One of the things I think will happen in Panther is that it will be able to fully accelerate Quartz Extreme on a GPU that has programmable pixel and vertex shaders. The implication is that a geforce 5200 would be the minimum spec card to pull it off.
I think we'll see everything but the eMac and the iBook make the leap upto fully programmable cards.
On top of that, we will see the iMac go to a 970. I believe that the cost of a 970 will be cheaper that the cost of a 1+ghz G4. Apple will be able to maintain a higher charge, and make more money off of a 970 equipped iMac.
My first incliniation is to kill the eMac and drop the iMac into it's price range. 15" LCD's are really cheap enough now, there's no reason why a 15" iMac couldn't come in at the same 799 price as the bottom end eMac.
AIO's do have a place, but they will find it erroded by laptop sales as time passes.
The problem with AIO's is that their sales potential is finite. The people who want them/can be convinced that AIO's are a better option for them, have bought them already. Apple OWNS that market. Sadly for Apple, the market is itself severely limited. To a degree, it's also propped up by the insane prices of PowerMacs that force some people who really want a "mac" into Apple's consumer line. That's a problem, because the consumer desktop, which should be the machine to rake in the switchers just isn't doing that. I know lots of people on their second and third iMac, I don't know anybody on their first.
There needs to be a choice. To me, these machines could even share largely overlapping price structures. The LCD iMacs could offer the AIO idiot proofing and integrated displays, while a cube redux offers slightly better power and more display options/expansion but no display. Want integration, choose iMac, want expansion and flexibility, choose Cube. Want LOTS of POWER and EXPANSION, choose PowerMac.
Canibalization is a word that must be stricken from the mac community's vocabulary. If a cube stole iMac sales, so what? A headless, slightly less miniaturized machine, assembled out of more generic components is easily cheaper to build that a highly customized enclosure with an integrated display. It can be CHEAPER and still have the same or HIGHER margins. So what if you lose an iMac sale to a Cube sale? That's actually a more advantageous position for Apple.
Think about it. If the purpose of different models is to provide a choice that covers all segments as efficiently as possible, then Apple's desktop line-up STILL doesn't make good sense. At it's worst they had three AIO's, one of which was utterly irrelevant at the price. The G3 iMac is now dead. But the situation is far from resolved in the case of the remaining vowel macs. They hit the same market with almost no differentiation. Clearly, the eMac exists only to mask certain pricing deficiencies in the iMac offerings. Schools DID NOT ask for a "sturdy" CRT, they asked for a CHEAP machine. Most of the schools I know are now recommending LCD based desktops where they can afford them. And, for the prices PC makers can offer, the schools are getting desktops plus 15" LCD's for LESS than the cost of an eMac. The LCD has clear health and ergonomic (radiation, eye strain) benefits that educators care about. I know that schools in my area will be recommending that displays be replaced only with LCD's (once they are obsolete.)
The eMac exists because Apple is unwilling to drop premium for an iMac. That "cannibalizes" far more iMac sales than a cube would. People who were happy with the AIO concept, but not the price, find the eMac more palatable, but it doesn't reach new people, new markets. Already all over the web, the comparison is that the new eMacs make the iMacs look like a bad deal, no one is saying that the new eMacs make consumer PC towers look like a bad deal -- Whether or not they do is besides the point, what is the point? Ity doesn't register with those new buyers, it registers with people already in the AIO (basically iMac) market. It doesn't reach new buyers, the people buying affordable towers, any way you slice it, it doesn't do it. Whether the formula is good or bad, it is severely limited and nothing shows it off better than our own reaction to the product.
A cube, OTOH, would appeal to an entirely different segment, at the same prices -- A segment immeasurably larger than that buying iMacs, whatever the reasons.
So rather than hit 1 market with two models, why not hit two markets with two models?
I would like to see the 970 in all of Apples lin-up as soon as they can release them. However it does sound like there is a wild card out there in IBM's Gobi chip, if such a chip exists. From what rumour I've read it is not 970, and sounds like the chip Apple needed a year ago not today, but it definatly fits in with at least the eMac/iBook market needs (assuming that the cost of the chip is considerably less mhz/mhz). If the speed of this rumoured chip were high enough, it might even make a good consumer chip for the iMac and possibly a new consumer computer (iCube?) further differentiating the consumer and professional lines. I do see some problems with this scenerio in additional development cost of maintaining a second chipset line, but it would also add to the amount of available processors (assuming that IBM is fabing them at seperate plants).
It seems that much of your well-thought-out post relies on the premise that Apple could charge less for its machines and not hurt its viability as a hardware manufacturer. If this is true, I would agree with many of your conclusions. However, I don't believe that Apple can reduce prices and still remain profitable. Apple does an incredible amount of hardware R&D, much more than any other beige-box manufacturer. They also develop a lot of software which is subsidized by hardware sales. Sure, they could drop prices on hardware, but then we'd be paying for iTunes, iMovie, quicktime, iSync... We would also have to pay more than $129 for an OS.
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Originally posted by Matsu
My first inclination is to kill the eMac and drop the iMac into it's price range. 15" LCD's are really cheap enough now, there's no reason why a 15" iMac couldn't come in at the same 799 price as the bottom end eMac.
AIO's do have a place, but they will find it eroded by laptop sales as time passes.
Here it is helpful to remind ourselves that we are not the average consumer. It is all too easy to forget that motivations and buying preferences are widely varied. No matter how cheap LCDs become, if still more expensive than CRTs, many will prefer a CRT. Most posters at AI are well educated and are at some point along a successful career path. They can afford the luxury of LCDs while the vast majority of current computer buyers cannot.
Also, laptops are not the final, and inevitable form factor for computers. As people age, ergonomics become the paramount concern. Many people couldn't care less how portable a laptop is. For them, adjustable keyboard position is not an option. Also, many older people have to choose a large, legible display over a small, portable display.
I guess the reason I decided to post in this thread is that I don?t agree with the conspiratorial tone of your post. (but I do enjoy the discourse)
Sure, I wish Apple?s line-up more perfectly fit my personal taste in computing hardware, but I am not representative of the target market. I also wish that Apple hardware were cheaper. Yet, IMHO, innovative hardware and software simply costs this much to produce. I don?t agree that there is a crisis in Apple?s product-line management. Room for improvement? Definitely. But I think that the faster, 970-based machines will make our support of R&D more palatable.
...I don't believe that Apple can reduce prices and still remain profitable. Apple does an incredible amount of hardware R&D, much more than any other beige-box manufacturer. They also develop a lot of software which is subsidized by hardware sales. Sure, they could drop prices on hardware, but then we'd be paying for iTunes, iMovie, quicktime, iSync... We would also have to pay more than $129 for an OS.
The two biggest reasons I hear for people not buying a Mac are that they are 1.) too slow and 2.) too expensive. That, and the oddity of Apple's all-in-one units is too much for most people. Although personally I can look at my iMac and understand how it's functionality and elegance is what drive it's design and appearance, it just looks too diffferent for many people. Likewise with the eMac. I think PC users would be more comfortable switching if they had a Cube or tower like product they could purchase, and the Powermacs don't count because the damn things start at $1,599 without a monitor. Many people these days are picking up a full system for $700. Why? Because they can't afford or don't need to spend more than that for what they do.
Lowering their prices right now wouldn't do much good, because people would still be paying the same or slightly more for a slower computer. So, Apple has the 970 coming out shortly. This should take care of the "Macs are slow" turn off. In fact, Macs might start being considered the "faster" computers again, if we're lucky. Apple doesn't need to bring in $300 per eMac, and $500 - $1000 per Powermac. If they lowered their prices by 20% across the board and had 970s installed across the board, they'd sell two, three, four times as many computers.
Institutions can't afford to buy thirty eMacs or iMacs. They can afford thirty $600 Dell towers though. Is Apple capable of lowering their prices? Yes. Could they still make enough to cover R&D costs? Yep, because they'll sell twice as many computers. Why are they charging $800 for an 800Mhz G4 eMac, 128 MB SDRAM, 40GB Hard Drive and CD ROM when eMachines can sell a tower for $400 that has a 2.2Ghz Celeron Processor, 128 MB DDR RAM, 40 GB hard Drive, and a CD ROM? Why? Because Apple makes over $300 on every eMac sold, that's why. Obviously eMachines isn't selling their towers at a loss, so they're still making money on them at $400. I don't expect Apple to sell that same eMac for $400 (the eMachine doesn't include a monitor, but that's only an extra $100) but Apple could sell it for $600, and it'd still be $100 overpriced. But that extra $100 gets you the iApps. And? Apple sells two or three times as many because schools and offices would buy room fulls of $600 eMacs.
So, throw in the 970 and cut prices by 20%. If Apple doesn't sell three times as many computers after that, you can shoot me. In the head. And they can raise their prices back up 20% again.
I disagree, margins on Powermacs are through the roof. I can cost out retail parts and come out (in Canadian dollars) way cheaper than retail PM's (in US dollars) That alone suggests gross margins of over 40% !!! We know the top flight PPC costs about half what a top X86 does, no wonder then they can afford to give you two of them, and we know the cost of drives, RAM, opticals, Graphics cards. The prices could be a whole lot lower. I'm not saying they have to be, these are the pro machines afterall, though the performance has to be a whole lot better! That's a difference.
The consumer machines are different altogether though. Even if iMac prices stayed the same, that's no reason you can't do a cube at the same prices as an eMac. When you're done deleting the bulky CRT and case, and build it with more standardized slightly larger and cheaper parts (ie, an AGP slot, DIMM modules rather than a so-dimm, a not quite so tiny PS and NO display) you've saved yourself a ton of money in assembly and shipping over the cost of an iMac/eMac. It turns out that the formula produces a cheaper machine (sans display) with the same or BETTER margins than any of your AIO's. By all means, sell the iMac, but sell the i/eCube too. It has better cost proportions for everyone, not just the consumer, but also the maker. And it can get to markets that just don't like AIO's -- like enterprise, edu...
Margins and prices are almost another debate entirely. The truly grating aspect of this debate is that there is a concept with enormous potential and a very large demand within easy grasp and that it does NOT require Apple to really budge at all from their carefully guarded margins while allowing them to lower the cost of entry.
It's become a misfortune that they released and targetted the original cube in the way they did. Just a little less flash, even a G3 based debut, and bit more practicality at the right price would have made it a killer way back.
They're gun shy now, no question about it, but it's time to try again. They have stores to move them, a digital lifestyle/AV enthusiast hook, some real attention and growing consumer interest -- Apple is doing better with consumers: their marketshare might have actually gone up these past two years if hadn't got hammered so badly in education.
It just makes sense, regardless of what I want, or want not, to pay for a machine.
The two biggest reasons I hear for people not buying a Mac are that they are 1.) too slow and 2.) too expensive. That, and the oddity of Apple's all-in-one units is too much for most people. Although personally I can look at my iMac and understand how it's functionality and elegance is what drive it's design and appearance, it just looks too diffferent for many people.
In a really wierd way, this is true. I was talking to a woman the other day who mentioned the "blue terminal" her mother was so mysteriously fond of. I said that it was a full-fledged computer, and she looked at me like I was nuts and asked me where the computer was!
That's what Apple gets for building an entire computer that's sleeker than the average PC monitor. Nevertheless, they should keep at it, because once people "get it" they tend to stick around.
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If they lowered their prices by 20% across the board and had 970s installed across the board, they'd sell two, three, four times as many computers.
It's hard to sort anything out when you conflate variables like that, but let's just say that I doubt you'd see anything close to that boost in sales, except maybe for a short-term burst of sales from frustrated Quark users.
Neither lower prices nor faster CPUs tackles the third reason that people don't consider Macs: Compatibility issues. The perception is far worse than the reality, and the mere risk (again, perceived) that you become an island in a sea of Windows-using friends is enough to get people to take the "safe" route.
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Institutions can't afford to buy thirty eMacs or iMacs. They can afford thirty $600 Dell towers though. Is Apple capable of lowering their prices? Yes. Could they still make enough to cover R&D costs? Yep, because they'll sell twice as many computers.
Given that Fred Anderson has emphasized market share over margins, and given that Steve has made a great deal of noise about "the other 95%," and doubling market share; if it was that simple, why hasn't Apple done it?
You are also ignoring the fact that Apple's decline in education can be traced immediately to the increasing presence of corporate IT people in education. Those people install Windows everywhere, for all purposes, unconditionally, because Windows is what they know. They paid in time, sweat and (serious) money to earn their certifications, and they're going to use the knowledge they've earned, dammit. When teachers control which machines they buy - which, increasingly, they don't - they tend to buy Macs. The rationalizations you're hearing out of educational institutions are the same rationalizations corporate IT has used to expunge Macs since 1995 at the latest, often repeated verbatim.
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Why are they charging $800 for an 800Mhz G4 eMac, 128 MB SDRAM, 40GB Hard Drive and CD ROM when eMachines can sell a tower for $400 that has a 2.2Ghz Celeron Processor, 128 MB DDR RAM, 40 GB hard Drive, and a CD ROM? Why? Because Apple makes over $300 on every eMac sold, that's why. Obviously eMachines isn't selling their towers at a loss, so they're still making money on them at $400.
I'd be shocked and amazed if Apple nets anything like $300 on every eMac.
eMachines' profit margin on their machines is $5 - enough that they can only afford one tech support call per machine before they start losing money. That's why their company is doing poorly. Apple is seen as innovative, which means they're seen as taking risks, which means they'd better have a nice big financial net under their high-wire act or Wall Street will destroy them. eMachines does nothing I couldn't do myself - and they're still cutting so close to the bone that they've gotten nowhere.
Meanwhile, Dell's average margin is 20% or better.
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I don't expect Apple to sell that same eMac for $400 (the eMachine doesn't include a monitor, but that's only an extra $100) but Apple could sell it for $600, and it'd still be $100 overpriced. But that extra $100 gets you the iApps. And? Apple sells two or three times as many because schools and offices would buy room fulls of $600 eMacs.
If IT people have been put in charge of a school, they sell 0 more eMacs, and continue to lose market share in education.
There's a reason Apple is targeting IT so aggressively now. They've finally figured this out, and they finally have a platform that has IT-friendly buzzwords. Note that "you don't even need a technician to set up a Mac network" is NOT a selling point to technicians. MS figured this out early on: Offer technologies with management-friendly names like "Zero Configuration" that are nevertheless fraught enough with problems to secure IT jobs and consolidate the CTO's power, and IT will love you. (Given this, I hope Apple is content to merely be tolerated by IT...)
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So, throw in the 970 and cut prices by 20%. If Apple doesn't sell three times as many computers after that, you can shoot me. In the head. And they can raise their prices back up 20% again.
We'll see. If anything like that happens, it'll be the 970 that does it, and/or Panther. When Apple slashed prices on their towers with last winter's speed bump, sales dropped.
They did, but Apple also took away the best deal in the PM space, the DP867 and replaced it with an 70% slower machine for 200USD less.
It's what I'm saying about not attracting new customers. This is pretty much because there's a core base of PM customers who upgrade their workstations with regularity. What Apple offered, even discounted, just offered no excuse for people with DP800's and up. Switchers haven't been enthused by those models since 12-18 months before even that date, so price drops really could reel anybody in.
You have to go in hot... PM's were already suffering badly at that point.
I think a cube slotted right UNDER the low-end Powermac, in the 1200-1500 range with nice GFx and optical drive options would do quite well.
I disagree, margins on Powermacs are through the roof. I can cost out retail parts and come out (in Canadian dollars) way cheaper than retail PM's (in US dollars) That alone suggests gross margins of over 40% !!!
What about R&D and bundled software-development costs?
Bundled software is a huge part of the equation. A non-insignificant percentage of the price is for bundled software, not just the powermac hardware.
Mac hardware would be absolutely worthless without OS 9, OS X, and the bundled applications. It seems ridiculous to analyze PowerMac pricing from a purely hardware-for-the-dollar standpoint.
What about it? Most top tier manufacturers spend just as much as Apple does on R&D and software licences.
I have always wondered where most top tier manufacturers' R&D actually goes - with Apple, you can see tangible results from their R&D budget (in hardware design, OSX, ITMS, FCP, iPod, hopefully a knockout 970 box etc). What on earth happens to Dell's R&D budget?
I'll give plenty of points to Matsu. I feel he's argued his corner stoutly. He's right. He's not the only one. Plenty of fine points here about what could and should be done.
The imac2 made a great initial sales splash and has subsequently dried up. Where did the sales go to? Former iMac owners? And 'some' Switchers? 120, 000 -ish Flat panel iMac2s? Pathetic. That isn't fit enough to tie the boot straps of the original iMac's last sales quarter.
Apple just isn't making this overpriced underspecced machine cheap enough. And if not? Why not? Other PC maker's are doing AIO cheaper. Sure, their design doesn't look quite as styl-ish. 15 inch LCD's are dirt cheap at the moment. So what's with the £999 inc VAT price? It didn't take the original iMac THAT long to break that barrier and get about 2-3 models under that price range. It took Apple ages to bring out the 'true' successor to the iMac, the 'e/iMac' and it was fat, overpriced, underspecced...and took ages to replace the flailingly old iMac complete with Ati Rage ('Alien Face Sucker') graphics card.
With the iMac2, Apple are making a greater mistake in 'SOME' ways than the Cube. It's a MORE limited Cube...but it DOES have the monitor with a cheaper combined price. Sorry, 'Son of Cube' but...you've got to do better than that..!
With the iPod, Apple have refined a good product. With the iMac? They stood still...just like they did with the original. And..? They're paying the price. If you price things to go...they GO...even in a soft economy. The iPod proves this.
Just drop in the iMac 2 where the eMac is. Push the eMac even lower. Create a fully configurable 'box-maker' iCube 'workstation/mini-tower/games/edu' machine' from £499-£1495 (with a options from a decent G3+SIMD to 970 single processor and a graphics options from integrated to Geforce Fx...) and I think a point would be proven. Repeating the mistakes of the past aint going to help Apple.
They're going to have to buy more components from Taiwan, in greater numbers. Their move to cheaper towers is a move too-late. They can't sell cheaper towers because their cpus are antiquated without monitor and a old graphics card as standard in their top of the line 'workstation'. I guess it isn't obvious to some why they aint selling 'just because they're cheaper' now.
The best imac2 is the iMac3. The '17 inch Powerbook'. It's alot more stylish and portable...sure, it's got the antiquated 1 gig G4...but put a 970 in it...and why would you even want an iMac2 other than for the 'cool' aio design? The 17 inch Laptop is far less 'limited'.
For what it's worth, I buy the some Mum's like the iMac2 argument. But I do think a fully scaleable iCube design could meet the needs of many where Apple's rigid desktop line does not. Apple are so hamfisted for a company so brilliant. Flawed. Yet great. Hmmm. They won't realise it until that 2% looks like 10% when they slip to 0.5%.
"As much as this hurts me to say (considering my ownership and absolute love and support of the iMac and all things "i"), I kinda have to agree with the previous post.
The eMac is, basically, what everyone was SCREAMING for 2-3 years ago for the iMac to be: 17" and G4-based.
Part of me always thinks "just rechristen the eMac the iMac (since it looks like what everyone associates with the iMac...a cool jellybean AIO) and let that handle the schools, consumers, grannies, budget-buyers, etc. Between that and the soon-to-come 970-equipped PowerMacs, position a nice semi-expandable thing (like the reborn "iCube" thing talked about in another thread in Future Hardware), pack it with 1GHz - or more - G4 power, put on all the digital hub-friendly ports and features and pair it with a nice, matching LCD display (use same size/resolution as those used on the 17" PowerBooks and 17" iMacs).
OR, people can simply CHOOSE THEIR OWN.
Short of designing the LCD iMac to have removable screens that you can have popped off and replaced with a Apple-designed/manufactured 15", 17" and 19" ones (ain't gonna happen, I'd imagine), maybe people balk at being tied to a set screen in your typical AIO?"
Sorry, the 'quoter' didn't work with that much text. But I agree with PSCates. (Whenever I read your handle I think of 'Pussy Cats'...but I'll play nice and spell it properly...still, whenever I read my handle...I think of Citrus boiled Sweets...hmmm...Bon Bons....drool....)
In short, I think he said it better. Apart from the G4 thing. A cpu which should be laid out to rest along with the half-hearted relationship from Motorola. But a fully config' iCube from £495-£1,495 with choice of G3+SIMD IBM chip from 1.4-2 gig to a single 970 with graphics candy and ram of their choice and hey, it would probably keep the Lemon's and Matsu's and PSCATES of the world happy(ER!)
Apple's desktop range is just not flexible enough. That is particularly targeted at the consumer desktop range. It's patronisingly rigid. People know a stinker when they smell one. Hmmm. So what don't they like about the smell of eMac/iMac2's, eh Amorph?
3. A CHOICE of graphics card options FROM integrated to 'FX'/9700.
4. A FASTER (970) cpu to justify the current ridiculi price.
5. A proper 17 inch LCD with a standard resolution.
6. Fully configurable.
7. A choice of 15 - 19 inch LCD screens.
8. Maybe an iBox that can boost/bolster the limited graphics and cpu...included a decent Graphics card and twin cpus...that your iMac2 can plug into...plug in more iBox (Cube like...heh...) and get more amplified iMac2 power..! An extensible computer from Apple. Now there's a thought.
I have always wondered where most top tier manufacturers' R&D actually goes - with Apple, you can see tangible results from their R&D budget (in hardware design, OSX, ITMS, FCP, iPod, hopefully a knockout 970 box etc). What on earth happens to Dell's R&D budget?
How to take another six cents off the manufacturing cost of each PC.
Seriously, a company like Dell does a lot to lower manufacturing costs. They sell so many PCs that even a small savings adds up to a tidy sum. Eliminating a few machine screws, along with associated labor, can be significant. While this helps Dell, it is hard to imagine that customers appreciate the fruits of such R&D.
. . . Apple just isn't making this overpriced underspecced machine cheap enough. And if not? Why not? Other PC maker's are doing AIO cheaper. Sure, their design doesn't look quite as styl-ish. 15 inch LCD's are dirt cheap at the moment. . .
. . . The best imac2 is the iMac3. The '17 inch Powerbook'. It's alot more stylish and portable...sure, it's got the antiquated 1 gig G4...but put a 970 in it...and why would you even want an iMac2 other than for the 'cool' aio design? The 17 inch Laptop is far less 'limited'. . .
I think you are right about the iMac price. When the original iMac was introduced, it was both low cost and very stylish. I suspect Apple tried too hard to be spectacular with the new iMac and didn't do enough to keep manufacturing cost low. Too much emphasis on style alone. Most of the potential market for an iMac wants lower price first. Style will influence them if the price is close enough.
You have an interesting point about the 17 inch PowerBook. Those who can easily afford it might just buy one in place of an iMac. However, a PowerBook cannot be built as cheaply as an AIO that is designed for low manufacturing cost. Maybe Apple needs to get one of Dell's top miser engineers to rework the iMac.
I'm sure others have pointed out that Apple offers two desktop models for the lower end markets, and both of these are AIO. Yet Mac users are clamoring for an expandable Mac, without attached monitor, in the lower price range. I agree. Apple should have an expandable Mac that covers a broad price range depending on options, and Apple should eliminate the eMac at that time. The eMac is big and heavy and takes up more desk space than the iMac. As LCD prices continue to drop, the eMac's days are limited anyway.
Still, the iMac has failed to live up to its calling, and will continue to fail until Apple finds a way to cut the price significantly. The iMac is meant to be like its predecessor, and even more so. It is meant to be ubiquitous, showing up everywhere. It cannot meet this goal unless the price drops. The style may have to suffer a tad bit to get manufacturing cost down enough. So be it.
With these changes to the product line up, the lowest price Mac would be the basic expandable Mac with no options, and using an existing monitor rather than purchasing one. The iMac might be the best selling Mac, since it is compact and very user friendly with its adjustable display.
The iMac is, in design terms, one of the best home PCs ever made. That neck isn't style, it's substance.
The eMac will not go away because big, heavy, solid AIOs are prized by schools - originally, and still, the eMac's target market. You want school PCs to be relatively kidproof.
I note that through most of the existence of the jellybean iMac, the median selling price was at least $1300, and often more. Apple does need to have a nominal model at a lower price to lure people in, but you'd better believe that they have a finger on what the highest selling price point is, per line. One reason the PowerMac's price slashed this winter is that the median selling price in the fall quarter was about $100 over the price of the bottom line machine!
An inexpensive, moderately expandable machine would sell, no question. There are at least a dozen people on the board who want one. I cannot see how it would magically dwarf sales of all other machines. The ATX/mini-ATX style is prevalent on the PC side because it's cheap to buy and cheap to build, and for no other reason (hint: You can't expand a cheap Dell the way you can expand a white box PC. Aftermarket expansion is a rapidly shrinking option in the Windows world.)
The iMac is, in design terms, one of the best home PCs ever made. That neck isn't style, it's substance. . .
I agree with your statement and mentioned what I believe are its two best features: compact design that takes up little space, and adjustable display that is easy to set the way you like it. However, I do not see the new iMac being accepted like the original iMac was. I noticed the first iMacs showing up in many, often unexpected, places. People would comment on them. I do not see this happening with the new iMac, and I don't know why. The new iMac is a lot nicer than the original.
My guess is that in its market, people are more interested in price than performance. Another possibility is just chance. Maybe the sales are as good as the earlier iMac, but I am not seeing the results. Interestingly, I do know a PC user who switched just to get an iMac. Yet I don't personally know anyone else who has the new iMac.
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One of the things I think will happen in Panther is that it will be able to fully accelerate Quartz Extreme on a GPU that has programmable pixel and vertex shaders. The implication is that a geforce 5200 would be the minimum spec card to pull it off.
I think we'll see everything but the eMac and the iBook make the leap upto fully programmable cards.
On top of that, we will see the iMac go to a 970. I believe that the cost of a 970 will be cheaper that the cost of a 1+ghz G4. Apple will be able to maintain a higher charge, and make more money off of a 970 equipped iMac.
AIO's do have a place, but they will find it erroded by laptop sales as time passes.
The problem with AIO's is that their sales potential is finite. The people who want them/can be convinced that AIO's are a better option for them, have bought them already. Apple OWNS that market. Sadly for Apple, the market is itself severely limited. To a degree, it's also propped up by the insane prices of PowerMacs that force some people who really want a "mac" into Apple's consumer line. That's a problem, because the consumer desktop, which should be the machine to rake in the switchers just isn't doing that. I know lots of people on their second and third iMac, I don't know anybody on their first.
There needs to be a choice. To me, these machines could even share largely overlapping price structures. The LCD iMacs could offer the AIO idiot proofing and integrated displays, while a cube redux offers slightly better power and more display options/expansion but no display. Want integration, choose iMac, want expansion and flexibility, choose Cube. Want LOTS of POWER and EXPANSION, choose PowerMac.
Canibalization is a word that must be stricken from the mac community's vocabulary. If a cube stole iMac sales, so what? A headless, slightly less miniaturized machine, assembled out of more generic components is easily cheaper to build that a highly customized enclosure with an integrated display. It can be CHEAPER and still have the same or HIGHER margins. So what if you lose an iMac sale to a Cube sale? That's actually a more advantageous position for Apple.
Think about it. If the purpose of different models is to provide a choice that covers all segments as efficiently as possible, then Apple's desktop line-up STILL doesn't make good sense. At it's worst they had three AIO's, one of which was utterly irrelevant at the price. The G3 iMac is now dead. But the situation is far from resolved in the case of the remaining vowel macs. They hit the same market with almost no differentiation. Clearly, the eMac exists only to mask certain pricing deficiencies in the iMac offerings. Schools DID NOT ask for a "sturdy" CRT, they asked for a CHEAP machine. Most of the schools I know are now recommending LCD based desktops where they can afford them. And, for the prices PC makers can offer, the schools are getting desktops plus 15" LCD's for LESS than the cost of an eMac. The LCD has clear health and ergonomic (radiation, eye strain) benefits that educators care about. I know that schools in my area will be recommending that displays be replaced only with LCD's (once they are obsolete.)
The eMac exists because Apple is unwilling to drop premium for an iMac. That "cannibalizes" far more iMac sales than a cube would. People who were happy with the AIO concept, but not the price, find the eMac more palatable, but it doesn't reach new people, new markets. Already all over the web, the comparison is that the new eMacs make the iMacs look like a bad deal, no one is saying that the new eMacs make consumer PC towers look like a bad deal -- Whether or not they do is besides the point, what is the point? Ity doesn't register with those new buyers, it registers with people already in the AIO (basically iMac) market. It doesn't reach new buyers, the people buying affordable towers, any way you slice it, it doesn't do it. Whether the formula is good or bad, it is severely limited and nothing shows it off better than our own reaction to the product.
A cube, OTOH, would appeal to an entirely different segment, at the same prices -- A segment immeasurably larger than that buying iMacs, whatever the reasons.
So rather than hit 1 market with two models, why not hit two markets with two models?
Originally posted by Matsu
My first inclination is to kill the eMac and drop the iMac into it's price range. 15" LCD's are really cheap enough now, there's no reason why a 15" iMac couldn't come in at the same 799 price as the bottom end eMac.
AIO's do have a place, but they will find it eroded by laptop sales as time passes.
Here it is helpful to remind ourselves that we are not the average consumer. It is all too easy to forget that motivations and buying preferences are widely varied. No matter how cheap LCDs become, if still more expensive than CRTs, many will prefer a CRT. Most posters at AI are well educated and are at some point along a successful career path. They can afford the luxury of LCDs while the vast majority of current computer buyers cannot.
Also, laptops are not the final, and inevitable form factor for computers. As people age, ergonomics become the paramount concern. Many people couldn't care less how portable a laptop is. For them, adjustable keyboard position is not an option. Also, many older people have to choose a large, legible display over a small, portable display.
I guess the reason I decided to post in this thread is that I don?t agree with the conspiratorial tone of your post.
Sure, I wish Apple?s line-up more perfectly fit my personal taste in computing hardware, but I am not representative of the target market. I also wish that Apple hardware were cheaper. Yet, IMHO, innovative hardware and software simply costs this much to produce. I don?t agree that there is a crisis in Apple?s product-line management. Room for improvement? Definitely. But I think that the faster, 970-based machines will make our support of R&D more palatable.
Originally posted by dfiler
...I don't believe that Apple can reduce prices and still remain profitable. Apple does an incredible amount of hardware R&D, much more than any other beige-box manufacturer. They also develop a lot of software which is subsidized by hardware sales. Sure, they could drop prices on hardware, but then we'd be paying for iTunes, iMovie, quicktime, iSync... We would also have to pay more than $129 for an OS.
The two biggest reasons I hear for people not buying a Mac are that they are 1.) too slow and 2.) too expensive. That, and the oddity of Apple's all-in-one units is too much for most people. Although personally I can look at my iMac and understand how it's functionality and elegance is what drive it's design and appearance, it just looks too diffferent for many people. Likewise with the eMac. I think PC users would be more comfortable switching if they had a Cube or tower like product they could purchase, and the Powermacs don't count because the damn things start at $1,599 without a monitor. Many people these days are picking up a full system for $700. Why? Because they can't afford or don't need to spend more than that for what they do.
Lowering their prices right now wouldn't do much good, because people would still be paying the same or slightly more for a slower computer. So, Apple has the 970 coming out shortly. This should take care of the "Macs are slow" turn off. In fact, Macs might start being considered the "faster" computers again, if we're lucky. Apple doesn't need to bring in $300 per eMac, and $500 - $1000 per Powermac. If they lowered their prices by 20% across the board and had 970s installed across the board, they'd sell two, three, four times as many computers.
Institutions can't afford to buy thirty eMacs or iMacs. They can afford thirty $600 Dell towers though. Is Apple capable of lowering their prices? Yes. Could they still make enough to cover R&D costs? Yep, because they'll sell twice as many computers. Why are they charging $800 for an 800Mhz G4 eMac, 128 MB SDRAM, 40GB Hard Drive and CD ROM when eMachines can sell a tower for $400 that has a 2.2Ghz Celeron Processor, 128 MB DDR RAM, 40 GB hard Drive, and a CD ROM? Why? Because Apple makes over $300 on every eMac sold, that's why. Obviously eMachines isn't selling their towers at a loss, so they're still making money on them at $400. I don't expect Apple to sell that same eMac for $400 (the eMachine doesn't include a monitor, but that's only an extra $100) but Apple could sell it for $600, and it'd still be $100 overpriced. But that extra $100 gets you the iApps. And? Apple sells two or three times as many because schools and offices would buy room fulls of $600 eMacs.
So, throw in the 970 and cut prices by 20%. If Apple doesn't sell three times as many computers after that, you can shoot me. In the head. And they can raise their prices back up 20% again.
The consumer machines are different altogether though. Even if iMac prices stayed the same, that's no reason you can't do a cube at the same prices as an eMac. When you're done deleting the bulky CRT and case, and build it with more standardized slightly larger and cheaper parts (ie, an AGP slot, DIMM modules rather than a so-dimm, a not quite so tiny PS and NO display) you've saved yourself a ton of money in assembly and shipping over the cost of an iMac/eMac. It turns out that the formula produces a cheaper machine (sans display) with the same or BETTER margins than any of your AIO's. By all means, sell the iMac, but sell the i/eCube too. It has better cost proportions for everyone, not just the consumer, but also the maker. And it can get to markets that just don't like AIO's -- like enterprise, edu...
Margins and prices are almost another debate entirely. The truly grating aspect of this debate is that there is a concept with enormous potential and a very large demand within easy grasp and that it does NOT require Apple to really budge at all from their carefully guarded margins while allowing them to lower the cost of entry.
It's become a misfortune that they released and targetted the original cube in the way they did. Just a little less flash, even a G3 based debut, and bit more practicality at the right price would have made it a killer way back.
They're gun shy now, no question about it, but it's time to try again. They have stores to move them, a digital lifestyle/AV enthusiast hook, some real attention and growing consumer interest -- Apple is doing better with consumers: their marketshare might have actually gone up these past two years if hadn't got hammered so badly in education.
It just makes sense, regardless of what I want, or want not, to pay for a machine.
Originally posted by Cory Bauer
The two biggest reasons I hear for people not buying a Mac are that they are 1.) too slow and 2.) too expensive. That, and the oddity of Apple's all-in-one units is too much for most people. Although personally I can look at my iMac and understand how it's functionality and elegance is what drive it's design and appearance, it just looks too diffferent for many people.
In a really wierd way, this is true. I was talking to a woman the other day who mentioned the "blue terminal" her mother was so mysteriously fond of. I said that it was a full-fledged computer, and she looked at me like I was nuts and asked me where the computer was!
That's what Apple gets for building an entire computer that's sleeker than the average PC monitor.
If they lowered their prices by 20% across the board and had 970s installed across the board, they'd sell two, three, four times as many computers.
It's hard to sort anything out when you conflate variables like that, but let's just say that I doubt you'd see anything close to that boost in sales, except maybe for a short-term burst of sales from frustrated Quark users.
Neither lower prices nor faster CPUs tackles the third reason that people don't consider Macs: Compatibility issues. The perception is far worse than the reality, and the mere risk (again, perceived) that you become an island in a sea of Windows-using friends is enough to get people to take the "safe" route.
Institutions can't afford to buy thirty eMacs or iMacs. They can afford thirty $600 Dell towers though. Is Apple capable of lowering their prices? Yes. Could they still make enough to cover R&D costs? Yep, because they'll sell twice as many computers.
Given that Fred Anderson has emphasized market share over margins, and given that Steve has made a great deal of noise about "the other 95%," and doubling market share; if it was that simple, why hasn't Apple done it?
You are also ignoring the fact that Apple's decline in education can be traced immediately to the increasing presence of corporate IT people in education. Those people install Windows everywhere, for all purposes, unconditionally, because Windows is what they know. They paid in time, sweat and (serious) money to earn their certifications, and they're going to use the knowledge they've earned, dammit. When teachers control which machines they buy - which, increasingly, they don't - they tend to buy Macs. The rationalizations you're hearing out of educational institutions are the same rationalizations corporate IT has used to expunge Macs since 1995 at the latest, often repeated verbatim.
Why are they charging $800 for an 800Mhz G4 eMac, 128 MB SDRAM, 40GB Hard Drive and CD ROM when eMachines can sell a tower for $400 that has a 2.2Ghz Celeron Processor, 128 MB DDR RAM, 40 GB hard Drive, and a CD ROM? Why? Because Apple makes over $300 on every eMac sold, that's why. Obviously eMachines isn't selling their towers at a loss, so they're still making money on them at $400.
I'd be shocked and amazed if Apple nets anything like $300 on every eMac.
eMachines' profit margin on their machines is $5 - enough that they can only afford one tech support call per machine before they start losing money. That's why their company is doing poorly. Apple is seen as innovative, which means they're seen as taking risks, which means they'd better have a nice big financial net under their high-wire act or Wall Street will destroy them. eMachines does nothing I couldn't do myself - and they're still cutting so close to the bone that they've gotten nowhere.
Meanwhile, Dell's average margin is 20% or better.
I don't expect Apple to sell that same eMac for $400 (the eMachine doesn't include a monitor, but that's only an extra $100) but Apple could sell it for $600, and it'd still be $100 overpriced. But that extra $100 gets you the iApps. And? Apple sells two or three times as many because schools and offices would buy room fulls of $600 eMacs.
If IT people have been put in charge of a school, they sell 0 more eMacs, and continue to lose market share in education.
There's a reason Apple is targeting IT so aggressively now. They've finally figured this out, and they finally have a platform that has IT-friendly buzzwords. Note that "you don't even need a technician to set up a Mac network" is NOT a selling point to technicians. MS figured this out early on: Offer technologies with management-friendly names like "Zero Configuration" that are nevertheless fraught enough with problems to secure IT jobs and consolidate the CTO's power, and IT will love you. (Given this, I hope Apple is content to merely be tolerated by IT...)
So, throw in the 970 and cut prices by 20%. If Apple doesn't sell three times as many computers after that, you can shoot me. In the head. And they can raise their prices back up 20% again.
We'll see. If anything like that happens, it'll be the 970 that does it, and/or Panther. When Apple slashed prices on their towers with last winter's speed bump, sales dropped.
It's what I'm saying about not attracting new customers. This is pretty much because there's a core base of PM customers who upgrade their workstations with regularity. What Apple offered, even discounted, just offered no excuse for people with DP800's and up. Switchers haven't been enthused by those models since 12-18 months before even that date, so price drops really could reel anybody in.
You have to go in hot... PM's were already suffering badly at that point.
I think a cube slotted right UNDER the low-end Powermac, in the 1200-1500 range with nice GFx and optical drive options would do quite well.
Originally posted by Matsu
I disagree, margins on Powermacs are through the roof. I can cost out retail parts and come out (in Canadian dollars) way cheaper than retail PM's (in US dollars) That alone suggests gross margins of over 40% !!!
What about R&D and bundled software-development costs?
Bundled software is a huge part of the equation. A non-insignificant percentage of the price is for bundled software, not just the powermac hardware.
Mac hardware would be absolutely worthless without OS 9, OS X, and the bundled applications. It seems ridiculous to analyze PowerMac pricing from a purely hardware-for-the-dollar standpoint.
Originally posted by Matsu
What about it? Most top tier manufacturers spend just as much as Apple does on R&D and software licences.
I have always wondered where most top tier manufacturers' R&D actually goes - with Apple, you can see tangible results from their R&D budget (in hardware design, OSX, ITMS, FCP, iPod, hopefully a knockout 970 box etc). What on earth happens to Dell's R&D budget?
I'll give plenty of points to Matsu. I feel he's argued his corner stoutly. He's right. He's not the only one. Plenty of fine points here about what could and should be done.
The imac2 made a great initial sales splash and has subsequently dried up. Where did the sales go to? Former iMac owners? And 'some' Switchers? 120, 000 -ish Flat panel iMac2s? Pathetic. That isn't fit enough to tie the boot straps of the original iMac's last sales quarter.
Apple just isn't making this overpriced underspecced machine cheap enough. And if not? Why not? Other PC maker's are doing AIO cheaper. Sure, their design doesn't look quite as styl-ish. 15 inch LCD's are dirt cheap at the moment. So what's with the £999 inc VAT price? It didn't take the original iMac THAT long to break that barrier and get about 2-3 models under that price range. It took Apple ages to bring out the 'true' successor to the iMac, the 'e/iMac' and it was fat, overpriced, underspecced...and took ages to replace the flailingly old iMac complete with Ati Rage ('Alien Face Sucker') graphics card.
With the iMac2, Apple are making a greater mistake in 'SOME' ways than the Cube. It's a MORE limited Cube...but it DOES have the monitor with a cheaper combined price. Sorry, 'Son of Cube' but...you've got to do better than that..!
With the iPod, Apple have refined a good product. With the iMac? They stood still...just like they did with the original. And..? They're paying the price. If you price things to go...they GO...even in a soft economy. The iPod proves this.
Just drop in the iMac 2 where the eMac is. Push the eMac even lower. Create a fully configurable 'box-maker' iCube 'workstation/mini-tower/games/edu' machine' from £499-£1495 (with a options from a decent G3+SIMD to 970 single processor and a graphics options from integrated to Geforce Fx...) and I think a point would be proven. Repeating the mistakes of the past aint going to help Apple.
They're going to have to buy more components from Taiwan, in greater numbers. Their move to cheaper towers is a move too-late. They can't sell cheaper towers because their cpus are antiquated without monitor and a old graphics card as standard in their top of the line 'workstation'. I guess it isn't obvious to some why they aint selling 'just because they're cheaper' now.
The best imac2 is the iMac3. The '17 inch Powerbook'. It's alot more stylish and portable...sure, it's got the antiquated 1 gig G4...but put a 970 in it...and why would you even want an iMac2 other than for the 'cool' aio design? The 17 inch Laptop is far less 'limited'.
For what it's worth, I buy the some Mum's like the iMac2 argument. But I do think a fully scaleable iCube design could meet the needs of many where Apple's rigid desktop line does not. Apple are so hamfisted for a company so brilliant. Flawed. Yet great. Hmmm. They won't realise it until that 2% looks like 10% when they slip to 0.5%.
Lemon Bon Bon
The eMac is, basically, what everyone was SCREAMING for 2-3 years ago for the iMac to be: 17" and G4-based.
Part of me always thinks "just rechristen the eMac the iMac (since it looks like what everyone associates with the iMac...a cool jellybean AIO) and let that handle the schools, consumers, grannies, budget-buyers, etc. Between that and the soon-to-come 970-equipped PowerMacs, position a nice semi-expandable thing (like the reborn "iCube" thing talked about in another thread in Future Hardware), pack it with 1GHz - or more - G4 power, put on all the digital hub-friendly ports and features and pair it with a nice, matching LCD display (use same size/resolution as those used on the 17" PowerBooks and 17" iMacs).
OR, people can simply CHOOSE THEIR OWN.
Short of designing the LCD iMac to have removable screens that you can have popped off and replaced with a Apple-designed/manufactured 15", 17" and 19" ones (ain't gonna happen, I'd imagine), maybe people balk at being tied to a set screen in your typical AIO?"
Sorry, the 'quoter' didn't work with that much text. But I agree with PSCates. (Whenever I read your handle I think of 'Pussy Cats'...but I'll play nice and spell it properly...still, whenever I read my handle...I think of Citrus boiled Sweets...hmmm...Bon Bons....drool....)
In short, I think he said it better. Apart from the G4 thing. A cpu which should be laid out to rest along with the half-hearted relationship from Motorola. But a fully config' iCube from £495-£1,495 with choice of G3+SIMD IBM chip from 1.4-2 gig to a single 970 with graphics candy and ram of their choice and hey, it would probably keep the Lemon's and Matsu's and PSCATES of the world happy(ER!)
Apple's desktop range is just not flexible enough. That is particularly targeted at the consumer desktop range. It's patronisingly rigid. People know a stinker when they smell one. Hmmm. So what don't they like about the smell of eMac/iMac2's, eh Amorph?
Lemon Bon Bon
1. Detachable screen
2. Cheaper price.
3. A CHOICE of graphics card options FROM integrated to 'FX'/9700.
4. A FASTER (970) cpu to justify the current ridiculi price.
5. A proper 17 inch LCD with a standard resolution.
6. Fully configurable.
7. A choice of 15 - 19 inch LCD screens.
8. Maybe an iBox that can boost/bolster the limited graphics and cpu...included a decent Graphics card and twin cpus...that your iMac2 can plug into...plug in more iBox (Cube like...heh...) and get more amplified iMac2 power..! An extensible computer from Apple. Now there's a thought.
Some of my own thoughts...
Lemon Bon Bon
Originally posted by McCrab
I have always wondered where most top tier manufacturers' R&D actually goes - with Apple, you can see tangible results from their R&D budget (in hardware design, OSX, ITMS, FCP, iPod, hopefully a knockout 970 box etc). What on earth happens to Dell's R&D budget?
How to take another six cents off the manufacturing cost of each PC.
Seriously, a company like Dell does a lot to lower manufacturing costs. They sell so many PCs that even a small savings adds up to a tidy sum. Eliminating a few machine screws, along with associated labor, can be significant. While this helps Dell, it is hard to imagine that customers appreciate the fruits of such R&D.
Originally posted by Lemon Bon Bon
. . . Apple just isn't making this overpriced underspecced machine cheap enough. And if not? Why not? Other PC maker's are doing AIO cheaper. Sure, their design doesn't look quite as styl-ish. 15 inch LCD's are dirt cheap at the moment. . .
. . . The best imac2 is the iMac3. The '17 inch Powerbook'. It's alot more stylish and portable...sure, it's got the antiquated 1 gig G4...but put a 970 in it...and why would you even want an iMac2 other than for the 'cool' aio design? The 17 inch Laptop is far less 'limited'. . .
I think you are right about the iMac price. When the original iMac was introduced, it was both low cost and very stylish. I suspect Apple tried too hard to be spectacular with the new iMac and didn't do enough to keep manufacturing cost low. Too much emphasis on style alone. Most of the potential market for an iMac wants lower price first. Style will influence them if the price is close enough.
You have an interesting point about the 17 inch PowerBook. Those who can easily afford it might just buy one in place of an iMac. However, a PowerBook cannot be built as cheaply as an AIO that is designed for low manufacturing cost. Maybe Apple needs to get one of Dell's top miser engineers to rework the iMac.
Lemon Bon Bon
Still, the iMac has failed to live up to its calling, and will continue to fail until Apple finds a way to cut the price significantly. The iMac is meant to be like its predecessor, and even more so. It is meant to be ubiquitous, showing up everywhere. It cannot meet this goal unless the price drops. The style may have to suffer a tad bit to get manufacturing cost down enough. So be it.
With these changes to the product line up, the lowest price Mac would be the basic expandable Mac with no options, and using an existing monitor rather than purchasing one. The iMac might be the best selling Mac, since it is compact and very user friendly with its adjustable display.
The eMac will not go away because big, heavy, solid AIOs are prized by schools - originally, and still, the eMac's target market. You want school PCs to be relatively kidproof.
I note that through most of the existence of the jellybean iMac, the median selling price was at least $1300, and often more. Apple does need to have a nominal model at a lower price to lure people in, but you'd better believe that they have a finger on what the highest selling price point is, per line. One reason the PowerMac's price slashed this winter is that the median selling price in the fall quarter was about $100 over the price of the bottom line machine!
An inexpensive, moderately expandable machine would sell, no question. There are at least a dozen people on the board who want one.
Originally posted by Amorph
The iMac is, in design terms, one of the best home PCs ever made. That neck isn't style, it's substance. . .
I agree with your statement and mentioned what I believe are its two best features: compact design that takes up little space, and adjustable display that is easy to set the way you like it. However, I do not see the new iMac being accepted like the original iMac was. I noticed the first iMacs showing up in many, often unexpected, places. People would comment on them. I do not see this happening with the new iMac, and I don't know why. The new iMac is a lot nicer than the original.
My guess is that in its market, people are more interested in price than performance. Another possibility is just chance. Maybe the sales are as good as the earlier iMac, but I am not seeing the results. Interestingly, I do know a PC user who switched just to get an iMac. Yet I don't personally know anyone else who has the new iMac.