Apple knows where the money is...

[VirtualRain]

and it isn't in Mac Pro's...

Desktop PCs have been in decline for a decade, and countless people have said their piece about it. But new evidence suggests the desktop tower's death spiral is underway—and we're not too broken up about it.

I say this as a guy who was baptized into the tech world with a desktop; who still obsessively follows the latest PC components from Intel, Nvidia, ATI and the like; who has built, fixed or upgraded more towers than I care to remember; and who, until a few years ago, was an avid PC gamer. As someone who would be, by most measures, a desktop-PC kinda guy, I just can't go on pretending there's a future for them.

The State of the Industry
This is more than a hunch; a grim future is borne out by the numbers. A week ago, iSuppli issued a broad report on the state of the PC industry. The leading claim was predictable: The PC industry was experiencing lower-than-expected quarterly sales—down about 8% from the same time last year. This included laptops, and made sense, because the whole economy's gone to hell, right? People aren't buying computers.

Except that's not quite what's happening. In the same period, laptop shipments—already higher than desktop shipments on the whole—grew 10% over last year. Desktops were entirely to blame, dropping by an astounding 23%. That's not decline—it's free fall.

Stephen Baker, an analyst for industry watchers NPD, shared with me a wider picture of how retail PC sales break down. The way he put it made measuring the rise and fall of sales percentages seem dumb—there really aren't any sales to lose: "In US retail, 80% of sales are notebooks now," he said. "Start throwing in stuff like iMacs and all-in-ones"—which share more hardware DNA with laptops and netbooks than traditional desktops—"and it gets even higher."

Link

I'm guessing the product manager for the Mac Pro line who set high pricing to try and make some margin on a market segment that is getting hammered (at least this year) if not long term, is looking good after this.

At any rate, this should help some folks here understand why the pricing is high and the updates infrequent. We are part of a dying market segment that is becoming increasingly niche.

 

[Eidorian]

Now if Apple sold a desktop that more people wanted to buy...

Their notebook line is fine for the most part though. Unless you want discrete graphics.

 

[J&JPolangin]

Now if Apple sold a desktop that more people wanted to buy...

Their notebook line is fine for the most part though. Unless you want discrete graphics.

...yeah, they'd sell a whole lot better if they were a fair price... I didn't need another "laptop" per say but the whitebook was the better value than the mini I was looking at for those duties...

 

[cube]

Let's see, I have a choice for a home server of:

- Exprensive low-end Mac mini that must be upgraded, is hard to open, and that cannot house 3.5" hard drives.
- Much cheaper used dual PowerMac G5 where I can fit the 2 drives that I want, and that in addition is better suited for running PPC applications.

The choice is obvious

 

[Eidorian]

...yeah, they'd sell a whole lot better if they were a fair price... I didn't need another "laptop" per say but the whitebook was the better value than the mini I was looking at for those duties...

The Mac mini does seem pointless when you have the White MacBook around.

Let's see, I have a choice for a home server of:

- Exprensive low-end Mac mini that must be upgraded, is hard to open, and that cannot house 3.5" hard drives.
- Much cheaper used dual PowerMac G5 where I can fit the 2 drives that I want, and that in addition is better suited for running PPC applications.

The choice is obvious

Apple does seem to have a fetish for making a simplistic machine that ends up with a nest of cables and accessories attached to it. Even then it doesn't meet goals you set out to meet in the first place.

 

[cube]

Apple does seem to have a fetish for making a simplistic machine that ends up with a nest of cables and accessories attached to it. Even then it doesn't meet goals you set out to meet in the beginning.

I'm not going to pay overkill Euro Mac Pro price for a little server.

 

[Eidorian]

I'm not going to pay overkill Euro Mac Pro price for a little server.

I actually had a chance to see one of HP's Windows Home Servers in person. They're tiny!

 

[cube]

I actually had a chance to see one of HP's Windows Home Servers in person. They're tiny!

I don't do Windows, and it has to be Mac for running some apps.

 

[bearcatrp]

Why do you think apple really never went after the business sector. More numbers with consumers. More sales with consumers. I've been one of those who want, sometimes needs, the latest and greatest for the last 25 years. When you give a little device like the iPhone video editing (although small) capabilities, you don't need a mac pro. Those of use who do semi to pro editing will need the mac pro but our numbers are dwindling. Look at the home media centers like hp's. A box with a jbod setup. You can let devices like the apple tv or tivos do the encoding for tv's and such. Hate to say it but the desktop as we know it will change tremendously. The folks with the deep pockets will be the only ones able to afford these monster computers.

 

[sommls]

While iMacs have now sold to a large number of consumers and drove Apple's financial rise from a very low point for a decade on the basis of "simplicity", I'd have to agree with the point made about nests of cables and accessories.

The G4 Cube was in a lot of ways the height of the approach and finally drove me crazy with external hubs, drives, and always another power brick.

I'd argue the MacPro is by far the more elegant solution for many people in real life.

 

[drossad]

The fact that notebooks have become increasingly more powerful and the introduction of netbooks for basic computing has been a big blow to desktops.
Why buy a big clunky desktop when you can get your needs in a portable machine.

 

[TheStrudel]

I think they're still selling more machines, though, even if laptop sales are growing at a faster rate to make desktops a smaller piece of the overall pie. There are market segments - whose population is fairly stable - who must have desktops, and they'll be buying for some time to come.

 

[JoJoCal19]

The fact that notebooks have become increasingly more powerful and the introduction of netbooks for basic computing has been a big blow to desktops.
Why buy a big clunky desktop when you can get your needs in a portable machine.

Exactly. I havent owned a desktop for home use since 2001. Ive used notebooks and only 2 months ago did I buy a monitor for my desk. My 3 year old MacBook runs better as a PC than anything Ive used thats been out before this year and it still runs better than any low end or budget desktop today. Why bother? Now I must say I am disappointed with the lack of quad core procs as an option in mac mini. That would be the perfect upgrade for me.

 

[techfreak85]

ok. i like being able to open up my computer and upgrade, fix, what ever. I Cant stand how people use a laptop as their main, desk computer.

A little cry out to Steve:
Please Apple! Dont Kill Your desktops! Give us something that is cheaper then the mac pro, but is upgradable before i turn to Hackintoshes!

 

[Tesselator]

and it isn't in Mac Pro's...



Link

I'm guessing the product manager for the Mac Pro line who set high pricing to try and make some margin on a market segment that is getting hammered (at least this year) if not long term, is looking good after this.

At any rate, this should help some folks here understand why the pricing is high and the updates infrequent. We are part of a dying market segment that is becoming increasingly niche.

Nope, I can't go for that. That's not even good logic. There are at least two sides to this equation and one of them is perceived and real value. Another is comparative analysis. In both Apple fails miserably! Comparatively they offer a low spec system at prices higher than the highest spec and perceived value follows suit (for the un-hypnotized). They are charging enough that we should be getting 12 or 16 real cores, lots of RAM slots, and at least embedded RAID - not to mention a professional selection of video cards. We get NONE of that. No, your point might be a more valid argument if we all lived in a vacuum - but we don't.


EDIT: The idea that portables and hand-helds are taking over doesn't seem to apply within my frame of consciousness. As TheStrudel points out these markets are quite unique unto themselves and very little mutual exclusion exists. Because I have an iPhone or iTouch doesn't mean I won't get or use a laptop and because I have a laptop doesn't typically mean that I won't get or use a desk-top model. You get what fits your needs within your budget and then of course there is the entire class of working computerists who need to maintain all three in some form or another.

 

[J the Ninja]

This is essentially the truth. Most of us are just scared to admit it because we don't want to loose our precious towers.

Remember, we are a niche market. Most of us are computer enthusiasts. Most of also make our living with our computers, or are (like myself) students looking to get into such professions. We buy towers since we need all the power we can get, and like messing around with our hardware a bit.

The consumer doesn't. They just need enough power to make their web browser run smoothly. Really, think about your friends. How many of them want a tower? Just the gamers and the ones who use their computers for their work. I honestly can't think of anyone I know who wants a tower (of any spec) just for listening to music and browsing Facebook. They all want laptops, or something like an iMac or Mac Mini that looks sleek and keeps their desk clean. They don't want to mess with their hardware, even for something so simple as adding RAM or dusting the fans. They're scared ****less just opening the case up. They really couldn't care less that it isn't upgradeable or easily self-repaired, because they won't be upgrading or repairing it themselves anyway.

Like it or not, the Mac lineup isn't really incomplete, it's just prepared for the future. Apple killed off the sub $2k tower in favor of iMacs, because that is what the public wants. The people who do want towers will cough up the money for the big boys provided you give them (mostly) proportionally faster hardware, since they know they'll get good use of it.

 

[PlaceofDis]

i thought this was a well known trend thats been happening over the past couple of years??

while there is still a place for the Towers, they are growing increasingly more of a niche market as laptops become more than adequate for the vast majority of people's needs.

 

[VirtualRain]

Nope, I can't go for that. That's not even good logic. There are at least two sides to this equation and one of them is perceived and real value. Another is comparative analysis. In both Apple fails miserably! Comparatively they offer a low spec system at prices higher than the highest spec and perceived value follows suit (for the un-hypnotized). They are charging enough that we should be getting 12 or 16 real cores, lots of RAM slots, and at least embedded RAID - not to mention a professional selection of video cards. We get NONE of that. No, your point might be a more valid argument if we all lived in a vacuum - but we don't.

I've worked in product management for high-tech companies my whole career and I'm guessing with this last rev of the Mac Pro, Apple had some difficult decisions to make.

The 2008 MP was probably a money loser for them, given the slim margins they had, the down-turn in the market mid-fiscal year would surely have meant that the expected unit sales did not materialize to make that product line profitable. That alone might have been putting pressure on some to kill the product line. Just holding the status-quo wasn't an option since the 2008 MP margins were so slim... they needed a higher-margin product. Thank goodness for Nehalem. No product manager wants a product line that loses money.

I'm sure when they forecasted units sales for 2009 it looked equally as bleak as the latter half of 2008... The economy plus the niche appeal of the Mac Pro ensures the market is almost not worth pursuing. Their only reasonable choice if they were going to continue the Mac Pro line at all was to significantly increase margins to compensate for the dwindling unit sales.

The target market for the Mac Pro is the professional content creation world, where inelastic demand is something that Apple can leverage... whether they price an 8 core workstation at $3K or $5K... doesn't matter to this target market... it won't materially affect demand. The only one's who are really impacted by this years price adjustment are the students and hardware enthusiasts. Demand from large studios and production houses is affected by the economy, not the price of the box.

Thus, perhaps it wasn't a brilliant decision on the part of product management to dramatically increase margins on this year's Mac Pro product line but it was likely a product line saving decision.

As long as the economy is in the tank, and Apple's big customers are not buying many 8-core workstations, you can expect the price to remain high.

At least that's how I see it.

 

[vohdoun]

The consumer doesn't. They just need enough power to make their web browser run smoothly. Really, think about your friends. How many of them want a tower? Just the gamers and the ones who use their computers for their work. I honestly can't think of anyone I know who wants a tower (of any spec) just for listening to music and browsing Facebook. They all want laptops, or something like an iMac or Mac Mini that looks sleek and keeps their desk clean. They don't want to mess with their hardware, even for something so simple as adding RAM or dusting the fans. They're scared ****less just opening the case up. They really couldn't care less that it isn't upgradeable or easily self-repaired, because they won't be upgrading or repairing it themselves anyway.

I have to agree with mostly everything you say. I could never do what your average joe does. The thought of sending in a unit freaks me out. I'm a possessive git, I hate people touching my stuff. The thought of it coming back with some gits manky finger marks really busts my chops. Even more so seeing what I have on my computer and it's nothing illegal or dodgy. I'm possessive no matter what. I don't want some person raiding through all my files or whatever. I really hate nosy people and they would do it too!

This reminds me of a funny quote somebody posted on another forum. Just the thought of somebody that may not be hygienic touching my computer really irks me or it goes in looking mint and comes back with some scratches here and there. No thank you!

Originally Posted by Shai
The thing I wouldnt like is that, if in fact those were created via the returned ones,You would own something that someone previously had in their hands...You know a lot of freaks masturbates here and touch their computers afterwards...

 

[Infrared]

This is essentially the truth. Most of us are just scared to admit it because we don't want to loose our precious towers.

Remember, we are a niche market. Most of us are computer enthusiasts. Most of also make our living with our computers, or are (like myself) students looking to get into such professions. We buy towers since we need all the power we can get, and like messing around with our hardware a bit.

The consumer doesn't. They just need enough power to make their web browser run smoothly. Really, think about your friends. How many of them want a tower?

I think what's happening is that consumers have bought into the
idea of compromise. Portability and size aside, a desktop (with a
monitor + keyboard etc of course) is in nearly every way superior
to its laptop rival. Far more reliable, more powerful, more options,
sometimes quieter (because laptops heat up so quick, their whiny
little fans kick in sooner), easier to use (better keyboard), more
screen space (ever seen a laptop with a built-in 30" screen? ),
and so on. The list of advantages is nearly endless. But, of course,
people will compromise on all of that for the sake of portability, even
when they often don't really need it.

I see it as being somewhat analogous to the rise of LCD television
sets. Quite often the picture they produce is, in many respects,
poorer than that of the technology they replace. But people don't
seem to care or notice.

 

[Infrared]

I've worked in product management for high-tech companies my whole career and I'm guessing with this last rev of the Mac Pro, Apple had some difficult decisions to make.

The 2008 MP was probably a money loser for them, given the slim margins they had, the down-turn in the market mid-fiscal year would surely have meant that the expected unit sales did not materialize to make that product line profitable. That alone might have been putting pressure on some to kill the product line. Just holding the status-quo wasn't an option since the 2008 MP margins were so slim... they needed a higher-margin product. Thank goodness for Nehalem. No product manager wants a product line that loses money.

I'm sure when they forecasted units sales for 2009 it looked equally as bleak as the latter half of 2008... The economy plus the niche appeal of the Mac Pro ensures the market is almost not worth pursuing. Their only reasonable choice if they were going to continue the Mac Pro line at all was to significantly increase margins to compensate for the dwindling unit sales.

The target market for the Mac Pro is the professional content creation world, where inelastic demand is something that Apple can leverage... whether they price an 8 core workstation at $3K or $5K... doesn't matter to this target market... it won't materially affect demand. The only one's who are really impacted by this years price adjustment are the students and hardware enthusiasts. Demand from large studios and production houses is affected by the economy, not the price of the box.

Thus, perhaps it wasn't a brilliant decision on the part of product management to dramatically increase margins on this year's Mac Pro product line but it was likely a product line saving decision.

As long as the economy is in the tank, and Apple's big customers are not buying many 8-core workstations, you can expect the price to remain high.

At least that's how I see it.

There could be a vicious cycle danger here. They raise the prices,
demand falls, so they bump up the prices again. Eventually so few
people buy the machines they assume nobody actually wants them
and drop the line entirely.

 

[Tesselator]

Ninja, Place, Really you guys think the future is iMac-like devices and towers are on their way out? I don't. Not at all. iMac like devices have been around for a very very long time. They're filling their niche out a bit more in the past 3 years but they won't grow to replace towers and mid-towers. The market segments really are NOT mutually exclusive as I think time has shown beyond any doubt. Everyone I know is mostly interested in towers weather they have a tower or an iMac-like-thingy. If the future really is iMac-like machines I think we should all start hating Apple right now for ruining a huge section of the world's economy. Because if it goes like that that's what'll happen more than likely. But I don't think this is the case at all.

When i go to the shops I see rows and rows and rows of motherboards, coolers, internal cables, HDDs, ODDs, and graphic cards none of which can be used inside and imac-like system. Over in the back corner of a few shops I see all-in-one systems. Usually taking a back seat to the laptops but just in front of the boom-boxes. Are all these shops set up wrong? Do they not know that all-in-one's are the future? Or is this a BS-line from Apple to sell a few more systems?

When I read magazines or web-sites that are computer related 80% of the discussion is about desktop boxes and related parts, 15% are about laptops, 4% is about all-in-ons, and 1% is about hand-helds. Do all these people have it wrong? Are they all talking to an empty room? Or does Apple just have a large percent of their customer based fooled into thinking (and buying) all-in-one's as "the future"?

Naw, I'm not going for it. If Apple is selling good quantities of their iMacs it only means (to me) that their all-in-one's are better than anyone else's. So everyone who wants an all-in-one system (all 5% of the computing public) ends up on Apple's porch.

Apple's product line really IS incomplete. That's a glaringly obvious fact. And I don't use the word "fact" loosely here. This is not a shameful thing. Many companies don't make all-in-one's or hand-helds at all. It just means that those of us who prefer OS X need to do a bit of hacking or go Linux or something else.

 

[doox00]

I would purchase a Mac Pro in a second if they were reasonably priced. I don't understand why they sell their hardware for so much money, a mac is a pc now.. you can build or buy a nice fast one for 6-700 dollars. You can build something much more powerful then the most powerful Mac Pro for 1500 or less.

I am currently using a hackintosh because apple prices or just to high. I am wanting to buy a genuine apple and trying to figure out what to go with but I will be downgrading from my current hackintosh unless I want to spend 1500-2000+ dollars.

 

[Infrared]

This is timely:

http://technologizer.com/2009/07/04/the-laptop-circa-1968/

 

[VirtualRain]

There could be a vicious cycle danger here. They raise the prices,
demand falls, so they bump up the prices again. Eventually so few
people buy the machines they assume nobody actually wants them
and drop the line entirely.

The Mac Pro is an inelastic product... in economics, this means that demand from their target market (creative design houses) is not affected by price. Sure, joe consumer and the average SOHO customer can no-longer justify a Mac Pro, but they are not the target market for this machine. If you are making good money with a Mac Pro, the difference between $3K and $5K is easy to absorb and just a cost of doing business.

I suspect that with the 2008 Mac Pro, initially the economic outlook (unit forecast) was good and the cost of goods was low enough that Apple felt they could price the product extremely aggressively to eat more of HP and Dell's piece of the pie.

But you are correct, the days of bargain pricing on Mac Pro's is probably over for the foreseeable future... leaving only the true pro's as customers.