The Upside of a $500 Dollar Mac

by Gregory Ng Jan 07, 2005

Muhahaha! Muhahahah! It’s alive! After years of producing and continually bettering the iLife suite of applications, the iPod, the iSight, Safari, and OSX, the profitable Apple user has finally come alive. Well not quite yet. Jobs and Co. have one key component to put into this Digital Hub FrankensteinÉ

“An iMac for $500? I’d buy that.” Of course you would. The rumor to sell the popular but, recently fledging iMac is the missing part in this profitable, lifelong sales stream. Is it a G4 or a G5 iMac? Who knows? Rumor says a 1.25Ghz G4 with no monitor. A “headless mac”. We have talked extensively about how Apple Computers have a perceived expensiveness to them. Whether that is true will be forever debated as it is virtually impossible to compare apples to oranges (or PCs for that matter). And yes, pun was intended. Specifications don’t matter because non-Apple users don’t know the difference. I’m not saying Apple should pull the wool over the eyes. IT’s not worth it for Apple to strip the iMac down to a basic system nor is it advisable to the brand building. What I am saying is explaining the performance difference of a 800Mhz G4 to a 1.25Ghz G4 is like trying to put in Mac terms the difference between a Pentium 2 and a Pentium 3. I, for one, do not know the difference. I just assume the Pentium 3 is better. But with even the low end G4 iMac being able to handle iLife and all the other benefits of a Apple digital lifestyle, that is not an issue either.

$500 prices the iMac below the eMac: my personal crusade. (See my previous article, When Good Things Go Unnoticed: The eMac) But an iMac has name recognition. And although it won’t have a monitor it is still unique and innovative to graybox addicts. A headless iMac allows PC users to dual purpose their monitor. In addition, the iMac has more options to expand your system via peripherals. Another way Apple can capitalize on the sales of accessories of theirs and that of their partners.

Saab recently announced in their radio advertising, “People who test drive a Saab, usually buy one.” I find this incredibly interesting. First off, I bet most car companies can say that. Once you test drive a car, you have most likely already pre-qualified the car company’s dependability, price, and styling. Besides, how do you measure the word, “most”? But what is also interesting is the clear attempt to just get people to try it out. Initiating trial can be tough for big ticket items. Most big ticket items involve sales people that make a living on commissions, thus making any advice given suspect. $500 for a computer no longer qualifies as a big ticket item. This is definitely one of the barriers to widespread domination in the computer market. I wonder how many kids, through Apple’s educational initiatives, have tried Apple computers and have become familiar with them only to get denied at home because their parents did not have the luxury of trying it out for themselves and thus failing to recognize the value of such an expensive machine.

Now $500 is not a big ticket item for a computer but it certainly is for an iPod. Which brings me to my next point. A $500 iMac will sell more iPods. And the continuing sales of iPods will sell more iMacs. Let’s get real here. If the iPod wasn’t so damn visually breathtaking and it’s user interface was not so flawless, the iPod might have not fared any better than the Newton. Us Apple enthusiasts would still lust after it, but it certainly would not have reached mainstream appeal. $500 is a lot of money to justify for a portable music player. I think even in it’s heyday, the most I spent on a Discman was $200. More iMac sales means more software and accessories being developed. Which in turn means upsell and crossell across Apple’s entire product line.

In targeting marketing, buyers of products or brands for that matter, can be broken into 5 categories:
Innovators: 5%
Early adopters: 15%
Fast majority: 30%
Late majority: 30%
Trailers: 20%

As you can see, the innovators and early adopters make up up to 20%. The real potential however is in the majority segments. It can be argued that for iPods, Apple has reached the fast majority stage. With a brand awareness of close to total, Apple can expect solid growth for many years to come. But in the computing segment, Apple is most likely just breaking out of the innovator and into the early adopter stage. This is in the consumer home market, not the professional market. And this is consistent with the supposed 5-8% marketshare Apple boasts. In simple terms, the $500 iMac could propel the computing segment well into the fast majority and drag everything Apple with it.

So let’s go Mr. Jobs. Why don’t you announce this $500 iMac next week at MacWorld ok? It will finish your digital hub masterpiece that everyone knew was possible.


  • They call marijuana a “gateway” drug, they say it leads to “harder” drugs…

    Well that being said, lets introduce the “headless gateway drug mac”. A stepping stone to bridge the gap for the pee cee consumer.

    I really ejoyed the point Greg made about kids using and prefering the mac at school, but having their parents sever that connection at home because of budget. That blows, I was one of those kids and I am pissed I missed out on the mac for so many years. This is an area that would be a huge pick up.

    Being that this is still going to be a “lower end” mac, I think they have to build this thing rock soild and pack it to the lid with features and specs. And yeah, maybe break even on the things…yes I said break even. But if this is to really be the stepping stone to help the other 95% break into the mac cult, then it better be everything it should be plus some. Switchers have to feel like the hassle of switching and learning a new os is absolutely worth every second.

    Look at it like this, You can buy a sony playstation 2 for like $150 new. Sony looses money on every unit they sell. A regular game for the ps2 costs $50 bucks, and there is thousands of games to buy and more come out every day. That is where they make there money, the ps2 is just the middle man.

    As is the ipod, this just happens to be a little bigger gap to bridge. People become very passionate about their computers, they are a huge part of their life. The ipos planted the seed and got people talking and take notice of apple. But now there has to be the second of the “one-two punch” to get the masses to seriously consider the switch. This just may be it.

    By the way, someone should really touch on the misconceptions that people have about macs. Like everytime I try to tell someone they should switch, they say ” yeah but they don’t make any software for macs and I use Microsoft office a lot, they don’t make that for macs!” Where is the apple education/myth campaign?

    chubbypixel had this to say on Jan 07, 2005 Posts: 2
  • Solving the problem of students in K-12 from being cut-off from Macs at home would be one way of boosting sales, but it’s a very small segment.  It’s just one of many channels that have to be attended to.

    Another segment that needs to be attended to are Mac users themselves.  I delayed switching for a long time because my Mac-using friends kept telling me, “Macs are more expensive, but…”.  It simply wasn’t true.  When looking at the features I wanted and comparing Wintel laptops to Mac laptops the Macs came out the same or slightly less.  Mac users need to get a life and lose the attitude about how special they are if they want Macs to be more common in the marketplace.

    Last, but not least, your comment, :“Most big ticket items involve sales people that make a living on commissions, thus making any advice given suspect.” is off the mark and insulting to many of us who are in sales.  A good sales person will focus on a customer’s needs and try to match that with what is in his or her product line.  There are bad sales people out there, but they are easy to spot.  They don’t care what you want or need… they push an item with features you don’t care about or don’t think you’ll use.  Anyone blindly making a purchase without any basic research, whether it’s computers or a car or whatever, run the risk of being taken for a ride.  Caveat Emptor… let the buyer beware…  do some very basic research before a substantial purchase so you’ll know if your sales person is actually trying to provide you with something you want and need.

    I mean, really, from your derogatory comments about sales people we should consider Steve Jobs’ keynote speech at the upcoming Macworld in San Francisco as “suspect” because he is, in effect, a sales person for Apple.

    DF in Boston had this to say on Jan 09, 2005 Posts: 15
  • I have to believe the rumors this year… the low-end Mac is a reality.

    But the price is wrong - it’s going to be at least $599, and even more likely $699.

    I also think they will remove the eMac from consumer buying, and relegate it to a education only purchase option.

    I am assuming that they will be marketing this to the family - the middle-class couple with children still at home. This is probably the fast to last majority segment Greg outlines above.

    It also seems like its for those on the upgrade cycle - they already have their 15in LCD or nice 17-18in CRT from 2 years ago.

    The killer apps of course will be iTunes and iPhoto - it will not be iWorks or iWhateverOfficeClone has been rumored.

    The only other thing I can bank on is the collective groans of… “If it was just a little cheaper - I would buy one today”

    Nathan had this to say on Jan 10, 2005 Posts: 219
  • Boy was I wrong. (thankfully)

    Nathan had this to say on Jan 13, 2005 Posts: 219
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