Steve Jobs, MacIntosh Fans; Time for your medicine: Clones and Costly IApps
With the sun going down on Apple's Q1 filing and talk of the company has swung from Safari to Loss Leaders it occurs to me that there are several factors that impede Apple's progress. That would be progress in creating momentum and thus market share as well as progress in it's bottom line by recouping R&D cost.
Apples Part:
I agree, that Apple's medicine is a loss leader or worse. Yes, Steve a loss leader. Apple's biggest problem in the education and consumer markets as others have put it so well and so often is the high premium that must be paid to be part of the seeming posh Apple club. Apple needs a piece of kit that while not as pretty as the TiBook or as powerful as the Windtunnel, the job gets done. Like many, I also think the all in one form factor is not up to this task. Apple needs something right at the 399.00 and 599.00 price points. They need to be headless, but still compelling in every sense that Apple connotes. The idea of a compact cube, or Aluminum enclosure is a great one. Keep in mind, as a loss leader, the computer doesn't have to have all of the connection options or the latest greatest buses. Let the after market guys take care of those needs.
There is one thing that prevents Apple from creating a loss leader were it inclined to do so. Until the 970, G5 or whatever God is cooking up to help Apple take the performance crown, Apple can't create a Loss Leader, because the public won't buy anything below at least 1.4 GHz. I know some of you may think I am crazy, but the public perception that Apple's products are slow still holds and I think if someone can get a Dell or EMachine for $500 or $600 american ,clocked at least in the upper 1.5 GHz range, no one is going to buy a computer at the current speeds of Apple's line. I mean think about it, I have people come up to me all the time getting me to spec. a fast WinTel system that turns out to have a fast second tier processor, Duron or P3. When I point out that they're not getting a P4 or Athlon most look at me with this blank stare and then they all respond with well is this going to be fast enough. Honestly, I find people more likely to buy more memory than upgrade to P4 or Athlon, if they can find a second or third tier chip at the same speed. If Apple is going to grow, it's to these people that it's wares must be sold.
Or Worse:
If Apple wanted to get snazzy and vicious, create an almost clone environment around the low end. Keep the 970 or the highend completely to itself as well as the 7457 RM or whatever the fastest G4 is for PowerBooks and iMac/Book of the day. Let the clone makers have the low end desktop. Sell them the operating system, ROMs, which are the only ones the OS will recognize, iApps, and the displays which are also the only displays that the clone makers would be allowed to sell, which would drop the prices of Apple's LCD displays quicker and allow them to transition the entire market to ever larger or higher quality LCDs faster than the PC industry as they have been doing, but with a lot less pain. Apple would either have to create enclosure guidelines or approve enclosures (maybe completely out there, but necessary). Once the G4 makes it to 1.8 GHz between the G4 and the G3s, there is plenty of opportunity for differentiation. How? Why? Because Apple would contract that every G3/4 processor sold to a clone maker is paired with the OS, thus if a clone maker buys a chip, it will boot OS X in the finished product. However, if the clone makers wants to create dual boot linux solutions, they can knock themselves out, it's yet more differentiation between the various linux distros and creates a broader opportunity for Apple to seed the world with OS X. Clearly Apple needs more marketshare, but doesn't have to create the incursions on Dell's turf by itself.
Now many of you say the OS is already paired with BSD, but not everyone is going to switch if they are happy with the linux distro of their choice. Especially not with Linux currently running on some of the least expensive kit in the wintel continuum. However, if they could get the Apple kit with the Linux of their choice or a close relative they might ultimately find that they boot into linux a lot less and BSD more while not loosing any funtionality. Velocity Engine might be nice for the linux crowd too.
If you think about it, if the plans that IBM allegedly has for the 970 are true, Apple is going to be in the same situation as you either get the 970 with Linux or OSX. Given enough total volume of 970s sold from both forks (probably a lot) the price of complete 970 systems and peripherals could drop below the cost of the G3 and G4s sold only by Apple and a few upgrade card makers. Then Apple finds itself in a situation where Linux geeks and other markets that need the computational power of the G4 or 970 and want OS X, can't justify passing up the 970 sans OS X vs. the highmarkup that the Apple solutions will demand. Keep in mind, IBM like Motorola doesn't care how the 970 gets out the door as long as it gets out the door. In my mind the 970 Linux solution is a clone program of sorts that can steal Apple's sales and it can cannibalize Apples momentum.
Now if you want an OS X laptop of any breed, you can only get it from Apple. The OS X highend, that too only comes from Apple.
"Don't ask what you can do for your company..."
Finally Our Part:
I'm guessing Steve wouldn't touch my "OR WORSE" scenario with William Jefferson Clinton's JONes for high risk cavorting, which I'm sure that's how he sees clone programs: pure, unadulterated whoring.
But what about us. We line up with Steve & Co. every Saturday night for the requisite gawking at our dates shiny and hip enclosure and the veritable dinner/movie combination that is iLife and it's constituent Apps, but when it comes to fore that we might have to put out, oh Mum we suddenly have values.
Clearly Apple puts a lot of R&D into iLife, but I submit that if we are clammering for Loss Leaders and what not, then we'd better be willing to pay something for iLife. Why because to continue to create a true low end, I think we have to go about it realistically. Loss Leaders don't get all and the kitchen sink. Violent change yes, but low end which doesn't need all the connectivty known to man, also does not need every bit of software for free either.
The iLife products should carry a nominal fee. At least $85.00. Or perhaps $50 to purchase them all and then $30 per year subscription for updates and special plug-ins.
There now, don't shove. I can get to the gallows on my own thank you very much.
Apples Part:
I agree, that Apple's medicine is a loss leader or worse. Yes, Steve a loss leader. Apple's biggest problem in the education and consumer markets as others have put it so well and so often is the high premium that must be paid to be part of the seeming posh Apple club. Apple needs a piece of kit that while not as pretty as the TiBook or as powerful as the Windtunnel, the job gets done. Like many, I also think the all in one form factor is not up to this task. Apple needs something right at the 399.00 and 599.00 price points. They need to be headless, but still compelling in every sense that Apple connotes. The idea of a compact cube, or Aluminum enclosure is a great one. Keep in mind, as a loss leader, the computer doesn't have to have all of the connection options or the latest greatest buses. Let the after market guys take care of those needs.
There is one thing that prevents Apple from creating a loss leader were it inclined to do so. Until the 970, G5 or whatever God is cooking up to help Apple take the performance crown, Apple can't create a Loss Leader, because the public won't buy anything below at least 1.4 GHz. I know some of you may think I am crazy, but the public perception that Apple's products are slow still holds and I think if someone can get a Dell or EMachine for $500 or $600 american ,clocked at least in the upper 1.5 GHz range, no one is going to buy a computer at the current speeds of Apple's line. I mean think about it, I have people come up to me all the time getting me to spec. a fast WinTel system that turns out to have a fast second tier processor, Duron or P3. When I point out that they're not getting a P4 or Athlon most look at me with this blank stare and then they all respond with well is this going to be fast enough. Honestly, I find people more likely to buy more memory than upgrade to P4 or Athlon, if they can find a second or third tier chip at the same speed. If Apple is going to grow, it's to these people that it's wares must be sold.
Or Worse:
If Apple wanted to get snazzy and vicious, create an almost clone environment around the low end. Keep the 970 or the highend completely to itself as well as the 7457 RM or whatever the fastest G4 is for PowerBooks and iMac/Book of the day. Let the clone makers have the low end desktop. Sell them the operating system, ROMs, which are the only ones the OS will recognize, iApps, and the displays which are also the only displays that the clone makers would be allowed to sell, which would drop the prices of Apple's LCD displays quicker and allow them to transition the entire market to ever larger or higher quality LCDs faster than the PC industry as they have been doing, but with a lot less pain. Apple would either have to create enclosure guidelines or approve enclosures (maybe completely out there, but necessary). Once the G4 makes it to 1.8 GHz between the G4 and the G3s, there is plenty of opportunity for differentiation. How? Why? Because Apple would contract that every G3/4 processor sold to a clone maker is paired with the OS, thus if a clone maker buys a chip, it will boot OS X in the finished product. However, if the clone makers wants to create dual boot linux solutions, they can knock themselves out, it's yet more differentiation between the various linux distros and creates a broader opportunity for Apple to seed the world with OS X. Clearly Apple needs more marketshare, but doesn't have to create the incursions on Dell's turf by itself.
Now many of you say the OS is already paired with BSD, but not everyone is going to switch if they are happy with the linux distro of their choice. Especially not with Linux currently running on some of the least expensive kit in the wintel continuum. However, if they could get the Apple kit with the Linux of their choice or a close relative they might ultimately find that they boot into linux a lot less and BSD more while not loosing any funtionality. Velocity Engine might be nice for the linux crowd too.
If you think about it, if the plans that IBM allegedly has for the 970 are true, Apple is going to be in the same situation as you either get the 970 with Linux or OSX. Given enough total volume of 970s sold from both forks (probably a lot) the price of complete 970 systems and peripherals could drop below the cost of the G3 and G4s sold only by Apple and a few upgrade card makers. Then Apple finds itself in a situation where Linux geeks and other markets that need the computational power of the G4 or 970 and want OS X, can't justify passing up the 970 sans OS X vs. the highmarkup that the Apple solutions will demand. Keep in mind, IBM like Motorola doesn't care how the 970 gets out the door as long as it gets out the door. In my mind the 970 Linux solution is a clone program of sorts that can steal Apple's sales and it can cannibalize Apples momentum.
Now if you want an OS X laptop of any breed, you can only get it from Apple. The OS X highend, that too only comes from Apple.
"Don't ask what you can do for your company..."
Finally Our Part:
I'm guessing Steve wouldn't touch my "OR WORSE" scenario with William Jefferson Clinton's JONes for high risk cavorting, which I'm sure that's how he sees clone programs: pure, unadulterated whoring.
But what about us. We line up with Steve & Co. every Saturday night for the requisite gawking at our dates shiny and hip enclosure and the veritable dinner/movie combination that is iLife and it's constituent Apps, but when it comes to fore that we might have to put out, oh Mum we suddenly have values.
Clearly Apple puts a lot of R&D into iLife, but I submit that if we are clammering for Loss Leaders and what not, then we'd better be willing to pay something for iLife. Why because to continue to create a true low end, I think we have to go about it realistically. Loss Leaders don't get all and the kitchen sink. Violent change yes, but low end which doesn't need all the connectivty known to man, also does not need every bit of software for free either.
The iLife products should carry a nominal fee. At least $85.00. Or perhaps $50 to purchase them all and then $30 per year subscription for updates and special plug-ins.
There now, don't shove. I can get to the gallows on my own thank you very much.
Comments
So, you and everyone else can keep clamoring for them to make a low priced, budget Mac, but I say Apple will never deign to create such a computer.
<strong>So, you and everyone else can keep clamoring for them to make a low priced, budget Mac, but I say Apple will never deign to create such a computer.</strong><hr></blockquote>
Well it depends...
/me mails "I bet you are not able to create a sub $1000 G4 tower, no matter how hard you try!" to [email protected]
<strong>
I'm guessing Steve wouldn't touch my "OR WORSE" scenario with William Jefferson Clinton's JONes for high risk cavorting, which I'm sure that's how he sees clone programs: pure, unadulterated whoring.
</strong><hr></blockquote>
Foo. Do you even remember the mac clones? I do, I have two Motorola StarMax machines sitting in my basement. I bought one in '96 and one in '97 (I think, the exact date escapes me.). Can you guess why I bought the clones instead of Apple products? Because they were cheaper.
This is exactly what half of the other Apple users did in those years also, this also happens to be around the time that talk of Apple dying became more than annoying posts to rumor boards by disillusioned users. I'm stretching my memory, but I believe they were down to 100 million dollars in the bank and on a streak of five quarters of losses? (Is there anyplace on the Web we could confirm this?).
Steve Jobs came back to the helm and promptly cut the clone program. Suddenly Apple was profitable! Wow! Magic!
That first quarter was before the iMac even came out. Anyway, I'm not saying that it was /just/ the cutting of the clone program that made Apple profitable again, but it was a huge part of it. Don't ever expect to see clones again while Steve is at the helm.
[ 01-16-2003: Message edited by: alernon ]</p>
Imagine a small, squarish desktop, made of aluminum, slot loading cd, room for an extra hard drive, 1 agp 4x slot, 2 pci slots, good video card, single g4 brain. They could SO make that for less than $500 - aluminum is cheapy cheapy - so it's stylish as heck and cheap too. No fan, so it's quiet. Sell that for $499 and provide a cheap LCD option with it - a bundle with a 17" LCD for less than $1000. It would rock. I'd buy one just for a cheap, second desktop mac. the iMac is a debutant - all looks and little utility for the price. I know it's pretty, but dang, it's expensive for a 'consumer' machine.
Clones-no. $399-$599? No. That's the iPod, and that's as close to a computer in that range you'll get. Apple innovates, and there's no innovating a cheap, broken down headless box that's innovative. If it was, it would cost more.
As for your public perception that macs are slow, funny none of the pc users in general (non pros) mention anything about speed. They all mention that they like macs, they are cool, but just a little expensive.
Botom line is this, the only way people will shut up about Apple is if they lowered their prices. If they lowered thier prices $300, they'd barely make 7% profit. That's not very good. So they can't really lower more then they have unless componenets get cheaper.
As for the $85 for iLife or annual fee, no, it won't work. People like the idea they acually get apps bundled with there machines. Until Apple released the iApps, macs didn't get SHIT bundled with them. We got like 2 games, Appleworks and a fricking dictionary. The iApps are what's attracting the regulars, make them pay for them and the expensive mac now has it's main feature expesive as well. That would totally screw Apple.
Apple is fine the way they are, they know what they are doing, they've surviced this long and have enough brains to contiue surviving and are positioning themselves to actually make a run.
Get your butt to the gallows
[ 01-16-2003: Message edited by: KidRed ]</p>
I have a PB12 on order, but were it not for a significant edu discount, I would already start to consider it on the expensive side given Apple's completely unfair foreign exchange rates.
<strong>
Foo. Do you even remember the mac clones? I do, I have two Motorola StarMax machines sitting in my basement. I bought one in '96 and one in '97 (I think, the exact date escapes me.). Can you guess why I bought the clones instead of Apple products? Because they were cheaper. ...
[ 01-16-2003: Message edited by: alernon ]</strong><hr></blockquote>
As I recall the clone companies, particularly Power Computing, were able to get new, faster processors to market quicker than Apple was.
<strong> Clones-no. $399-$599? No. That's the iPod, and that's as close to a computer in that range you'll get. Apple innovates, and there's no innovating a cheap, broken down headless box that's innovative. If it was, it would cost more.
</strong><hr></blockquote>
You saying they couldn't 'innovate' in a small, modular enclosure? What's so innovative about the new iMac other than the neck? Sure, they make less profit PER item, but they sell way more.
Also, i still know a number of people who use windows for creative endeavours, audio, video - even the odd graphic designer. They would LIKE to switch but frankly, CAN NOT AFFORD a powermac and don't want an iMac. this is a problem - and i think a bigger one than we acknowledge.
[quote]Originally posted by KidRed:
<strong>
As for your public perception that macs are slow, funny none of the pc users in general (non pros) mention anything about speed. They all mention that they like macs, they are cool, but just a little expensive.
</strong><hr></blockquote>
I'm not sure who you're responding to, but I'm coming from a pro perspective, and when it comes to rendering animated projects, the mac is SLOW and costs a lot more than a faster Windows box that will run the same software (in this case, after effects). My point is that this is a problem for Apple and one they need to fix.
If it were the case that macs outperformed their windows counterparts AND cost more, that wouldn't be as much of an issue. But that's not the case... and yeah yeah, performance isn't everything, blah blah blah, but when you're talking about waiting 3 hours or 5 hours for a project to render, it becomes a serious issue.
tM
<strong>
I'm not sure who you're responding to, but I'm coming from a pro perspective, and when it comes to rendering animated projects, the mac is SLOW and costs a lot more than a faster Windows box that will run the same software (in this case, after effects). My point is that this is a problem for Apple and one they need to fix.
If it were the case that macs outperformed their windows counterparts AND cost more, that wouldn't be as much of an issue. But that's not the case... and yeah yeah, performance isn't everything, blah blah blah, but when you're talking about waiting 3 hours or 5 hours for a project to render, it becomes a serious issue.
tM</strong><hr></blockquote>
No, I think they could innovate in a small enclosure- the iPod is a prime example. I don't, however, think they could be innovative in a desktop that's in the $3-500 price range.
As for performance, I'm a graphic designer and my dual is plenty fast. The performance issue is really only for video and 3D, otherwise I think it's a non issue. As for pro users, you also have coders, and they are liking the mac for X, and speed isn't an issue there. I'm hoping once the 970 debuts, a lot of the againgst arugements no longer hold water and if priced right, that's another less arguement.
Early reports indicate the 970 will rock and we know it will scale well into 3ghz range. So I'm excited about things.
<strong>
As I recall the clone companies, particularly Power Computing, were able to get new, faster processors to market quicker than Apple was.</strong><hr></blockquote>
You fail to take into account the fact that the clones required only a fraction of the processors that Apple needed. What would happen today if a clone sold computers using sample PowerPC 970s? Think about it.
What I think is that instead of Apple having to eat the pain of selling the Loss Leader itself, it could open a limited clone model where it creates this new market segment, which is the $399 to $1300.00 desktop market. The Clone shops would never be allowed any processor Apple was using in it's lines and never as fast.
It could look something like:
Apple:
PowerMacs 970 2 - 3Ghz $3-5000.00
PowerBooks (970/Fastest G4 avail.) $2-4500.00
iMac/iBooks 1.5 - 2 GHz (fG4 avail.) $1200+
Clone Shops:
Desktops(Only) Older/Slower G4s $399-1300.00
Obviously, the prices are theoretical. Apple could determine the pricing structure. But, I thinks it's time we and Apple accept that cloning is what got the MacOS out there. MS wouldn't even be where it is were it not for the IBM clones.
The clone makers could only sell Apple LCDs and would have to buy and ship the OS with Apple's roms as noted at the beginning of the thread.
Potentially, this would make OS X a compelling reason for software development again.
Clearly I'm betting that if Apple kept the highend processors to itself as well as laptops and such that it would be in a protected situation and would not find itself competing against the clones as Apple's market and the clones market are clearly different based on offering and price.
<strong>If you think about it, if the plans that IBM allegedly has for the 970 are true, Apple is going to be in the same situation as you either get the 970 with Linux or OSX. ... Keep in mind, IBM like Motorola doesn't care how the 970 gets out the door as long as it gets out the door. In my mind the 970 Linux solution is a clone program of sorts that can steal Apple's sales and it can cannibalize Apples momentum.</strong><hr></blockquote>
IBM's main market for them is higher end than Apple's ever visited though. IBM is trying to get back to their service orientation -> they aren't going to be making $400 computers. They might make $1500ish computers, but $129 for an OS is not big deal at that point. Some of the single CPU IBM computers for which this is postulated to be a replacement are $20,000. The others cost more.
The missing piece is that IBM has their own OS, AIX. They don't _just_ offer linux on them, and IBM's prices on the OS, support, and hardware would elicit mass panic if Apple instituted the same pricing plans.
<strong>
As I recall the clone companies, particularly Power Computing, were able to get new, faster processors to market quicker than Apple was.</strong><hr></blockquote>
That's probably true, especially since Motorola was one of the companies making clones.
<strong>With the sun going down on Apple's Q1 filing and talk of the company has swung from Safari to Loss Leaders it occurs to me that there are several factors that impede Apple's progress. That would be progress in creating momentum and thus market share as well as progress in it's bottom line by recouping R&D cost.
The iLife products should carry a nominal fee. At least $85.00. Or perhaps $50 to purchase them all and then $30 per year subscription for updates and special plug-ins.
There now, don't shove. I can get to the gallows on my own thank you very much.</strong><hr></blockquote>
Not to be harsh, first learn to read a 10K report, and understand what you are reading. Last nights news was actually pretty good, and that sentiment was eflected on the stockprice last I checked +.19. I agree that Apple should be doing better but I don't know if they could be doing better given the circumstances. Now would be a good time to buy, ya' know, if you like to make money on investments. You bring up several valid points, the iLife stuff stuckout to me and I agree. Don't think that there will be much competition from Linux, maybe shear numbers but that don't count that much, a fare-amount are servers and that is the strength of Linux. If you don't believe me go out and get a copy of RedHat 8 and attempt to down load your pictures from your digital camera and fix the pictures up and save them to a CDR. Once done with that, tell/help your Mom to the point she can complete these same operations on her own. My point.
Edit: As far as clones go, remember that Steve said that Apple could sell a license to the clones at $600 per copy and still lose money. The clones would only compete in the same market that Apple is in. Evidence is how many ads were ran in PC Mags 0, how many ads were ran in MacWorld and others ALL. That is what pissed Steve off, taking the customers that Apple had built up and not pushing out the edges, just selling right in the middle.
[ 01-16-2003: Message edited by: Brendon ]</p>
<strong>
No, I think they could innovate in a small enclosure- the iPod is a prime example. I don't, however, think they could be innovative in a desktop that's in the $3-500 price range.
</strong><hr></blockquote>
Why do they need to innovate with everything? Why can't they have one cheap, competitive "headless iMac"?
<strong>
Why do they need to innovate with everything? Why can't they have one cheap, competitive "headless iMac"?</strong><hr></blockquote>
Maybe its just not profitable? The margin wouldnt be worth it, Apple could gain marketshare but could also make more money if they sold 1 PowerMac compared to 20 HeadlessiMacs...maybe thats it?
<strong>As I recall the clone companies, particularly Power Computing, were able to get new, faster processors to market quicker than Apple was.</strong><hr></blockquote>
Nope. Power Computing had a test-bed 750 (G3) doing the rounds (before Apple had a G3 out), but it was never released as a final product, because Apple bought Power Computing and shut down the whole clone machine.
<strong>
Nope. Power Computing had a test-bed 750 (G3) doing the rounds (before Apple had a G3 out), but it was never released as a final product, because Apple bought Power Computing and shut down the whole clone machine.</strong><hr></blockquote>
I have a starmax, but not because it was cheaper, but because it was the best, one of the fastest out!
604e and 200MHz, loved it....heck i'm on it right now but now it seems rather slow!
its retail was $3600, was it cheaper?