Aaron Adams’s Blowhard Blog

Last evening I had the opportunity to speak to Omar Jamil of Red Herring, who was writing this article and asked my thoughts about the rumors of a cheap Mac, allegedly to be introduced at MWSF. Mr. Jamil asked a number of hard questions, many of which I really didn’t have an answer for simply because there aren’t enough facts with which to form a solid opinion about the subject yet, if it’s even true. I was able to theorize a bit, however, and Mr. Jamil chose the perfect quote to represent my first thoughts on the issue:

Apple could not be reached for comment. Even assuming the rumors to be true, a new low-end iMac does not guarantee that Apple will successfully lure Windows users to the Apple platform. Aaron Adams, a Mac enthusiast and occasional co-host of Your Mac Life, believes a new headless Mac runs the risk of cannibalizing the sales of existing products.

ÒThe specs for this headless box very closely matched the iBook, and Apple is selling iBooks like hotcakes,Ó he said. Given that the new iMac would be cheaper than the iBook, he wonders whether this might eat into iBook sales. Additionally, he said, a new low-end iMac would replace the eMac as AppleÕs low-end machine and possibly erode sales of that product as well.

I’d like to take an opportunity to elaborate on those remarks here.

First and foremost, this cheap Mac is pure speculation and anyone who follows Apple knows that no Apple product is real until Steve says it’s real. During the Red Herring interview I was being asked to speculate about a hypothetical product brought to our attention by a rumor that wasn’t even public for 24 hours at the time. Any thoughts expressed here, or anywhere else, concerning unannounced products that have no surrounding context from Apple are subject to change if such a product becomes reality. Take all of this with a grain of salt.

I stated to Mr. Jamil that the alleged specs for this hypothetical machine seem to closely match the iBook and I would be concerned that such a similarity would impact iBook sales. Notebooks make up half of Apple’s computer sales, and iBooks lead the way because of their pricing combined with respectable specs. A cheaper desktop box could become an internal competitor to an already successful iBook. When it comes time to buy, prospective Apple customers who read specs would compare the two, think long and hard about whether they value portability or need to save $500, and undoubtedly there will be numerous cases where the iBook will not be chosen. I don’t believe that increased sales of a cheap Mac would offset any iBook losses, and I’ll explain why in just a bit.

I also stated that I believed eMac sales could be hurt. Right now, there are people who want a Mac and would like to spend less than $1000, and the eMac is the machine of choice for those people. They buy the eMac simply because its the cheapest machine. A $500 Mac would supplant the eMac’s position as the least expensive Mac and greatly reduce demand for those all-in-one boxes. My guess would be that Apple would eventually pulll the eMac from consumer sales in such a market, if they didn’t plan to already.

The idea of a $500 Mac is currently being hailed as a panacea, a miracle box that will finally pull over switchers from Windows, put Macs on corporate desktops, and increase Apple’s meaningless market share numbers. I’m here to assert that no such thing will happen. I do believe that such a box would provide the opportunity for some people interested in the Mac to finally take the plunge, but I don’t think the numbers will be anywhere near what some people fantasize they may be.

In the case of Windows users, many of them are perfectly happy with Windows and its myriad of problems and annoyances. They don’t know any better, and those hassles are simply part of day-to-day computing. New and unfamiliar things frighten these users, and a whole new computer and OS are downright terrifying. Apple will not win over those users with a cheap box alone, they will need an aggressive marketing effort to spell out why Macs are better and what users have to gain by switching. Cheapness doesn’t sell boxes to consumers, comfort does, and any strategy that relies solely upon cheap boxes to increase meaningless market share is unlikely to make up for lost sales of presumably higher margin products.

Most companies have spent the better part of a decade (or more) building an IT infrastructure around Windows and Intel compatible hardware. A cheap Mac will not put large numbers of Macs on corporate desktops. There is too much custom-written Windows-specific software out there, there are training costs involved, and IT staffs are usually grossly misinformed about Apple products of any kind. Apple’s best angle with which to move into the corporate world is the current track they’re taking with the Xserve: Familiarize the company’s IT staff with Mac servers and their capabilities, and Macs are more likely to show up on desktops.

The single biggest factor that prevents Macintosh sales, in my opinion, is prejudice and misinformation. In this story from Monday I wrote about the iPod halo effect, I pointed out that most of the letters published from users who weren’t interested in a Mac contained glaring factual errors. As I stated in that story, there are valid reasons for not wanting a Mac, but reasons based on premises that are simply not true aren’t valid. A $500 Mac will do little to correct factual inaccuracies.

Is this $500 box real? I’d say there’s a 70% chance that it is, but I don’t believe its intended to be a cheap desktop box. Considering Apple’s push into the audiovisual world, my guess is that such a box has a purpose that’s more related to media storage and distribution rather than as a desktop machine.

We’ll all know on January 11.