[opendtv] Re: News: Changing Course, Apple Offers Low-Priced Mac for the Home

  • From: "John Willkie" <JohnWillkie@xxxxxxxxxx>
  • To: <opendtv@xxxxxxxxxxxxx>
  • Date: Wed, 12 Jan 2005 09:17:04 -0800

Only a Mac enthisiast would call this a "low-priced" computer.  Dell -- 
nobody's idea of a cut-rate maker -- sells whole computers (with the
keyboard, mouse and keyboard that the mini Mac doesn't include) for the same
price point.  And, they don't make you think that you're getting something
insignificant.

John Willkie
----- Original Message ----- 
From: "Craig Birkmaier" <craig@xxxxxxxxx>
To: "OpenDTV Mail List" <opendtv@xxxxxxxxxxxxx>
Sent: Wednesday, January 12, 2005 6:08 AM
Subject: [opendtv] News: Changing Course, Apple Offers Low-Priced Mac for
the Home


>
http://www.nytimes.com/2005/01/12/technology/12apple.html?adxnnl=1&oref=login&adxnnlx=1105536243-qJ8YQU+1thwxz7ZTf3ZzhQ
>
> Changing Course, Apple Offers Low-Priced Mac for the Home
>
> January 12, 2005
>
> Changing Course, Apple Offers Low-Priced Mac for the Home
> By JOHN MARKOFF and SAUL HANSELL
>
> SAN FRANCISCO, Jan. 11 - Apple Computer introduced its first
> low-priced Macintosh on Tuesday, signaling its bet that most
> consumers now see computers as simply another appliance in the modern
> house.
>
> While computers have long been sold as machines that can turn a home
> into an office, most Americans now use them in their bedrooms and
> kitchens as e-mail terminals; as hubs for playing music, storing and
> editing photos; and as stations for navigating the Web.
>
> The new Mac Mini, priced as low as $499 without a keyboard, monitor
> or mouse, is aimed squarely at the needs of this new digital
> household.
>
> The new Apple strategy, which moves the company deeply into the
> consumer electronics market, positions the new Macintosh as an
> entertainment and communication device. It also promises to intensify
> Apple's battle with Microsoft in the personal computer market
> dominated by machines using Windows software.
>
> The move is in part propelled by Apple's success with its iPod
> digital music players; with 10 million sold in the last three years,
> the iPod has pulled Apple into the mass market. The popularity of
> iPod, analysts say, may persuade consumers who have not been Apple
> computer users to consider the Mac Mini.
>
> "I wish I had a nickel for every time people have suggested that we
> do this," said Steven P. Jobs, Apple's chief executive, at a
> conference on Tuesday. "We want to price this Mac so that people who
> are thinking of switching will have no excuse."
>
> But Apple's introduction of a low-priced machine is not likely to cut
> significantly into Microsoft's dominance in personal computing; more
> than 90 percent of PC's are Windows machines.
>
> More important, Microsoft is also moving to turn PC's into
> entertainment centers with its Windows Media Center Edition software,
> which lets a computer double as a television and video recorder.
>
> Gene Munster, an analyst at Piper Jaffray, said that Apple's
> consumers were probably not going to give up their Windows PC's but
> might buy a Macintosh as an additional computer for entertainment.
>
> "It's not about switching but adding," he said. "People may still
> need a PC because of work activities, but this is for doing
> multimedia activities and searching the Internet."
>
> For the last few years, Apple has deflected criticism of its roughly
> 3 percent share of the computer market by comparing itself to
> prestige brands like BMW. It tried to make sophisticated and
> attractive products that appealed to a small segment of consumers
> willing to pay a premium for superior design.
>
> Mr. Jobs played down suggestions that Apple had any grand strategy to
> transform itself, saying instead that the new pricing strategy came
> in response to things that Apple customers have been requesting.
>
> In addition to the Mac Mini, which goes on sale Jan. 22, Mr. Jobs
> introduced a tiny digital music player, the iPod Shuffle, which is
> priced as low as $99. The less-expensive player has no screen and can
> hold about 120 songs, compared with 5,000 songs on a standard iPod.
>
> "Today we saw the unveiling of a business strategy that people will
> be talking about for years to come," said John M. Gallaugher, a
> business professor at Boston College.
>
> Even with the low price of the new iPod, Mr. Gallaugher said that
> Apple would probably make up the low profit margins from the music
> player by selling a series of accessories with higher margins.
>
> Even loyal iPod users have resisted Apple computers because they are
> perceived to be expensive and not compatible with the so-called
> industry standard of personal computers based on Windows and Intel
> microprocessors.
>
> But the advantages for consumers of using a Windows PC are less
> significant if they are performing common Internet and entertainment
> functions. Moreover, the computer viruses, worms and spyware that
> plague Windows machines have been far less of a problem for Macintosh
> machines.
>
> The question still remains, however, whether PC users will try
> Macintosh machines in large numbers.
>
> "This is not going to return Apple to a high level of profitability,"
> said David Yoffie, a professor at Harvard Business School. "The
> margins on these new machines will be trivial. And I think they will
> add no more than one or two points of market share."
>
> He said, however, that even a small growth in market share could be
> enough to attract software developers willing to write programs for
> the Macintosh.
>
> Apple has struggled to break out of its niche position in the
> computer business since the Macintosh was introduced in 1984. Early
> on, Mr. Jobs defined the Macintosh as an all-in-one appliance, but he
> was forced to leave Apple just a year later after losing a management
> battle with the chief executive then, John Sculley.
>
> During the 1990's, while Mr. Jobs was in exile from the company,
> Apple flirted with broadening its market by licensing the Macintosh
> operating system to companies that made systems that were Macintosh
> compatible.
>
> The strategy backfired when those companies began stealing Apple's
> profits and Microsoft successfully imitated the Macintosh user
> interface with Windows version 3.1.
>
> Mr. Jobs canceled the Macintosh operating systems licenses when he
> returned to Apple in 1997, focusing Apple instead on attractive
> industrial designs and a new operating system, Macintosh OS X, which
> he brought with him from Next, the company he founded in 1985.
>
> Most of the decisions Mr. Jobs has made since returning to Apple have
> been well received, but the company's market share has continued to
> erode in the face of fierce price competition.
>
> Some analysts said that the cheaper Mac Mini, which could cost a few
> hundred dollars more than $499 with a monitor, keyboard and mouse,
> could help stop the erosion. Inexpensive PC's sell for about $700 or
> even lower. The low-end Macintosh, called the eMac, sells for about
> $800.
>
> "The product is sensational for the market it's designed for," said
> Charles Wolf, an analyst at Needham & Company. He said the new
> machine was designed to appeal to iPod users with Windows systems who
> have stayed away from the Macintosh in the past. "I think it's going
> to stem any further loss of market share, and I foresee the day late
> in the decade when they will double their market share because of a
> product like this."
>
> Shares of Apple fell $4.40 Tuesday, to close at $64.56.
>
> Mr. Munster said that investors had been guessing that Apple would
> sell more iPods in the fourth quarter than the 4.5 million the
> company reported. Apple will report its first-quarter results
> Wednesday afternoon.
>
> Mr. Jobs made the announcements in front of an audience of more than
> 4,000 Macintosh enthusiasts. The announcements cap a year of both
> success and personal challenge for Mr. Jobs, who has seen Apple's
> stock more than triple.
>
> Last summer Mr. Jobs was found to have a rare form of pancreatic
> cancer. After emergency surgery, he quickly returned to work at both
> Apple Computer and at Pixar Animation Studios, where he is also
> chairman and chief executive.
>
> He has resisted speaking publicly about his personal crisis. Yet some
> at the conference thought the marketing slogan for the iPod Shuffle,
> "Life Is Random," was a reference to the fortunes of Mr. Jobs.
>
> "It jumped out at me," said Roger McNamee, a Silicon Valley venture
> capitalist. "It's existential marketing with maybe even a touch of
> nihilism."
>
> Mr. Jobs said he had not created the slogan, which came from the
> company's advertising agency, TBWA\Chiat\Day, but he acknowledged
> that it had struck him as well. "I thought about it," he said.
>
> John Markoff reported fromSan Francisco for this article and Saul
> Hansell from New York.
>
>
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