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Cza,

If Mac's are not commodities because they are differentiated then how would selling an consumer tower bring Apple into the commodity PC market? I don't think Apple, by introducing a consumer tower, is going to return to the cluster smurf that was their lineup of the 90's.   

Also do the economic rules for the niche market hold as true as they do the economy as a whole? (That is just a general question for people far better familiar with economics then I)

Mr. McPhee wrote:

Cza,

If Mac's are not commodities because they are differentiated then how would selling an consumer tower bring Apple into the commodity PC market? I don't think Apple, by introducing a consumer tower, is going to return to the cluster smurf that was their lineup of the 90's.

Very well stated.  That move alone wouldn't - a point I am advocating in this thread.  If it becomes to Apple's advantage based on the numbers to sell it, they should and probably will.

The point being made regarding the commodity market is that it would be a mistake for Apple to return to the failed strategies of the past of trying to sell Macs as is they were a commodity.   That means, don't think that dangling a low price is going to have the same effect on your sales numbers as it would if they were selling Windows boxes.

If they release a consumer tower, it will inherently be differentiated, because it is a Mac, so don't expect them to sell it like an undifferentiated commodity.  That means if they sold it, it would probably be more expensive that most people would be happy about, and much much much more than the $799 some people have been making a case for.  It would have to be priced high enough to offset the lost profits from cannabalzing the higher-end sales.  My guess, based on the analysis Mr T and I did, that is somewhere in the $1500 range.  Which happens to be a range where Pariah has said numerous times that he would buy at, paying the "premium" for the Mac, as long as its the Mac that he wants.  That's exactly what he should do:  only buy when what is being offered meets his needs.

So my predictions in a nutshell: Apple will never again sell Macs as a commodity (no $799 consumer towers), they will start selling them if the market flips to a place where it is advantegous to do so, and if that happens, you are looking at a price point in the neighborhood of $1500.

Czachorski wrote:

Trying to sell at Sears can also be regarded as trying to sell Macs the same way as other PCs - in the department stores - and it just doesn't work.  Their current solution to this with the Apple retail stores makes much more sense, and clearly is working.

I think they learned a lot from their past mistakes, and are making brilliant decisions now from it.

Agreed.  For one thing, department store employees aren't adequately trained in selling computers - and aren't likely to be familiar with Macs.

My guess, based on the analysis Mr T and I did, that is somewhere in the $1500 range.

I think it's most concrete at $1500, but I think it could work just as well at $1000-$2000.  In fact I think it might work at a $700 too.  Apple's laptop offerings are priced closer to the "generic" laptop market than Apple's desktop machines are to the generic desktop market - and this has been met with great success in their laptop line.  If Apple applied the same methodology to their desktop line (i.e. refrained from redefining the consumer's idea of a desktop at the iMac's and especially mini's price range) the desktop line would see similar success, imo.

But 4% to 20% as a range sounds right.

I'll agree, as a range.  In other words, it doubt that it's more than 20%.

If it is up at 20%, my guess is we would already have a consumer tower, or one would be on the way shortly.  If it's 4% I'd say not.  Do you think it just might be possible that Apple has market research data on this, and ohhhhhh, I don't know - might actually be making decisions based on strategy and data?

I think Apple has a team of strategists and probably even hires one or more market research firms, but at the end of the day, it all boils down to Steve's vision of what he believes consumers want.  Since his return to Apple, he's been spot on, for the most part.  But his vision has gotten him into trouble before - sometimes big - and I believe he's making a mistake with Apple's desktop line.

Last edited by Mr. T (2007-06-08 2:12 pm)

Mr. T &  Czachorski

There is a fundamental difference on how you arrived at your %'s.

Mr. T, you correctly began by considering the total market, ie.  your premise began with the current approximation of 40% buying desktops in your statement,"I widdle different. 

40% want a desktop."

Czachorski, your premise, if I read it properly starts with only those switcher numbers that Apple has stated, ie. the 50 of new customers are switchers.  Then proceed to whittle this 50% figure down.  How can you start with the 50% figure that have already switched than at the end of your argument say, "Of those, switchers who desire a consumer desktop, almost all of them are interested in Macs because of software, not hardware.  How many are going to flip  now and not buy because of hardware?  I was guessing 10%.  But I will spot you the number being as high as 50%."
note I added the bold.

It make no sense, they've already switched, ie already bought a computer, yet you were guessing only 10% would switch??????

Your whole premise is based on a 50% figure of customers who already switched.  not from the 40% of the total market that bought desktops.

kb5zhh wrote:

Not only was Apple's early to mid 90's lineup confusing, but their selling strategy sucked.  Sears was one of their big selling locations.

I can't wait until I can buy a Mac at WalMart!

Czachorski wrote:

Uh-oh.  This thread must be over, because I agree with pretty much everything you wrote.

Damn it.

rickag wrote:

Mr. T wrote:

Czachorski wrote:

Uh-oh.  This thread must be over, because I agree with pretty much everything you wrote.

Damn it.

If indeed this thread is over, just one last comment

4 - 20% of what?  If it is of the potential switchers out there, then even at 4% Apple's market share would approximately double.  Then again, I probably didn't understand the numbers to begin with.

In my mind, there are 3 fundamental widdlings that define the potential number of Mac buyers being turned awaw from the lack of a consumer tower:

1.  % of potential Mac customers who want a laptop
2.  % of those left who wanted a mini, iMac or Mac Pro
3.  % of those left who would bail on a Mac all together and get a PC rather than picking another Mac

My contention is that the % in #3 is relatively small, because most of Apple's potential customers want to go Mac because of software, so they are unlikely to bail because of the lack of their ideal harware choice.  The switcher discussion became relevant, because that is the conduit for Apple to capture a piece of the PC market and increase market share.  My contention was that the % in #3 was even smaller for switchers, because of their likely motivation to go Mac over software.  Play with the numbers a little, and you will see that we can debate them all day long, but that the ranges will gel real nicely in that lower range.  Just throwing out the straight 50% of 50% of 50% is 12.5%.  And we know that something like 60% of the market wants a laptop, so #1 is probably something more like 40%

The number doesn't represent the % of new marketshare, it's the percentage of Apple's potential customers that they lost a sale over the lack of the consumer desktop.  In other words, if the number is 10%, then rather than selling 1.5 million Mac last quarter, Apple could have sold something like 1.66 Million with the comsumer tower.  Lost sales = 166,000 Macs, or about 10% of the total number of people that wanted a Mac of 1.66 Million.

Last edited by Czachorski (2007-06-09 2:03 pm)

rickag wrote:

Czachorski wrote:

rickag wrote:

If indeed this thread is over, just one last comment

4 - 20% of what?  If it is of the potential switchers out there, then even at 4% Apple's market share would approximately double.  Then again, I probably didn't understand the numbers to begin with.

In my mind, there are 3 fundamental widdlings that define the potential number of Mac buyers being turned awaw from the lack of a consumer tower:

1.  % of potential Mac customers who want a laptop
2.  % of those left who wanted a mini, iMac or Mac Pro
3.  % of those left who would bail on a Mac all together and get a PC rather than picking another Mac

My contention is that the % in #3 is relatively small, because most of Apple's potential customers want to go Mac because of software, so they are unlikely to bail because of the lack of their ideal harware choice.  The switcher discussion became relevant, because that is the conduit for Apple to capture a piece of the PC market and increase market share.  My contention was that the % in #3 was even smaller for switchers, because of their likely motivation to go Mac over software.  Play with the numbers a little, and you will see that we can debate them all day long, but that the ranges will gel real nicely in that lower range.  Just throwing out the straight 50% of 50% of 50% is 12.5%.  And we know that something like 60% of the market wants a laptop, so #1 is probably something more like 40%

The number doesn't represent the % of new marketshare, it's the percentage of Apple's potential customers that they lost a sale over the lack of the consumer desktop.  In other words, if the number is 10%, then rather than selling 1.5 million Mac last quarter, Apple could have sold something like 1.66 Million with the comsumer tower.  Lost sales = 166,000 Macs, or about 10% of the total number of people that wanted a Mac of 1.66 Million.

Thank you for the explanation.

So we're just back to disagreeing on the potential increase in market share.

The potential is what it is.  The formula above gives a basis to compute the upside of creating the tower - you can capture x new sales.  The risks are that you lose profits from cannibalizing higher-end sales from existing Mac user repeat customers and not forcing those people who buy Macs in catagory #3 buying a higher end machine.

Apple could, with a little bit of market research, quantify these numbers and make the call.

ConnertheCat wrote:

People always complain about lack of upgradeability, but how often do you guys actually do it?  My three year old G5 tower has gotten a few RAM upgrades, and a new harddrive - both of which can be done on an iMac…

One of the most common is the GPU followed by the HDD.

Yes you can upgrade the HD in the iMac.....but you cannot upgrade the HD and keep the warranty....

The nice 750GB+ HDD's (and very soon 1 TB) you can buy beg for large or many files and USB 2 or even FW 400 pale compared to native SATA speeds... or even ATA 133 for that matter.

eSATA would improve things some but since the Mac Pro did not see any eSATA or the MBP for that matter I do not expect it on the next iMac revision

Concerning eSata, on the bright side, MacLife reviewed some external drives and Firewire 800 was faster than eSata in their tests.

On the Mac Pros &  Mac Book Pros

SATA is up to 3.0Gbps, while FW800 is 800Mbps.  If the FW drive won, it means that the drives themselves were the limiting factors in the tests.