see a third party analysis, I bet it's quite a bit higher.
You are not making any sense at all. EVERY manufacter from Dell to Gateway to whoever has Computers over $2k
It would require Apple to "have no brain" to squeeze their lineup between 1-2k. That simply makes no sense.
When Lemon Bon Bon taked about 1k-2k range I think he was thinking in pounds (GBP), at least he used pound signs. That would be US $1,575-$3,150, not a lot different from what we have now. I'm confused
It's not about being the cheapest. That is not what Apples about nor have they EVER been that way.
The original CRT iMac (bon voyage, old buddy!) wasn't the cheapest, but a nearly so. Let's face it, it saved Apple from the brink of bankruptcy a few years ago. But can something like this happen again? Of course, that is what innovation is all about. Will it be another cheap all-in-one? No way! Why not? The iMac was right for the time. People wanted to get on the internet, not deal with the cluster-f**k that was/is Windows and getting the modem to work right with their ISP, blah blah blah.
No, that was a totally different time than today. Today, a lot of people have a computer at home (some a home network) and are fairly good at understanding how computers communicate with each other. Seeing the scenario unfold, what is it that would be a killer product in such an environment? Digital Hub. Not an iMac either. That works in such an environment, but wasn't truely designed for such tasks.
It will be an interesting next couple of years to see what Apple delivers for the true Digital Hub
The whining around the net from IT people suggests that this little problem is finally getting adressed in the form of long overdue IT cutbacks and wage controls.
I think we both agree, and probably most of the IT people on AI, that Apple needs to focus more on the corporate world, since it is the easiest, fastest way to gain more market share. Home users are a bit tougher to win over at this point. I don't think that was true when the iMac first graced the scene. The thinking is different these days (no pun, I swear) as to what users want. I think that corporate people are sick of babysitting a Windows installation and sick of paying through the nose to sustain such a beast with SMS and various other 'support systems'. Things that Apple has generously included with OS X Server (unlimited client licensing is a major selling point for it!) I think to complete the puzzle, Apple needs a killer corporate machine, which is not to say the most powerful, but quite a simple machine. OS X can sell itself, I've said it countless times, and the box is virtually irrelevant in a workplace. Access to an optical drive is the only reason most people even touch theirs, and if you are pushing applications over the network, an end user rarely even does that. Simple, understated, inexpensive and effective. IT budgets are being scrutinized, and Apple needs to adjust to this phenomenon.
Apple did an internal audit of their costs to come up with the $170 (Actually $167) figure. This represents Apple's support costs for supporting their own Macs across their enterprise. Either they lied about their own internal numbers or they told the truth. In my experience with business Mac and PC users, I would generally agree with Apple's numbers: that Macs cost about 1/3 the support cost of PCs.
Non-tech PC users tend to pay more for support (instead of successfully doing it themselves). A major advantage of the Mac is that non-tech users can more easily perform support functions, and are, in fact, encouraged by Apple and the Mac community to do so. If a Mac user installs his own RAM instead of paying a tech to do it, that's $25-80 bucks saved.
I have not seen a PC manual lately, but for a long time, only Mac user manuals featured EASILY UNDERSTANDABLE how-to's on adding RAM, Hard Drives, PCI Cards, etc. That's lots of IT support that Mac users NEVER need.
Can PC support costs be less than $510 a year? Yes. But that number is from the third party Gartner study. It also reflects what I have seen in the business world. For non-enterprise businesses, that number might be much bigger - since small businesses often put off support until there is a catastrophic breakdown.
Well, if the 'cost of entry' isn't stopping Apple getting customers then how come apple themselves cut price of their 'power'Macs (by 200£ on the low end and 700£ on the top end)? And have indicated they will do so again.
You're articulate Amorph. I'll give you that
But you're dead WRONG(!) on the cheaper tower. You were proven WRONG when Apple cut the price by 200£. And you'll be proven wrong again if Apple cut prices further.
Not if they also drop the prices on the consumer line. Why? Because that would allow Apple to drop PowerMac prices without muddying the lineup.
As for the price drop: First, prices drop. The current pro machines don't cost as much as the 9600MP, or the 840av, or the IIfx, or the Lisa. Second, if you're offering a line whose appeal hinges on performance, and performance starts to stagnate due to a reason you can't control (in the medium term) what else can you do? The last round of price drops only affirms my point that the PowerMacs need power - and since Apple can't offer more power, they have no choice but to cut price to make the price/performance ratio attractive.
Apple has dropped prices on a line and then raised them back up to more standard (for Apple) levels before. They've done it with PowerMacs and PowerBooks both. The 970 will allow them to sell machines that people will be willing to pay for. I'm not going to predict the exact pricing structure, because I'm not sure that we'll see the current PowerMac, only with a different chip stuffed inside. But don't forget that Apple is targeting the high-end video and 3D market. A $3500 Apple workstation would cost 1/3 as much as the workstations they'd replace, for a machine that could replace both the UNIX workstation and the PC beside it (for running office apps). I'm confident that Apple will offer a nice price spread.
Oh, and I never said gamers were a small market. In fact, they're a bigger market than the gaming industry currently addresses. I said the hardcore gamer market, and you can't leave that word out without radically changing what I meant. The majority of games that most people enjoy don't need cutting edge hardware. A great many don't need more than trivial video acceleration (card games, the various Yahoo! and Flash games, the Sims, etc.).
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I don't think it muddies the product line at all. The only problem with the Cube was it plain old vanilla wasn't cheap enough. Sure, Amorph could afford one (and I hope you're still enjoying it... ) BUT alot couldn't. And that wasn't for not wanting one.
Heh. I had to stretch myself to get it, and I'm enjoying it very much, thanks. But this is my argument, repeated. The Cube had a very real appeal, and a very real market, but the pricing structure made no sense — especially with the PowerMacs sitting right next to them at a lower price! So it sold to people like me who really, really didn't want some big beast of a machine with a lot of useless (to me) expandability roaring nearby. Priced well, and with a clearly defined place in the lineup, a small, silent Apple workstation would fly off the shelves. Note that it's not a cheap, expandable tower, though: It's a small, quiet, reasonably priced machine. In fact, if Apple goes the way I hope they're going, that will be the PowerMac, and things like PCI slots and carriages for internal drives will be available as external chassis.
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When Apple themselves come out and say they have to address the 'power'Mac issue, they are clearly admitting that cost and performance do matter.
Cost and performance, yes. So if you don't have the performance, you have to offer a low cost. If you do have the performance, people will pay for it. Not as much as they did back in the bad old days of $10,000 black and white machines, but they will pay. $1000 difference in initial price is a week's work at the utmost for a professional.
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Most decent PC towers can be got for a grand. You don't have to spend thousands anymore. Apple are facing up to this reality (fingers crossed as he says this...) can Amorph?
Amorph looks at the much more than $1000 Dell OptiPlex sitting by his knee, with its endless quirks, its severe limitations and its sheath of dull, cheap plastic, and shakes his head sadly.
Comments
Originally posted by BlueRabbit
What if, after coming out with 970 Powermacs with a new case, Apple sold G4 Powermacs with the current case for less than $1000? Then, you would get a really fast but expensive high end, and also a really cheap, upgradeable low end.
...that would sound great.
Originally posted by BlueRabbit
What if, after coming out with 970 Powermacs with a new case, Apple sold G4 Powermacs with the current case for less than $1000? Then, you would get a really fast but expensive high end, and also a really cheap, upgradeable low end.
Well if they currently have a 25% margin on the low-end ~$1500 PowerMac at the moment (I don't know if they do -- does anybody?), then $1000 would be a 33% reduction in price resulting in an 8% loss per unit. That wouldn't be too smart, would it?
The iMac fares somewhat better -- $1800 less the cost of the 17" LCD panel (say $500?) in a cheaper case. The arrival of the 7457 will hopefully improve yields and thus reduce the cost of the G4. The iMac's form-factor probably means they can't use the cheapest parts for things like power supplies and hard disks so a more standard case design might allow costs to be pushed farther down. Cut the margins down to ~10% to hit the low end... sub-$1000 for a >1 GHz should be doable.
Not being able to upgrade that one feature is the only real drawback to the design for me... for what it is. My old computer I upgraded for about an added 3 years of life, for a total of about 8 years. But that's all it could handle. This one I'll need to replace after 3 to 4 years... no upgrade possible. With this machine, I believe, I would have to change video cards, too, if it were possible to upgrade the monitor. So my wish list for the new iMac line would change the design slightly to accomidate....
Upgrade Monitor and Graphics Card (8x AGP Slot)
With Firewire I haven't needed a PCI slot with this machine. On my old box I used one of the three PCI's for USB and Firewire capabilities and one for a graphics card. The only other thing I would use a PCI slot for is Professional Audio Input or SCSI. The new iMac really isn't that market share. But everyone, I believe, would like the ability to change monitor size and capabilities as easily as upgrading RAM. Even at current prices (minus the monitor) I would buy another iMac for my household, as well as a new 970 tower for my professional usage.
IBM basically abandoned the desktop market as beyond salvation. HPaq is losing money in the PC division hand over fist. Gateway is going under for the third time.
The reality is that unless you have a product that you can charge a 20-30% premium over the base Dell price (think what Sony, Toshiba, etc. are trying for), then you are not going to survive in the PC market.
In the end, there will be the whitebox market for the supercheap, the Dell market, and perhaps the premium box market.
If PC's become entirely a commodity market, then there will be the same premium market for PCs that there is for say high voltage electricity cable (i.e. none). It will also mean, that like any other commodity, the only real metric of value will be the price. Dell is depending on it. As Amorph said, their R+D is devoted to only one thing, keeping the price down. They sure as heck don't invest in the user experience. And to be honest, it looks like, for the Wintel world, they guessed right. Only MS can significantly change the user experience, and they do it for everyone equally.
Anyway, if Apple can be competitive with the premium brands of the Wintel world, I will be very happy. I'd love to have them be competitive with Dell, but I'd hate to see them gamble the company on trying it. Everybody else (who doesn't have to spend a penny on user experience) who has tried it is going under.
Originally posted by Programmer
Well if they currently have a 25% margin on the low-end ~$1500 PowerMac at the moment (I don't know if they do -- does anybody?), ....
I'd have to track this down to provide a link, but Fred Anderson did say at one point that the 'margin' for _each_line_ is aimed at being 27%ish.
That is, the cheapest iMac doesn't have a 27% margin, and the most expensive iMac doesn't have a 27% margin, it's only when you run it across the iMacs sold that the margin _averages_ 27%.
Though that fluctuates some, and is _somewhat_ different by product line also. And I can beleive that the 'plan' is in somewhat of a shambles with the PowerMacs being outsold by home tonsillectomy kits.
The SEC filings and the papers I get from Apple as a shareholder do not seem to provide enough information to give a per-line margin calculation.
So what that means is I don't think the margin on the $1500 MDD machine is 27%. It _should_ be lower, if they're following their avowed planning. Each line is designed to get people upgrading to the next model - the lowest priced iMac is _not_ the best selling model. (The lowest priced PowerMac _was_ when it was a dual... and note that the Dual867 stopped pretty fast.)
Originally posted by mooseman
Face it, the PowerMacs are selling like crap. So how could selling a midrange consumer tower possibly do any more damage than has already been done? You can defend Apple all you want on this, but the market is speaking. Quit trying to force configurations on the customers.
Um, what's left of the market is waiting for budgets and personnel to stop getting cut, Quark, and one of: A small, quiet but reasonably powerful workstation, or a balls-out Pentium crushing monster. A midrange G4 tower would interest a few hobbyists, but the PowerMac isn't selling well for reasons that don't have a lot to do with its cost of entry. The simple fact is that for anyone who uses their machine to earn income, $500 here or $1000 there is a perfectly reasonable investment if it means that you get that much more work done. If a machine with a $1K premium saves you about a week of work over the course of its life as a primary workstation then it's paid for itself.
All a midrange PowerMac would do is muddy the lineup. What the PowerMac needs is power; the rest (Quark, unemployment and budget constraints) is out of Apple's control. If Apple is going to release a midrange thing, it would be more along the lines of the Cube (only with a 970), which, if it was reasonably priced, would get snapped up by audio engineers, DTP and Photoshop users, and people looking for higher-end office computers.
Expandability is craved by hardcore gamers, old school IT techs (who, I note, have not had enough of a voice to prevente Dell from shipping onboard Ethernet in just about everything) and hobbyists. I'm not going to say that those aren't legitimate markets, but they're not very big. I wouldn't expect more than a slight uptick in market share if a machine like this was released, accompanied by a fair amount of consumer confusion.
You're articulate Amorph. I'll give you that
But you're dead WRONG(!) on the cheaper tower. You were proven WRONG when Apple cut the price by 200£. And you'll be proven wrong again if Apple cut prices further. I don't think it muddies the product line at all. The only problem with the Cube was it plain old vanilla wasn't cheap enough. Sure, Amorph could afford one (and I hope you're still enjoying it...
When Apple themselves come out and say they have to address the 'power'Mac issue, they are clearly admitting that cost and performance do matter. We're no longer living in the days of a £4k or £3k towers. (And if Apple fancy doing that with the 970 launch they'll only dampen a sure fire seller like they did with the iMac2's steep price...)
Mooseman just about sums up the frustration felt by buyers such as myself. I think it's well possible for a sub K Apple tower. Hell, they're only 10% away now! That's less than their legendary margins. So why are we arguing about it? Go on Apple, just do it. I'm fed up with this one. It's just such a no-brainer. Keep it single cpu and the rest can single, dual, dual from there. Four standard tower configs. From just under a k to about 2K. How hard can that be?
Most decent PC towers can be got for a grand. You don't have to spend thousands anymore. Apple are facing up to this reality (fingers crossed as he says this...) can Amorph?
Lemon Bon Bon
gamers
Not very big?
So not big that Apple, previously oblivious to this market, has started paying attention to this market (they even have there own games site at Apple if you've been, you've been, right?). Gee, they're quick to point out Quake framerates on their top tower (which is crushed by most 1K towers or less I might add...)
A market that rivals movie sales in size. If 'hardcore' gaming is such a niche market, then why are Sony, M$ and Nintendo in it for the long haul?
There's a strong case for a cheaper tower with an option to stick a decent graphics card in it. Apple (chief niche chaser...) can chase even more of this 'niche' (worth billions) market. Which would make more sense than chasing the music player market before Apple started doing that...
I'd venture that the 'ipod market' is worth considerably less than the 'hardcore' gamers market.
So why are Apple chasing that? Sorry, I forgot, because it's a niche market. (S'funny how alot of people ridiculed that before Apple launched ipod and started selling truckloads...)
You know Amorph, for such a clearly intelligent guy, I find myself vexed (but not too much...
Lemon Bon Bon
It's just such a no-brainer. Keep it single cpu and the rest can single, dual, dual from there. Four standard tower configs. From just under a k to about 2K. How hard can that be?
Most decent PC towers can be got for a grand. You don't have to spend thousands anymore. Apple are facing up to this reality (fingers crossed as he says this...) can Amorph?
You are not making any sense at all. EVERY manufacter from Dell to Gateway to whoever has Computers over $2k
It would require Apple to "have no brain" to squeeze their lineup between 1-2k. That simply makes no sense.
It's not about being the cheapest. That is not what Apples about nor have they EVER been that way. Back when they could have saved a few bucks by dumping the auto eject floppy for the cheapo push button models they refused. Apple is a company that has a base technology set that they refuse to go under. They will not drop the price for people who cannot or will not allow themselve to afford a Powermac. You want expandability...you want the most speed you buy a Powermac or you go enjoy Bill Gates creation.
But Apple computers do merit prices higher than PCs.
In the enterprise, Macs cost about $170 a year to support, according to Apple. The Gartner group released a study in June 2002 that showed that PCs in the enterprise market cost $510 a year to support.
That means for every year that a business owns a PC, it pays (on average) $510 to simply keep that PC in use.
Let's say I buy a dual 1.42 G4 for $2,899 (1GB total RAM + $2,699 base model). We'll ignore tax since the rate would be the same for any computer. I keep the G4 for five years. My support costs will be $170X5 = $850, according to Apple. Cost of purchase+support = $3,749
Let's buy a $699 Dell PC with comparable RAM, HD, DVD-R, Win XP Pro, and the slowest P4 available (2ghz) = $1448. This includes built-in video (not Radeon 9000, like the Mac). But I'm not going to add the cost of the video card. Let's subtract the $100 rebate and we start with a $1,348 purchase cost for the PC. I keep it for five years (I doubt it, but I might). My support costs, according to Gartner are $510X5 = $2,550. Cost of purchase+support = $3,898.
If you keep them only four years, then the PC beats the Mac by about $200.
This assumes that the PC will last as long as the Mac.
Out there in the real world, if I buy a PC it is far more easy to get illigal copies of software than for a Mac this lowers the cost of having a PC. People bying a PC does not expect to get viruses and strange hardware conflicts and do not calculate support costs into buying a computer.
Apple does not have to compete with Dell but they should be comparable with Sony and other premium brands. A top of the line Sony Vaio tower has a faster CPU than a G4, FW and USB ports also at the front, multi channel sound and stuff currently not aviable from Apple. If Apple had parity in features and performance, they would sell well.
The fact that Apple tower sales has dropped dramatically over the G4 era reflect the percived value of these towers, among Apple customers, compared with previous G3 towers and with Windows towers.
If Apple can make towers that feture wise are on par or better than win boxes and use CPUs that gives them performance on par or even better than the Intel/AMD the tide away from the towers will turn.
Originally posted by Lemon Bon Bon
A market that rivals movie sales in size. If 'hardcore' gaming is such a niche market, then why are Sony, M$ and Nintendo in it for the long haul?
First up you need to distinguish between the console market and the computer market because they are very different. Home consoles aren't designed to specifically target hardcore gamers either they are designed to target the home entertainment market.
Secondly the game industry as a whole challenges the movie industry (why wouldn't it? It's much better value for money in terms of entertainment really.) but console game revenues out pace PC game revenues by a factor of 4 (from memory). Further more PC game sales, and PCs are the traditional home for the hardcore gamer, are seeing decreasing games sales while consoles continue to see growth.
Originally posted by Lemon Bon Bon
There's a strong case for a cheaper tower with an option to stick a decent graphics card in it. Apple (chief niche chaser...) can chase even more of this 'niche' (worth billions) market.
If you speak to the people over at ATI and NVIDIA they will tell you that the hardcore gaming market accounts for very little of their major income sources. In fact if you speak to most major computer producers they'll back that one up. The big income makers for graphic card companies are the more economical cards further down the line and the OEM contracts that they get for them.
For computer manufacturers the money has and always will be the enterprise markets. The only people that think the hardcore gamer market is the centre of the IT world are gamers themselves.
That isn't to say Apple shouldn't develop gaming technology for their computers for the average person but to chase the "hardcore" gaming market specifically is a waste of time because that group isn't leaving the Wintel world anytime soon. And gamer worth a cent is going to go where the library of games are and the mac platform simply doesn't have it. Apple would be better served creating offerings that are more appealing to the enterprise markets and trying to finally get themselves taken seriously (their advertising needs to change first though).
Originally posted by Lemon Bon Bon
Which would make more sense than chasing the music player market before Apple started doing that...
So why are Apple chasing that? Sorry, I forgot, because it's a niche market. (S'funny how alot of people ridiculed that before Apple launched ipod and started selling truckloads...)
The music player market is definitely not a niche market and definitely worth billions (consider worldwide sales of mp3 players alone exceed 40 million and that doesn't include the people who still buy discmans).
The iPod itself is a marvel of low cost design and engineering and if it serves to attract consumers to the platform then it's a far more valuable area to invest than "hardcore" gaming.
"According to Apple..." what exactly does Apple account for? I'd rather see a third party analysis, I bet it's quite a bit higher.
Originally posted by hmurchison
You are not making any sense at all. EVERY manufacter from Dell to Gateway to whoever has Computers over $2k
It would require Apple to "have no brain" to squeeze their lineup between 1-2k. That simply makes no sense.
When Lemon Bon Bon taked about 1k-2k range I think he was thinking in pounds (GBP), at least he used pound signs. That would be US $1,575-$3,150, not a lot different from what we have now. I'm confused
Originally posted by hmurchison
It's not about being the cheapest. That is not what Apples about nor have they EVER been that way.
The original CRT iMac (bon voyage, old buddy!) wasn't the cheapest, but a nearly so. Let's face it, it saved Apple from the brink of bankruptcy a few years ago. But can something like this happen again? Of course, that is what innovation is all about. Will it be another cheap all-in-one? No way! Why not? The iMac was right for the time. People wanted to get on the internet, not deal with the cluster-f**k that was/is Windows and getting the modem to work right with their ISP, blah blah blah.
No, that was a totally different time than today. Today, a lot of people have a computer at home (some a home network) and are fairly good at understanding how computers communicate with each other. Seeing the scenario unfold, what is it that would be a killer product in such an environment? Digital Hub. Not an iMac either. That works in such an environment, but wasn't truely designed for such tasks.
It will be an interesting next couple of years to see what Apple delivers for the true Digital Hub
Originally posted by Matsu
The whining around the net from IT people suggests that this little problem is finally getting adressed in the form of long overdue IT cutbacks and wage controls.
I think we both agree, and probably most of the IT people on AI, that Apple needs to focus more on the corporate world, since it is the easiest, fastest way to gain more market share. Home users are a bit tougher to win over at this point. I don't think that was true when the iMac first graced the scene. The thinking is different these days (no pun, I swear) as to what users want. I think that corporate people are sick of babysitting a Windows installation and sick of paying through the nose to sustain such a beast with SMS and various other 'support systems'. Things that Apple has generously included with OS X Server (unlimited client licensing is a major selling point for it!) I think to complete the puzzle, Apple needs a killer corporate machine, which is not to say the most powerful, but quite a simple machine. OS X can sell itself, I've said it countless times, and the box is virtually irrelevant in a workplace. Access to an optical drive is the only reason most people even touch theirs, and if you are pushing applications over the network, an end user rarely even does that. Simple, understated, inexpensive and effective. IT budgets are being scrutinized, and Apple needs to adjust to this phenomenon.
Apple did an internal audit of their costs to come up with the $170 (Actually $167) figure. This represents Apple's support costs for supporting their own Macs across their enterprise. Either they lied about their own internal numbers or they told the truth. In my experience with business Mac and PC users, I would generally agree with Apple's numbers: that Macs cost about 1/3 the support cost of PCs.
Non-tech PC users tend to pay more for support (instead of successfully doing it themselves). A major advantage of the Mac is that non-tech users can more easily perform support functions, and are, in fact, encouraged by Apple and the Mac community to do so. If a Mac user installs his own RAM instead of paying a tech to do it, that's $25-80 bucks saved.
I have not seen a PC manual lately, but for a long time, only Mac user manuals featured EASILY UNDERSTANDABLE how-to's on adding RAM, Hard Drives, PCI Cards, etc. That's lots of IT support that Mac users NEVER need.
Can PC support costs be less than $510 a year? Yes. But that number is from the third party Gartner study. It also reflects what I have seen in the business world. For non-enterprise businesses, that number might be much bigger - since small businesses often put off support until there is a catastrophic breakdown.
I buy the numbers.
Originally posted by Lemon Bon Bon
Well, if the 'cost of entry' isn't stopping Apple getting customers then how come apple themselves cut price of their 'power'Macs (by 200£ on the low end and 700£ on the top end)? And have indicated they will do so again.
You're articulate Amorph. I'll give you that
But you're dead WRONG(!) on the cheaper tower. You were proven WRONG when Apple cut the price by 200£. And you'll be proven wrong again if Apple cut prices further.
Not if they also drop the prices on the consumer line.
As for the price drop: First, prices drop. The current pro machines don't cost as much as the 9600MP, or the 840av, or the IIfx, or the Lisa. Second, if you're offering a line whose appeal hinges on performance, and performance starts to stagnate due to a reason you can't control (in the medium term) what else can you do? The last round of price drops only affirms my point that the PowerMacs need power - and since Apple can't offer more power, they have no choice but to cut price to make the price/performance ratio attractive.
Apple has dropped prices on a line and then raised them back up to more standard (for Apple) levels before. They've done it with PowerMacs and PowerBooks both. The 970 will allow them to sell machines that people will be willing to pay for. I'm not going to predict the exact pricing structure, because I'm not sure that we'll see the current PowerMac, only with a different chip stuffed inside. But don't forget that Apple is targeting the high-end video and 3D market. A $3500 Apple workstation would cost 1/3 as much as the workstations they'd replace, for a machine that could replace both the UNIX workstation and the PC beside it (for running office apps). I'm confident that Apple will offer a nice price spread.
Oh, and I never said gamers were a small market. In fact, they're a bigger market than the gaming industry currently addresses.
I don't think it muddies the product line at all. The only problem with the Cube was it plain old vanilla wasn't cheap enough. Sure, Amorph could afford one (and I hope you're still enjoying it...
Heh. I had to stretch myself to get it, and I'm enjoying it very much, thanks.
When Apple themselves come out and say they have to address the 'power'Mac issue, they are clearly admitting that cost and performance do matter.
Cost and performance, yes. So if you don't have the performance, you have to offer a low cost. If you do have the performance, people will pay for it. Not as much as they did back in the bad old days of $10,000 black and white machines, but they will pay. $1000 difference in initial price is a week's work at the utmost for a professional.
Most decent PC towers can be got for a grand. You don't have to spend thousands anymore. Apple are facing up to this reality (fingers crossed as he says this...) can Amorph?
Amorph looks at the much more than $1000 Dell OptiPlex sitting by his knee, with its endless quirks, its severe limitations and its sheath of dull, cheap plastic, and shakes his head sadly.