My Turn

Resurrecting the Low Cost Mac

Ben Wells - 2002.12.09

My Turn is Low End Mac's column for reader-submitted articles. It's your turn to share your thoughts on all things Mac (or iPhone, iPod, etc.) and write for the Mac web. Email your submission to Dan Knight .

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 Macintosh LCdid 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 NeXT Cubewhite, 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.

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