I've just finished reading Jeff Adkins article How a Revised Cube Could Save Apple Education.
Jeff touches on several very important points, and one in particular is
to blame for Apple's still rather underwhelming market share. It is, of
course, Apple's premium pricing.
Apple often get compared to BMW and Mercedes, usually in the context
of sharing similar levels of technological and design prowess. Yet they
share more than that; all three focus on quality and technology, not
price.
Just as you can buy a Japanese four-door sedan (that's saloon for
non-Aussies) with a 2L engine and plenty of electronic gizmos for far
less that what you'll pay for a BMW 320i, Dell will sell you a Wintel
PC for much less than a (roughly) comparable Power Mac G4.
Neither the Dell nor the Toyota will have the same level of quality
engineering and design. On the flip side, I'd bet owner satisfaction is
a lot higher among BMW and Apple owners, not to mention the factor of
pride. Just as most BMW owners feel they own the road, Apple users tend
to consider themselves vastly smarter people for using a Mac.
The difference is that while BMW and Mercedes' premium spec, premium
priced, high profit margin, low volume vehicles sales don't seem to
affect their ability to compete in their marketplace, Apple's Macintosh
is.
The Mac isn't just a funky computer; it's an entire computing
platform. While Apple - and Apple alone - controls that platform with
an iron fist, its ultimate survival depends on third party software and
products being available for it.
Apple nearly sank in 1996-97 because of its failure to provide
affordable competitors to then-new Pentium-based Windows 95 and NT
machines resulted in software developers and peripheral manufacturers
abandoning the Mac platform. This, in turn, provided the double whammy
blow for Apple; being too expensive is one thing, but without current
software and readily accessible printers, modems, etc., you're doomed.
Consumers had even more reasons to switch to PCs - even Apple's core
creative media customers left in droves.
Only when Apple adopted PC standards like USB, FireWire, and IDE -
not to mention sold a tonne of Macs, thanks to the iMac - did the third
party developers come back to the party.
Today, the Macintosh is still sitting pretty, so to speak. While
virtually all of their peers are bleeding red ink, Apple is holding
firm and still managing to innovate.
Yet I can't help but be worried. Mac peripherals are out there and
easy to get hold of, but you'll still pay more for a Mac-compatible
product. You'll also be choosing from a smaller range of products. The
sheer volume of the Windows industry means that there are more players
competing against one another, and thus prices constantly fall.
Macintosh needs this. It needs more developers working to better
existing products, introduce new products, and maintain a healthy level
of competition. We all know what can happen when one company is left to
dominate a given market.
Indeed, even Apple is at risk of becoming complacent if left to
control too much of the Macintosh market. Today's third party hacks for
Mac OS X will become features of Mac OS X tomorrow, for
example.
So not only does Macintosh need a bigger marketplace to bring in
more players to increase volume and choice while reducing prices, we
also need that increase to keep the pressure on Apple to continue
innovating and making great products.
So, how does Apple increase market share? Simple - Low
Cost Macs.
The irony is that Apple was competing well with the Wintel PC
companies in 1998-2000. The storming power of first the G3 - and then
the G4 - meant that any premium paid over an "equivalent" Windows box
was more than justified by the extra performance. While seemingly
low-spec, the iMac delivered a highly usable mix of performance and
features at a price other PC vendors simply couldn't touch.
And if that didn't clinch the deal, the sexy new translucent casings
usually did.
Coming towards the end of 2002, that situation no longer exists. The
beleaguered G4 has lagged behind the Pentium 4; first in the MHz game
and eventually in terms of sheer performance and value for money.
This presents a serious problem for Apple. The next generation
PowerPC CPU - the IBM 970 - is still some time away from making its way
into the Macintosh. Until then, Apple cannot compete with comparable
Wintel PCs by out performing them.
Apple must instead go where they've never gone before and bring the
Macintosh name to one or more products selling for under US$700.
I believe all-in-one designs like the iMac would be more suitable
for the rigors of education use than a multi-component desktop system.
While most believe the CRT iMac should retire gracefully before it gets
too long in the tooth, a 15" eMac, with specs and pricing along the
lines of what Jeff Adkins suggests, would be a winner with schools.
Power and features are nice, but the education market is increasingly
ruled by shrinking budgets. Offer a most usable product from a vendor
of Apple's reputation at these sorts of prices, and I'm sure many
schools will take the bait.
Not only should such systems be available at the prices Adkins
suggests, but Apple should create incentive schemes where parents of
children at participating schools could buy similar models for a
substantial discount for home use.
And this is the rub: Apple needs to get families buying Macs.
Clueless parents usually have their computer purchase led by their
children, who in most cases want a Windows PC because of the game
titles readily available for it, and because of their perceived better
upgradeability. Yet if parents see that their son's or daughter's
school uses Macs, and that buying a similar model through the school
will land a big discount, there is an excellent chance they'll take
home a Mac instead.
Low cost offerings would also give Apple's "Switch" campaign a much
needed boost. I'm willing to bet that for every "switcher" out there,
there are 3 or 4 who'd like switch yet cannot justify the extra cost of
a Mac - initially anyway. With a low cost machine, reluctant would-be
switchers can "test the water" without making a large investment
upfront.
People need time to discover for themselves why the Mac platform is
superior. They can only do that in their own time, doing their own
work; a ten minute demonstration by an Apple Store sales rep simply
isn't enough for most people. Switchers must be allowed to "convert"
themselves; a low cost Mac would be an affordable manner in which to do
that.
For Apple, the dividends would come fast enough. Not only with
increased sales will the Mac platform be as more attractive/practical
option as more third party developers enter into the market place;
typical Mac-loyalty means that a switcher will probably be more secure
in replacing a US$300 eMac G3 with a US$1,500 iMac G4 or PowerBook G4
in the future.
In a nutshell, the small profit margin required to sell low cost
models will be justified by increased future sales on higher margin
products and the overall boost to the Macintosh platform through
increased third party developer involvement.
I'm no businessman, but it makes good sense to me.
Apple, are you listening?
The LC Rebirth
In the early 90s Apple introduced the LC
(Low Cost) line of Macs. While far from Apple's top performers,
they 
did bring the Macintosh to the masses with
their low prices reaching markets the US$4,000+ Mac IIs and Quadras
could never hope reach.
It's time to bring back the LC concept, if not the name, in order to
make the Macintosh even more affordable for the average person.
A Cube-like system wouldn't be the most desirable choice for schools
[see Dan Knight's No, Don't
Resurrect the Cube for Schools for the reasons], but a low cost,
small footprint desktop Mac would be ideal for the SOHO market and
creative media professionals on limited budgets.
While the Cube was too expensive any way you looked at it, I know
plenty of people who would have given it a second though if it had come
with 1 or 2 PCI slots. For those involved with audio production, a
virtually silent, small footprint computer would have been a dream
system. Unfortunately, the bulk of preferred audio interfaces, both in
2000 and today, don't use USB or FireWire. Two PCI slots would be
enough to add an audio interface card and a DSP (digital signal
processor) card - a standard for serious audio production.
Don't write off the external power supply, either. I'd be happy to
place yet another power supply on the floor around my desk to reduce
the ambient noise level of my studio by 20-30 dB without stuffing the
box in a cupboard, where I can't easily get at it.
The original Cube's 8" x 8" suspended box design will obviously have
to change; I see a somewhat plainer box design, in de rigeur
snow 
white, more akin to a miniature NeXT Cube. The nonsense of the Cube's hidden,
hard to get at FireWire/USB sockets would be avoided by a neat row of
connections at the back and a single USB and FireWire port at the
front, giving quick access for devices such as digital cameras or an
iPod. With a bit of ingenuity, Apple should be able to squeeze in not
only a 3.5" hard drive and a CD-ROM, CD-R, or Combo drive, but also
leave room for a second hard drive.
Unlike recent consumer-oriented Macs, Apple should make it a doodle
to access the system's innards. RAM slots must be easily accessed, and
the CPU should be ZIF socket mounted for future upgrades.
Cash-strapped graphic designers and web developers are another
market Apple needs to capture. I know many fellow freelance designers
are stuck between the choice of a secondhand Mac or a brand new Wintel
PC. Even for the converted Mac lovers, the need for sheer horsepower
makes Windows very tempting.
Again, a small desktop system with two PCI slots provides the
necessary expansion room for another video card or other specialist PCI
add-ons. For between US$450 and US$700, depending on processor, this
would be a boon for the creative media industry, which is currently
doing it tough.
Finally, if Apple really wants to convince the world the CRT is
dead, it needs to produce some lower cost flat panel displays. One
would assume purchasing a low cost model, like what Jeff and I have
suggested, would seek out a cheapish PC brand CRT to keep the overall
system cost down.
However, if Apple could use its existing notebook LCD display forms
- i.e., the 12.1", 14", and 15.2" units fitted to the current iBooks
and TiBook - and repackage them as stand alone displays selling for
between US$250 (or less) and US$600, far more people would be willing
to give flat panel displays a try.
While 12.1" and 14" displays sound like a backward move, both are
more than satisfactory for everyday use, and the LCD's brighter and
sharper image offsets any size advantage a 15" or 17" CRT would
have.
Again, Apple needs to take an initial profit margin hit in order to
enjoy a greater long term dividend. After all, lower prices mean more
sales, which equals more volume, which equals still lower prices. It
again also gives the consumer a chance to try something different
without taking too big a financial hit early on.
Once used to the advantages of LCD technology (sharper, brighter
image, smaller footprint), they'd be more willing to upgrade to a
larger, more expensive 17" or 22" display.
LCD displays have been slowly coming down in price as they grow in
popularity, but I feel we're still several years away before they are
as ubiquitous as 17" CRT displays are now. Here is Apple's chance to
accelerate the process.
To conclude, Apple cannot continue to be the BMW of the computing
world. Remaining focussed solely on mid-to-high end products will not
increase market share significantly and will result in many continuing
to view Apple's products as overpriced novelties. For better or worse,
the personal computer industry is one driven by price, and while Apple
must always stand for quality and innovation, it also needs to play the
dollar game.
By increasing part of its focus on low end models, Apple can finally
bring the Macintosh to markets it has never been able to reach. While
meeting these new low price levels will require Apple to forgo the
large profit margins that it's used to, the resultant increase in sales
will not only keep Apple profitable but also secure the long term
viability of the Macintosh.
Share your perspective on the Mac by emailing with "My Turn" as your subject.
