Re: PCMag: Louderback praising Mac Pro

Josh McKee <jtmckee@xxxxxxxx> wrote:

In article <1hl26t7.zyckfw1utlvt9N%me4@xxxxxxxxxxx>,
me4@xxxxxxxxxxx (Wayne Stuart) wrote:

Three potential Apple customers:

1. Customer looks at the Mac, would like a Mac, but decides not
to buy one because there isn't a Mac within his price range.
His desire for a Mac is overshadowed by his pre-determined
budget constraints.

So Apple could possibly gain from this market.

Yes. But at what cost?...

Since this type of customer would never have purchased a Mac then there
is little cost and a lot of potential.

* Extra resource required to develop the OS to run on a wider range of
hardware configurations, plus living with all the downsides of such.

Should be trivial...at least according to the Mac zealots.

* Extra resources for support requirements to cover customers on that
wider range of hardware.

How so? Microsoft requires a Dell customer to contact Dell for support.

Microsoft has no customer support department?

* The danger that such a venture could piss off the 800lb gorilla that
holds of the sacred chalice of MS Office.

According to at least one Maccie Office is no longer necessary due to an
alternative.

Don't care what "one Maccie" thinks. What do *you* think?

* Lost revenue from potentially reduced hardware sales from
'malcontents' (customer 2).

Or a net gain to these "malcontents".

That costs.

While there will be some additional costs the potential revenue that
could be generate is likely to offset them.

Might cover the development and support costs, but enough to cover the
lost hardware sales? That's highly debatable, and in my option,
doubtful.

2. Customer looks at the Mac, wants a Mac, would prefer a cheaper
one,
but there not being a cheaper one in the range, buys one anyway at
more
than ideally he would have liked to have paid. His pre-determined
budget constraints are overshadowed by his desire for a Mac.

3. Customer looks at the Mac, wants a Mac, find a Mac that suits his
needs that's within his pre-determined budget, and happily buys it.
<snip>
Ah ahhh! Now here is where the crux of the problem lies. Yes, it's no
change in the amount of sales, i.e. an OS sale (minus a few who'll
inevitably download a pirate copy instead) instead of a hardware sale,
but overall, this would be lost revenue.

Why would it be lost revenue? I think that it's reasonable to think that
there will be more people who will choose to purchase a lower cost,
non-Macintosh PC running OS X than would be lost buying a higher cost
Macintosh from Apple. If that holds true Apple has nothing to lose.

I'm going to try and summarise this here, as I think this all boils down
to opinion as to what percentage of potential Apple customers are split
between my hypothetical customer types 1, 2, and 3. And all we have are
opinions, which is not something I'd want to bet the solvency of my
company on...

I'm sure that Apple could come up with more than opinions.

Yes, I'm sure they have already. And presumably that's the main reason
they're not doing it.

The fact is, Apple makes more revenue on a hardware sale than it would
on an OS sale.

Perhaps. But $0 from $129 is still $129 profit.

A sale of a $129 OS package is not $129 profit for Apple, more than a
$1300 hardware sale is $1300 profit.

How much more is debatable, but some estimates have said that if Apple
loses an amount of hardware sales, they would need to sell an estimated
3 to 5 times more copies of its OS, just to break even!

Who's estimates? Where can I find them?

Here's one:

<http://daringfireball.net/2006/04/asinine_and_or_risky_ideas>

<quote>
If that were the case, sure, it would only add to Apple's success. But
that wouldn't be the case. There can be no doubt that many current Mac
users would buy other-branded hardware, costing Apple hundreds of
dollars in profits. To make up for each such loss, Apple would need to
gain three, four, or maybe even five new customers.

That's not to say all Mac users would abandon Apple hardware. But
hundreds of thousands would, and Apple would need to gain millions of
new switchers just to compensate for that lost revenue and break even;
otherwise they'd lose money on the endeavor, even while gaining many
more users of Mac OS X.
</quote>

If you have anything to the contrary, or your own calculations, please
post them.

This is the bit where everyone do a sharp intake of breath. ;)

Apple has slowly morphed into something other than a hardware company.
According to this CNN article 45% of Apple's revenue are non-Mac
related. Perhaps Apple shouldn't have created the iPod or iTunes as the
opportunity cost was too large?

iPod/iTunes wasn't going to potentially damage their core existing
business.

So, now the unanswered questions:

1. What is the split of current Mac users between my customer types 2
and 3, i.e. grudgingly so (2), or ungrudgingly so (3)?

We can only speculate.

2. How many current *non* Mac users are my customer type 1, i.e. wants
the Mac experience, but can't justify something about its hardware?

They're almost all sources of additional revenue.

3. How does the number of customer 1's compare to customer 2's?

I bet a lot of customer 2's become customer 1's.

In simplistic terms, if customer 1 doesn't outweigh customer 2 by a
factor of between (say) 3 and 5, then this venture would be a
catastophic failure.

I think they do once they factor in the other disadvantages of a
Macintosh.

What are you trying to say here? Do you believe this venture would
attract more *new* customers to Mac OS, than existing Mac owners would
abandon Mac hardware? If so how much more? 3x? 4x? 5x? Anything
less than that, and Apple's looking at probably losing revenue despite
having more customers.

Now, by opinions you've expressed here, I can only conclude you believe
not many current Mac users would choose non-Mac hardware,

It's not my opinion. It's that of the Maccies. I've already given you
one such example. You glossed over it with "I don't care".

And indeed right now, I *don't* care. What do *you* think?

and/or there is an army of people out there who are just itching to
migrate to OSx86 if they could choose their own hardware.

I don't know if I would use the "army" but I think that there are people
who would use OS X if they could run it on their PC.

How many times more than the number of current Mac users who would not
buy Mac hardware next time? 3x? 4x? 5x?

Correct me if I've misunderstood you, but if that's so, I can only say you
have a lot more faith in the pull of Mac OS than I have.

Is this an admission that OS X is not all that the Maccies make it out
to be?

This is an admission that the benefits of Mac OS often isn't enough to
lure the masses from the safe, more widely supported, adequate option
that is Windows. Larger choice of hardware will not change that for
anywhere near enough for such a venture to be a success. All IMHO of
course.

Mac OS on generic x86 hardware potentially removes some roadblocks, but
there are many many other roadblocks that are still very much in place
that matter (or perceived to matter) to many people. Like it or not,
the vast majority of PC buyers will *never* be an Apple customer, in
whatever form that takes.

Sadly I agree. There's not enough difference between Windows and OS X to
motivate a significant number to switch.

So where are all these theoretical new OSx86 buyers coming from?

Here's how I think it would go down: Overall revenue for Apple would
skyrocket almost immediately as many of the customer 1's who've been
waiting in the wings, rush out to buy retail copies of OSx86 for their
existing x86 hardware. This initial splurge would be more than enough
to counteract the accompanying comparatively small hardware sales
decrease. But this would be short term gain. The killer would come
months or years later as the customer 2's kick in. This is when they'll
be looking around to replace their Mac hardware with something new, and
deciding to look elsewhere for their hardware this time.

Wouldn't these be customer 3's?

No. Customer 3's are happy with Mac hardware, and will likely continue
to be so. Customer 2's are the 'hardware malcontents' who would likely
look elsewhere if the opportunity arose.

And why would they look elsewhere?

Any number of reasons, real or perceived, already covered previously.

Maccies have been championing the idea of the "entire package". Is this
an acknowledgment that the additional cost for the "entire package" is
in error?

Some perceive the 'whole widget' approach it to a benefit. Others
perceive not. Lose it, and we'll see who's right.

And also by this time, the sales of Mac OS will have died down to a trickle
not much bigger than the amount the hardware sales have gone down. Result:
Short term killing, long term killer.

According to the Maccies OS X is the bomb and no one would ever think of
using Windows once exposed to OS X. Are you admitting that this is in
error too?

I'm not into playing the broad generalisation game.

<snip>
Only if Mac customers are made up of only 1's & 3's. The moment you
introduce even a few 2's into the mix, it all goes horribly pear shaped.

What's wrong with the 2's?

Customer 2 is the only one who's a potential revenue loss.

I believe that customer 2's a small compared to customer 1's (who may
have started out as 2's).

3x? 4x? 5x?

Can you say with absolute certainty there are significantly more 2's
than 1's?

Why would I want to? Both are revenue opportunities, through OS sales,
for Apple.

Only customer 1 is a potential revenue gain. Customer 2 is a potential
*overall* revenue loss.

But there are likely to be a lot of customer 1's compared to customer
2's.

3x? 4x? 5x?

<snip>
Thus licensing OS X to vendors who are willing to sell
to more cost conscious buyers seems like a win.

<analogy>
Win 2 cents, lose 1 dollar. You now have 2 pieces of currency instead
of 1, but you're still 98 cents down. Is that a win or a loss?
</analogy>

How do you arrive at the conclusion that they're losing a dollar?

A proverbial dollar. Proverbial cent = OS sale, proverbial dollar =
hardware sale. See?

No. There's no hardware sale for the customers in question. They're
going to buy from someone other than Apple. Thus .02 is better than .00

He shoots, he fires it over the bar!

--
This message was brought to you by Wayne Stuart - Have a nice day!
<http://homepage.ntlworld.com/wssenterprises/whynotmacfaq/>
.

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