The Mac Paradox

[rickag]

Let's assume Apple develops a tower aimed at the market you're describing. The costs wouldn't be too high for development because the tower that's used for the Mac Pro could be used in a slightly altered form. Now, it would come down to guaging the market.

Apple already sells more notebooks than it does desktops; I believe the ratio has come to nearly 2:1 now. So, we already know that the desktop market is gradually shrinking. Mind you, it will probably level off at some point, but it will probably level off at something around 20% of any company's total sales. Knowing this, why would Apple commit the resources to develop a product whose market is gradually being eaten away? This is one nail in the coffin for your tower.

Now, let's assume that Apple would be able to develop the tower and make enough sales off of it in order to pay off sunk costs like design, marketing, production of the first ten thousand units, etc. Would the product continue to sell in numbers great enough to give Apple it's 25%+ profit margin? Since the iMac starts at $1200, and the Mini ends at $800, Apple would have to somehow convince buyers to forgo the built-in display, and cough up more money for a what is essentially a better Mini. Since $1000 seems to be a good in between marker, let's say that's the entry price for one of these towers. How many consumers do you think, aside from yourself, would go into a store, look at a $1000 machine with no moniter, and then at a $1200 machine with everything built-in, and say, "I want the $1000 machine."? There's a major conflict in terms of price points and features. Granted, the $1000 tower would be more powerful than the iMac, but how many average consumers are going to think about this? For the average computer know-nothing, it's easier to buy everything in a single package. This tower only appeals to those who are going to game, or who need a powerful desktop.

Well, I have good news for you. You can get the powerful desktop, it's called a Mac Pro



No PC maker is doing well in desktop sales, esspecially to home users. By far, most desktops that are sold are sold to the business market.
PS: merge your posts next time by double-quoting.

I don't want a Mac Pro. I don't need dual processors nor do I need the expensive ram it requires. I do not need a workstation.

Without knowing Apple's margins on the iMac or Mac mini, any claims concerning profit margins of them compared to a mid priced tower are speculation. My speculation is that when compared to other computer manufactures, on a feature for feature basis, the iMac is often quite competitively priced. This flucuates as time goes on, most probably based on the introduction of newer, higher priced/higher margin cpus and technology, etc. This seems to hold true more for the higher end than the lower end models. In the price range for the iMac, other manufactures are also making their higer margins. Is it 25%+, I contend that it is. It almost has to be for companies like Dell to end up with margins in the 14 - 16% range.

As far as I know the desktop market is not shrinking, it just growing more slowly than the laptop market.

The iMac and Mac mini use more expensive laptop cpus and ram, the mini uses a laptop harddrive. This at the expense of flexibility.

I own an iMac G5 iSight, I like it, but would rather have bought an Apple mid priced tower. Why should I buy an Apple tv? It uses the next generation of wireless, I've no upgrade path. Should I spend more money for an external wireless router, a la Airport? Makes no sense.

With Leopard coming out, I'd like to buy a relatively(relative to external) inexpensive eSata hard drive for Time machine, opps can't do that, no upgrade path, leaving me to buy a relatively expensive external harddrive with either USB 2 or Firewire ports.

I can only hope that Apple doesn't depricate my computer further by using more of the graphics processor for the OS, core image and audio. I could've just bought a newer generation graphics card, but not for the iMac or Mac mini. When Apple abandoned Firewire on the iPods and went exclusively with USB 2, what were the millions of iMac owners to do if they wanted to buy a new iPod. They could buy their new iPod and suffer the hiddiously slow speed of USB 1 transfer speeds, not buy a new iPod, or buy an new computer that cost at the time >$1000. What did all the Windows user have to do, well, they could go out and buy a $30 or less USB 2 card and install it within minutes in their clunky towers.

Will I sell my Apple stock, no. Will I switch to Windows, no. I value the Mac OS more than what advantages there are with other systems. But, how many switchers will give up their monitor to go to an iMac. How many would give up any internal harddrives or optical drives to go to the Mac mini?

IMHO Apple's extraordinary increase in market share for laptops signals an interest in the OS. The languishing of Apple's desktop market share, to me at least, shows a severe lack of interest in their desktop line-up. Maybe I'm all wrong, but this topic has been a recurring theme throughout most all Mac centric bulletin boards for quite some time.

 

[Blue Velvet]

Maybe I'm all wrong, but this topic has been a recurring theme throughout most all Mac centric bulletin boards for quite some time.

The assumption that those who post on Mac-centric boards are representative of, and identical to, Apple's target markets for hardware sales is one that is also a recurring theme on Mac-centric boards.

 

[rickag]

Spec out a similar Dell, HP, Gateway, or Sony and you'll see a competitive price.

Start pricing comparable software and you'll see the scales start to tip heavily in Apple's favor.
Lethal

Agreed. Then that begs the question concerning Apple's margins, doesn't it.
If Apple's margins are indeed so much greater on computers than their competitors, how?

One explanation is that Apple gets parts for a lower price. That can't be for Intel cpus because of the law suit with AMD. Economies of scale would indicate that it wouldn't hold true for any of their other parts either. In fact, just the alluminum case puts them at a price disadvantage.

Another explanation would be manufacturing efficiency. Are Apple's contractors that much more efficient than their competitors? Maybe, but I doubt it would make that much of a difference.

Apple has made the decision to compete on price with the Mac Pro. Can anyone prove they don't do the same thing with the iMacs? How much of their last quarters 35% margins were do to favorable pricing on memory for the ipods?

The assumption that those who post on Mac-centric boards are representative of, and identical to, Apple's target markets for hardware sales is one that is also a recurring theme on Mac-centric boards.

I never made that assumption. What it does indicate is that there is interest in a mid priced tower. One recent blog got over 4000 diggs. How many people are even aware of that blog, my guess is, not many. Yet, 4000 + people gave it a digg. Not very scientific, but does indicate interest.

Just a note. I like Apple and believe they will be profitable and are not going to exit the computer business, nor will a lack of mid priced tower effect my purchasing their stock. But, I do believe a mid priced tower would benifit them both in sales and on the bottom line.

 

[IJ Reilly]

It's not about Dell vs Apple. It's about the hole in Apple's desktop line-up.

Haven't we been hearing this complaint for positive eons? The funny thing about it, behind this perennial gripe there seems to be an inherent assumption that maybe Apple just hasn't considered this issue, that they haven't developed prototypes, that the haven't run the numbers, that they aren't staying clear of this market for a very good reason. And what is that reason? I think it's because the margins stink.

 

[flopticalcube]

I think it's because the margins stink.

QFT. PC box shifters go out of business faster than sub-prime lenders.

 

[-::ubermann::-]

in my opinion apple's bad machines are precisely the high end ones, ridiculously expensive, compare a macbook pro with dell xps line, xps just kicks mbp's ass, with a significant lower price, not to mentions mac pros, osx is nice but you can run linux and have a good os too
only mac worthy for me is the macbook

 

[rickag]

Haven't we been hearing this complaint for positive eons? The funny thing about it, behind this perennial gripe there seems to be an inherent assumption that maybe Apple just hasn't considered this issue, that they haven't developed prototypes, that the haven't run the numbers, that they aren't staying clear of this market for a very good reason. And what is that reason? I think it's because the margins stink.

You may be right, but I doubt the margins on computers in the $899 to >$2000 range represented by the typical single processor Conroe towers don't stink, they boost the margins of the company, to offset the razor thin margins of the low end, as in Micheal Dell's statement after a quarterly report awhile ago. At the time Dell's margins were in the 14% - 16% range.

How high would the margins on the mid to upper end towers have to be to offset the razor thin margins of the low end if the low end outsells them by say a ratio of 6 or 8 to one?

Could it be that Apple has always felt the consumer should consider a computer to be an appliance? Doesn't Steve Jobs recent statement indicate this? Does it have more to do with a company wide belief in what is best for the consumer? Even the Woz was in disagreement with Jobs on these very issues.

 

[Freyqq]

Apple already sells more notebooks than it does desktops; I believe the ratio has come to nearly 2:1 now.

Have you ever considered that laptops outsell desktops 2:1, not because mac users necessarily all want laptops, but because of the gaping problems with apple's desktop lineup.

The userbase of the PC world has every option available to them. They have the ability to buy tablet pcs, regular laptops, desktop replacement laptops, towers, all in ones, small systems like shuttles, etc etc etc

they clearly favor the tower desktop form factor.

evidently there are people that want towers and I know for a fact it is holding back many users from getting macs. A completely upgradeable system for a slightly premium price would get more people to buy macs. If apple adjusts the margins on their products correctly, they won't be losing any money from offering a new line.

Believe it or not, not everyone wants the form factor of the imac or needs the power of a mac pro.

about the whole SJ thing..SJ said he didn't like putting video on an ipod and...now just about every ipod can do video. At the time, all in one might be way to go b\c there simply isn't an alternative present in the lineup. This can be easily changed..

 

[flopticalcube]

The same thing is happening in the PC world. Laptops sales are growing much faster than desktop. Nobody can make decent margins on desktops anymore.

 

[LethalWolfe]

Have you ever considered that laptops outsell desktops 2:1, not because mac users necessarily all want laptops, but because of the gaping problems with apple's desktop lineup.

As flopticalcube said, the trend is industry wide not Apple centric. Laptops have become practical enough (both in price and performance) to be on par with desktops in the most commonly used applications. And as more households get more than one computer it's easier to make room for a laptop than a desktop.

they clearly favor the tower desktop form factor.

They clearly don't , but maybe one reason you don't see many AIO PCs is that there isn't a decent AIO PC available?


Lethal

 

[Freyqq]

As flopticalcube said, the trend is industry wide not Apple centric. Laptops have become practical enough (both in price and performance) to be on par with desktops in the most commonly used applications. And as more households get more than one computer it's easier to make room for a laptop than a desktop.


They clearly don't , but maybe one reason you don't see many AIO PCs is that there isn't a decent AIO PC available?


Lethal

there is a difference between growth and units sold

at the present time in the PC world, desktops far outsell laptops

 

[TheAnswer]

The problem is that this "gap" in the desktop lineup is filled with potential buyers with different needs.

Some percentage just want to be able to swap up their graphics card and attach their own monitor, a "headless iMac", if you will.

Other's won't be happy until you add in a PCI slot. Others want two slots, but a smaller case (and price) than the MacPro. Others demand hard drive expansion (but don't want external drives for aesthetic reasons). Again, some want two drives, some three.

There are so many divergent needs and people in this "gap" seem highly sensitive to the price point as well. So, they're often uncompromising about exactly how this machine should be configured, because they don't want to pay for features they'll never use.

 

[Freyqq]

The problem is that this "gap" in the desktop lineup is filled with potential buyers with different needs.

Some percentage just want to be able to swap up their graphics card and attach their own monitor, a "headless iMac", if you will.

Other's won't be happy until you add in a PCI slot. Others want two slots, but a smaller case (and price) than the MacPro. Others demand hard drive expansion (but don't want external drives for aesthetic reasons). Again, some want two drives, some three.

There are so many divergent needs and people in this "gap" seem highly sensitive to the price point as well. So, they're often uncompromising about exactly how this machine should be configured, because they don't want to pay for features they'll never use.

that is the definition of a tower

that is also the reason why the imac/mac pro does not suit this "gap"

 

[CalBoy]

I don't want a Mac Pro. I don't need dual processors nor do I need the expensive ram it requires. I do not need a workstation.

If you don't need a work station, then an iMac would be right for you. You're basing your complaint on the fact that you already have a display, and that the iMac forces you to buy another one. That isn't an argument favoring the tower, it's an argument that's using your personal needs. Like I said before, most consumer go in and want to get all of their stuff at once. Even Dell sells packages with towers and displays together. Apple just does it with style.

As for the margins on the hypothetical tower, I was using Apple's margins from the first quarter of 2007. I believe I read that story here; it basically stated that the margins on Macs are as high as 30% in some products, but that the average is around 25%. That's why I said Apple should be able to keep their margin around there for the tower you suggest. As for whether or not Apple can do this, I'm going to defer to a post which summed up my feelings on this quite well:???

Haven't we been hearing this complaint for positive eons? The funny thing about it, behind this perennial gripe there seems to be an inherent assumption that maybe Apple just hasn't considered this issue, that they haven't developed prototypes, that the haven't run the numbers, that they aren't staying clear of this market for a very good reason. And what is that reason? I think it's because the margins stink.

Thank you for understanding; where would I be without you?

QFT. PC box shifters go out of business faster than sub-prime lenders.

Scary huh? If only is wasn't so real, it would funny (the housing part that is, I could care less about PC box makers).

Have you ever considered that laptops outsell desktops 2:1, not because mac users necessarily all want laptops, but because of the gaping problems with apple's desktop lineup.

Laptops are movable, lighter, smaller, more convenient, and don't have the same lack of power issues they had before. They are popular because of their own merits, not because Apple's desktops are bad.

The userbase of the PC world has every option available to them. They have the ability to buy tablet pcs, regular laptops, desktop replacement laptops, towers, all in ones, small systems like shuttles, etc etc etc

I wouldn't say every option, but on the whole, they do have more options. But remember, Apple is one company. All of the products you mentioned are supplied by dozens of companies in the PC world. Very few (if any) offer a complete range of products exactly like you would like. There's always a drawback somewhere, whether it's price, Windows, size, Windows, style, Windows, quality, Windows, design, or Windows.

they clearly favor the tower desktop form factor.

No they don't. Even in the PC world, laptops out pace desktop sales by a considerable (I believe something like 60:40) margin. The trend is industry wide. Apple is simply ahead of the curve because Apple customers tend to be more affluent, better educated, and more intelligent than the average PC customer. And no, this isn't Fanboy-ism talking. More than half of all Mac users have a college degree, as opposed to a much smaller (something like 30%) of PC users.

evidently there are people that want towers and I know for a fact it is holding back many users from getting macs. A completely upgradeable system for a slightly premium price would get more people to buy macs. If apple adjusts the margins on their products correctly, they won't be losing any money from offering a new line.

Forgive me, but your anecdotal evidence is worth nothing. Even if you know ten people who are withholding their purchase because they want a tower, it wouldn't be much compared to the thousands of people who are ready to buy what Apple already has. No one is saying that the tower won't increase sales; we're questioning whether or not it will make a dramatic difference. And by the way, Apple can lose money by offering a new line. Remember the Cube? Newton? Jobs is being more careful these days, and I can see why a tower is not on the agenda.

Believe it or not, not everyone wants the form factor of the imac or needs the power of a mac pro.

I believe it. They also don't have to buy a Mac. There are other possibilities.

about the whole SJ thing..SJ said he didn't like putting video on an ipod and...now just about every ipod can do video. At the time, all in one might be way to go b\c there simply isn't an alternative present in the lineup. This can be easily changed..

I actually agree with you here Just because Jobs said it once doesn't mean it's not subject to change. Anything is possible, but if anything, we'll see more of Apple's resources go towards iPods, iPhones, and notebooks; it's where the future is.

 

[CalBoy]

there is a difference between growth and units sold

at the present time in the PC world, desktops far outsell laptops

No they don't. And that story is two years old.

 

[TheAnswer]

that is the definition of a tower

Yes...but the problem is how big/how much? And the problem is that the group that would be served by a midrange tower doesn't really agree on what features such a tower should offer.

It seems aesthetics and price point are big factors in why this group feels it's needs aren't met. It's filled with people who don't want an AIO machine, yet some of them seem to hate the idea of using external drives. Some want PCI slots, others don't. And, like I mentioned before, the people that don't want PCI expansion don't want to pay for it as a feature. Likewise, the person that just wants one PCI slot and one hard drive bay doesn't want to pay for a machine with two slots and two or three bays. On the other hand, I seen people argue that any such tower would have to offer three hard drive bays and that they wouldn't settle for anything less. Additionally, there are a lot of people out there who won't be satisfied until Apple offers them all the features of the MacPro at half the cost.

 

[LethalWolfe]

there is a difference between growth and units sold

at the present time in the PC world, desktops far outsell laptops

No they don't and here is another link.

Last year, a report by research firm Current Analysis found that 2005 was the first year that laptops outsold desktop computers in the US.

Lethal

 

[Freyqq]

Yes...but the problem is how big/how much? And the problem is that the group that would be served by a midrange tower doesn't really agree on what features such a tower should offer.

It seems aesthetics and price point are big factors in why this group feels it's needs aren't met. It's filled with people who don't want an AIO machine, yet some of them seem to hate the idea of using external drives. Some want PCI slots, others don't. And, like I mentioned before, the people that don't want PCI expansion don't want to pay for it as a feature. Likewise, the person that just wants one PCI slot and one hard drive bay doesn't want to pay for a machine with two slots and two or three bays. On the other hand, I seen people argue that any such tower would have to offer three hard drive bays and that they wouldn't settle for anything less. Additionally, there are a lot of people out there who won't be satisfied until Apple offers them all the features of the MacPro at half the cost.

well..those are issues that face every computer made by every company

look at the imac for instance, I personally don't want to pay for that screen..i already own a 24" external screen...but if i want a "midrange" mac I have to.

you give a little, you take a little, and you offer a wide range of customizabilty...if people want 2 hds..let them have 2 hds...but don't make them pay for 2 if they only want one...its not a novel idea.

 

[Freyqq]

No they don't and here is another link.



Lethal

"Laptops will overtake desktop PCs as the dominant form of computer in 2011, according to a report by analysts IDC." -BBC

ok..maybe in 2011 if trends continue the desktop will be overtaken by the laptop. Fine. In 2011. It is 2007. The desktop remains a very important part of the computer market. Even after 2011 if trends continue...it will remain an important part of the computer market.

Second..the articles referenced refer to a single month of sales of laptops overtaking desktops...if by a very small percentage. There are many many months were desktop sales overtake laptops.

 

[IJ Reilly]

You may be right, but I doubt the margins on computers in the $899 to >$2000 range represented by the typical single processor Conroe towers don't stink, they boost the margins of the company, to offset the razor thin margins of the low end, as in Micheal Dell's statement after a quarterly report awhile ago. At the time Dell's margins were in the 14% - 16% range.

How high would the margins on the mid to upper end towers have to be to offset the razor thin margins of the low end if the low end outsells them by say a ratio of 6 or 8 to one?

Could it be that Apple has always felt the consumer should consider a computer to be an appliance? Doesn't Steve Jobs recent statement indicate this? Does it have more to do with a company wide belief in what is best for the consumer? Even the Woz was in disagreement with Jobs on these very issues.

In my experience, in business, philosophy generally takes a back seat to profits. My point being, everyone who argues so vehemently that Apple is missing a huge, profitable market for their computers, probably isn't looking at the same numbers as Apple is, and so it doesn't make much sense to seek out philosophical rationales for what is most likely a very pragmatic business strategy. Even more to the point, Apple can't possibly match every Windows box maker product-for-product. There's just too damn many of them -- and a lot of them sell frighteningly close to cost. My instinct tells me that Apple is selling into the markets where they want to be selling, for reasons that have a lot more to do with making a buck than what Steve Jobs believes.

 

[Blubbert]

I dont understand this clamoring for a midsize desktop from Apple. The current iMac lineup provides performance on the level or exceeding current midsized desktops. For those who need more power than that, there is always a Mac Pro.
Another complaint i dont understand is this need for super upgradeablility. IMHO the only parts of the computer that need to be upgradeable are the RAM and the hard drive. Everything beyond that is simply unneeded, especially considering the long useablity one can get from a mac and the fact that after two-three years to upgrade a computer you basically have to hollow it out and place everything new in there.

 

[Freyqq]

What if...:

what if apple came out with a midrange tower tomorrow. It had a conroe processor, a 8600GTS Nvidia card, 2 gigs of ram, a 320 gig hd, and a dvd burner for 1200. The case is basically the same as a mac pro, just half the size. It has 2 hd slots and 4 ram slots total.

There is still a huge margin on that. Look up the parts on newegg..i could build that for hundreds cheaper. I'd still buy it b\c it has osx. Its got good parts, the conroe processor is nice and the 8600GTS is a good midrange card.

If this happened tomorrow, would everyone that has proclaimed the concept of a midrange tower mac heresy immediately decry apple for releasing a tower, or would they immediately embrace the idea that apple is now offering a decently competitively priced tower? I think i've been on this board long enough to know that the would be praised and lauded by everyone here.

Just because Apple hasn't done it or doesn't look like they are going to do it does NOT mean it isn't a good idea AND does not mean that it might not be pursued a later date...

I dont understand this clamoring for a midsize desktop from Apple. The current iMac lineup provides performance on the level or exceeding current midsized desktops. For those who need more power than that, there is always a Mac Pro.
Another complaint i dont understand is this need for super upgradeablility. IMHO the only parts of the computer that need to be upgradeable are the RAM and the hard drive. Everything beyond that is simply unneeded, especially considering the long useablity one can get from a mac and the fact that after two-three years to upgrade a computer you basically have to hollow it out and place everything new in there.

good luck upgrading that one harddrive slot on that new imac

the only problem is that you have to take the computer apart and void your warranty to do it

 

[CmdrLaForge]

The iMac and Macpro are both really good buys. If you are that into games, you shouldn't be buying a Mac to begin with.

I have to agree with what you are saying,

what does the ribbon mean ?

 

[TheAnswer]

what does the ribbon mean ?

Contest winners get ribbons next to their posts. decksnap won the Best 1,000,000 Post Avatar Contest.

 

[Blubbert]

What if...:

what if apple came out with a midrange tower tomorrow. It had a conroe processor, a 8600GTS Nvidia card, 2 gigs of ram, a 320 gig hd, and a dvd burner for 1200. The case is basically the same as a mac pro, just half the size. It has 2 hd slots and 4 ram slots total.

And that performance is similar to an iMac in many regards. There is simply no need for what you are asking. If you want a workstation get a mac pro, if you want a personal computer get the iMac. There is no inbetween, because the inbetween doesnt exist.