A few days ago we published an editorial suggesting that Apple should be selling the eMac for 500 bucks or a bare-bones G3-based machine for $200-300 USD, in order to compete with the “cheap PCs” trend today. I was wrong. Creating such price differentation between the G5 and the G3 or eMac would cannibalize the sales of the high-end machines (where more margin for profit exists) and even worse, it would destroy the Apple brand name. But hey, you know me, I am as stubborn as it goes. I discussed the situation with some more people around me and we came up with an alternative plan, which in my opinion, makes more sense business-wise and it has some good potential.Note: Please excuse the bad grammar and syntax. It is 2 AM as I type this editorial quickly, a result of a stormy discussion we had this afternoon here…
So, the idea is to not cheapen the Macintoshes. Apple-heads in our forums are trying very hard to convince us about the fact that Apple is a premium company and they do have a point. Dragging the prices of Macs down to the ones found in the PC world, will only destroy the Apple brand. And the brand is all Apple has today, it is what keeps the Mac market together. The brand has to be kept and enhanced, not commoditized.
So, how do we bring Macs closer to these PC price-concious consumers you ask? Well, Apple will have to spin off a new brand. A completely new brand of computers that has nothing to do with the Mac brand. The new brand, let’s call it BrandX, will be G3-based, as all Macs would in the meantime be moved to G4/G5s, so there would be no direct competition. It is important to remember that this won’t be a Mac. It will still run Mac OS X and all its third party apps just fine (more on this later), but it will be a beast of its own. It won’t be called “BrandX by Apple Computer, Inc.”, but more something like “BrandX by Strawberry Inc.”. I am not even sure that it would make sense to sell this on Apple Stores instead of just retailers around the world! There should be enough differentiation between the two Apple products, otherwise kiss the Mac brand goodbye. Here’s how the differentiation will work:
1. BrandX is only based on G3s, while Macs are based on G4/G5s. When all Macs are moved to G4s, only then BrandX will see an upgrade to G4s.
2. The overall design of the case and peripherals doesn’t have to be expensive. A cheap modified taiwanese keyboard, a cheap usb mouse and a normal case are to be included. Not very fancy Apple stuff here, but not garbage either.
3. The mouse will be a 2 button mouse, plus a wheel+button. Remember, BrandX is not a Mac, and we don’t want people to think that it is a Mac. It is an Apple PC in essense, a cheap way to run Mac OS X and introduce users to the OSX world (just like Lexus is Toyota, but not exactly Toyota) and a way to be able to compete in the low-end market with the AMD/Cyrix-based PCs. Also, this BrandX machine is the introduction to the Macs for the consumer, the “middle step” during a user’s switch, therefore, the machine should have things that PC users love, e.g. some expandability (two PCI slots, additional hard drive space) while keeping a small form factor in the case and a mouse with more buttons and a wheel.
4. The box would be something between a Power Mac and a Shuttle PC. It will look like a Shuttle, so that will make it “cute” and manageable (even easily portable). There would be space for one more hard drive in the box. Think of it as a more expandable Apple Cube (everyone loved the Apple Cube, but people were not happy of its restrictions to expandability — more so the PC users that we try to capture here).
5. Graphics card is soldiered to the mobo, no AGP slot provided. Cheaper this way. If users want more 3D power, that would be a good incentive to buy a Mac instead (remember, we want to offer features on BrandX, but on the same time “cripple” it in a way that would drive users to condider the Mac brand instead of BrandX). It is not a rip-off, it is keeping the company out of a possible risk.
6. The external speakers would be cheap PC speakers, the ones that cost about 6 or 7 bucks. Nothing fancy, but usable nevertheless, same as the ones that come in the cheap PC line. But with a coloring that would match the case, keyboard and mouse. BrandX will be plain, but it will still have the Apple touch on it looks-wise. It won’t be garbage, but not as elegant as a PowerMac either, for example.
7. The Ultimate model as seen below, will offer two more USBs, one FireWire 400 and one 800, all on the back of the case (the other two USBs and the audio jacks should be in the front of the case).
8. Monitor is not included in the price, but a 17″ $149 CRT monitor would be available for purchase, or an Apple LCD.
9. Choice of Yellow Dog Linux 3.x or OSX Lite. The new company would be in interest in paying 2-3 bucks per copy the TerraSoftSolutions guys to sell an unsupported copy of their Linux with these machines. This way, the OSX Lite operating system would go against the Windows XP OEM PCs, while YDL would battle the raising Red Hat, SuSE or Lindows. Now, you ask, what is this OSX Lite. Read carefully, because the real meat of the differentiation follows:
BrandX won’t be running Mac OS X. It will be running a crippled version of Mac OS X instead, dubbed ‘OSX Lite’ (note that the word “Mac” is missing). Essentially, it will be the same OS, and it would be 100% binary compatible, so you could run all Mac OS X applications on your OSX Lite. But a few things will be missing from the Lite version of the OS. Premium things mostly, things that would be available only on a Mac or if you actually buy the upgrade OS box to upgrade your OSX Lite to Mac OS X. The special upgrade box (a vanilla Mac OS X CD won’t work on these machines) should cost between $150 and $200 USD. You of course now think “what? But, if I go and buy a Mac OS X box it only costs $130, not $200”. Yes, but you have already paid the difference when you bought your Mac. Or, if you bought your Mac second hand, the previous owner has already paid the Mac OS X premium in the Mac’s price. With BrandX, you haven’t. It is a cheap machine. Besides, if we make it too easy for BrandX users to upgrade to a full Mac OS X, we lose the differentiation between BrandX and a Mac. We lose the whole game.
So, what features will be missed from OSX Lite? Here is what will not be included by default:
OS features that are not included: Classic support, Rendezvous, Inkwell, FileVault, multi-processing, multi-monitor support, ColorSync, Speech recognition, ability to make a basestation out of an airport card.
Non-core applications that are not included: iSync, iChat AV, iMovie, iPhoto, DVD player, Sherlock, iCal.
All the other applications (Safari, FontBook, Mail, Address Book, iTunes (and its profitable Music Store), QuickTime Player, Chess, TextEdit, Preview, Grab, X11, developer tools, Calculator and all other Mac OS X Utilities etc etc) will be included. And all other third party Mac OS X applications will work as they are supposed to. All the basic functionality to run a modern OS will be there. At the end of the day, Windows XP doesn’t come with more functionality than that either! As for the users who can’t live without the non-core applications listed above, there are always good alternatives, often for free: VideoLAN, mplayer, Watson, photo management, Fire, AIM, Proteus, MSN, ICQ, scheduling apps etc., all to be found at VersionTracker.com. Charging for the iApps is not even a new idea, Apple already does it with iLife (and in fact, they wanted to charge for iMovie too but public outcry made them only charge for iDVD, literally at the last minute last January). And if some users just want the “real” thing, they just shave off the 200 bucks and they buy the upgrade to full Mac OS X. That’s a good and fair price to turn your cheap BrandX into –pretty much– a ‘real and premium’ Mac.
By having a Lite version of OSX, the product differentiates from the Macs without losing much value (as most needed functionality is still there and there are a lot of freeware to fill up the holes), and also, Apple makes money out of it, compensating for the low price of the BrandX products. Think of it as Windows XP Home and PRO. There is $100 difference between these two products, so why not pay this extra $200 to get all these OS features back, plus all the non-core Mac OS X applications?
In the meantime, the Mac line will have to be simplified. The iBook should be moved to the BrandX brand, but it is not clear if it should change its name or keep it. You see, from one side is good to not make any assumptions that this iBook is a Mac, but on the other hand, it is a good marketing “push” for the new BrandX that was just created. The lowest-end Mac should be the $999 flat panel iMac (today is $799). The eMac should go back to education-only, as BrandX will be filling up its product range and we don’t want products to overlap here. Powerbooks will be the only laptops for Macs, with the 12″ one be the most affordable one, for $1500. As you can see, Macs are increasing their prices slightly, going back to be a true premium brand, while BrandX will take care of the price-consious market segment, competing with the cheap PCs.
See below a mockup of the BrandX product with some configuration information.