Expanding Marketshare Through Cheap Consumer Macs

Posted:
in Future Apple Hardware edited January 2014
I know this subject has been discussed before, but I feel compelled to bring it up once more. The topics most prevalent in the Mac community have been future CPUs and enhancements to OSX. Within Apple itself they are focusing on their switch complain and expanding marketshare. These are both important to the success and future of the Mac platform. This short essay however will focus on the expansion of Apple's hardware line.

\tApple is in a unique position of being developing both hardware and software. While this is advantageous in many respects, it is also limiting in the number of hardware choices. The wintel world has an advantage in that user can choose a number of different hardware choices from different vendors. As it stands Apple has a strong hardware line. I'm not talking about processor speed or price performance ration but rather clearly defining different product lines. The four-quadrant product matrix was helpful in regaining focus in Apple's dark days, but now it is somewhat limiting. Apple has strayed away from this strategy with the eMac and Xserve, as well as the Cube two years ago. Apple has an opportunity to regain marketshare. I'm not expecting world domination, but 7-8% (which would double its current marketshare) would help. So how does Apple lure customers? The classic Mac way: word of mouth, Media advertisements, and the Apple Store. The Apple store is the best thing Apple has done on years. Getting your hands on a Mac with knowledgeable staff is really what Apple needs. So once Apple gets people in the stores, how do they get them to walk away with a computer? Most people don?t understand about an OS, and they don?t understand what they can do with the Apps on their computer. This is true when it comes to the everyday consumer. When the consumer comes in the store their mindset is that they are paying for a computer, not an OS or iApps or a better user experience. Granted this is what they will get, but I?m trying to get in the mind of the average consumer. Apple's cheapest computer is 1100 dollars. Bottom line: this is too expensive. Marketshare can expand in the consumer arena. So what should Apple do? Add more Hardware to the Consumer line. Apple has three consumer machines: iBook, iMac, and eMac. Apple needs two more segments: cheap laptop, and sub $1000 desktop sans monitor. So here is my Apple lineup



Sub $1000 eMac,eBook,xMac

$1000-$2000 iMac, iBook, entry Power Mac

$2000+ Power Mac, Powerbook, Xserve



The iBook and iMac will be Apple?s higher end consumer machines. They can showcase Apple's style with widescreen displays and sleek form factors. The eBook, like the eMac, would be a reincarnation of its predecessor, namely the iBook clamshell. The eBook would be a rugged, toss around inexpensive notebook. Make the base $799. Notebooks are the future of computing. Apple can really profit on offering an inexpensive, well-designed notebook. Profit margins would be slim, but this is a market share booster machine. The xMac would be the headless iMac/Cube people have been waiting for. This is another market share machine. Linux geeks will buy it to play with OSX, and Mac geeks will eat it up as an inexpensive second Mac.





Apple needs cheap consumer machines to increase market share. The eBook would work because it is creating a segment absent from the entire computer industry, cheap laptops. The xMac fills a hole in the Mac market. I am not going to discuss exact specs or pricing. I'm more concerned with the overall structure and implications of Apple's products. I will leave it to the Mac faithful to suggest hypothetical Hardware configurations and exact pricing. I am merely initiating the seeds of discussion.
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Comments

  • Reply 1 of 43
    Well, I follow you through most of that... but I have never seen Apple deploy a consumer machine since the first revision iMac. Even then I'm not sure that that would be considered a consumer level model. It was still way more then comprable PCs. So the story goes around two fold, only make sure you add that this would be an entirely new strategy for Apple since they have never cut the lower income brackets in on the Apple secret.



    Naked Naked Naked.



    Which in and of itself is another interesting discussion. The demographic that you are targeting with sub 1k prices may be too much of a liability for Apple. Isn't it easier to have mac people who KNOW how to add? Saves them bundles on tech support to be sure. I work at an ISP and have yet to meet a really dense mac user. They are all eccentric and fun. PC users on the other hand....



    Naked Naked Naked.



    So in my re-invisioned topic starter would be to say does Apple really want to touch the festering cess pool of PC sludge to buffer a bottom line? (with only MARGINAL profit levels on these said 'discount macs'?) I don't think it's gonna happen. If it did, I'd simply buy the cheap mac instead of the pro one. I don't need all that fancy 8x AGP quad speed ram mumbo jumbo. Even the bottom end iMac outclasses my B&W G3 by miles. So here's to hoping mate!



    Edit: Since nobody is reading what I said anyway...



    [ 09-30-2002: Message edited by: Not Unlike Myself ]</p>
  • Reply 2 of 43
    satchmosatchmo Posts: 2,699member
    A sub $1000 eBook would be nice but difficult to pull off.



    If it were to be positioned as the eMac's portable counterpart, it would logically be similarly powered.

    That means a G4 chip, which isn't even in the iBook.

    An eBook could use the G3 currently in the iBook, but I'm not sure there's a big enough of a market. Most would spend the extra $200 or so and go with a newly upgraded G4 iBook.
  • Reply 3 of 43
    serranoserrano Posts: 1,806member
    Nevermind profit margins, Apple can't make X snappy? on a $1600 iBook- you expect them to pull it of on a sub $1000 eBook? This is why mac rumors focus on faster cpu's. They have to.
  • Reply 4 of 43
    jdbonjdbon Posts: 109member
    Well its all a matter of perspective. I am a college student and cannot afford a $3000 Powermac. I use a Mac because I love the platform. However for Wintel users, who are usually neutral about their platform, will look at cost when considering switching.In addition the whole speed issue is relative. My main machine is an iBook 500 and for what I do it is more than adequate for the average user. The proposed eBook would have higher specs so I think the speed would be sufficient.
  • Reply 5 of 43
    stunnedstunned Posts: 1,096member
    I have a dream: That Macs will be one day as cheap as PCs with faster configurations



    but this ain't gonna happen anytime soon
  • Reply 6 of 43
    We will be lucky to get an Apple phone that cost $1000 little own a notebook.



    I do agree however with your sentiment and think a consumer CPU to get people in the door is a good idea. The only reason I am going to buy a Mac is because my parents got me a iMac when i went to college (the first rev tangerine model) I hated it until I watched all my roomates PCs crash and do gay crap and deal with a boar of an OS. Now I have the big bucks saved up to buy the new Powerbook if it ever comes out. But that Imac got me in the door, before I moved on up to a big boy machine, so a cheap and cool computer would be a good idea to get people into the Mac family. The eMac prolly fits into this niche but it is not being marketed that way.



    Once you go Mac you never go back.
  • Reply 7 of 43
    i know a pile of people who are tempted to try out OSX, but the cost of hardware is the biggest setback.



    they want to try it, but can't afford it.



    a cheap laptop would be a great way to go. people can justify getting a laptop when they already have a desktop, and speed isn't the major issue. laptops play well into the G3/G4 arena of lower power consumption, silent running and the like.



    only time will tell though.
  • Reply 8 of 43
    The eMac is a good low-end computer...in fact it's far better than the original iMac. If Apple had introduced it even a year earlier it would have made a big difference. The only drawback to the eMac is that it doesn't have an AGP slot, and this will drive away many potential buyers who are interested in gaming. But for anyone else, it's a sweet computer.



    In any event, it's got a G4, a sweet display, and can even be had with a Superdrive. Very nice. And the 17" CRT should be large enough for almost anyone's needs.



    And yet, the price is a bit off. I really don't understand why Apple cannot sell the eMac for $999 on the intro model, maybe even 899. 17" CRTs are dirt cheap, and the G4 used in the eMac is very cheap as well. I wouldn't be surprised if the eMac had some of the highest margins of any Mac sold, besides the Powermacs.
  • Reply 9 of 43
    Apple will not build cheap consumer Macs. It goes against everything they stand for and believe in. Quality is the key word here. The minute you cut corners on the design and construction, you lose something. And to reduce the price of Apple's quality machines, there would have to be less features (less ports, lesser video, etc) and the Apple buying public certainly won't stand for that.



    People complain enough about Apple's products as they are. A lower end, "cheap" Mac would open them up to even more negative criticism. That would do nothing to help the Apple brand.
  • Reply 10 of 43
    jcgjcg Posts: 777member
    [quote]Originally posted by clonenode:

    <strong>Apple will not build cheap consumer Macs. It goes against everything they stand for and believe in. Quality is the key word here. The minute you cut corners on the design and construction, you lose something. And to reduce the price of Apple's quality machines, there would have to be less features (less ports, lesser video, etc) and the Apple buying public certainly won't stand for that.



    People complain enough about Apple's products as they are. A lower end, "cheap" Mac would open them up to even more negative criticism. That would do nothing to help the Apple brand.</strong><hr></blockquote>



    Apple COULD market a Cube with specs similar to the eMac for less money than the eMac. Bring some of the specs down to bare bones for OS X, 128 MB, GForce 2; Cut the memory slots down to 2 for a Max of 1GB rather than 1.5, etc. Depending on their profit margin target for such a computer, given that the R&D is done for it already, they could have a quite inexpensive computer. Granted they would have to advertise it without a monitor to get the lowest price in print that they could, but it would probably bring some converts over. The question is would it sell enough computers to Switchers to make it worth the effort, or would it just erode the low end PowerMac sales.
  • Reply 11 of 43
    Oh please, Apple wouldn't have to cut many corners to sell the eMac for $999. Sure if they were to sell it for $599 then it would suck, but $99 is easy, especially considering that the CRT iMac goes for $799.



    The problem with another cube is that it WOULD cut into Apple's margins. By selling all-in-ones, Apple forces a "bundle" on the consumer, making them buy the display with the computer. This is a good way to pad margins since Apple can add the cost of a display in with the computer, but of course Apple pays real low prices for their displays since they buy them in bulk.



    Still, Apple may have to face up to this and offer a headless iMac anyways, because that will attract more switchers. Many Windows users have displays that work fine, so if they could buy a cheap Mac and user their current display it would be more tempting.



    The eMac proves how horribly overpriced the cube was. Basically the eMac has the same mobo and feature set as the Cube, and it goes for the price that the cube should have sold for, about $1100. That's WITH a decent CRT display!



    As for cutting into sales, a headless iMac would probably cut into iMac sales more than Powermac sales. Those who buy a low-end cube will be doing so in lieu of buying an all-in-one mac. The Powermacs have so much going for them now, dual CPUs, good expandability, and soon the GPUL. If Apple could keep the Powermacs dual CPU (or dual core GPUL) and then sell a G4 cube it would work out nicely.



    Obviously a new cube wouldn't have the vertical optical drive, and it would probably have more accessable ports. Another important feature would be the capacity to take a full sized AGP video card. It should also have a fan, since there are many reports of thermal wear on old cubes, and also the new iMac shows that a fan doesn't have to loud if designed well.



    I'd give the chances of a cube comeback about 50000:1, if that.
  • Reply 12 of 43
    Apple would be smart to release a more basic, single processor PowerMac at around $1000, that would take care of the consumers who need expandability and/or have a separate monitor. Something like this will probably happen once Apple feels the economy has picked up and it can diversify it's product line a little. Theres no way you guys can expect them to release a whole new line of consumer products right now.



    As for this basic PowerMac, probably a good setup would be something like the specs of the bottom of the line PowerMac except with a single processor and maybe a less powerful video card. Also some cosmetic differences might be a good idea, an all-white theme would tie it to the iMac and differentiate it from the more powerful PowerMacs.
  • Reply 13 of 43
    muahmuah Posts: 165member
    I agree that Apple has (some of) the best, and most intelligent users. I also would like to add that they have stayed profitable longer during this most recent economic downturn, than almost every other PC manufacturer out there.



    So, I don't think they need my advice on how to continue to operate.



    I am a PC user at home (and at work) and I would love to get back to using macs. My biggest problem is that none of my software will work if I switch (and I don't think M$ will be offering a rebate for PC owners of Office to switch to Mac Office) and the classic price/performance problem. I would have no problem switching if I could have a mac that was as fast (not necessarily just in Mhz) as my PC is, or if not the speed then the price.



    Buying a commodity PC like from emachines would give you a faster processor for MUCH less (1/2 to 1/3 of the cost for AT LEAST 30% faster Mhz). Dell would be less too.



    Obviously Apple hasn't been touting speed and processing power for a while. You don't hear anything about the megahertz myth anymore because Intel will be almost tripling the speed of the G4 in less than 6 months (without any hail mary's from Motorola) and it sounds like 'sweet lemon'.



    Like I said, I don't think apple needs my input on how to run their company. I just won't be switching until it makes sense financially. And I don't think it does for most people. At least not for 97% of people, and growing. Yes growing.



    It is kinda like deisel car. Sure there are some advantages to using deisel. Just not any that matter to me. You can't always find a station that offers it, or a mechanic that knows it, and other people feel bad for the hassles you must go through. But it still gets you back and forth to work just as well.
  • Reply 14 of 43
    gargar Posts: 1,201member
    hmmm...

    what is the main reason to use a mac?

    i think it is the operating system. the design is not that important (look at the clonewar in the second half of the 90s)



    how does apple finance most of its software

    developments?

    i think by selling hardware.



    how do you sell hardware?

    i think or by being dell <img src="graemlins/embarrassed.gif" border="0" alt="[Embarrassed]" /> or by making attractive hardware and i don't mean attractive as in lots of mhz that is just not important (and all of you know that 99% of all ai posters would be more than happy with a 1 ghz machine for the next 2 years or so. you know who you are )



    we have to get rid of the idea that apple is selling boxes, they sell digital hubs (okay, they want to sell digital hubs or something that looks and feels like more than just a computer)



    so i think apple doesn't need a cheap stuppid box: the emac is perfect for the low end (it will be cheaper in the future) and geuss what:

    the imac will be perfect for the prosumer (when there will be a 19" version it's the perfect dtp/webdesign-machine) and the powermac will get it's gpul and be a killer for video and 3d apps.



    i don't think apple would expand its marketshare by selling those cheap crappy aldi-boxes, that's really really bad for bussiness. they don't want to expand it that way, they want to convince everybody that they sell something different than just another (to expensive) computer, including the regular mac-user.
  • Reply 15 of 43
    Of course, the G3 doesn't need to go away. In spite of what many of said on this forum, a 600Mhz G3 iBook runs OS X 10.2.1 just fine. With the upcoming GPUL chip from IBM and the possible mystery chip from Motorola in early 2003, the opportunity arises for G3 entry-level Macs, G4 consumer Macs, Dual G4/new Moto mystery chips prosumer Macs, and GPUL Macs for those with the need/desire for the fastest Macs. Processor speeds, DDR and FSB configurations, video card, optical drives, all create options Apple could use to differentiate models. Many companies offer entry-level items to draw people into the store, then let them see the available options for them to decide whether they really want the base-level model. Apple just needs to run the numbers to see if making use of all these options creates a hierarchy of models that will not only give a good user experience at the low-end, but appeal to the real power user at the high-end, while not jeopardizing their cash flow. Then, you could advertise the entry-level machine, which would still have the enviable Mac experience and entice people into the store, where they could then decide if speed, higher quality monitors, etc. would encourage them to move up to a slightly better Mac they might not have originally considered.







    [ 09-30-2002: Message edited by: Dave Marsh ]</p>
  • Reply 16 of 43
    [quote]The minute you cut corners on the design and construction, you lose something. And to reduce the price of Apple's quality machines, there would have to be less features (less ports, lesser video, etc) and the Apple buying public certainly won't stand for that.<hr></blockquote>



    I think Apple has been cutting corners on construction for some time (starting in 1993 perhaps), just based on my experiences with their stuff before and after. <img src="graemlins/hmmm.gif" border="0" alt="[Hmmm]" />



    [quote]the emac is perfect for the low end<hr></blockquote>



    Take away the monitor and you'd be right. Jobs says most people now have computers. 95%, say, have PCs. Therefore, 95% already have monitors. Making a headless eMac would probably give Apple a bit more of a breakthrough into switcher territory.



    Anyway, I would absolutely love to have a cheap pizza box or cube on which to run OS X. I'm sure such a computer would garner a favourable reaction from the market.



    And hey, I have another idea for expanding marketshare (in Canada at least, perhaps globally): advertise here!! Make sure your retailers put your products in their flyers. The state of Apple marketing here is pathetic. Nonexistent. Plus, it's not that this market isn't viable; Dell sends out flyers routinely.



    [ 09-30-2002: Message edited by: Mac The Fork ]</p>
  • Reply 17 of 43
    Apple does not cut corners on design they cut corners on materials. Look at the problems with the tibook paint for example of this. No one should argue they cut corners on design but they do on materials.
  • Reply 18 of 43
    apple makes their money on their Hardware. but ppl buy the hardware because of the OS and apps. apple could get away with "cutting some corners" on their hardware cause the hardware isnt what ppl paying less than 1000 bucks are wanting. they want the OS. they want the apps.



    granted apple would make little to no money on a sub 1000 comp. but they would increase their marketshare. and the more ppl that say "yeah i got this comp. its alot better than my old wintel machine. you should get one" the more ppl that will come back and perhaps buy a more expensive powermac.



    just cause apple wouldnt make an immediate profit off of a sub $1000 computer doesnt mean they shouldnt make one.
  • Reply 19 of 43
    jdbonjdbon Posts: 109member
    [quote]Originally posted by Aris:

    <strong>apple makes their money on their Hardware. but ppl buy the hardware because of the OS and apps. apple could get away with "cutting some corners" on their hardware cause the hardware isnt what ppl paying less than 1000 bucks are wanting. they want the OS. they want the apps.



    granted apple would make little to no money on a sub 1000 comp. but they would increase their marketshare. and the more ppl that say "yeah i got this comp. its alot better than my old wintel machine. you should get one" the more ppl that will come back and perhaps buy a more expensive powermac.



    just cause apple wouldnt make an immediate profit off of a sub $1000 computer doesnt mean they shouldnt make one.</strong><hr></blockquote>



    Thank You! You summed up my thinking exactly. Apple has very high loyalty with their customers. My argument for cheap Macs (in terms of cost, not quality) is based on getting users to switch. The immediate profit is not there,but it gets more people on the Mac platform and ensures (to a degree) future sales.



    P.S. does anyone have a statistic of what Apple's loyalty rate is?
  • Reply 20 of 43
    jcgjcg Posts: 777member
    Larger market share also equates to more programs bieng ported and or developed for the platform in question. Mor available software, particularly cross platform applications that have an existing market base, leads to more potential sales of that platform.



    Lower market share, and higher prices, lead to an erosion in software development and porting due to a lower potential return on the developers investment.
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