My experience with selling Macs has been closer to what Amorph says. Low cost Towers would be very welcome but they would be no panacea IMO.
Switchers with an "upgrade" mentality are just not the faint of heart. I've seen the disinterested look that Amorph mentions when you talk about upgradeability to some consumers. If you're savvy enough to want to upgrade components then the Powermacs are for you.
I don't blame Apple for their current strategy and marketing. It's working well right now for their linuep.
My personal opinion (as long as we're just speculating anyway) is that there are three Macintosh niches.
The first is the consumer line of products. I believe Amorph described these folks as buying a new computer and printer when it was time to upgrade just about ANYTHING in their computer.
The second is the professional line of products. Amorph mentioned that the folks who buy these products could pretty much care less about a couple of hundred dollars difference between models, because they're looking for features first and price second.
My personal belief is that there is a THIRD group of products. And for lack of a better definition, this third group of products is pretty much what's left over from the other two.
This group of consumers does not need the firepower of a $3000.00 computer. They do not want to be pigeonholed into buying an Apple monitor (eMac, iMac). They consistently hold off on buying NEW Macintosh hardware because the price tag does not justify the initial cost. They do not generally use the Macintosh for their livelyhood, but incorporate it into their daily lives as a necessary tool (re: Swiss Army Knife). They generally DO upgrade their machine (graphics card, replacement HD), but never really occupy ALL of the available PCI slots.
I pretty much count myself as part of the third group. I've been looking for a low-MHz, G4-equipped Powermac for some time now. If I could actually find one with a decent price tag, I'd yank out the CDRW and crappy MX2 video card, and toss in a Superdrive and an ATI 8500. Top it off with my 17" CRT, and I'd be VERY satisfied. Unfortunately, I've not had any success finding refurbished G4 towers at a sub-$1000 price tag.
If Apple were to offer a low-powered, highly expandable machine in their product line, I'd have purchased one of them already.
"Consumers don't upgrade individual components. The moment you mention swapping out a hard drive, adding a PCI slot, or even adding RAM, you lose people."<hr></blockquote>
Not true.
Not true.
Not true.
Wintel users are NOTORIOUS for customizing their machines. It comes (in part) from Wintel being the premier gaming platform. It is VERY common for Wintel gamers (which is a LARGE portion of the platform, btw.) to swap video cards and CPUs every year or so.
On another subject...
It seems to me that Apple is going about this whole "market share" thing is a backwards way. I'd figure that if you wanted to increase market share, you'd have a bunch of software for your market.
Quite frankly, I'm baffled why Apple doesn't institute a series of Cocoa classes at local community colleges across America. Microsoft already has a multitude of MFC classes available at nearly every community college, and the sheer volume of software for the platform is incredible. (Not saying it's GOOD software, btw. Just that it's available...)
As it stands, I'm pretty sure that the only Macintosh programming classes take place on some Ranch out in the boondocks and costs several thousand dollars. Oh, and you have to bring your OWN computer.
Apple can only hit that 3rd group by having room to differentiate their products.
If your Processing lineup can only span the lowly G3 to a G4 1.250 Apple doesn't have enough room to adequately space their line. Of course PC's have the same problem...how many Celeron or Duron systems do you see people building? Not many.
Consumers are tuned into getting the best proc in their price range and ignoring the rest.
Apple will be able to create low cost towers when their high end Powermacs have enough oomph as to not be cannibalized by the entry towers. Consumses are great and showing restraint ie " ahh I don't need that much speed" so Apple would be foolish to think that the slight increase in sales of Low end PM's would make up for larger profits that the current PM's enjoy.
There really is no easy anser..both roads could lead to problems if not travelled carefully.
Macs still need to get faster and cheaper or they have no legitimate shot at increasing their marketshare (or even just total sales per annum) over the long term. In fact in the very long term they won't be able to stay in the consumer business without significantly cheaper machines.
Computers will become commodity items whether Steve wants it or not. Digital video and 3-D have only earned thema temporary reprieve from disposable commodity status. When even the lowliest home computer handles 3-D, design, and DV as easily as they now handle Office tasks prices of all machines will change dramatically.
When PC's had dropped to record lows people on the mac side claimed that prices for products were unnaturally low due to fierce competition and that eventually prices for PC's would rise again. It hasn't happened to any significant degree. Computers will only get faster, cheaper, and easier. White box makers will keep major manufacturers honest. Windows will betray the manufacturers if neccessary, Linux or some other platform will grow and flourish to exploit cheap hardware if M$ and it's various schemes try too hard to tie us in to expensive software and hardware. Open source will get easy enough/mature enough for people to actually use. And downward pressure on prices will continue unabated.
Games are not enough to justify a 2000-3000 dollar PCs/Macs, nor 1000-1500 ones for that matter. OS's alone will not be able to either (so mac fans should feel no comfort) -- the competition will be good enough, and the open (linux) platforms will also be good enough/easy enough for the prices they demand. Anyone with a compliant/fast browser will have the possiblity to compete. Platforms could proliferate but there is no reason, downward price pressure will make sure most platforms are just idiot proofed *nixes (like OSX) that can run on cheap hardware (unlike mac) on relatively free end-user empowering/controlled licences (unlike M$).
Here, I say so humbly, is the answer to this dilema:
When Apple updates the Power Macs, leave the bottom model from the previous series and knock off $200 to $300. And not just for the education market. Do this consistently.
If that cuts into the newer Power Mac sales, then so be it. It only means that the new machines are lacking and they'd better make better ones.
More market share, more .Mac customers. I like that Apple is trying to make $ in services and digital lifestyle devices. Selling just computers is a tough business.
<strong>My personal opinion (as long as we're just speculating anyway) is that there are three Macintosh niches.
The first is the consumer line of products. I believe Amorph described these folks as buying a new computer and printer when it was time to upgrade just about ANYTHING in their computer.
The second is the professional line of products. Amorph mentioned that the folks who buy these products could pretty much care less about a couple of hundred dollars difference between models, because they're looking for features first and price second.
My personal belief is that there is a THIRD group of products. And for lack of a better definition, this third group of products is pretty much what's left over from the other two.
</strong><hr></blockquote>
I think that's a pretty good synopsis.
But.
By having two product lines serving the three niches you described, let's see what happens.
100% of niche one folk buy niche one products.
100% of niche two folk buy niche two products.
40% of niche three folk buy niche one products and clamor for more upgradability. (Which is probably helping to spur more and more interesting USB/Firewire widgets)
40% of niche three folk buy niche two products and argue for lower prices.
20% of niche three folk use an antique Mac with 17 upgrades of various sorts and keep waiting for the next insanely great thing. Or defect.
The real argument is, what are the real percentages for the niche three folk? (40,40,20 being numbers I made up from thin air). The only one of _real_ importance is the number of people not buying new macs.
Apple's long been accused of being marketing-research-happy. Market research this, market research that. If the numbers ever say 'Gosh, the losses associated with starting up a third product line are less than the losses we're taking as people defect.' there will be an expansion of the product lines to accommodate that. Witness how fast the eMac was opened to the general consumers, and how fast the iMac's screen got bigger.
They aren't clueless, much as we like ragging on them -> that particular fraction of a niche must be too small to be profitable. Or, at least, it must be too small to be a 'sure thing'. Apple's not currently in a position to take more than a couple risks a year - and the iMac & .mac are about the limit for this year.
The real argument is, what are the real percentages for the niche three folk? (40,40,20 being numbers I made up from thin air). The only one of _real_ importance is the number of people not buying new macs.<hr></blockquote>
That's an excellent question. Unfortunately, I haven't a clue as to the answer. I would suggest that the "niche three" catagory has the potential to attract some PC SWITCHers, along with the Macintosh faithful.
[quote]They aren't clueless, much as we like ragging on them -> that particular fraction of a niche must be too small to be profitable. Or, at least, it must be too small to be a 'sure thing'.<hr></blockquote>
I agree that Apple is not a clueless company. Often times, they show amazing resillience and cunning in a dangerously competitive market.
Unfortunately, they sometimes "miss the mark". Most noteable was the "Cube" product, which had some of the elements of the "niche three" category, but was so GROSSLY overpriced that virtually no one purchased it.
Apple seems to be a living paradox. They have billions in LIQUID CASH, but spend it ultra-conservatively. They seek to increase their market share, but deliberately make products that cater to one small segment of the market. They have ingenious advertising, but it is dwarfed by the PC competition (re: Dell). They have the world's most impressive Operating System (IMHO), but it cannot communicate with even the simplest of 3rd party hardware (re: scanners).
<strong>Some consumers have old monitors they would like to reuse. Some feel more comfortable just knowing that they could upgrade, even though most never would. Some might want to upgrade a video card, or replace a small harddrive with a bigger one, or add a second optical drive....</strong><hr></blockquote>
In my own experience, not many. Some of those who have gone in with that intention have walked out with all-new systems.
[quote]<strong>And it's not that they ever would, but if you absolutely CAN'T with an iMac, they'll never buy. And by your own logic, a low-cost entry model gets people to look and you can then upsell.</strong><hr></blockquote>
You can upsell into the tower line. But the tower line is ill-suited for most consumers. Most of the people here clamoring for cheap towers sound like they wouldn't sell up, either.
[quote]<strong>I've had plenty of friends look into purchasing a Mac but balk at the thought of an all-in-one machine. Were a tower available, I'm more than sure some of then would have switched.</strong><hr></blockquote>
As I have pointed out, cheap towers are available, with warrantees if you purchase them from a good provider (including Apple itself). If you know how to add a PCI card, you know how to look for one.
[quote]<strong>As for selling to current Apple users instead of consumers, you say that as if it's bad.</strong><hr></blockquote>
The constant refrain in this thread has been "to get another 5%... to get people to switch..." If Apple sells into their userbase, great. It keeps them afloat. But it won't accomplish what the cheap-tower crowd really hopes it will accomplish. In fact, what it means is that Apple will make less money from its installed base.
[quote]Originally posted by TheMagius:
<strong>Not true.
Not true.
Not true.
Wintel users are NOTORIOUS for customizing their machines. It comes (in part) from Wintel being the premier gaming platform. It is VERY common for Wintel gamers (which is a LARGE portion of the platform, btw.) to swap video cards and CPUs every year or so.</strong><hr></blockquote>
Sorry, but true true true. You're describing a small minority of Windows users, and a small minority of gamers (the so-called "hard-core" gamers are now less than 5% of the overall gaming market), who are themselves not a majority of Windows users (think of all the seats in business and enterprise!). The PC gaming industry is 1/10th the size of the console gaming industry, to give you some idea. The sales of high-profile games like RTCW vanish in the bulk of the gaming industry as a whole, and so does the hardware required to run them. Most games are targeted at hardware one or two or three generations behind, simply because that means a much bigger market for the game: Because most people don't upgrade anything.
It's true that there are some people who are constantly tweaking things. I know some of them. That really isn't Apple's crowd, and it's not a big crowd. This becomes obvious when you get older. Furthermore, the PC industry almost requires a constant flow of video card sales by offering consumer towers that use Intel integrated graphics with no VRAM and up to 12MB (stop the presses!) borrowed from main RAM. Faced with that, you have to go and buy a card to get any kind of game performance. But if you buy an iMac, you don't.
You can upsell into the tower line. But the tower line is ill-suited for most consumers.</strong><hr></blockquote>
I think this is part of the problem. Most consumers LIKE towers, even if they never fully utilize them. The form factor of a person's comuter shouldn't be Apple's choice, but their own.
Most? No, I wouldn't say most from my own experience. Most want something simple that lets them do what they want to, and they don't care much what it's like. The all-in-one offerings (including the iBook) are well targeted, because they offer a lot of advantages in the area of simplicity. For one thing, when the hardware is that standardized, hardware/software integration tends to work really well, and there tend to be a minimum of compatibility problems.
It's true that some people care about potential expandability, even if they'll never use it, but I would not say that they're most of the population. The best information we have is that most people buy what they need, use it until it doesn't do what they need it to do, and then replace it lock, stock and barrel.
Now, I should disclose something: I am one of the people you're talking about. I have kept peripherals, swapped drives, added PCI cards, and I'm now eyeing a possible CPU upgrade for my Cube. But I know that I'm in a distinct minority.
When Apple triples in size, perhaps they can address smaller markets. Right now, I think they've got the markets nailed, and the refurb/clearance market can handle people looking for cheaper, expandable towers.
If Apple wants the 5%, what they really need to hammer home is compatibility. You can move all your files over. You can send and receive email. You can use the Web. You can share documents. That's the #1 fear I've run into, over and above all other considerations.
Sorry, but true true true. You're describing a small minority of Windows users, and a small minority of gamers (the so-called "hard-core" gamers are now less than 5% of the overall gaming market), who are themselves not a majority of Windows users (think of all the seats in business and enterprise!).<hr></blockquote>
By nature of my original post (re: second group), I was pretty much ruling out the business and enterprise market.
[quote]The PC gaming industry is 1/10th the size of the console gaming industry, to give you some idea.<hr></blockquote>
Really? I guess you haven't seen these, then:
2001 Video Game Sales: 141.5 Million
2001 Computer Game Sales: 83.6 Million
(src: Interactive Digital Software Association)
The robust growth was not limited to software for game consoles. PC game sales also had a good year, reaching nearly $6 billion in 2001 from $5.4 billion in the preceding year. The most popular PC game was Electronic Arts' "The Sims," which has sold more than 2.6 million copies during its two-year lifespan. (src: ZDNet News)
As far as I can tell, the Computer game industry is actually closer to 1/3 the size of the console industry.
[quote]The sales of high-profile games like RTCW vanish in the bulk of the gaming industry as a whole, and so does the hardware required to run them. Most games are targeted at hardware one or two or three generations behind, simply because that means a much bigger market for the game: Because most people don't upgrade anything.<hr></blockquote>
Perhaps, but consider this:
According to the Interactive Digital Software Assn. (IDSA), an industry trade group based in Washington, D.C., about 60% of Americans -- or 145 million people -- now play computer or video games. The average player's age is 28, and 43% are women. (src: BusinessWeek Online)
So, the fact that RTCW may pale in comparison to games like TheSims doesn't diminish the fact that games are DAMN popular (re: 60%), and that hardware--even 3 generations behind--will need to be updated eventually. If you buy an iMac, you'll ALWAYS be stuck with that minimalistic $50 MX2 video card that may work today, but not in a year's time.
[quote]It's true that there are some people who are constantly tweaking things. I know some of them. That really isn't Apple's crowd, and it's not a big crowd.<hr></blockquote>
But it COULD be Apple's crowd, Amorph. Consider this:
"What we've found is that most people in the U.S. have a PC that they've bought in the last couple of years, and there are enough enhancements available that people are choosing to upgrade rather than buy a new machine," Forrester Research analyst Jed Kolko told NewsFactor Network. (src: NewsFactor Network, March 2001)
There are users out there, who have a SUBSTANTIAL impact on the computer market, who DO UPGRADE.
[quote]This becomes obvious when you get older. <hr></blockquote>
So, the older you get, the less you choose to upgrade your computer? How old must I be to realize that more expandability = more value?
I don't mean to get snippy here, but there's a certain "stigma" associated with the Macintosh when talking about the influence of game-related entertainment. One group of Apple users screams, "We don't need games, we use our machines for WORK!" The other half screams, "PCs get 192.65387 more frames per second on QuakeIII than my Dual Gig G4!"
It would sure be nice if the Macintosh could be the best at BOTH gaming and productivity for a price tag of $3000.00. Or, as an alternative, it would be nice if Apple had a line of Macintoshes that could be affordably configured as EITHER gaming or productivity machines.
I leave you with another quote, just because it is SO DAMNED INCREDIBLE.
Research firm IDC reported that total domestic hardware and software sales for interactive games totaled $8.2 billion in 2000 -- vs. just $7.75 billion in U.S. movie box-office receipts. (src: BusinessWeek Online)
<strong>Faced with that, you have to go and buy a card to get any kind of game performance. But if you buy an iMac, you don't.</strong><hr></blockquote>
[note: This post has been edited substantially since I first put it up]
[quote]quote:
The PC gaming industry is 1/10th the size of the console gaming industry, to give you some idea.
<strong>
Really? I guess you haven't seen these, then:
2001 Video Game Sales: 141.5 Million
2001 Computer Game Sales: 83.6 Million
(src: Interactive Digital Software Association)
The robust growth was not limited to software for game consoles. PC game sales also had a good year, reaching nearly $6 billion in 2001 from $5.4 billion in the preceding year. The most popular PC game was Electronic Arts' "The Sims," which has sold more than 2.6 million copies during its two-year lifespan. (src: ZDNet News)
As far as I can tell, the Computer game industry is actually closer to 1/3 the size of the console industry.</strong><hr></blockquote>
I see nothing here about the size of the console industry, whose sales are well into the tens of billions of dollars annually. The last statistic I did see, posted on one of the PC gaming sites (VoodooExtreme, I think?) showed PC games at 10% of the revenue of console games (which is why Microsoft is hyping XBox) and pointed out that the hardcore PC gamers (VoodooExtreme readers ) are almost vanishing - actually, the casual gamer industry is exploding around them.
Edit: Since I can't find a link, I'll grant you the 30% statistic.
Casual games tend to have casual hardware demands. Even some of the more hardcore titles haven't required 3D acceleration until the current generation. High hardware demands translate directly into fewer sales.
[quote]quote:
The sales of high-profile games like RTCW vanish in the bulk of the gaming industry as a whole, and so does the hardware required to run them. Most games are targeted at hardware one or two or three generations behind, simply because that means a much bigger market for the game: Because most people don't upgrade anything.
<strong>Perhaps, but consider this:
According to the Interactive Digital Software Assn. (IDSA), an industry trade group based in Washington, D.C., about 60% of Americans -- or 145 million people -- now play computer or video games. The average player's age is 28, and 43% are women. (src: BusinessWeek Online)
So, the fact that RTCW may pale in comparison to games like TheSims doesn't diminish the fact that games are DAMN popular (re: 60%), and that hardware--even 3 generations behind--will need to be updated eventually. If you buy an iMac, you'll ALWAYS be stuck with that minimalistic $50 MX2 video card that may work today, but not in a year's time.</strong><hr></blockquote>
Interactive software = the card games on Yahoo! and their ilk. This does change the rate at which games drive upgrades, because with online card games you can use the same machine for years before considering an upgrade instead of once every six months. Once the upgrade cycle gets long enough, you're talking replacement rather than upgrades, because everything has gotten too old. The average PC is replaced in three years; a three year old PC can run most of the games thrown at it adequately, with the exception of the niche games like RTCW.
[quote]
quote:
It's true that there are some people who are constantly tweaking things. I know some of them. That really isn't Apple's crowd, and it's not a big crowd.
<strong>But it COULD be Apple's crowd, Amorph. Consider this:
"What we've found is that most people in the U.S. have a PC that they've bought in the last couple of years, and there are enough enhancements available that people are choosing to upgrade rather than buy a new machine," Forrester Research analyst Jed Kolko told NewsFactor Network. (src: NewsFactor Network, March 2001)</strong><hr></blockquote>
This goes against everything I've found, so I wonder who they're surveying. If true, it would be because of the recent fact that PC vendors aren't offering compelling replacements: The machines are fast enough. So people are actually thinking of replacing the stuff around them. Fair enough. However, "upgrade" could mean any number of things that don't require towers. You can change hard drives, add RAM, update the OS etc. in an iMac. Those are all upgrades; never mind changing the printer or adding a drive.
This report doesn't necessarily apply to Apple, because Apple offers other reasons to upgrade than CPU performance. They aren't in the commodity rat race with the PC OEMs. The monitor isn't upgradeable on an iMac, which I can see as one legitimate sore point; but the tradeoff is that the monitor is mounted in a way that's much more versatile and user-friendly.
[quote]
quote:
This becomes obvious when you get older.
<strong>So, the older you get, the less you choose to upgrade your computer? How old must I be to realize that more expandability = more value?</strong><hr></blockquote>
More expandability != more value, first of all. At best it provides more value; at worst it provides nothing but hassles and a poor computer design (from a usability perspective). A lot of the less expensive "expandable" PCs are actually crippled in ways that make it pointless or even impossible to use all the slots they have.
But what I meant was, the older you get the more obvious it is that most people don't upgrade, because you get to know older people. (the people with money). I'm the go-to guy for a lot of them who ask me about purchases. I know what they do. They buy a system, use it for a few years, and buy another one. The few people I know who don't are gearheads who build huge antennae to bounce radio signals off the moon for fun. This is not the majority of the population.
[quote]<strong>I don't mean to get snippy here, but there's a certain "stigma" associated with the Macintosh when talking about the influence of game-related entertainment. One group of Apple users screams, "We don't need games, we use our machines for WORK!" The other half screams, "PCs get 192.65387 more frames per second on QuakeIII than my Dual Gig G4!"</strong><hr></blockquote>
I remember when the stigma around Macs was that games were all they were good for. I've heard that Macs suck because the fonts are rounded and feminine looking. Something about Macs attracts stigmas. Nothing to do but ignore them.
[quote]<strong>It would sure be nice if the Macintosh could be the best at BOTH gaming and productivity for a price tag of $3000.00. Or, as an alternative, it would be nice if Apple had a line of Macintoshes that could be affordably configured as EITHER gaming or productivity machines.</strong><hr></blockquote>
The current models do well for both until you bring the hardcore gamers in. But then Apple's competing with a commodity market, which they can't; or they're competing with the likes of Alienware, in which case their current towers do well enough (in another thread in FH, a dual PMG4 with a RADEON 9000 Pro outdoes a 2.53GHz Pentium in Quake III at 10x7x32, and is in the ballpark otherwise). The expandable, cheap Mac basically addresses the student age hardcore gaming market, which is neither large nor particularly well to do.
[quote]<strong>I leave you with another quote, just because it is SO DAMNED INCREDIBLE.
Research firm IDC reported that total domestic hardware and software sales for interactive games totaled $8.2 billion in 2000 -- vs. just $7.75 billion in U.S. movie box-office receipts. (src: BusinessWeek Online)</strong><hr></blockquote>
That's about right. Actually, I've seen $9.3 billion in a few places while looking for links.
The group 3 niche discribed would be what I would call the "hobbist"
They want everything, but have little reason to have it except to thinker.
Kind of like a fake professional. They want to do the work, learn the things, but have little intentions to work in that field for the immediate future.
These usually live in the PC world because of what PCs are. The time spent, building, researching, customizing a computer(both hardware and software) can equal thousands of dollars to a professional and quite a decent sum of money at minium wage.
But the satisfaction of knowing they got the best bang for a buck and what they wanted is its own reward. Basically time isn't money for this group.
I'm generalizing here of course, there are professionals that double as hobbists on their free time.
This conflicts with apple's idea of making the whole widget however. They are not in the market of leting you do it, because it's unprofitiable. They rather charge for "service" whenever possible as with business 101.
My current machine is a B&W G3 (400MHz). I don't like any of the current offerings and so won't be buying a new Mac this year. If they ever come out with a faster than 500MHz G3 CPU upgrade, I'll probably go with that.
If, however, they offered a eMac without the monitor and sold it for, say, $699 or (maybe) $799, I'd buy one today. In fact, I would have bought one last year. But when the machine costs twice as much, I'll upgrade half as often. For all the reasons given, I won't buy an all-in-one machine.
The Cube was a good idea that was executed poorly. This seems so obvious. If Apple would make a headless eMac, they'd double their marketshare within 12 months.
An important consideration from a business perspective is, ?What is the goal of selling a budget tower?? The knee-jerk response is ?to increase sales?, but to whom:
New users (switchers), hold-outs (currents users on a decade old machine), upgraders (bought and iMac in last 4 years want more but maybe all-in-one doesn?t cut it anymore), and there are obviously other categories as well.
I think that most will agree, as does Apple based upon there current campaign, that the first category is the most crucial right now. How does a budget product attract this market?
My take: Apple needs a ?loss leader? product. Example: Lexus. When the first LS400 was introduced it sold for under $35,000. Toyota lost money on each car. This loss was easily absorbed by the high-profit Toyota brand. Within 3 years the LS400 was selling for about $48,000, the same price as competitive cars, but due to great early sales (mostly driven by an incredible price) it had brand recognition and a good reputation and continued to sell, now at a profit. Jet Blue is currently doing the same thing in the Airline industry.
The goal is to have a product out there that makes consumers say, ?Holy moose snot, I can?t believe that they are selling (Product A) for $$$.
Before anyone chimes in with ?That?s what we say about Apple products now!? Please try to control yourself.
My first choice for this role is still the 15? CD-RW iMac, but a budget tower may fit this role better. It?s less ?different? than what PC users are familiar with and they get to keep their old monitor.
Take the iMac guts in a small cool tower form with modest upgrade capability; HD, graphics, etc. Two versions: a low end for $699 which will lose money and a high end bare-minimum profit margin unit for $899. Apple has plenty of cash to cover the very modest short term losses and features/price can be modified as sales numbers come in to maximize the benefit of the budget unit.
Take the iMac guts in a small cool tower form with modest upgrade capability; HD, graphics, etc. Two versions: a low end for $699 which will lose money and a high end bare-minimum profit margin unit for $899. Apple has plenty of cash to cover the very modest short term losses and features/price can be modified as sales numbers come in to maximize the benefit of the budget unit.</strong><hr></blockquote>
I don't think Apple could go that cheap, not until their .Mac or other subscription services are robust enough to actually become truly desirable. At that point the hardware can become more of a commodity. Until then, I still think an eMac priced midTower with eMac specs would be a great start.
Comments
Switchers with an "upgrade" mentality are just not the faint of heart. I've seen the disinterested look that Amorph mentions when you talk about upgradeability to some consumers. If you're savvy enough to want to upgrade components then the Powermacs are for you.
I don't blame Apple for their current strategy and marketing. It's working well right now for their linuep.
The first is the consumer line of products. I believe Amorph described these folks as buying a new computer and printer when it was time to upgrade just about ANYTHING in their computer.
The second is the professional line of products. Amorph mentioned that the folks who buy these products could pretty much care less about a couple of hundred dollars difference between models, because they're looking for features first and price second.
My personal belief is that there is a THIRD group of products. And for lack of a better definition, this third group of products is pretty much what's left over from the other two.
This group of consumers does not need the firepower of a $3000.00 computer. They do not want to be pigeonholed into buying an Apple monitor (eMac, iMac). They consistently hold off on buying NEW Macintosh hardware because the price tag does not justify the initial cost. They do not generally use the Macintosh for their livelyhood, but incorporate it into their daily lives as a necessary tool (re: Swiss Army Knife). They generally DO upgrade their machine (graphics card, replacement HD), but never really occupy ALL of the available PCI slots.
I pretty much count myself as part of the third group. I've been looking for a low-MHz, G4-equipped Powermac for some time now. If I could actually find one with a decent price tag, I'd yank out the CDRW and crappy MX2 video card, and toss in a Superdrive and an ATI 8500. Top it off with my 17" CRT, and I'd be VERY satisfied. Unfortunately, I've not had any success finding refurbished G4 towers at a sub-$1000 price tag.
If Apple were to offer a low-powered, highly expandable machine in their product line, I'd have purchased one of them already.
Anyways, just thought I'd chime in with my $0.02,
-theMagius
[quote]Amorph wrote:
"Consumers don't upgrade individual components. The moment you mention swapping out a hard drive, adding a PCI slot, or even adding RAM, you lose people."<hr></blockquote>
Not true.
Not true.
Not true.
Wintel users are NOTORIOUS for customizing their machines. It comes (in part) from Wintel being the premier gaming platform. It is VERY common for Wintel gamers (which is a LARGE portion of the platform, btw.) to swap video cards and CPUs every year or so.
On another subject...
It seems to me that Apple is going about this whole "market share" thing is a backwards way. I'd figure that if you wanted to increase market share, you'd have a bunch of software for your market.
Quite frankly, I'm baffled why Apple doesn't institute a series of Cocoa classes at local community colleges across America. Microsoft already has a multitude of MFC classes available at nearly every community college, and the sheer volume of software for the platform is incredible. (Not saying it's GOOD software, btw. Just that it's available...)
As it stands, I'm pretty sure that the only Macintosh programming classes take place on some Ranch out in the boondocks and costs several thousand dollars. Oh, and you have to bring your OWN computer.
Pretty sad, actually,
-theMagius
[ 08-20-2002: Message edited by: theMagius ]</p>
If your Processing lineup can only span the lowly G3 to a G4 1.250 Apple doesn't have enough room to adequately space their line. Of course PC's have the same problem...how many Celeron or Duron systems do you see people building? Not many.
Consumers are tuned into getting the best proc in their price range and ignoring the rest.
Apple will be able to create low cost towers when their high end Powermacs have enough oomph as to not be cannibalized by the entry towers. Consumses are great and showing restraint ie " ahh I don't need that much speed" so Apple would be foolish to think that the slight increase in sales of Low end PM's would make up for larger profits that the current PM's enjoy.
There really is no easy anser..both roads could lead to problems if not travelled carefully.
Computers will become commodity items whether Steve wants it or not. Digital video and 3-D have only earned thema temporary reprieve from disposable commodity status. When even the lowliest home computer handles 3-D, design, and DV as easily as they now handle Office tasks prices of all machines will change dramatically.
When PC's had dropped to record lows people on the mac side claimed that prices for products were unnaturally low due to fierce competition and that eventually prices for PC's would rise again. It hasn't happened to any significant degree. Computers will only get faster, cheaper, and easier. White box makers will keep major manufacturers honest. Windows will betray the manufacturers if neccessary, Linux or some other platform will grow and flourish to exploit cheap hardware if M$ and it's various schemes try too hard to tie us in to expensive software and hardware. Open source will get easy enough/mature enough for people to actually use. And downward pressure on prices will continue unabated.
Games are not enough to justify a 2000-3000 dollar PCs/Macs, nor 1000-1500 ones for that matter. OS's alone will not be able to either (so mac fans should feel no comfort) -- the competition will be good enough, and the open (linux) platforms will also be good enough/easy enough for the prices they demand. Anyone with a compliant/fast browser will have the possiblity to compete. Platforms could proliferate but there is no reason, downward price pressure will make sure most platforms are just idiot proofed *nixes (like OSX) that can run on cheap hardware (unlike mac) on relatively free end-user empowering/controlled licences (unlike M$).
When Apple updates the Power Macs, leave the bottom model from the previous series and knock off $200 to $300. And not just for the education market. Do this consistently.
If that cuts into the newer Power Mac sales, then so be it. It only means that the new machines are lacking and they'd better make better ones.
More market share, more .Mac customers. I like that Apple is trying to make $ in services and digital lifestyle devices. Selling just computers is a tough business.
<strong>My personal opinion (as long as we're just speculating anyway) is that there are three Macintosh niches.
The first is the consumer line of products. I believe Amorph described these folks as buying a new computer and printer when it was time to upgrade just about ANYTHING in their computer.
The second is the professional line of products. Amorph mentioned that the folks who buy these products could pretty much care less about a couple of hundred dollars difference between models, because they're looking for features first and price second.
My personal belief is that there is a THIRD group of products. And for lack of a better definition, this third group of products is pretty much what's left over from the other two.
</strong><hr></blockquote>
I think that's a pretty good synopsis.
But.
By having two product lines serving the three niches you described, let's see what happens.
100% of niche one folk buy niche one products.
100% of niche two folk buy niche two products.
40% of niche three folk buy niche one products and clamor for more upgradability. (Which is probably helping to spur more and more interesting USB/Firewire widgets)
40% of niche three folk buy niche two products and argue for lower prices.
20% of niche three folk use an antique Mac with 17 upgrades of various sorts and keep waiting for the next insanely great thing. Or defect.
The real argument is, what are the real percentages for the niche three folk? (40,40,20 being numbers I made up from thin air). The only one of _real_ importance is the number of people not buying new macs.
Apple's long been accused of being marketing-research-happy. Market research this, market research that. If the numbers ever say 'Gosh, the losses associated with starting up a third product line are less than the losses we're taking as people defect.' there will be an expansion of the product lines to accommodate that. Witness how fast the eMac was opened to the general consumers, and how fast the iMac's screen got bigger.
They aren't clueless, much as we like ragging on them -> that particular fraction of a niche must be too small to be profitable. Or, at least, it must be too small to be a 'sure thing'. Apple's not currently in a position to take more than a couple risks a year - and the iMac & .mac are about the limit for this year.
The real argument is, what are the real percentages for the niche three folk? (40,40,20 being numbers I made up from thin air). The only one of _real_ importance is the number of people not buying new macs.<hr></blockquote>
That's an excellent question. Unfortunately, I haven't a clue as to the answer. I would suggest that the "niche three" catagory has the potential to attract some PC SWITCHers, along with the Macintosh faithful.
[quote]They aren't clueless, much as we like ragging on them -> that particular fraction of a niche must be too small to be profitable. Or, at least, it must be too small to be a 'sure thing'.<hr></blockquote>
I agree that Apple is not a clueless company. Often times, they show amazing resillience and cunning in a dangerously competitive market.
Unfortunately, they sometimes "miss the mark". Most noteable was the "Cube" product, which had some of the elements of the "niche three" category, but was so GROSSLY overpriced that virtually no one purchased it.
Apple seems to be a living paradox. They have billions in LIQUID CASH, but spend it ultra-conservatively. They seek to increase their market share, but deliberately make products that cater to one small segment of the market. They have ingenious advertising, but it is dwarfed by the PC competition (re: Dell). They have the world's most impressive Operating System (IMHO), but it cannot communicate with even the simplest of 3rd party hardware (re: scanners).
-theMagius
<strong>I don't blame Apple for their current strategy and marketing. It's working well right now for their linuep.</strong><hr></blockquote>
Yey, great! So they're finally increasing marketing share by more then 1% a year, or? Oh.. wait..
<strong>Some consumers have old monitors they would like to reuse. Some feel more comfortable just knowing that they could upgrade, even though most never would. Some might want to upgrade a video card, or replace a small harddrive with a bigger one, or add a second optical drive....</strong><hr></blockquote>
In my own experience, not many. Some of those who have gone in with that intention have walked out with all-new systems.
[quote]<strong>And it's not that they ever would, but if you absolutely CAN'T with an iMac, they'll never buy. And by your own logic, a low-cost entry model gets people to look and you can then upsell.</strong><hr></blockquote>
You can upsell into the tower line. But the tower line is ill-suited for most consumers. Most of the people here clamoring for cheap towers sound like they wouldn't sell up, either.
[quote]<strong>I've had plenty of friends look into purchasing a Mac but balk at the thought of an all-in-one machine. Were a tower available, I'm more than sure some of then would have switched.</strong><hr></blockquote>
As I have pointed out, cheap towers are available, with warrantees if you purchase them from a good provider (including Apple itself). If you know how to add a PCI card, you know how to look for one.
[quote]<strong>As for selling to current Apple users instead of consumers, you say that as if it's bad.</strong><hr></blockquote>
The constant refrain in this thread has been "to get another 5%... to get people to switch..." If Apple sells into their userbase, great. It keeps them afloat. But it won't accomplish what the cheap-tower crowd really hopes it will accomplish. In fact, what it means is that Apple will make less money from its installed base.
[quote]Originally posted by TheMagius:
<strong>Not true.
Not true.
Not true.
Wintel users are NOTORIOUS for customizing their machines. It comes (in part) from Wintel being the premier gaming platform. It is VERY common for Wintel gamers (which is a LARGE portion of the platform, btw.) to swap video cards and CPUs every year or so.</strong><hr></blockquote>
Sorry, but true true true.
It's true that there are some people who are constantly tweaking things. I know some of them. That really isn't Apple's crowd, and it's not a big crowd. This becomes obvious when you get older.
<strong>
You can upsell into the tower line. But the tower line is ill-suited for most consumers.</strong><hr></blockquote>
I think this is part of the problem. Most consumers LIKE towers, even if they never fully utilize them. The form factor of a person's comuter shouldn't be Apple's choice, but their own.
It's true that some people care about potential expandability, even if they'll never use it, but I would not say that they're most of the population. The best information we have is that most people buy what they need, use it until it doesn't do what they need it to do, and then replace it lock, stock and barrel.
Now, I should disclose something: I am one of the people you're talking about. I have kept peripherals, swapped drives, added PCI cards, and I'm now eyeing a possible CPU upgrade for my Cube. But I know that I'm in a distinct minority.
When Apple triples in size, perhaps they can address smaller markets. Right now, I think they've got the markets nailed, and the refurb/clearance market can handle people looking for cheaper, expandable towers.
If Apple wants the 5%, what they really need to hammer home is compatibility. You can move all your files over. You can send and receive email. You can use the Web. You can share documents. That's the #1 fear I've run into, over and above all other considerations.
[ 08-20-2002: Message edited by: Amorph ]</p>
Sorry, but true true true.
By nature of my original post (re: second group), I was pretty much ruling out the business and enterprise market.
[quote]The PC gaming industry is 1/10th the size of the console gaming industry, to give you some idea.<hr></blockquote>
Really? I guess you haven't seen these, then:
2001 Video Game Sales: 141.5 Million
2001 Computer Game Sales: 83.6 Million
(src: Interactive Digital Software Association)
The robust growth was not limited to software for game consoles. PC game sales also had a good year, reaching nearly $6 billion in 2001 from $5.4 billion in the preceding year. The most popular PC game was Electronic Arts' "The Sims," which has sold more than 2.6 million copies during its two-year lifespan. (src: ZDNet News)
As far as I can tell, the Computer game industry is actually closer to 1/3 the size of the console industry.
[quote]The sales of high-profile games like RTCW vanish in the bulk of the gaming industry as a whole, and so does the hardware required to run them. Most games are targeted at hardware one or two or three generations behind, simply because that means a much bigger market for the game: Because most people don't upgrade anything.<hr></blockquote>
Perhaps, but consider this:
According to the Interactive Digital Software Assn. (IDSA), an industry trade group based in Washington, D.C., about 60% of Americans -- or 145 million people -- now play computer or video games. The average player's age is 28, and 43% are women. (src: BusinessWeek Online)
So, the fact that RTCW may pale in comparison to games like TheSims doesn't diminish the fact that games are DAMN popular (re: 60%), and that hardware--even 3 generations behind--will need to be updated eventually. If you buy an iMac, you'll ALWAYS be stuck with that minimalistic $50 MX2 video card that may work today, but not in a year's time.
[quote]It's true that there are some people who are constantly tweaking things. I know some of them. That really isn't Apple's crowd, and it's not a big crowd.<hr></blockquote>
But it COULD be Apple's crowd, Amorph. Consider this:
"What we've found is that most people in the U.S. have a PC that they've bought in the last couple of years, and there are enough enhancements available that people are choosing to upgrade rather than buy a new machine," Forrester Research analyst Jed Kolko told NewsFactor Network. (src: NewsFactor Network, March 2001)
There are users out there, who have a SUBSTANTIAL impact on the computer market, who DO UPGRADE.
[quote]This becomes obvious when you get older.
So, the older you get, the less you choose to upgrade your computer?
I don't mean to get snippy here, but there's a certain "stigma" associated with the Macintosh when talking about the influence of game-related entertainment. One group of Apple users screams, "We don't need games, we use our machines for WORK!" The other half screams, "PCs get 192.65387 more frames per second on QuakeIII than my Dual Gig G4!"
It would sure be nice if the Macintosh could be the best at BOTH gaming and productivity for a price tag of $3000.00. Or, as an alternative, it would be nice if Apple had a line of Macintoshes that could be affordably configured as EITHER gaming or productivity machines.
I leave you with another quote, just because it is SO DAMNED INCREDIBLE.
Research firm IDC reported that total domestic hardware and software sales for interactive games totaled $8.2 billion in 2000 -- vs. just $7.75 billion in U.S. movie box-office receipts. (src: BusinessWeek Online)
Respectfully,
-theMagius
[ 08-20-2002: Message edited by: theMagius ]</p>
<strong>Faced with that, you have to go and buy a card to get any kind of game performance. But if you buy an iMac, you don't.</strong><hr></blockquote>
You mean you don't get any performance?
[quote]quote:
The PC gaming industry is 1/10th the size of the console gaming industry, to give you some idea.
<strong>
Really? I guess you haven't seen these, then:
2001 Video Game Sales: 141.5 Million
2001 Computer Game Sales: 83.6 Million
(src: Interactive Digital Software Association)
The robust growth was not limited to software for game consoles. PC game sales also had a good year, reaching nearly $6 billion in 2001 from $5.4 billion in the preceding year. The most popular PC game was Electronic Arts' "The Sims," which has sold more than 2.6 million copies during its two-year lifespan. (src: ZDNet News)
As far as I can tell, the Computer game industry is actually closer to 1/3 the size of the console industry.</strong><hr></blockquote>
I see nothing here about the size of the console industry, whose sales are well into the tens of billions of dollars annually. The last statistic I did see, posted on one of the PC gaming sites (VoodooExtreme, I think?) showed PC games at 10% of the revenue of console games (which is why Microsoft is hyping XBox) and pointed out that the hardcore PC gamers (VoodooExtreme readers
Edit: Since I can't find a link, I'll grant you the 30% statistic.
Casual games tend to have casual hardware demands. Even some of the more hardcore titles haven't required 3D acceleration until the current generation. High hardware demands translate directly into fewer sales.
[quote]quote:
The sales of high-profile games like RTCW vanish in the bulk of the gaming industry as a whole, and so does the hardware required to run them. Most games are targeted at hardware one or two or three generations behind, simply because that means a much bigger market for the game: Because most people don't upgrade anything.
<strong>Perhaps, but consider this:
According to the Interactive Digital Software Assn. (IDSA), an industry trade group based in Washington, D.C., about 60% of Americans -- or 145 million people -- now play computer or video games. The average player's age is 28, and 43% are women. (src: BusinessWeek Online)
So, the fact that RTCW may pale in comparison to games like TheSims doesn't diminish the fact that games are DAMN popular (re: 60%), and that hardware--even 3 generations behind--will need to be updated eventually. If you buy an iMac, you'll ALWAYS be stuck with that minimalistic $50 MX2 video card that may work today, but not in a year's time.</strong><hr></blockquote>
Interactive software = the card games on Yahoo! and their ilk. This does change the rate at which games drive upgrades, because with online card games you can use the same machine for years before considering an upgrade instead of once every six months. Once the upgrade cycle gets long enough, you're talking replacement rather than upgrades, because everything has gotten too old. The average PC is replaced in three years; a three year old PC can run most of the games thrown at it adequately, with the exception of the niche games like RTCW.
[quote]
quote:
It's true that there are some people who are constantly tweaking things. I know some of them. That really isn't Apple's crowd, and it's not a big crowd.
<strong>But it COULD be Apple's crowd, Amorph. Consider this:
"What we've found is that most people in the U.S. have a PC that they've bought in the last couple of years, and there are enough enhancements available that people are choosing to upgrade rather than buy a new machine," Forrester Research analyst Jed Kolko told NewsFactor Network. (src: NewsFactor Network, March 2001)</strong><hr></blockquote>
This goes against everything I've found, so I wonder who they're surveying. If true, it would be because of the recent fact that PC vendors aren't offering compelling replacements: The machines are fast enough. So people are actually thinking of replacing the stuff around them. Fair enough. However, "upgrade" could mean any number of things that don't require towers. You can change hard drives, add RAM, update the OS etc. in an iMac. Those are all upgrades; never mind changing the printer or adding a drive.
This report doesn't necessarily apply to Apple, because Apple offers other reasons to upgrade than CPU performance. They aren't in the commodity rat race with the PC OEMs. The monitor isn't upgradeable on an iMac, which I can see as one legitimate sore point; but the tradeoff is that the monitor is mounted in a way that's much more versatile and user-friendly.
[quote]
quote:
This becomes obvious when you get older.
<strong>So, the older you get, the less you choose to upgrade your computer? How old must I be to realize that more expandability = more value?</strong><hr></blockquote>
More expandability != more value, first of all. At best it provides more value; at worst it provides nothing but hassles and a poor computer design (from a usability perspective). A lot of the less expensive "expandable" PCs are actually crippled in ways that make it pointless or even impossible to use all the slots they have.
But what I meant was, the older you get the more obvious it is that most people don't upgrade, because you get to know older people. (the people with money). I'm the go-to guy for a lot of them who ask me about purchases. I know what they do. They buy a system, use it for a few years, and buy another one. The few people I know who don't are gearheads who build huge antennae to bounce radio signals off the moon for fun. This is not the majority of the population.
[quote]<strong>I don't mean to get snippy here, but there's a certain "stigma" associated with the Macintosh when talking about the influence of game-related entertainment. One group of Apple users screams, "We don't need games, we use our machines for WORK!" The other half screams, "PCs get 192.65387 more frames per second on QuakeIII than my Dual Gig G4!"</strong><hr></blockquote>
I remember when the stigma around Macs was that games were all they were good for. I've heard that Macs suck because the fonts are rounded and feminine looking. Something about Macs attracts stigmas. Nothing to do but ignore them.
[quote]<strong>It would sure be nice if the Macintosh could be the best at BOTH gaming and productivity for a price tag of $3000.00. Or, as an alternative, it would be nice if Apple had a line of Macintoshes that could be affordably configured as EITHER gaming or productivity machines.</strong><hr></blockquote>
The current models do well for both until you bring the hardcore gamers in. But then Apple's competing with a commodity market, which they can't; or they're competing with the likes of Alienware, in which case their current towers do well enough (in another thread in FH, a dual PMG4 with a RADEON 9000 Pro outdoes a 2.53GHz Pentium in Quake III at 10x7x32, and is in the ballpark otherwise). The expandable, cheap Mac basically addresses the student age hardcore gaming market, which is neither large nor particularly well to do.
[quote]<strong>I leave you with another quote, just because it is SO DAMNED INCREDIBLE.
Research firm IDC reported that total domestic hardware and software sales for interactive games totaled $8.2 billion in 2000 -- vs. just $7.75 billion in U.S. movie box-office receipts. (src: BusinessWeek Online)</strong><hr></blockquote>
That's about right. Actually, I've seen $9.3 billion in a few places while looking for links.
[ 08-20-2002: Message edited by: Amorph ]</p>
They want everything, but have little reason to have it except to thinker.
Kind of like a fake professional. They want to do the work, learn the things, but have little intentions to work in that field for the immediate future.
These usually live in the PC world because of what PCs are. The time spent, building, researching, customizing a computer(both hardware and software) can equal thousands of dollars to a professional and quite a decent sum of money at minium wage.
But the satisfaction of knowing they got the best bang for a buck and what they wanted is its own reward. Basically time isn't money for this group.
I'm generalizing here of course, there are professionals that double as hobbists on their free time.
This conflicts with apple's idea of making the whole widget however. They are not in the market of leting you do it, because it's unprofitiable. They rather charge for "service" whenever possible as with business 101.
~Kuku
If, however, they offered a eMac without the monitor and sold it for, say, $699 or (maybe) $799, I'd buy one today. In fact, I would have bought one last year. But when the machine costs twice as much, I'll upgrade half as often. For all the reasons given, I won't buy an all-in-one machine.
The Cube was a good idea that was executed poorly. This seems so obvious. If Apple would make a headless eMac, they'd double their marketshare within 12 months.
New users (switchers), hold-outs (currents users on a decade old machine), upgraders (bought and iMac in last 4 years want more but maybe all-in-one doesn?t cut it anymore), and there are obviously other categories as well.
I think that most will agree, as does Apple based upon there current campaign, that the first category is the most crucial right now. How does a budget product attract this market?
My take: Apple needs a ?loss leader? product. Example: Lexus. When the first LS400 was introduced it sold for under $35,000. Toyota lost money on each car. This loss was easily absorbed by the high-profit Toyota brand. Within 3 years the LS400 was selling for about $48,000, the same price as competitive cars, but due to great early sales (mostly driven by an incredible price) it had brand recognition and a good reputation and continued to sell, now at a profit. Jet Blue is currently doing the same thing in the Airline industry.
The goal is to have a product out there that makes consumers say, ?Holy moose snot, I can?t believe that they are selling (Product A) for $$$.
Before anyone chimes in with ?That?s what we say about Apple products now!? Please try to control yourself.
My first choice for this role is still the 15? CD-RW iMac, but a budget tower may fit this role better. It?s less ?different? than what PC users are familiar with and they get to keep their old monitor.
Take the iMac guts in a small cool tower form with modest upgrade capability; HD, graphics, etc. Two versions: a low end for $699 which will lose money and a high end bare-minimum profit margin unit for $899. Apple has plenty of cash to cover the very modest short term losses and features/price can be modified as sales numbers come in to maximize the benefit of the budget unit.
<strong>
Take the iMac guts in a small cool tower form with modest upgrade capability; HD, graphics, etc. Two versions: a low end for $699 which will lose money and a high end bare-minimum profit margin unit for $899. Apple has plenty of cash to cover the very modest short term losses and features/price can be modified as sales numbers come in to maximize the benefit of the budget unit.</strong><hr></blockquote>
I don't think Apple could go that cheap, not until their .Mac or other subscription services are robust enough to actually become truly desirable. At that point the hardware can become more of a commodity. Until then, I still think an eMac priced midTower with eMac specs would be a great start.