[Hash]

No, I am not talking about about marketshare. While it is important, there are other ways for competition to strangle your enemies. What I am meaning is that Mac Pro desktop pricing strategy is really killing Dell: you see, assemblers like Dell have very low margin of profit, as we all know, but there is one area where Dell earns higher margins: workstation, servers, other high end hardware.

By pricing its top desktops, perfectly capable of running Windows, almost by 25% lower than Dell, Apple is driving market prices for that segment down and taking away the most lucrative market segment. I am sure that even notebooks are not as profitable as high end desktops. So even without taking market share, Apple is actually killing unrealized Dell profits. If Apple will be able to do the same jump in market share as with notebooks (from 6 to 12%), Dell earnings will be very damaged.

On low end it is under attack from hp; its notebooks also under attack from hp and lenovo; its servers being again attacked by hp and IBM; now its high end desktop are being beaten by Apple. Significance of this cannot be overestimated. Apple is taking away the last profitable segment for Dell. No wonder its moving to AMD (to get some back some margins, I assume), tries to diversificate into higher-profit game stations; but losing its high-end desktops which were bringing almost 1000$ of pure profit really hurts (i assume 1000$ because Mac Pro costs almost 800$ cheaper+assembler's profit).


So Dell margin's will be smaller and smaller. In order to compensate, Dell itself prices lower and lower and it really hurt is stocks, so it had to reevaluate its pricing. Time, when Dell will move out of some market segments or make some downsizing is probably close. Dell's model does not work in developing markets; its quality and service are becoming very poor; it lost its momentum.

Apple was wise not to enter low-end market but move first to high-end and take market share there (both notebooks/desktops).

Notice Apple's strategy:

• first enter high-end (MacBook pro, MacPro); establish its presense there, drive competitors profits down; intensify price competition and gain market share while keeping service quality good;
• then move to middle market - Macbooks using the established reputation for high-end machines; gain market share, and
• then probably move to low end - purely for market share gains;

This strategy can be extrapolated to possible future steps:

1. We should expect Macs (not Pro) or Mac tower; a middle end equivalent of Macbooks; should be with Core 2 Duo, powerful videocard; limited only by size, very competitively priced (I would say low-end configurations beginning from 899 to 1599). 2 base configurations differing by CPU

2. On low end, more competitive pricing or upgrading of Mac Mini (notice the gap between mac pro and mac mini). Spreading the pricing back to 499 (possibly 399) to 699

This may be combined by dividing Mac mini line into a more powerful mini ATX or mid size mini tower and the cheapest and slowest Mini.

3. probable entry of Macbook mini or MacBookPro mini: again perhaps in 2 basic configurations, very competitively priced.

The pricing of Apple is closely following price discrimination strategy: release most expensive hardware first; then capture middle price segment while simultaneously not losing higher end; and finally capture low price segment. Since Intel transition began from mac book pro, in notebooks its close to end; in desktops its just beginning; i would not however include imacs into prosumer category but rather leave them as AIO units and pay more attention to real prosumer category or middle towers.

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Releasing most expensive goods first has 2-fold advantages: since these modesl are most expensive, they have better reputation and quality of build; its important to maintain that impression when moving down the line; secondly, most expensive hardware captures buyers who are willing pay most; so if you cannot wait for middle tower and are willing to pay more and have that purchasing power, you will buy the Pro tower even if you needed only a middle tower; once that demand is saturated you move down the line and release a next model, which is more appealing to budget-conscious consumers; lastly you release a very cheap model for those who do not have much money; this model's aim is to gain market share, not profits.

An only flaw in this strategy so far something that Apple could not influence: slow release of universal apps by MS and Adobe. And I assume that MS will drag on producing universal version of Office for as long as possible, maybe until 2008. And probably it will be a last version of MS office for macs. However, Apple had to create Intel macs' base first, so this was the only possible way otherwise it would become a vicious circle.

Expect new Apple universal software - especially business oriented. Mail is becoming an office organizer soft; together with more powerful iSync, iChat and Addressbook, and with revamping of iWork, all pieces for creating a best office software suit are becoming ready.

Apple has also attacked Microsoft Exchange and will create its own version with the help of open source.

All in all, Macs with Xserves and OS X Server together with the Apple Exchange (?) will create a fully integrated business solution. Virus-free/low maintenance cost/low installation costs/low software costs (cheap iWork) - unbeatable combination.

Have everything linked with Bluetooth and wifi through Airport and wifi Apple routers, discovered by Bonjour. Complete solution as well.

Home front: iMacs+iPods+music streaming+video streaming+iLife+web presence - again complete and elegant solution.

Business networks require low cost/mid power Macs. Minis are too weak for some tasks and probably for full power of Leopard. Hence, middle end Macs must exist to work since iMacs are not business solutions - too expensive. Expect a headless Mac, I assume. OK, that how I see Apple strategy.

[The Godfather]

It needs to be paired with effective, direct advertising. Bring Ellen Feiss back and make a few commercials STATING THE NAME AND PRICE OF THE PRODUCTS.

[CharlesS]

As long as you have to pay over $2100 just to get a simple PCI slot or extra hard disk bay, I don't think Dell needs to worry about Apple.

[Hash]

Well, i think its began. However, Apple is not ready to advertise its full Mac desktop line: it doesn't exist yet. It needs to introduce missing middle and mid-low macs to have full line. As I already said, I do not consider iMacs to be real desktops/they are AIO units with its own niche.

[turtle777]

Originally Posted by CharlesS

As long as you have to pay over $2100 just to get a simple PCI slot or extra hard disk bay, I don't think Dell needs to worry about Apple.

That is true.

However: is a low-end MacPro a financially lucrative segment for Apple to get in, or would the overall effect (e.g. cannibalization of MacPro's) hurt Apple more than help.

-t

[Hash]

Low end MacPro is not financially lucrative; i think it has slimmest of margins; however, its important tool to expand overall market share - hence introduction of mini.

Regarding PCI slotted macs: I think we will see introduction of reasonably priced mid-towers. In analogy with notebooks, if yuo have MacBook pro, you should Macbook as well.

[CharlesS]

Originally Posted by what_the_heck

That is true.

However: is a low-end MacPro a financially lucrative segment for Apple to get in, or would the overall effect (e.g. cannibalization of MacPro's) hurt Apple more than help.

-t

Well, back in the G4 days, the low-end Power Mac used to be in the $1499-$1699 range. At one point the low-end G4 tower was actually $1299. The towers being priced well out of most people's range has been a relatively recent phenomenon.

Would I personally buy such a machine? No, my next machine will probably be a laptop. However, a lot of people do need expansion, and PC users just expect it in a desktop machine. It's kind of a stifling feeling, knowing that you won't be able to add ports if some new standard comes along that you need to have to use new peripherals (see: iPod 5G requiring USB 2.0) and that you won't be able to add new ports in case your built-in USB or FireWire ports fail. Even if they never use the expansion, switchers are still going to want to have it, and I think that Apple will need to add a mid-range tower if they want to really attract switchers who are desktop users. Currently their laptops are doing great, their desktops not so much.

[Macola]

I really doubt that Dell has anything to worry about as long as IT managers are around and continue to buy Dell like sheep.

[baw]

Perhaps Apple releases a tower/desktop computer and names it "Mac". So, you have the iMac, Mac, and Mac Pro.

[Judge_Fire]

Dell has been signaling a move away from being the low cost brand, for about a year now.

I guess they're trying to do it slowly, but we should be seeing signs of their commitment to some justifying factor. Better quality? More versatility? Service and support?

[OldManMac]

Originally Posted by Macola

I really doubt that Dell has anything to worry about as long as IT managers are around and continue to buy Dell like sheep.

Bingo! Apple, great machines that they are, are never going to get a major footprint in the IT market, because IT people are the ones who spec what companies use, and they aren't going to buy Macs. It's all about perception, not about product quality, and not even price. If you're using Windows servers, etc., you're not going to switch, and bear the expense of retraining, etc.

[mitchell_pgh]

Originally Posted by CharlesS

As long as you have to pay over $2100 just to get a simple PCI slot or extra hard disk bay, I don't think Dell needs to worry about Apple.

While you and I might like PCI slots, most consumers never use them... in fact, most consumers don't even know what a PCI slot is or what it could be used for.

I still think Apple needs a Mac mini tower or whatever, but I'm not holding my breath.

[CharlesS]

Originally Posted by mitchell_pgh

While you and I might like PCI slots, most consumers never use them... in fact, most consumers don't even know what a PCI slot is or what it could be used for.

Only trouble is, those customers are getting laptops more and more these days, rather than desktops.

[Hash]

Originally Posted by Macola

I really doubt that Dell has anything to worry about as long as IT managers are around and continue to buy Dell like sheep.

It is not about marketshare: it is that Apple intensifies price competition in high-end desktops killing potential Dell profits by introducing very reasonably priced own high-end desktops.

[Hash]

Originally Posted by CharlesS

Well, back in the G4 days, the low-end Power Mac used to be in the $1499-$1699 range. At one point the low-end G4 tower was actually $1299. The towers being priced well out of most people's range has been a relatively recent phenomenon.

Would I personally buy such a machine? No, my next machine will probably be a laptop. However, a lot of people do need expansion, and PC users just expect it in a desktop machine. It's kind of a stifling feeling, knowing that you won't be able to add ports if some new standard comes along that you need to have to use new peripherals (see: iPod 5G requiring USB 2.0) and that you won't be able to add new ports in case your built-in USB or FireWire ports fail. Even if they never use the expansion, switchers are still going to want to have it, and I think that Apple will need to add a mid-range tower if they want to really attract switchers who are desktop users. Currently their laptops are doing great, their desktops not so much.

Yes, thats true. My both Macs used to be low-end machines yet cost a lot. Nowadays however, low-end is of course in the 500-600 range; 1000-1600 is really a middle tower and should have expansion opportunities (though one may argue that instead of PCI one should use Firewire or USB2). I agree that Apple desktop line is missing important components but will become full, perhaps this fall, with introduction of mid-tower as I assume