17" LCD iMac, HELL YES!!!
From the posts that I'd read in this thread, I found that many of the reasons for not going with the 17" LCD are actually reasons for going with the 17" LCD.
Supply problems:
Many have noted that the 15" LCD supply suggest that Apple shouldn't go with a 17" LCD.
On the contrary, that is one of the greatest reasons for adding a 17" LCD iMac. Since Apple introduced the 15" LCD iMac, it has failed to meet demand. Undoubtedly, this has slowed the momentum that iMac would have otherwise enjoyed. This is contrary to what Fred Johnson said today. He claimed that sales do not appear to have slowed because of the supply shortage. That is just plain hogwash@!!! It may be that sales have kept up with Apple's original conservative forecast of sales. But, sales beget sales!!! The difference between delivering 50,000 units and delivering 150,000 units is that there are 100,000 more people showing their friends, colleagues, and family the new iMac and talking about how wonderful it is. So, Apple has lost much in the way of opportunity sales due to the supply shortage.
So, why the 17" LCD iMac? If your suppliers can provide you 5,000 units per day of 15" LCD's and your total demand is 7,500 units, adding 17" LCD's to the mix could fill the gap.
The simple pricing approach is to maintain constant margin. But, people willing to buy a 17" LCD iMac are considerably less sensitive than those buying lower-end Macs. So, either way, the addition of the 17" LCD iMacs would raise Apple's earnings period (more than enough to cover the incremental development and production costs).
A 17" iMac would generate much needed publicity for Apple to reinvigorate its market momentum, dampened by the supply problems. Further, it would provide a further cushion for handling variances or deficits in 15" LCD supplies should Apple's johnny-come-lately advertising campaign that has been unusually small finally be funded at industry normal levels. Do you doubt that if Apple didn't have this supply problem that it wouldn't be employing considerably more advertising resources? Backlogs are fine for the Apple faithful; but new converts are significantly less likely to tolerate shipment delays, a mark that Apple would wear for a long time.
Costly development to add 17" LCD:
If Apple didn't have several prototype models of 17" LCD iMac I would be absolutely shocked!!! If Apple has to lengthen the display arm..., that would be trivial. If Apple has to increase the weight of the dome, that too would be trivial. The display arm has supposedly been causing production problems. Well, the same solution for the 15" LCD would obviously apply to the 17" model. I have no doubts that Apple has always intended to make 17" LCD's a future enhancement.
Apple has had months to deal with its supply issues. In this period of time, Apple could easily make a practical 17" variant as well as be damn near close if not finished with adding it to production.
Cannibalize low-end PowerMacs:
That would be great news!!! The low-end PowerMac is one of Apple's lowest margin units. The 17" iMac would appeal to people less price sensitive than those buying low-end PowerMacs; it would generate higher margins. The low-end PowerMac consumers are considerably more price sensitive than high-end iMac consumers, certainly more so than high-end PowerMac consumers.
Is it so hard to imagine yuppy consumers that prefer style over expandability and minor performance differences? PowerMac buyers want expandability, upgradeability, and performance. An iMac falls short on these preferences. No, I do not think there would be any adverse cannibalism. If anything, there would be earnings positive cannibalism.
Price would be too high:
In Apple's finance conference call, Fred Anderson stated that there is no evidence that the $100/unit across the board price increase for iMac had any impact on sales. This confirms my premise that iMac buyers are relatively price inelastic or price insentivie. Add a $100/unit to a low-end Dell and you'd see a significant drop in unit volume because that target market is more price sensitive or price elastic.
The iMac is not exactly a low-end PC. Yes, its less expensive than PowerMacs. But, its clearly more expensive than Dell, Gateway, or white box CRT units. The true low-end PC targets price sensitive consumers. Upper low-end consumers to high-end consumers go for LCD PCs today. The 15" LCD iMac is price and value competitive. Gateway is already offering a 17" upper-low-end option.
LCD Cost:
This really is part of the price issue but I've separated it to make a point. When an OEM negotiates deals with suppliers, the smart OEM's create incentives for the suppliers to meet demand and/or to cut their prices to get business. Apple recently added a second supplier, Apple could have reasonably worked out a deal for more heavily discounted 17" LCD's by levering the second supplier against the first and by making it a condition for the second supplier to get the deal. Even if no special accomodation is/was attained, the yuppy iMac crowd would still buy the 17" version. Only a sound conjoint analysis could determine this prior to launch, I would expect that Apple's market research firm has done this already. If not, an Apple product manager needs a butt kicking!!!
CPU Speed Delta:
One might argue that the 17" iMac must be slower than that of the low-end PowerMac. I tend to agree with this insofar as an iMac should not be faster than a PowerMac. But it can be equal!!! Again, a conjoint analysis would be very useful.
Another might feel that the 17" iMac must be faster than the 15" iMac. I disagree. The display delta is all the differentiation that is required. Why tempt fait further; the target consumers may be less price sensitive but they are not price insensitive.
Well, I think a 17" iMac makes a lot of sense.
I also think what someone has called a "headless" iMac makes a lot of sense. This is what I have in the past referred to as the iBrick. But that's another post/thread.
Eirik
