The counter argument presents itself early: Apple is the Porsche of computers. The company has as much need to produce a more budget-friendly machine as Porsche has of pumping out a fuel-efficient sub-twenty-grand hybrid car. But sometimes the climate is right for such things, and the climate is right for Apple to bust the low-cost computing block.
For two solid decades, Apple lost out to the Microsoft dominance achieved by the Wal-Mart approach. One has to wonder if personal computing—and as a result, the Internet and ebusiness—would have reached the level it is now if Microsoft carried Apple’s snootier, accept-no-substitutes attitude.
Think back to the Nineties. How many people did you know with a Mac? Here’s the list: people with money, journalists, anybody who designed anything—tech geeks were explosively split. Microsoft conquered the rest of the world on price points. Apple rested on its heels with geek credibility until the iPod brought the brand suddenly back into worldview.
It just so happens this was the right time in history for geek cred to transform into the new cool. Apple’s ridden that wave, too, the new cool, pumping out the Jesus Phone and some funny and effective anti-PC commercials. Apple was onto something also a couple of years ago by integrating Intel chips, hastening a would-be Apple revolution.
But they stopped there. Why? Stubborn devotion to branding? The same devotion to a luxury market that stymied them in the Nineties while Microsoft made it to 90 percent of desktops? Some proud sense that quality is expensive and exclusive? Yeah, it’s certainly worked with the iPhone, all those early adopters in line for a realization a couple of months made a big difference price-wise—nice repayment for loyalty, there.
Those hardware margins are what have floated the company all the while—their last quarter was a record-breaker, Apple says. So was Microsoft’s, by the way, reaching $60 billion last year.
Apple is so focused on the “one more thing” in their presentation, they’re missing a prime opportunity to strike another, very lucrative market. Here is the current climate. Apple investors are concerned about Jobs’ health, non-life-threatening or not, and about Apple’s future without his resident coolness. Microsoft is preoccupied with Google at the moment, and with convincing the public Vista is a good deal after all, that their longing for the days of XP are misguided—even flat-earth thinking. What Microsoft isn’t saying is that XP lovers won’t have much choice to upgrade as the Vole stops selling or supporting XP. Why will consumers and businesses put up with that type of manipulation?
Simple. Macs cost too much. Mac isn’t on a pallet at Wal-Mart when your daughter’s begging for her own machine.
So, who else besides Microsoft is filling the low-end computing gaps? Well, Dell initially won the race to the bottom and we see how that worked out for them. It went from “Dude, you’re getting a Dell” to “Dude, customer service could be a lot better at fixing this thing for me.” Acer? Perhaps a machine that thinks it’s overheating all the time is what one gets for less than $400.
But it shouldn’t be that way.
Basic business economics says you can sell a lot of a cheap thing or few of an expensive thing and come out roughly equal. Here’s the truth about this market: the number of people who can buy expensive things is getting smaller—what used to be a pyramid is more of a pear-shaped model these days, with the base of the pear getting bigger and bigger.
Add that up: General, widespread frustration with Microsoft; general respect, love, recognition, and—most importantly—coveting of Apple products; hardware companies dropping the ball in low-end computing; shareholder uncertainty; increased acceptance of cloud-computing; and shrinking middle and upper classes.
Now’s not the time to be stubborn on price points because of some snooty, antiquated ideal. Now is the time to strike a market while it’s hot and ready.
Due to some interesting wording by Apple’s CFO in the last earnings call, those who follow Apple closely are expecting an announcement of something new by September.
It could be a third incarnation of Apple TV, which the market isn’t completely ready for, again fueling the early adopters and geek chic status machine. It could be a new iPod Touch or Macbook Air—yawn. It could be putting to use the company’s acquisition of chipmaker PA Semi—no doubt for something else cutting edge and expensive. A game console? What for? Just to provide a high-end alternative to the already high-end PS3?
Why not drop a $400-$500 complete, high-quality Mac system on the market just in time for Christmas? They can do it; they have the technology. If so, watch the world explode, and watch Apple put a severe dent in Microsoft’s desktop dominance, something open source could never do. And wouldn’t that be a coup?
