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The Devil's Advocate
by John Kheit

Some Free Advice For Apple. Lower Prices.
April 13th, 2004

For the life of me I cannot figure out why Apple does not go for more market share; it seems a very elementary thing to do. The place where you grab globs of market share is from the corporate market. Although different IT folks will quibble that the corporate market and the enterprise market are distinct, and I might agree, for purposes of simplicity, let's just glom them together. Apple's basic problem with market share is they've been pussy footing around the enterprise market and have barely put a toe in the water with the low-volume Xserve. Considering Apple's downward trending market share, I've decided to help them out with some free advice.

My advice is exceedingly simple. Step 1. Lower prices. Step 2. Target the corporate world. Step 3. Profit like underpants gnomes.

To that end, I'm going to help out Apple marketing by donning my if-I-were-Apple's-CEO-for-a-day cap and redesigning Apple's product grid. The new grid boils down to this: offer lower price points on the mid to low-end products, and increase functionality to justify higher prices on the high-end. No longer should Apple limit itself to a 2x2 grid of Mobile and Desktop segments for Consumers and Professionals. I've expanded the grid by adding an Enterprise market and a Server segment. Here's what Apple should be selling in the very near term:

 

Consumer

Enterprise

Professional

Mobile

iBook
13.3" (1152x768)
ATI 9600 32 MB
1.25 GHz G4
Combo Drive
30 GB HD
512 MB RAM (2 GB Max)

iBook
13.3" (1152x768)
ATI 9600 32 MB
1.33 GHz G4
Combo Drive
60 GB HD
512 MB RAM (2 GB Max)

iBook
15" (1280x854)
ATI 9600 64 MB
1.5 GHz G4
Combo

0 Drive
60 GB HD
512 MB RAM (2 GB Max)

PowerBook
13.3" (1152x768)
ATI 9700 64 MB
1.0 GHz G5
DVD-+(R)/W
60 GB HD
512 MB RAM (4 GB Max)

PowerBook
15" (1280x854)
ATI 9700 64 MB
1.2 GHz G5
DVD-+(R)/W
60 GB HD
512 MB RAM (4 GB Max)

PowerBook
17" (1440x900)
ATI 9700 64 MB
1.4 GHz G5
DVD-+(R)/W
60 GB HD
1 GB RAM (8 GB Max)

PowerBook
13.3" (1152x768)
ATI 9700 128 MB
1.2 GHz G5
DVD-+(R)/W
80 GB HD
1 GB RAM (4 GB Max)

PowerBook
15" (1280x854)
ATI 9700 128 MB
1.4 GHz G5
DVD-+(R)/W
80 GB HD
1 GB RAM (4 GB Max)

PowerBook
17" (1440x900)
ATI 9700 128 MB
Dual 1.4 GHz G5
DVD-+(R)/W
Dual RAID0 80 GB HD
1 GB RAM (8 GB Max)

$799

$999

$1,299

$1,499

$1,799

$2,499

$1,699

$1,999

$3,499

Desktop

iMac 15" (1280x854)
ATI 9600 64 MB
1.2 GHz G5
Combo Drive
80 GB HD
512 MB RAM (4 GB Max)

iMac 17" (1440x900)
ATI 9600 64 MB
1.4 GHz G5
DVD-+(R)/W
120 GB HD
512 MB RAM (4 GB Max)

iMac 20" (1680x1050)
ATI 9600 64 MB
1.6 GHz G5
DVD-+(R)/W
160 GB HD
1GB RAM (4 GB Max)

eMac
ATI 9600 64 MB
1.2 GHz G5
Combo Drive
80 GB HD
512 MB RAM (4 GB Max)

eMac
ATI 9600 64 MB
1.6 GHz G5
DVD-+(R)/W
120 GB HD
512 MB RAM (4 GB Max)

eMac
ATI 9600 64 MB
2.0 GHz G5
DVD-+(R)/W
160 GB HD
1GB RAM (4 GB Max)

PowerMac
ATI 9800 128 MB
Dual 2.0 GHz G5
DVD-+(R)/W
160 GB HD
1GB RAM (16 GB Max)

PowerMac
ATI 9800 128 MB
Quad 2.4 GHz G5
DVD-+(R)/W
250 GB HD
1GB RAM (16 GB Max)

PowerMac
ATI 9800 128 MB
Quad 3.0 GHz G5
DVD-+(R)/W
250 GB HD
1GB RAM (16 GB Max)

$699

$999

$1,499

$599

$899

$1,199

$2,499

$3,499

$3,999

Server

iHome Digital Hub
iPod for your home stereo
Home backup server
TiVo functionality
Dual HDTV capable tuners
iPhoto/iMovie integration
iSight integration
iSync/iPod Synchronization
Airport Router

Bluetooth and Bluetooth remote with mic
Combo Drive
2 Firewire 800 ports
2 USB 2.0 ports
1.0 GHz G5
256 MB RAM (2 GB Max)
120 GB HD

iHome Digital Hub
iPod for your home stereo
Home backup server
TiVo functionality
Dual HDTV capable tuners
iPhoto/iMovie integration
iSight integration
iSync/iPod Synchronization
Airport Router
Bluetooth and Bluetooth remote with mic DVD-+(R)/W
2 Firewire 800 ports
2 USB 2.0 ports
1.0 GHz G5
512 MB RAM (2 GB Max)
160 GB HD

iHome Digital Hub
iPod for your home stereo
Home backup server
TiVo functionality
Dual HDTV capable tuners
iPhoto/iMovie integration
iSight integration
iSync/iPod Synchronization
Airport Router
Bluetooth and Bluetooth remote with mic DVD-+(R)/W
2 Firewire 800 ports
2 USB 2.0 ports
1.0 GHz G5
512 MB RAM (2 GB Max)
250 GB HD

Xserve
ATI 9600 32 MB
2.0 GHz G5
Combo Drive
120 GB HD
512 MB RAM (32 GB Max)
10 Client License

Xserve
ATI 9600 32 MB
Dual 2.0 GHz G5
Combo Drive
160 GB HD
512 MB RAM (32 GB Max)
10 Client License

Xserve
ATI 9600 32 MB
Dual 2.4 GHz G5
Combo Drive
250 GB HD
512 MB (32 GB Max)
10 Client License

Xserve
ATI 9600 32 MB
Dual 2.6 GHz G5
Combo Drive
250 GB HD
1 GB RAM (32 GB Max)
Unlimited Client License

Xserve
ATI 9600 32 MB
Quad 2.4 GHz G5
Combo Drive
250 GB HD
1 GB RAM RAM (32 GB Max)
Unlimited Client License

Xserve
ATI 9600 32 MB
Quad 3.0 GHz G5
Combo Drive
500 GB HD
1 GB RAM RAM (32 GB Max)
Unlimited Client License

$599

$799

$999

$1,799

$2,199

$2,499

$2,799

$3,399

$4,499

Screens

15" 1280x854

17" 1440x900

20" 1680x1050

23" 1920x1200

30" 3840x2400

$299

$399

$999

$1,999

$3,999

There are a few interesting additions in the proposed grid. First, I slashed prices everywhere. The first thing you need to do if you want to increase market share is lower prices. Next, everywhere I could, I would use standardized components to reduce costs and increase volume purchasing power. There is no reason why Apple has one 17" monitor for its stand-alone display, and a different one for its iMac and PowerBook. Also, in the enterprise market, I basically watered down the Pro machines to tailor them to the more price sensitive enterprise market. Then, I boosted the Pro product offerings to give Apple some high-revenue generating products. Last, I also created some new devices to let Apple expand into new and emerging markets.

Let's start with the mobile segment. First, I've standardized all the screens across all the lines. Let's get some economies of scale going here. The 15" and 17" screens on the laptops are the same ones that should be used in the iMac and in stand-alone displays. I also bumped the 12" screens on the iBook and PowerBook to 13.3" with wide screen resolutions. I upgraded the CPUs to G5s on the PowerBooks. Next, on the high-end professional PowerBook, I used dual G5's and dual hard drives.

Hard drive advancements

Ever since IBM got out of the hard drive market, the pace of hard drive capacity has stalled; drive space has been topped out at 80GB in the laptop market and at around 320-400GB in the desktop market for quite some time. One solution to this stalled capacity problem is to put dual drives in a RAID configuration in the 17" PowerBook.

Next up, the Desktops. I dropped single G5's in the iMacs and otherwise let them be. I would completely revise the eMac. Off with its head. In that way, I would make the eMac stand for "Enterprise Macintosh." All Star Trek jokes aside, educational and corporate institutions have a great need for a headless machine that can be deployed widely; the iMac and current eMac are generally unsuitable because different organizations have varied needs for screen size and expandability options, but do not need the full-throttle power and expense of a PowerMac.

So the new eMac will fill this void. It needs to have a decent processor, but not a screaming processor. As such, I dropped single G5s in there as well. It needs to be pretty compact, sport an AGP video card that can be upgraded, and maybe one spare PCI-X/Express slot. Of course, you need a nice looking case for the new eMac, and I'll leave it to Ive & Co. to do their dandiest. Here's a nice one someone dreamed up.

The great thing about this proposed new eMac is that it gets Apple close to the burgeoning US$399 - US$599 PC market. Also, with the new screens and prices that I've proposed, you could get a nice system for under US$1,000. Basically, this is everything that the Cube should have been, including a reasonable price.

Next in the grid, we have the PowerMacs. There is no reason to have less than two processors on a PowerMac. I have a 1.33GHz PowerBook G4, and a Dual 1.25GHz G4 PowerMac. It is amazing how much more responsive the Dual G4 feels; way more than twice the speed. OS X is so efficient at handling multithreading and multitasking, that having an extra CPU greatly improves the feel of everything. Particularly with Quartz overhead being handled by one CPU, it leaves the other CPU more available to tend to your actual tasks.

Anyway, what you'll notice is that the grid does not stop at just two CPUs for the PowerMac. On the high end for both PowerMacs and Xserves, we go up to Quad (4) processor systems. And as dual-core processors become available, there is the prospect of having eight (Oct.) processor systems in the future. Of course, these would be a bit more difficult to build and should cost more as a consequence. Nevertheless, this multi-CPU trend is going to continue. As IBM moves to produce more dual (and higher) core PPC CPUs (i.e., two or more CPUs on one chip), it allows Apple to increase the processor count on its machines more readily.

Before we get to the server market, a quick note on the stand-alone monitors. I've dropped the prices and updated the 15", 17", and 20" monitors so they share the same mechanism found in the iMacs and PowerBooks. Hey, it's good to be the CEO. This should save some costs through economies of scale. Also, I added a new 30" LCD to the line up with a super high resolution screen. At that size, the screen would have a very high 151 DPI resolution, so the caveats from my previous article apply.

Finally, let's look at the server market. My proposed feature sets for the Xserve, at this point, are mostly self-explanatory. The addition of quad processor Xserves would make it even more attractive for supercomputing and renderfarm applications.

Combo Drives

Of minor note, I added combo drives to the Xserves. They should have the ability to read DVDs for loading newer software shipped on DVDs, but I decided to upgrade them to Combo drives (which can also burn to CDs) simply for economies of scale; i.e., they can share the same mechanism with other machines in the grid, which would presumably reduce the price through increased volume.

The interesting addition to the server portion of the grid is the iHome entry to service the consumer server market. I know what you're thinking, "what home server market?" Well, that's really what a digital hub is, a home server. It's a place where you put your digital stuff. Something like the iHome (granted, with a spiffier name) would be a natural repository for all things digital.

What you will first notice from the chart is that the iHome has a built in Airport base-station. Getting networking to work for most people is too much of a hassle. By putting the router and server in one unit, you save a step. Yes, it can decrease reliability, etc. by putting in so many features into one box, but we're talking about a consumer device that's supposed to be usable by mere mortals here; this is not an Xserve environment.

Next, you'll see I threw in a smidge of TiVo functionality, the ability to sync with devices (e.g., iSync wirelessly) and programs (e.g., iLife, iCal, Address Book, etc.), and the ability to directly import video and pictures from cameras. The idea is to let Granma and Granpa plug their cameras in and get a DVD burned or a photo album ordered through .Mac with little fuss or muss. I also threw in an integrated iSight. An iHome server connected to your television is a natural for video conferencing. Add a Bluetooth remote with a built-in mic, and you have the ability to be heard and seen from your couch. You could even send e-mails.

Mail

Actually, Mail.app used to have the ability to send voice attachments under NeXT/OPENSTEP, but that functionality was removed in the Mac version for some reason. I certainly hope Apple will eventually put this functionality back into Mail and anticipate iSight video mail attachments coming into their own in OS X 10.4.

I've already discussed a lot of this type of iHome functionality in my first article for TMO. Unfortunately, it seems I was right about Apple not dominating the digital-hub market or increasing its marketshare with PowerMac G5s. People have just not gone out and bought Macs to make them their digital-hubs. Nor did people go out and buy G5's in droves. Sadly, Apple's marketshare attests to this.

The iHome and the better price points I propose would change all that by being attractive to more consumers and to the enterprise. Apple is perhaps the only company with the prowess to come up with an interface simple enough to make something like the iHome work. They did it for the iPod when earlier MP3 players didn't catch on; partly by picking and balancing the right mix of features, but mostly by coming up with an interface that was usable by the average consumer. With a Bluetooth remote sporting an iPod-like wheel for controlling the iHome, Apple is well on its way to conjuring up a new UI for such a product. To be sure, it would require effort, but most things worth having do. And more marketshare should be worth the effort to Apple. Its marketshare has been going downward for quite some time. Apple's last quarter global marketshare has reached a precipitously low 1.7%.

It's time Apple started doing something different.

is an attorney. Please don't hold that against him. This work does not necessarily reflect the views and/or opinions of The Mac Observer, any third parties, or even John for that matter. No assertions of fact are being made, but rather the reader is simply asked to consider the possibilities.

You can send your comments directly to me, or you can also post your comments below.

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