Strangely I don't really think of my iMac as a computer. An Apple is an Apple. When PC folk ask me why I like apple my usual response is that I enjoy using them. I usually just say, "well you know they just work for me." And I think thats why we all use apples because they just tend to work the way they are expected to. They do what you think they will and they hold to what they are. I always tell PC users that it's just more fun opening an apple box up. I say, "You can just see that they actually thought out everything carefully ahead of time, as if they were proud of their name." An apple seems worth the money when you open it and put it on your desk. A PC looks like a machine that you had to buy not something that you wanted to buy.
[quote]Strangely I don't really think of my iMac as a computer. An Apple is an Apple. When PC folk ask me why I like apple my usual response is that I enjoy using them. I usually just say, "well you know they just work for me." And I think thats why we all use apples because they just tend to work the way they are expected to. They do what you think they will and they hold to what they are. I always tell PC users that it's just more fun opening an apple box up. I say, "You can just see that they actually thought out everything carefully ahead of time, as if they were proud of their name." An apple seems worth the money when you open it and put it on your desk. A PC looks like a machine that you had to buy not something that you wanted to buy. <hr></blockquote>
I've never seen anyone write so eloquently about Windows or a PC. When is the last time you heard someone wax poetic about their "box"? The main reason people use PCs it seems is because A) price (this does NOT make them better, in my opinion, more later *cough* child labor *cough*) compatibility (again not "better") and C) megahertz, which we don't even need to bother with.
A). You have to love good ol' Dell child labor. Seriously, who do you think builds your computer? Or anything you buy?
Plus, matsu apparently hasn't heard of the economies of scale. --maybe someone else pointed this out but I couldn't get past the first page...I skipped to Algol's little Mac poem
compatibility. Mac users are a creative and "different" lot so we don't go along with the herd mentality, for starters. We're independent, and also, we are more inquisitive/informed to know about things like samba, VPC, or M$ Remote Desktop Connection. Macs do a pretty good job being compatible if you are resourceful.
This thread turned into an Apple "apologist" thread from the looks of it. Until Apple gets bigger, the simplest way to explain their prices is the economy of scale. matsu! Plus, Macs being better and Apple as a company being better (in certain aspects.) For example Apple is a greener company than most PC companies.
I think with OS X market share will slowly go up to around 10%, then who knows, depending on M$ anti-trust trials. This will help make Macs cheaper, as well as new technology and management improvements at Apple. 2003 is going to be good.
The problem remains, you are calculating an artificially low margin into the equation, the overall gross margin would be much greater were the sales of Apples highest margin products not so poor.</strong><hr></blockquote>
Their gross margin is higher than Dell's yes.
That leads into what I'm guessing is one of your reasons for hating Dell: They cut out distributors and retailers, so they need a significantly lower gross margin to net a given profit margin than Apple (or HPaq, or Gateway). Apple doesn't really have that option: Apple needs retail, since they're the alternative and so people need to try them out. Retail means distribution, and both distributors and retailers need to make money. Which means Apple has to factor their profits into the prices of the machines.
[quote]<strong>It doesn't cost Apple $700 more to make the 17" iMac than it does to make the 15" iMac, there is a much higher margin on the 17" iMac than there is in the 15" iMac</strong><hr></blockquote>
The computer industry is a lot like the automotive industry in that regard: The baseline model is sold not far above cost (to the dealer, not the manufacturer), and money is made on options whose profit (not gross) margins range from fat to mind-boggling. $300 for cruise control indeed. In this regard Dell is no different.
[quote]<strong>As for the question of lowering the price to $1549, I think if Apple were to get the 17" iMac above the psychological 1 Ghz high watermark I think that would be adaquate for that particular model, however Apple would have to make the same sacracife on the lower end LCD iMac to see double the sales.</strong><hr></blockquote>
I still think, given the razor-thin difference between 15" and 17" LCD component prices, that the 17" will take over the current price points and the 15", if it still exists, will drop to a new low pricewise. That should goose sales nicely, I'd think.
[quote]<strong>But that has to be dynamic, they can't leave the same model standing out in the wind all year long while PC's move ahead in performance and fall in price.</strong><hr></blockquote>
Absolutely. Given that they don't, generally, I can only imagine that they ran into an unforeseen difficulty enhancing the current model - TiBook revisions were slow in coming at first, too. And, of course, the eMac needs a significant overhaul even more, since it's suffering from the Apple 17" CRT Curse.
I'm expecting a significant update to both lines. Not just in ways the consumer would notice, but also in the plumbing. That's the only explanation I have for letting what really is their flagship model (from a branding point of view) stagnate for a year.
Lowering a Mac price will sell more units, but how many? Stag - how much lower would the price have to go to sell more Mac's such that the total gross margin will be greater than the current total gross margin? I would expect that the more Mac's sold will drive down some component costs, but let's not grossly over-estimate this.
Total Gross - (price - component costs) * units sold
Stag - what would be your educated guess at solving the NTG equation? Is there a solution where NTG > CTG? According to JLL's attempt previously, there is no solution for NTG > CTG.
</strong><hr></blockquote>
Ofcourse it can be solved, JLL just doesn't want to because it would completely destroy his argument,
For the sake of simplicity lets just say some mac costs $500 to make and Apple is trying to sell it for $1200.
And lets say Dell has a system that is better than the Apple system and they are selling it for $700, consumer psychology puts the Macintosh at a disadvantage because the PC is perceived to be the better value and Dell sells 10 computers.
Now lets say Apple only sells 2 computers and they take their $1400 margin and just sit back and watch Dell eat them alive.
Now, Apple likes their $700 margin on each machine, but that margin hurts sales as they are viewed as a poor value by the consumer and rightfully so.
Now some people fell Apple is in the same league as BMW and Versachi, I personally think that is a load of shit, but for the sake of argument lets say that is true.
If Apple were to lower their price to match Dell at $700 to earn the same gross margin of $1400 they would have to sell seven macs where before they had to sell two.
But factor in the snob tax and lets say the Mac is $800 instead of $700 they would only have to sell 6 Macs to get their $1400.
Obviously these are artificial numbers, but that doesn't matter because they are just an illustration.
CTG = (6) * ($800) - (6) * ($500)
NTG = (6) * ($800) - (6) * ($500) - Savings
Obviously calculating the exact savings is difficult however it has been said in manufacturing that each 50% increase in production costs 20% less than the last one.
If Apple were making only two computers and they increased their production to three computers, the oppertunity cost of each $500 cost computer would fall to $400 (remember this is JUST A MODEL, not an actual computer were talking about) and if production was increased to 6 computers the oppertunity cost would fall to $360. Eventually this reaches a point of null returns,
But for the sake of the model
NTG = (6) * ($800) - (6) * ($500) - ($140)
[quote]Originally posted by jwdawso:
<strong>2) Production costs.
Don't forget that Production costs can actually rise as more units are produced. This can happen when having to use less efficient manufacturers to produce needed components. For instance, more iMacs may require another source for flat panels, which might require new development engineering costs.</strong><hr></blockquote>
Production costs do rise with growth, but they don't rise in lock step with growth, if Apple builds a factory and builds a single iMac, it doesn't cost as much to make the second iMac.
As for flat-panels, Samsung and LG are the largest supliers in the world and Apple is probably their smallest major customer, I don't think they would have trouble dealing with additional demand from Apple.
[quote]Originally posted by jwdawso:
<strong>Let me add a couple of things -
1) Apple's costs are high due to various reasons. I'm sure some of the costs could be lowered through smart management. For instance, sell all Silicon Valley capital assets and move to Austin!</strong><hr></blockquote>
Apple owns most of their facilities in California, I don't think that is breaking the bank and in the current market, there aren't many people other than maybe homeless squatters who would want Infinite Loop.
[quote]Originally posted by jwdawso:
<strong>
2) Stag - I am really interested in your thoughts on price versus units sold. Also - what premium would people pay for a Mac such that sales would double/triple?</strong><hr></blockquote>
Remember, at the moment Apple sales are almost statistically irrelivent, so any increase in sales would look like an earthquake.
I think Apple could still demand and receive a premium on the iMac and G4 Powerbook as expensive toys, however as a flagship product the current iMac is the most impractical system imaginable.
I think Apple is in a very good position with the iBook, they seem unable to do any wrong there, but while the laptop market has been growing 10 years straight, it is still quite small compared to desktops, I think if Apple were to produce a basic desktop tower, something along the lines of the old 6500 series and priced it within 20% and got it above the psychological 1ghz barrier we would see alot of movement.
I think with a basic tower alone Apple could take 5% or more just selling to existing mac users what they have been screaming for since 1998.
"I think with a basic tower alone Apple could take 5% or more just selling to existing mac users what they have been screaming for since 1998."
Steve, I've been reading your excellent posts across the many threads.
I agree 100% with your theories on Apple.
Let's face it, Apple have always liked 'fat' profits. They put it before 'Marketshare/critical mass/and Mind share/.' In the end, their short termed greed cost they WAyyy more money in the long run as M$ and the IBM clones have proven.
They managed to price their way to their current world wide marketshare... Yeah. They're selling more Macs...but they're sliding as further than they climb as part of the whole cake. So, more Mac users in the world? Yes. BUT wayyyyy more PC users. I'd hardly call Apple's current line up, on a bang for buck basis, as competing. I'll exclude the iBook from that generalisation.
Deferred Gratification.
So, Apple chose the hard way.
I did read a Macworld story that Apple are buying more Taiwanese components to make their products more price sensitive. They'll have to as PCs enter 'toaster commodity' status.
I'm glad to hear Apple are seeing the light somewhat belatedly. They DON'T have to be cheaper or as cheap as x86 land. But 10-20% with the same specs would be okay.
But 50% more for last year's spec? Takin' the p*ss and Apple loyalists are footin' the bill. Without question, Apple is taking their loyal users for granted as .Mac and Jag' payments proved.
I'm intrigued by the greater investment Taiwainese tech' to bring prices down. I wonder...what will San Fran' and 2003 bring..?
Two things. Sell a 1 gig tower for £999 inc VAT. Lemon Bon Bon starts sweating. Drive prices down on low end iMac flat screen to £850 inc Vat, Lemon Bon Bon starts sweating. Sell an iCube for £499 sans Monitor. Lemon BOn BOn breaks down into a gibbering wreck and hands over his wallet to Gordon Harwoods Computers...
The most annoying thing about Apple is just how close they have always been. They aren't that far away now. We're talking a hundred quid or so. The economies of scale to drive down price.
Maybe the retail stores will help in this respect. Especially if they can open maybe a hundred stores in the USA and 50 world wide. I'd stick at that.
Twice recently I have heard this from friends, well, from a friend and from a family member:
"I would love to use a Mac, hell I was always a Mac user from way back when . . .but I just got a very powerfull computer for less than a thousand dollars . . . I can't afford to be a Mac user anymore"
Ofcourse it can be solved, JLL just doesn't want to because it would completely destroy his argument,</strong><hr></blockquote>
And yet you come up with a calculation containing made up models at made up prices.
140% gross margin
How about doing it all over again with REAL EXISTING PRODUCTS which was my point: Apple can't sell 80% more Macs by lowering their gross margin by $300 on EXISTING MODELS.
Using the 17" iMac and your competing Dell:
For the sake of simplicity lets just say some mac costs $1400 to make and Apple is trying to sell it for $2000.
And lets say Dell has a system that is better than the Apple system and they are selling it for $1200, consumer psychology puts the Macintosh at a disadvantage because the PC is perceived to be the better value and Dell sells 10 computers.
Now lets say Apple only sells 2 computers and they take their $1200 margin and just sit back and watch Dell eat them alive.
Now, Apple likes their $600 margin on each machine, but that margin hurts sales as they are viewed as a poor value by the consumer and rightfully so.
Now some people fell Apple is in the same league as BMW and Versachi, I personally think that is a load of shit, but for the sake of argument lets say that is true.
If Apple were to lower their price to match Dell at $1200 to earn the same gross margin of $1200 they would have to go to the bank and take a loan.
But factor in the snob tax and lets say the Mac is $1500 instead of $1200 they would 'only' have to sell 12 Macs to get their $1200.
600% increase in sales - Yay! Apple will have 30% of the market - a piece of cake!
It's been more than adaquately explained why they can't now it is your job to prove why they can't,
Thusfar outside shameless apple apologism you seem unable to provide an answer.</strong><hr></blockquote>
Get real!! Do you really expect Apple to be able to sell 5,872,000 a quarter of the existing models just by lowering their gross margins by $300 per model?
It made Dell the largest PC vendor in the world didn't it?
And $300 is just the average discount that would be required to make the LCD iMac competitive, the Power Mac G4 would need a much much much larger discount.
It doesn't address the need for a more practical desktop or tower system
<strong>It made Dell the largest PC vendor in the world didn't it?
And $300 is just the average discount that would be required to make the LCD iMac competitive, the Power Mac G4 would need a much much much larger discount.</strong><hr></blockquote>
You're focusing on price alone. There are other factors that customers look at when choosing a computer.
[quote]Originally posted by Stagflation Steve:
<strong>It doesn't address the need for a more practical desktop or tower system</strong><hr></blockquote>
It's been more than adaquately explained why they can now it is your job to prove why they can't,
Thusfar outside shameless apple apologism you seem unable to provide an answer.
[ 01-02-2003: Message edited by: Stagflation Steve ]</strong><hr></blockquote>
Not picking but what is your point Steve?? I don't mean with this particular post but in general. Are you really going on and on about Apple selling computers that are much more expensive than the rest?? When has this not been the case?? If the computers are much more expensive and folks won't buy them then the Apple stores are a great way for them (Apple) to get this message. I think that what you getting at is that you do not agree with the way the executive team is leading Apple. If this is the case surely you have a better plan to effectively to make this argument. In other words you could be preaching to the choir. What I think that you are advocating is Apple should lower their margins to the point that they are making around 10% not 30%, and that way they could sell more computers and the laws of market size will take over and then they will make more money, it will just be spread out over a much bigger market. Is that right? If that is the case then perhaps some time in the future, but not right now. When Apple starts to see significant revenue from all that software they purchased and the stuff they already had, and they have a good desktop offering, is the only time they should consider lowering prices. While your argument is compelling, it may as well be short sighted, and narrow in focus. Currently I say ride out the storm, don't change what isn't screaming to be changed. Continue to improve the software portfolio, and continue to improve the overall package (iApps and devices), which is what they are doing, while they wait for the desktop situation to improve.
Have you ever thought about pinning a letter to the Apple board, and or the executive team?? They are the ones impowered to take action on your argument, at least it would not be wasted time, because you could convince everyone of us that Apples' prices are out of line and what, nothing. I say Amen brother, go forth and take your argument on high!
<strong>However today PC's are so cheap, that price becomes the only issue.</strong><hr></blockquote>
Given Apple's current market share, I'm convinced that a Mac and a comparable PC costing about the same would still mean that the majority leaves the shop with the PC.
Comments
[ 01-02-2003: Message edited by: Aquatic ]</p>
I've never seen anyone write so eloquently about Windows or a PC. When is the last time you heard someone wax poetic about their "box"? The main reason people use PCs it seems is because A) price (this does NOT make them better, in my opinion, more later *cough* child labor *cough*)
A). You have to love good ol' Dell child labor. Seriously, who do you think builds your computer? Or anything you buy?
Plus, matsu apparently hasn't heard of the economies of scale. --maybe someone else pointed this out but I couldn't get past the first page...I skipped to Algol's little Mac poem
This thread turned into an Apple "apologist" thread from the looks of it. Until Apple gets bigger, the simplest way to explain their prices is the economy of scale. matsu! Plus, Macs being better and Apple as a company being better (in certain aspects.) For example Apple is a greener company than most PC companies.
I think with OS X market share will slowly go up to around 10%, then who knows, depending on M$ anti-trust trials. This will help make Macs cheaper, as well as new technology and management improvements at Apple. 2003 is going to be good.
Plus girls like my iBook.
<strong>
The problem remains, you are calculating an artificially low margin into the equation, the overall gross margin would be much greater were the sales of Apples highest margin products not so poor.</strong><hr></blockquote>
Their gross margin is higher than Dell's yes.
That leads into what I'm guessing is one of your reasons for hating Dell: They cut out distributors and retailers, so they need a significantly lower gross margin to net a given profit margin than Apple (or HPaq, or Gateway). Apple doesn't really have that option: Apple needs retail, since they're the alternative and so people need to try them out. Retail means distribution, and both distributors and retailers need to make money. Which means Apple has to factor their profits into the prices of the machines.
[quote]<strong>It doesn't cost Apple $700 more to make the 17" iMac than it does to make the 15" iMac, there is a much higher margin on the 17" iMac than there is in the 15" iMac</strong><hr></blockquote>
The computer industry is a lot like the automotive industry in that regard: The baseline model is sold not far above cost (to the dealer, not the manufacturer), and money is made on options whose profit (not gross) margins range from fat to mind-boggling. $300 for cruise control indeed.
[quote]<strong>As for the question of lowering the price to $1549, I think if Apple were to get the 17" iMac above the psychological 1 Ghz high watermark I think that would be adaquate for that particular model, however Apple would have to make the same sacracife on the lower end LCD iMac to see double the sales.</strong><hr></blockquote>
I still think, given the razor-thin difference between 15" and 17" LCD component prices, that the 17" will take over the current price points and the 15", if it still exists, will drop to a new low pricewise. That should goose sales nicely, I'd think.
[quote]<strong>But that has to be dynamic, they can't leave the same model standing out in the wind all year long while PC's move ahead in performance and fall in price.</strong><hr></blockquote>
Absolutely. Given that they don't, generally, I can only imagine that they ran into an unforeseen difficulty enhancing the current model - TiBook revisions were slow in coming at first, too. And, of course, the eMac needs a significant overhaul even more, since it's suffering from the Apple 17" CRT Curse.
I'm expecting a significant update to both lines. Not just in ways the consumer would notice, but also in the plumbing. That's the only explanation I have for letting what really is their flagship model (from a branding point of view) stagnate for a year.
<strong>
1) Elasticity of price
Lowering a Mac price will sell more units, but how many? Stag - how much lower would the price have to go to sell more Mac's such that the total gross margin will be greater than the current total gross margin? I would expect that the more Mac's sold will drive down some component costs, but let's not grossly over-estimate this.
CTG = (C#MacSold * Price) - (C#MacSold * cost)
NTG = (N#MacSold * LowerPrice) - (N#MacSold * (cost - smallSavings)
CTG - Current Total Gross
NTG - New Total Gross
Total Gross - (price - component costs) * units sold
Stag - what would be your educated guess at solving the NTG equation? Is there a solution where NTG > CTG? According to JLL's attempt previously, there is no solution for NTG > CTG.
</strong><hr></blockquote>
Ofcourse it can be solved, JLL just doesn't want to because it would completely destroy his argument,
For the sake of simplicity lets just say some mac costs $500 to make and Apple is trying to sell it for $1200.
And lets say Dell has a system that is better than the Apple system and they are selling it for $700, consumer psychology puts the Macintosh at a disadvantage because the PC is perceived to be the better value and Dell sells 10 computers.
Now lets say Apple only sells 2 computers and they take their $1400 margin and just sit back and watch Dell eat them alive.
Now, Apple likes their $700 margin on each machine, but that margin hurts sales as they are viewed as a poor value by the consumer and rightfully so.
Now some people fell Apple is in the same league as BMW and Versachi, I personally think that is a load of shit, but for the sake of argument lets say that is true.
If Apple were to lower their price to match Dell at $700 to earn the same gross margin of $1400 they would have to sell seven macs where before they had to sell two.
But factor in the snob tax and lets say the Mac is $800 instead of $700 they would only have to sell 6 Macs to get their $1400.
Obviously these are artificial numbers, but that doesn't matter because they are just an illustration.
CTG = (6) * ($800) - (6) * ($500)
NTG = (6) * ($800) - (6) * ($500) - Savings
Obviously calculating the exact savings is difficult however it has been said in manufacturing that each 50% increase in production costs 20% less than the last one.
If Apple were making only two computers and they increased their production to three computers, the oppertunity cost of each $500 cost computer would fall to $400 (remember this is JUST A MODEL, not an actual computer were talking about) and if production was increased to 6 computers the oppertunity cost would fall to $360. Eventually this reaches a point of null returns,
But for the sake of the model
NTG = (6) * ($800) - (6) * ($500) - ($140)
[quote]Originally posted by jwdawso:
<strong>2) Production costs.
Don't forget that Production costs can actually rise as more units are produced. This can happen when having to use less efficient manufacturers to produce needed components. For instance, more iMacs may require another source for flat panels, which might require new development engineering costs.</strong><hr></blockquote>
Production costs do rise with growth, but they don't rise in lock step with growth, if Apple builds a factory and builds a single iMac, it doesn't cost as much to make the second iMac.
As for flat-panels, Samsung and LG are the largest supliers in the world and Apple is probably their smallest major customer, I don't think they would have trouble dealing with additional demand from Apple.
[quote]Originally posted by jwdawso:
<strong>Let me add a couple of things -
1) Apple's costs are high due to various reasons. I'm sure some of the costs could be lowered through smart management. For instance, sell all Silicon Valley capital assets and move to Austin!</strong><hr></blockquote>
Apple owns most of their facilities in California, I don't think that is breaking the bank and in the current market, there aren't many people other than maybe homeless squatters who would want Infinite Loop.
[quote]Originally posted by jwdawso:
<strong>
2) Stag - I am really interested in your thoughts on price versus units sold. Also - what premium would people pay for a Mac such that sales would double/triple?</strong><hr></blockquote>
Remember, at the moment Apple sales are almost statistically irrelivent, so any increase in sales would look like an earthquake.
I think Apple could still demand and receive a premium on the iMac and G4 Powerbook as expensive toys, however as a flagship product the current iMac is the most impractical system imaginable.
I think Apple is in a very good position with the iBook, they seem unable to do any wrong there, but while the laptop market has been growing 10 years straight, it is still quite small compared to desktops, I think if Apple were to produce a basic desktop tower, something along the lines of the old 6500 series and priced it within 20% and got it above the psychological 1ghz barrier we would see alot of movement.
I think with a basic tower alone Apple could take 5% or more just selling to existing mac users what they have been screaming for since 1998.
Steve, I've been reading your excellent posts across the many threads.
I agree 100% with your theories on Apple.
Let's face it, Apple have always liked 'fat' profits. They put it before 'Marketshare/critical mass/and Mind share/.' In the end, their short termed greed cost they WAyyy more money in the long run as M$ and the IBM clones have proven.
They managed to price their way to their current world wide marketshare...
Deferred Gratification.
So, Apple chose the hard way.
I did read a Macworld story that Apple are buying more Taiwanese components to make their products more price sensitive. They'll have to as PCs enter 'toaster commodity' status.
I'm glad to hear Apple are seeing the light somewhat belatedly. They DON'T have to be cheaper or as cheap as x86 land. But 10-20% with the same specs would be okay.
But 50% more for last year's spec? Takin' the p*ss and Apple loyalists are footin' the bill. Without question, Apple is taking their loyal users for granted as .Mac and Jag' payments proved.
I'm intrigued by the greater investment Taiwainese tech' to bring prices down. I wonder...what will San Fran' and 2003 bring..?
Two things. Sell a 1 gig tower for £999 inc VAT. Lemon Bon Bon starts sweating. Drive prices down on low end iMac flat screen to £850 inc Vat, Lemon Bon Bon starts sweating. Sell an iCube for £499 sans Monitor. Lemon BOn BOn breaks down into a gibbering wreck and hands over his wallet to Gordon Harwoods Computers...
The most annoying thing about Apple is just how close they have always been. They aren't that far away now. We're talking a hundred quid or so. The economies of scale to drive down price.
Maybe the retail stores will help in this respect. Especially if they can open maybe a hundred stores in the USA and 50 world wide. I'd stick at that.
Lemon Bon Bon
"I would love to use a Mac, hell I was always a Mac user from way back when . . .but I just got a very powerfull computer for less than a thousand dollars . . . I can't afford to be a Mac user anymore"
HEY APPLE ARE YOU PAYING ATTENTION!!!!!
<strong>
HEY APPLE ARE YOU PAYING ATTENTION!!!!!
They obviously don't care.
<strong>
Ofcourse it can be solved, JLL just doesn't want to because it would completely destroy his argument,</strong><hr></blockquote>
And yet you come up with a calculation containing made up models at made up prices.
140% gross margin
How about doing it all over again with REAL EXISTING PRODUCTS which was my point: Apple can't sell 80% more Macs by lowering their gross margin by $300 on EXISTING MODELS.
Using the 17" iMac and your competing Dell:
For the sake of simplicity lets just say some mac costs $1400 to make and Apple is trying to sell it for $2000.
And lets say Dell has a system that is better than the Apple system and they are selling it for $1200, consumer psychology puts the Macintosh at a disadvantage because the PC is perceived to be the better value and Dell sells 10 computers.
Now lets say Apple only sells 2 computers and they take their $1200 margin and just sit back and watch Dell eat them alive.
Now, Apple likes their $600 margin on each machine, but that margin hurts sales as they are viewed as a poor value by the consumer and rightfully so.
Now some people fell Apple is in the same league as BMW and Versachi, I personally think that is a load of shit, but for the sake of argument lets say that is true.
If Apple were to lower their price to match Dell at $1200 to earn the same gross margin of $1200 they would have to go to the bank and take a loan.
But factor in the snob tax and lets say the Mac is $1500 instead of $1200 they would 'only' have to sell 12 Macs to get their $1200.
600% increase in sales - Yay! Apple will have 30% of the market - a piece of cake!
[ 01-02-2003: Message edited by: JLL ]</p>
<strong>Well I'll keep buying Macs and so will everyone else here, even Matsu. Admit it
Well Matsu doesn't even own a Mac...
<strong>Uhh okay, other than plagerizing me what is your point?</strong><hr></blockquote>
That Apple in no way can four-six double their market share by lowering gross margins - I've only said it four times in this thread now.
[ 01-02-2003: Message edited by: JLL ]</p>
<strong>
That Apple in no way can four-six double their market share by lowering gross margins - I've only said it four times in this thread now.
[ 01-02-2003: Message edited by: JLL ]</strong><hr></blockquote>
It's been more than adaquately explained why they can now it is your job to prove why they can't,
Thusfar outside shameless apple apologism you seem unable to provide an answer.
[ 01-02-2003: Message edited by: Stagflation Steve ]</p>
<strong>
It's been more than adaquately explained why they can't now it is your job to prove why they can't,
Thusfar outside shameless apple apologism you seem unable to provide an answer.</strong><hr></blockquote>
Get real!! Do you really expect Apple to be able to sell 5,872,000 a quarter of the existing models just by lowering their gross margins by $300 per model?
And $300 is just the average discount that would be required to make the LCD iMac competitive, the Power Mac G4 would need a much much much larger discount.
It doesn't address the need for a more practical desktop or tower system
<strong>It made Dell the largest PC vendor in the world didn't it?
And $300 is just the average discount that would be required to make the LCD iMac competitive, the Power Mac G4 would need a much much much larger discount.</strong><hr></blockquote>
You're focusing on price alone. There are other factors that customers look at when choosing a computer.
[quote]Originally posted by Stagflation Steve:
<strong>It doesn't address the need for a more practical desktop or tower system</strong><hr></blockquote>
I agree.
<strong>
It's been more than adaquately explained why they can now it is your job to prove why they can't,
Thusfar outside shameless apple apologism you seem unable to provide an answer.
[ 01-02-2003: Message edited by: Stagflation Steve ]</strong><hr></blockquote>
Not picking but what is your point Steve?? I don't mean with this particular post but in general. Are you really going on and on about Apple selling computers that are much more expensive than the rest?? When has this not been the case?? If the computers are much more expensive and folks won't buy them then the Apple stores are a great way for them (Apple) to get this message. I think that what you getting at is that you do not agree with the way the executive team is leading Apple. If this is the case surely you have a better plan to effectively to make this argument. In other words you could be preaching to the choir. What I think that you are advocating is Apple should lower their margins to the point that they are making around 10% not 30%, and that way they could sell more computers and the laws of market size will take over and then they will make more money, it will just be spread out over a much bigger market. Is that right? If that is the case then perhaps some time in the future, but not right now. When Apple starts to see significant revenue from all that software they purchased and the stuff they already had, and they have a good desktop offering, is the only time they should consider lowering prices. While your argument is compelling, it may as well be short sighted, and narrow in focus. Currently I say ride out the storm, don't change what isn't screaming to be changed. Continue to improve the software portfolio, and continue to improve the overall package (iApps and devices), which is what they are doing, while they wait for the desktop situation to improve.
Have you ever thought about pinning a letter to the Apple board, and or the executive team?? They are the ones impowered to take action on your argument, at least it would not be wasted time, because you could convince everyone of us that Apples' prices are out of line and what, nothing. I say Amen brother, go forth and take your argument on high!
<strong>You're focusing on price alone. There are other factors that customers look at when choosing a computer.</strong><hr></blockquote>
That was true back when a PC was $3000 and a Mac was $3500.
However today PC's are so cheap, that price becomes the only issue.
<strong>However today PC's are so cheap, that price becomes the only issue.</strong><hr></blockquote>
Given Apple's current market share, I'm convinced that a Mac and a comparable PC costing about the same would still mean that the majority leaves the shop with the PC.