Lots of people don't want the integrated monitor, or to spend the extra money even though they already have a monitor.
The mac mini is a viable alternative for those people that don't want an iMac and can't afford (whether financially or because of the size) a PowerMac.
I don't believe $100 will make or break a computer sell.
What likely happened with the $499 Mac mini is that people still spent the $100 to upgrade to the features that $599 Mac mini would have.
Instead of crippling the Mac mini just to drop it to $499 price point they just leave in all of the features that people will want in a modern computer.
If a consumer knowlingly or unknowlingly bought the $499 Mac mini they would forever have a computer with fewer modern features that will be useful in the future.
Damn straight.
You know, I've been pretty critical of the Mac mini, especially on MacRumors where I've been flamed for my comments. (I'm one of those who's very unhappy about the decision to go with IIG for the mini, without even the option of a model with good OpenGL acceleration)
But I can't agree with all the flaming of Apple for not having a $499 model. Did anyone ever look at the spec of the original $499 models? There has never been a time in the mini's history where I'd either buy one or suggest anyone - and I mean anyone, even the hypothetical "Computer enthusiast who only wants to run iTunes" that the Mac mini is supposedly aimed at, according to the current crop of apologists anyway, buy the $499 model.
It never had enough RAM (as it is, the current models don't either, but let's not get there - I guess the second generation had enough RAM for iTunes, but...), the networking was limited (no BT or Airport), the burner couldn't burn DVDs, and the chances of someone not needing at least one of those features was slim to none. It could probably work as a music hub, hidden in a closet, but as a general purpose machine?
It was there largely for marketing reasons. It allowed Apple to tell everyone "Hey, you can now get a Mac for under $500!"; it succeeded in that, but $599 isn't bad, and the $599 model doesn't require as much upgrading (except RAM, IMO) before it becomes the machine it's intended to be.
even the hypothetical "Computer enthusiast who only wants to run iTunes"
It isn't only computer enthusiasts who buy computers, you know. Of course a computer enthusiast wants to do more with their computer, that's what the configurability is for, and it's what other computer models are for. Most people don't really care about computers, but they have one because they want to be able to browse the web and send e-mail.
Quote:
Originally posted by peharri
It never had enough RAM (as it is, the current models don't either, but let's not get there - I guess the second generation had enough RAM for iTunes, but...), the networking was limited (no BT or Airport), the burner couldn't burn DVDs, and the chances of someone not needing at least one of those features was slim to none. It could probably work as a music hub, hidden in a closet, but as a general purpose machine?
It was there largely for marketing reasons. It allowed Apple to tell everyone "Hey, you can now get a Mac for under $500!"; it succeeded in that, but $599 isn't bad, and the $599 model doesn't require as much upgrading (except RAM, IMO) before it becomes the machine it's intended to be.
This is exactly the mistake that you and other people in this thread are making. You are projecting your desires for a computer onto everyone else. I know that I don't want my next computer to be without wireless, Front row, a dual-layer DVD burner, less than a gig of RAM etc. But just because I want those things, doesn't mean that everyone else does. Everyone on this board is a computer enthusiast. But most people are not, but they still have a computer. Why? Because they want to surf the web, send e-mail and maybe listen to some music or manage digital photos. So why force all these extras on to them that they don't want? Why not give them the option of taking out features and saving some money? They have the option if they want to run Windows, but currently do not if they want to run OS X.
edit: I forgot, there is also the fantastically large corporate market, that doesn't have a need for remote controls, wireless (most companies have wired networks, and probably consider bluetooth a security risk), CD/DVD burners etc.
[B]It isn't only computer enthusiasts who buy computers, you know. Of course a computer enthusiast wants to do more with their computer, that's what the configurability is for, and it's what other computer models are for. Most people don't really care about computers, but they have one because they want to be able to browse the web and send e-mail.
Please don't quote half my sentence. I didn't say that only computer enthusiasts buy computers, I implied the exact opposite and that the apologists for the poor specs of the Intel Mac mini range are aiming the machine at a bizarre market.
Quote:
This is exactly the mistake that you and other people in this thread are making. You are projecting your desires for a computer onto everyone else. I know that I don't want my next computer to be without wireless, Front row, a dual-layer DVD burner, less than a gig of RAM etc. But just because I want those things, doesn't mean that everyone else does.
No, but I didn't say that everyone wants/needs wireless, a DVD burner, and more RAM. I said that pretty much everyone will want at least one of those.
Personally, I think the connectivity argument is a non-starter. Pretty much everyone wants that today. It may be a mere "convenience" for many buyers, for others it may be an absolute must, but it's as necessary, in today's market, as USB. I'd argue wireless is as useful as CD burning, and more useful than Firewire, in the current climate.
And given it hasn't added a cent to the cost of the Mac mini (it's free with the chipset), it's not as if the added features have added to the price. It's more that the added features have justified the higher price.
I suspect, if you look into it, sales of non-BTO'd $499 Mac minis have rarely approached those of better models, and most of BTOs were to give them Wifi and extra RAM.
Please don't quote half my sentence. I didn't say that only computer enthusiasts buy computers, I implied the exact opposite and that the apologists for the poor specs of the Intel Mac mini range are aiming the machine at a bizarre market.
I'm sorry. I wasn't trying to twist your words or anything. The comment I quoted did imply that you think everyone who buys a computer is a computer enthusiast.
You did say, "the hypothetical "Computer enthusiast who only wants to run iTunes"" This is an oxymoron. Of course someone who only wants to run iTunes is not an enthusiast. I didn't label such people "enthusiasts", you did. By doing so, you included them in the group "computer enthusiasts", leaving no computer-buying people outside said group, hence implying all people who buy computers are computer enthusiasts.
I'm sorry. I wasn't trying to twist your words or anything. The comment I quoted did imply that you think everyone who buys a computer is a computer enthusiast.
No, it didn't.
Quote:
You did say, "the hypothetical "Computer enthusiast who only wants to run iTunes""
Again, you quoted half of what I wrote, even after I told you it was half of what I wrote and explained what the full sentence meant. I'm getting pissed off here.
I wrote, which means the exact opposite of what you claim I wrote:
even the hypothetical "Computer enthusiast who only wants to run iTunes" that the Mac mini is supposedly aimed at, according to the current crop of apologists anyway
Like I said, when I explained the comment to you, I implied the exact opposite of what you claim I wrote, that the apologists for the poor specs of the Intel Mac mini range are aiming the machine at a bizarre market.
Words like "hypothetical", "supposedly aimed at" and "according to {...} apologists anyway" should have been a dead give-away. Instead you deliberately removed them, twice, from your quoting in order to make me look like I was making a stupid, easily proven wrong, point.
If an iMac is so great (which I think it is), why would this computer cannibilise it? They appeal to different markets.
Because the all-in-one market is less popular than the tower market. Sony does make a all-in-one V series but likely doesn't sell as many as Apple does the iMac (the prices don't help). Its in the product line IMHO simply because the iMac exists and Sony can afford it.
For Apple the market is captive and used to the all-in-one format for the consumer market dating back to the original Mac. Its better for Apple (and Sony), not necessarily the consumer.
Lets say we had your tower that ranged from a $499 core solo to a $799 1.66Ghz core duo just like the current upper end mini. A 20" cinema display is $799. Total price is $1598.
How many $1699 20" iMacs get sold?
How many folks opt for a UltraSharp 2005FPW 20.1 inch Dell at $529 instead of the $799 20" Cinema Display for a total of $1328 for a 1.66Ghz Core Duo machine?
How many folks opt to get a $499 1.5 Ghz core solo, a $529 2005FPW and a $421 2.0Ghz Core Duo for $1449?
So...how dumb do you still think Steve is? Show me that you can preserve Apple's profitability in your scenario at the $499 price point once you've cannibalzed both the iMac line and the low end PowerMac line with an inexpensive mini-tower.
I had a look at the SEC filing that was linked to.
We (melgross and I) are both wrong about gross margin.
I said:
Melgross said:
the SEC filing says:
Net sales : $5,749 million
Cost of sales: $4,185 million
Gross margin: $1,564 million (which is 27.2% gross margin)
Operating expenses; R&D: $182 million
Operating expenses; selling, general and administrative: $632 million
this suggests that gross margin incorporates manufacturing and shipping costs, but not costs of shows, the gardener, elevator maintanance, support staff, development engineering staff, mangement etc... (these things do affect overall profits, just not gross margin)
oh, and also, in (kind of) support of towel, I think he's made a good point. I don't think retail sales of boxed OS X is anywhere near as high as melgross thinks it is. As towel said, whenever Apple release sales figures for OS X, they are including versions shipped with Macs, and they ship about 1.25 million Macs a quarter.
That's fine. I don't disagree with that.
But, I'm not discussing GROSS margins, as you think I am. I'm discussing TOTAL costs.
For Apple to make a 10% overall PROFIT, total costs must be taken into account. The gross margins for each individual product will vary, that's correct. Generally, from about 30% for PM's to around 18% for a Shuffle. The gross margins for software are far higher. When you average it all out, it came to about 28% for Apple last quarter. I could be off by a percent or so, as I'm going from memory. Where does that 28% come from, if the lower margin shullfes and Nanos' are added to the mix? They are bolstered by the software sales.
If Apple claims to have sold 2 million copies of OS X during a Quarter in which they sold one about million computers, they must have sold around one million copies retail. This is approximate, of course, but it illustrates that it isn't that hard to get some handle on this. Even in the unlikely case that, somehow, all of the sales of OS X from retail that quarter merely approched 750 thousand copies, with the rest being bundled with the machines, as well as going to the others areas mentioned, that would still leave around 3 million copies sold at retail for the year, assuming that retail sales didn't increase as time went on. If we average the possible selling price Apple has for the distributors and their own, at list, we might arrive at a price of $100 per box. That would mean at least $300 million for the year. I think that that figure is certainly low.
From the number of people I pol,l upgrading amongst the members of my group alone, there seems to be very good takeup. Better than for any other version. We have about 900 members in our User Group, about 700 of them are using OS X. That number keeps going up as a percentage of our members. Over two thirds of those who didn't buy a new machine upgraded to Tiger this year. I'm sure that the population, as a whole, isn't at that level, but the fact that the upgrading itself is reaching higher percentages over time is certainly a reflection of what is happening elsewhere as well.
Apple does not ship about 1.250 million computers a quarter. The last quarter they shipped about 1.25 million. But, for the year, they shipped about 4.5 million, total. That comes out to 1.13 million per quarter. If you subtract that last quarter from the totals, and then average the first three quarters of the year together, it comes out to just 1.08 million per quarter. When you consider that for the time in question, Apple only shipped about one million, for the quarter, my numbers are pretty good. Most of the increase above one million was for the last two quarters of the year, and most of that was from the last quarter alone, well AFTER those numbers were released.
Lets say we had your tower that ranged from a $499 core solo to a $799 1.66Ghz core duo just like the current upper end mini. A 20" cinema display is $799. Total price is $1598.
How many $1699 20" iMacs get sold?
You are starting to argue a little bit in my favour. If you are so worried about this machine cannibalising the iMac, you are admitting that Apple is failing to make computers that people actually want.
I would not be afraid of cannibalising iMac sales (expanded on below). But, if it made the iMac unfeasible to make, just stop making it.
Quote:
Originally posted by vinea
How many folks opt for a UltraSharp 2005FPW 20.1 inch Dell at $529 instead of the $799 20" Cinema Display for a total of $1328 for a 1.66Ghz Core Duo machine?
How many folks opt to get a $499 1.5 Ghz core solo, a $529 2005FPW and a $421 2.0Ghz Core Duo for $1449?
The $799 tower would still have (compared to iMac): IG, smaller HDD, slower processor, no iSight, not include keyboard and mouse, and not be an all-in-one, which many people do prefer, due to its elegance.
Quote:
Originally posted by vinea
So...how dumb do you still think Steve is? Show me that you can preserve Apple's profitability in your scenario at the $499 price point once you've cannibalzed both the iMac line and the low end PowerMac line with an inexpensive mini-tower.
Vinea
I still think he is failing to address the $399 - $1299 market segment properly. My scenario hinges on an updated Power Mac range (mid-range tower with Conroe and proper high-end workstations with Woodcrest), and expanded market share.
If you want to switch you can from $599 to $3299. From fully integrated iMac to dual processor tower to small form factor mini. Where do you see "One Size"?
So Apple is neglecting the cheap tower config.
That doesn't keep the majority of the desktop market switching from Windows to OSX OR Mac lovers from upgrading where appropriate even if the target machine is sub-optimal for their needs (ie iMac vs desktop).
Gamers are forced to get the iMac or PowerMacs. Non-gamer consumers have the option of the entire mac line. Pro users are still stuck on PowerMacs till things go universal.
Laptops are likely where the game is at anyway...which means Apple's current strategy of using laptop parts in their desktop machines isn't hurting them in terms of volume purchases across the entire product line. They probably are on the same par as Dell in terms of the components they do buy.
Effectively they sell mobile laptops, non-mobile laptops (iMac and mini) and PowerMacs.
Because the all-in-one market is less popular than the tower market. Sony does make a all-in-one V series but likely doesn't sell as many as Apple does the iMac (the prices don't help). Its in the product line IMHO simply because the iMac exists and Sony can afford it.
I don't really agree with this. The iMac G3 sold extremely well during a time when Apple offered many towers.
The Sony all-in-ones are ugly computers. The Dell all-in-one and the Gateway all-in-one are all awkward and ugly. The iMacs have always been well designed. I think that makes a big difference.
Quote:
You are starting to argue a little bit in my favour. If you are so worried about this machine cannibalising the iMac, you are admitting that Apple is failing to make computers that people actually want.
He's right you are saying Apple refuses to make a computer that people really want. In fact you are saying people don't really want an iMac, but since that's all Apple offers they have to buy it.
Which I don't agree with, the iMac is a great computer in of itself.
But I think Mr. H is wrong in Apple producing an upgradable computer for $499 while maintaining current margins. Something like that would need to be an entirely different computer from the current Mac mini.
You are starting to argue a little bit in my favour. If you are so worried about this machine cannibalising the iMac, you are admitting that Apple is failing to make computers that people actually want.
No, I'm saying that the product you want doesn't have a very strong business case with respect to Apple's current strategy and line up. Remember A B and C? B = poor business case.
Saying "don't build the iMac" ignores the synergy in their current desktop line up and their laptop lines.
Your machine might make Apple users happier. I doubt Apple shareholders would be as happy.
Quote:
I still think he is failing to address the $399 - $1299 market segment properly. My scenario hinges on an updated Power Mac range (mid-range tower with Conroe and proper high-end workstations with Woodcrest), and expanded market share.
Perhaps he is addressing it properly by ignoring it and pursuing market segments with better ROI.
Your strategy boils down to "if you build it, they will come" since it is based on expanded market share.
He's right you are saying Apple refuses to make a computer that people really want. In fact you are saying people don't really want an iMac, but since that's all Apple offers they have to buy it.
Which I don't agree with, the iMac is a great computer in of itself.
Sorry, I got a bit lost there with what you are attributing to who. I did not say that people don't really want an iMac. There are plenty of people who want an iMac, and I don't think the emergence of a configurable low-end tower would change that.
Quote:
Originally posted by TenoBell
But I think Mr. H is wrong in Apple producing an upgradable computer for $499 while maintaining current margins.
We have to be careful about using words like "prefer" in instances like this.
Most people prefer Windows because that's all they know. Many may not even like it. But it's what they use at work. It's probably what their parents had (have) at home, and it's what they can get "free" software for.
Most people grew up using Windows, and can't even imagine using anything else.
Prefer, means that they have been able to make an informed, non prejudicial decision as to which one they would like to use. Very few people have had that chance.
It's like religion. People are born into what they believe. Or, like language. Most people just stick with what they have, because they are comfortable with it, and most people around them are the same.
Only a few ever break away from that. People in the minority become more fanatical about their choices because they tend to be belittled by the majority.
I know that that seems to be a political statement, and perhaps it is. But it illustrates where the problems are.
People are generally adverse to moving away from something they know well, when they are being assured that it is the only, or best way of doing it.
I've had problems, over the years of getting people in the NY school system for which I'm a technology advisor (unpaid). Even those hired to teach the teachers came from mostly a Windows environment. They had to learn the Mac's themselves first.
But, when they did, they used them as PC's! They didn't bother to learn any of the Mac shortcuts, or ease of use features. Why? Because as they didn't exist in Windows, these people didn't think they existed on Mac's either.
I have to say, truthfully, that if you aren't going to learn "the Mac way", then there isn't much point to moving over.
Little things, such as the one button mouse, used to drive them crazy. You would think, that these people, who were computer technology people, would bother to subscribe to a Mac magazine, as their new jobs required them to know Mac's so intimately, but, no, that didn't happen.
I would have to bring a Logitech trackball in, to show them that you could do this, if you wanted to.
This post might seem like digression, but, it's not. It goes to Vinea's post about WHY people "prefer" things.
And that is a powerful reason why Apple has such a hard time, in addition to all of the other things we have been discussing here.
He's right you are saying Apple refuses to make a computer that people really want. In fact you are saying people don't really want an iMac, but since that's all Apple offers they have to buy it.
Which I don't agree with, the iMac is a great computer in of itself.
I did not say that people don't really want an iMac. There are plenty of people who want an iMac, and I don't think the emergence of a configurable low-end tower would change that.
Actually that was in response to vinea, I was agreeing with you.
iMacs run OS X. You can't have it both ways. If someone prefers Windows, they would not be satisfied and happy with an iMac.
Or your mini-tower. When you asked:
Quote:
Really? Then why aren't 75% of people who buy desktops buying iMacs?
Were you only referring to current mac users? Because 75% of people that buy mac desktops is pretty danged small.
The point is that those 75% tower users (a number Gar pulled out of thin air) are windows users and that's why they don't buy iMacs. Not the form factor.
Using that same bogus 75% number for just Macintosh desktop users, the reason they aren't buying iMacs are because they are "pro" or "pro-sumer" users and need (not just want) the expansion capability.
I would also guess that among Macintosh users the majority have purchased iMacs over Powermacs over the last few years.
Comments
The mac mini is a viable alternative for those people that don't want an iMac and can't afford (whether financially or because of the size) a PowerMac.
Originally posted by TenoBell
As far as the $499 Mac mini.
I don't believe $100 will make or break a computer sell.
What likely happened with the $499 Mac mini is that people still spent the $100 to upgrade to the features that $599 Mac mini would have.
Instead of crippling the Mac mini just to drop it to $499 price point they just leave in all of the features that people will want in a modern computer.
If a consumer knowlingly or unknowlingly bought the $499 Mac mini they would forever have a computer with fewer modern features that will be useful in the future.
Damn straight.
You know, I've been pretty critical of the Mac mini, especially on MacRumors where I've been flamed for my comments. (I'm one of those who's very unhappy about the decision to go with IIG for the mini, without even the option of a model with good OpenGL acceleration)
But I can't agree with all the flaming of Apple for not having a $499 model. Did anyone ever look at the spec of the original $499 models? There has never been a time in the mini's history where I'd either buy one or suggest anyone - and I mean anyone, even the hypothetical "Computer enthusiast who only wants to run iTunes" that the Mac mini is supposedly aimed at, according to the current crop of apologists anyway, buy the $499 model.
It never had enough RAM (as it is, the current models don't either, but let's not get there - I guess the second generation had enough RAM for iTunes, but...), the networking was limited (no BT or Airport), the burner couldn't burn DVDs, and the chances of someone not needing at least one of those features was slim to none. It could probably work as a music hub, hidden in a closet, but as a general purpose machine?
It was there largely for marketing reasons. It allowed Apple to tell everyone "Hey, you can now get a Mac for under $500!"; it succeeded in that, but $599 isn't bad, and the $599 model doesn't require as much upgrading (except RAM, IMO) before it becomes the machine it's intended to be.
Originally posted by peharri
even the hypothetical "Computer enthusiast who only wants to run iTunes"
It isn't only computer enthusiasts who buy computers, you know. Of course a computer enthusiast wants to do more with their computer, that's what the configurability is for, and it's what other computer models are for. Most people don't really care about computers, but they have one because they want to be able to browse the web and send e-mail.
Originally posted by peharri
It never had enough RAM (as it is, the current models don't either, but let's not get there - I guess the second generation had enough RAM for iTunes, but...), the networking was limited (no BT or Airport), the burner couldn't burn DVDs, and the chances of someone not needing at least one of those features was slim to none. It could probably work as a music hub, hidden in a closet, but as a general purpose machine?
It was there largely for marketing reasons. It allowed Apple to tell everyone "Hey, you can now get a Mac for under $500!"; it succeeded in that, but $599 isn't bad, and the $599 model doesn't require as much upgrading (except RAM, IMO) before it becomes the machine it's intended to be.
This is exactly the mistake that you and other people in this thread are making. You are projecting your desires for a computer onto everyone else. I know that I don't want my next computer to be without wireless, Front row, a dual-layer DVD burner, less than a gig of RAM etc. But just because I want those things, doesn't mean that everyone else does. Everyone on this board is a computer enthusiast. But most people are not, but they still have a computer. Why? Because they want to surf the web, send e-mail and maybe listen to some music or manage digital photos. So why force all these extras on to them that they don't want? Why not give them the option of taking out features and saving some money? They have the option if they want to run Windows, but currently do not if they want to run OS X.
edit: I forgot, there is also the fantastically large corporate market, that doesn't have a need for remote controls, wireless (most companies have wired networks, and probably consider bluetooth a security risk), CD/DVD burners etc.
Originally posted by Mr. H
[B]It isn't only computer enthusiasts who buy computers, you know. Of course a computer enthusiast wants to do more with their computer, that's what the configurability is for, and it's what other computer models are for. Most people don't really care about computers, but they have one because they want to be able to browse the web and send e-mail.
Please don't quote half my sentence. I didn't say that only computer enthusiasts buy computers, I implied the exact opposite and that the apologists for the poor specs of the Intel Mac mini range are aiming the machine at a bizarre market.
This is exactly the mistake that you and other people in this thread are making. You are projecting your desires for a computer onto everyone else. I know that I don't want my next computer to be without wireless, Front row, a dual-layer DVD burner, less than a gig of RAM etc. But just because I want those things, doesn't mean that everyone else does.
No, but I didn't say that everyone wants/needs wireless, a DVD burner, and more RAM. I said that pretty much everyone will want at least one of those.
Personally, I think the connectivity argument is a non-starter. Pretty much everyone wants that today. It may be a mere "convenience" for many buyers, for others it may be an absolute must, but it's as necessary, in today's market, as USB. I'd argue wireless is as useful as CD burning, and more useful than Firewire, in the current climate.
And given it hasn't added a cent to the cost of the Mac mini (it's free with the chipset), it's not as if the added features have added to the price. It's more that the added features have justified the higher price.
I suspect, if you look into it, sales of non-BTO'd $499 Mac minis have rarely approached those of better models, and most of BTOs were to give them Wifi and extra RAM.
Originally posted by peharri
Please don't quote half my sentence. I didn't say that only computer enthusiasts buy computers, I implied the exact opposite and that the apologists for the poor specs of the Intel Mac mini range are aiming the machine at a bizarre market.
I'm sorry. I wasn't trying to twist your words or anything. The comment I quoted did imply that you think everyone who buys a computer is a computer enthusiast.
You did say, "the hypothetical "Computer enthusiast who only wants to run iTunes"" This is an oxymoron. Of course someone who only wants to run iTunes is not an enthusiast. I didn't label such people "enthusiasts", you did. By doing so, you included them in the group "computer enthusiasts", leaving no computer-buying people outside said group, hence implying all people who buy computers are computer enthusiasts.
Originally posted by Mr. H
I'm sorry. I wasn't trying to twist your words or anything. The comment I quoted did imply that you think everyone who buys a computer is a computer enthusiast.
No, it didn't.
You did say, "the hypothetical "Computer enthusiast who only wants to run iTunes""
Again, you quoted half of what I wrote, even after I told you it was half of what I wrote and explained what the full sentence meant. I'm getting pissed off here.
I wrote, which means the exact opposite of what you claim I wrote:
even the hypothetical "Computer enthusiast who only wants to run iTunes" that the Mac mini is supposedly aimed at, according to the current crop of apologists anyway
Like I said, when I explained the comment to you, I implied the exact opposite of what you claim I wrote, that the apologists for the poor specs of the Intel Mac mini range are aiming the machine at a bizarre market.
Words like "hypothetical", "supposedly aimed at" and "according to {...} apologists anyway" should have been a dead give-away. Instead you deliberately removed them, twice, from your quoting in order to make me look like I was making a stupid, easily proven wrong, point.
Originally posted by Mr. H
If an iMac is so great (which I think it is), why would this computer cannibilise it? They appeal to different markets.
Because the all-in-one market is less popular than the tower market. Sony does make a all-in-one V series but likely doesn't sell as many as Apple does the iMac (the prices don't help). Its in the product line IMHO simply because the iMac exists and Sony can afford it.
For Apple the market is captive and used to the all-in-one format for the consumer market dating back to the original Mac. Its better for Apple (and Sony), not necessarily the consumer.
Lets say we had your tower that ranged from a $499 core solo to a $799 1.66Ghz core duo just like the current upper end mini. A 20" cinema display is $799. Total price is $1598.
How many $1699 20" iMacs get sold?
How many folks opt for a UltraSharp 2005FPW 20.1 inch Dell at $529 instead of the $799 20" Cinema Display for a total of $1328 for a 1.66Ghz Core Duo machine?
How many folks opt to get a $499 1.5 Ghz core solo, a $529 2005FPW and a $421 2.0Ghz Core Duo for $1449?
So...how dumb do you still think Steve is? Show me that you can preserve Apple's profitability in your scenario at the $499 price point once you've cannibalzed both the iMac line and the low end PowerMac line with an inexpensive mini-tower.
Vinea
Originally posted by Mr. H
Really? Then why aren't 75% of people who buy desktops buying iMacs?
Because they prefer Windows over OSX.
Vinea
Originally posted by vinea
Because they prefer Windows over OSX.
Vinea
Think again. Once size dosn't fit all.
Originally posted by Mr. H
I had a look at the SEC filing that was linked to.
We (melgross and I) are both wrong about gross margin.
I said:
Melgross said:
the SEC filing says:
Net sales : $5,749 million
Cost of sales: $4,185 million
Gross margin: $1,564 million (which is 27.2% gross margin)
Operating expenses; R&D: $182 million
Operating expenses; selling, general and administrative: $632 million
this suggests that gross margin incorporates manufacturing and shipping costs, but not costs of shows, the gardener, elevator maintanance, support staff, development engineering staff, mangement etc... (these things do affect overall profits, just not gross margin)
oh, and also, in (kind of) support of towel, I think he's made a good point. I don't think retail sales of boxed OS X is anywhere near as high as melgross thinks it is. As towel said, whenever Apple release sales figures for OS X, they are including versions shipped with Macs, and they ship about 1.25 million Macs a quarter.
That's fine. I don't disagree with that.
But, I'm not discussing GROSS margins, as you think I am. I'm discussing TOTAL costs.
For Apple to make a 10% overall PROFIT, total costs must be taken into account. The gross margins for each individual product will vary, that's correct. Generally, from about 30% for PM's to around 18% for a Shuffle. The gross margins for software are far higher. When you average it all out, it came to about 28% for Apple last quarter. I could be off by a percent or so, as I'm going from memory. Where does that 28% come from, if the lower margin shullfes and Nanos' are added to the mix? They are bolstered by the software sales.
If Apple claims to have sold 2 million copies of OS X during a Quarter in which they sold one about million computers, they must have sold around one million copies retail. This is approximate, of course, but it illustrates that it isn't that hard to get some handle on this. Even in the unlikely case that, somehow, all of the sales of OS X from retail that quarter merely approched 750 thousand copies, with the rest being bundled with the machines, as well as going to the others areas mentioned, that would still leave around 3 million copies sold at retail for the year, assuming that retail sales didn't increase as time went on. If we average the possible selling price Apple has for the distributors and their own, at list, we might arrive at a price of $100 per box. That would mean at least $300 million for the year. I think that that figure is certainly low.
From the number of people I pol,l upgrading amongst the members of my group alone, there seems to be very good takeup. Better than for any other version. We have about 900 members in our User Group, about 700 of them are using OS X. That number keeps going up as a percentage of our members. Over two thirds of those who didn't buy a new machine upgraded to Tiger this year. I'm sure that the population, as a whole, isn't at that level, but the fact that the upgrading itself is reaching higher percentages over time is certainly a reflection of what is happening elsewhere as well.
Apple does not ship about 1.250 million computers a quarter. The last quarter they shipped about 1.25 million. But, for the year, they shipped about 4.5 million, total. That comes out to 1.13 million per quarter. If you subtract that last quarter from the totals, and then average the first three quarters of the year together, it comes out to just 1.08 million per quarter. When you consider that for the time in question, Apple only shipped about one million, for the quarter, my numbers are pretty good. Most of the increase above one million was for the last two quarters of the year, and most of that was from the last quarter alone, well AFTER those numbers were released.
Originally posted by vinea
Lets say we had your tower that ranged from a $499 core solo to a $799 1.66Ghz core duo just like the current upper end mini. A 20" cinema display is $799. Total price is $1598.
How many $1699 20" iMacs get sold?
You are starting to argue a little bit in my favour. If you are so worried about this machine cannibalising the iMac, you are admitting that Apple is failing to make computers that people actually want.
I would not be afraid of cannibalising iMac sales (expanded on below). But, if it made the iMac unfeasible to make, just stop making it.
Originally posted by vinea
How many folks opt for a UltraSharp 2005FPW 20.1 inch Dell at $529 instead of the $799 20" Cinema Display for a total of $1328 for a 1.66Ghz Core Duo machine?
How many folks opt to get a $499 1.5 Ghz core solo, a $529 2005FPW and a $421 2.0Ghz Core Duo for $1449?
The $799 tower would still have (compared to iMac): IG, smaller HDD, slower processor, no iSight, not include keyboard and mouse, and not be an all-in-one, which many people do prefer, due to its elegance.
Originally posted by vinea
So...how dumb do you still think Steve is? Show me that you can preserve Apple's profitability in your scenario at the $499 price point once you've cannibalzed both the iMac line and the low end PowerMac line with an inexpensive mini-tower.
Vinea
I still think he is failing to address the $399 - $1299 market segment properly. My scenario hinges on an updated Power Mac range (mid-range tower with Conroe and proper high-end workstations with Woodcrest), and expanded market share.
Originally posted by vinea
Because they prefer Windows over OSX.
Vinea
This is what you said:
Originally posted by vinea
I think market research would have pointed out that 75% of people considering to buy a desktop computer would be saticfied and happy with the iMac.
iMacs run OS X. You can't have it both ways. If someone prefers Windows, they would not be satisfied and happy with an iMac.
Originally posted by BenRoethig
Think again. Once size dosn't fit all.
Eh? Gar was joking with the 75% number.
If you want to switch you can from $599 to $3299. From fully integrated iMac to dual processor tower to small form factor mini. Where do you see "One Size"?
So Apple is neglecting the cheap tower config.
That doesn't keep the majority of the desktop market switching from Windows to OSX OR Mac lovers from upgrading where appropriate even if the target machine is sub-optimal for their needs (ie iMac vs desktop).
Gamers are forced to get the iMac or PowerMacs. Non-gamer consumers have the option of the entire mac line. Pro users are still stuck on PowerMacs till things go universal.
Laptops are likely where the game is at anyway...which means Apple's current strategy of using laptop parts in their desktop machines isn't hurting them in terms of volume purchases across the entire product line. They probably are on the same par as Dell in terms of the components they do buy.
Effectively they sell mobile laptops, non-mobile laptops (iMac and mini) and PowerMacs.
Vinea
Because the all-in-one market is less popular than the tower market. Sony does make a all-in-one V series but likely doesn't sell as many as Apple does the iMac (the prices don't help). Its in the product line IMHO simply because the iMac exists and Sony can afford it.
I don't really agree with this. The iMac G3 sold extremely well during a time when Apple offered many towers.
The Sony all-in-ones are ugly computers. The Dell all-in-one and the Gateway all-in-one are all awkward and ugly. The iMacs have always been well designed. I think that makes a big difference.
You are starting to argue a little bit in my favour. If you are so worried about this machine cannibalising the iMac, you are admitting that Apple is failing to make computers that people actually want.
He's right you are saying Apple refuses to make a computer that people really want. In fact you are saying people don't really want an iMac, but since that's all Apple offers they have to buy it.
Which I don't agree with, the iMac is a great computer in of itself.
But I think Mr. H is wrong in Apple producing an upgradable computer for $499 while maintaining current margins. Something like that would need to be an entirely different computer from the current Mac mini.
Originally posted by Mr. H
You are starting to argue a little bit in my favour. If you are so worried about this machine cannibalising the iMac, you are admitting that Apple is failing to make computers that people actually want.
No, I'm saying that the product you want doesn't have a very strong business case with respect to Apple's current strategy and line up. Remember A B and C? B = poor business case.
Saying "don't build the iMac" ignores the synergy in their current desktop line up and their laptop lines.
Your machine might make Apple users happier. I doubt Apple shareholders would be as happy.
I still think he is failing to address the $399 - $1299 market segment properly. My scenario hinges on an updated Power Mac range (mid-range tower with Conroe and proper high-end workstations with Woodcrest), and expanded market share.
Perhaps he is addressing it properly by ignoring it and pursuing market segments with better ROI.
Your strategy boils down to "if you build it, they will come" since it is based on expanded market share.
Vinea
Originally posted by TenoBell
He's right you are saying Apple refuses to make a computer that people really want. In fact you are saying people don't really want an iMac, but since that's all Apple offers they have to buy it.
Which I don't agree with, the iMac is a great computer in of itself.
Sorry, I got a bit lost there with what you are attributing to who. I did not say that people don't really want an iMac. There are plenty of people who want an iMac, and I don't think the emergence of a configurable low-end tower would change that.
Originally posted by TenoBell
But I think Mr. H is wrong in Apple producing an upgradable computer for $499 while maintaining current margins.
Fair enough.
Originally posted by steve666
I am referring to PC users which Apple must continue to convert to the Mac.
God save us from anyone who's overzealously religious about it.
This is apropos:
Familiarity Breeds a User Base
Originally posted by vinea
Because they prefer Windows over OSX.
Vinea
We have to be careful about using words like "prefer" in instances like this.
Most people prefer Windows because that's all they know. Many may not even like it. But it's what they use at work. It's probably what their parents had (have) at home, and it's what they can get "free" software for.
Most people grew up using Windows, and can't even imagine using anything else.
Prefer, means that they have been able to make an informed, non prejudicial decision as to which one they would like to use. Very few people have had that chance.
It's like religion. People are born into what they believe. Or, like language. Most people just stick with what they have, because they are comfortable with it, and most people around them are the same.
Only a few ever break away from that. People in the minority become more fanatical about their choices because they tend to be belittled by the majority.
I know that that seems to be a political statement, and perhaps it is. But it illustrates where the problems are.
People are generally adverse to moving away from something they know well, when they are being assured that it is the only, or best way of doing it.
I've had problems, over the years of getting people in the NY school system for which I'm a technology advisor (unpaid). Even those hired to teach the teachers came from mostly a Windows environment. They had to learn the Mac's themselves first.
But, when they did, they used them as PC's! They didn't bother to learn any of the Mac shortcuts, or ease of use features. Why? Because as they didn't exist in Windows, these people didn't think they existed on Mac's either.
I have to say, truthfully, that if you aren't going to learn "the Mac way", then there isn't much point to moving over.
Little things, such as the one button mouse, used to drive them crazy. You would think, that these people, who were computer technology people, would bother to subscribe to a Mac magazine, as their new jobs required them to know Mac's so intimately, but, no, that didn't happen.
I would have to bring a Logitech trackball in, to show them that you could do this, if you wanted to.
This post might seem like digression, but, it's not. It goes to Vinea's post about WHY people "prefer" things.
And that is a powerful reason why Apple has such a hard time, in addition to all of the other things we have been discussing here.
He's right you are saying Apple refuses to make a computer that people really want. In fact you are saying people don't really want an iMac, but since that's all Apple offers they have to buy it.
Which I don't agree with, the iMac is a great computer in of itself.
I did not say that people don't really want an iMac. There are plenty of people who want an iMac, and I don't think the emergence of a configurable low-end tower would change that.
Actually that was in response to vinea, I was agreeing with you.
Originally posted by Mr. H
This is what you said:
No, that was Gar.
iMacs run OS X. You can't have it both ways. If someone prefers Windows, they would not be satisfied and happy with an iMac.
Or your mini-tower. When you asked:
Really? Then why aren't 75% of people who buy desktops buying iMacs?
Were you only referring to current mac users? Because 75% of people that buy mac desktops is pretty danged small.
The point is that those 75% tower users (a number Gar pulled out of thin air) are windows users and that's why they don't buy iMacs. Not the form factor.
Using that same bogus 75% number for just Macintosh desktop users, the reason they aren't buying iMacs are because they are "pro" or "pro-sumer" users and need (not just want) the expansion capability.
I would also guess that among Macintosh users the majority have purchased iMacs over Powermacs over the last few years.
Vinea