Free Mac with Each iPod Sold
Apple has got it all wrong. You see, during this year’s school shopping season they are giving away a free iPod with each computer. And that’s great and all, who doesn’t love a free iPod, but its backwards. Apple needs to start giving away Macs with each purchase of an iPod. Because there are a whole lot more people this school year that are going to want an iPod than there are who want a Mac.
Of course I wouldn’t want them to lose too much money in this deal, so there would need to be some restrictions in place. For example, only the two top-end iPod models should be eligible and the computer given away should be a Mac Mini. But even then I think Apple could do well in this deal.
The goal of course being to grow marketshare in the computer sector by leveraging its dominance in the music sector. If Apple could stand to take that big a hit to its margins then this would be the best way possible to get OS X out to the masses. Additionally, this would entice anyone looking for a cheap computer as well. Who could resist an iPod and a Mac, all for one insanely low price?
Apple certainly has the reserves to pull off something like this (once). And it wouldn’t lose too much money per sale, so why not? I think it would be much more effective than its current promotions. But if that is too much, then maybe Apple should consider giving away a $50 gift card to the iTMS with each iPod. That at least would seem to be a sure fire way to get new customers hooked on its download service. I mean, if it really is going to give a $200 iPod away for free with a computer, then it shouldn’t break the bank to pass out gift cards to anyone buying just an iPod.
The real problem is that Apple needs to take dramatic steps to grow its marketshare. The commercials are a step in the right direction, but more can and should be done. And while bare-bones pricing isn’t what Apple’s known for, it sure would help get the word out on its computers. I hate to suggest a bait-and-switch type marketing approach, but something must be done eventually. Unless it is happy with 5% of the market. Come on Apple, make me a deal I can’t refuse! After all, the back-to-school shopping frenzy is almost upon us. Get to it!
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My friend this is nuts. Even I would buy the iPod and sell the mini on eBay. As would 99% of everyone else taking this deal.
Please don’t ever run a business.
In response to comment 1, well their market share would still grow like that. Someone has to be buying the mini at the other end, and presumably they will put it into use.
But really to comment on the article. Apple’s goal would seem to not be growing a large market share. In order to do that they would need to start building the “bargain basement” variety PC. Thats not Apple’s idea, they don’t want to sell large numbers of basically 0 margin computers. They would rather sell a smaller number of good computers with a “decent” markup attached to them. They have been pretty successful with this strategy recently. There’s not much point in changing it just for the sake of a number.
Not a chance. Can you imagine what an such an obviously desparate move would do to AAPL’s share price? I also take issue with this statement: ‘The real problem is that Apple needs to take dramatic steps to grow its marketshare’. That’s not true at all. if it were, Apple would license OS X, cut the price of their computers, outsource their support and blitz the world with cheap advertising and cheap, commodity machines.
In response to comment 1, well their market share would still grow like that. Someone has to be buying the mini at the other end, and presumably they will put it into use. -kartack
The goal of business is not marketshare, but long-term profits. It doesn’t matter if giving away Macs at a massive loss (so they can be resold on eBay at the actual market price) increases your marketshare - your profits will plummet because you’re enriching people for free. I’ve never heard of a giveaway promotion that cost more than the item you actually have to buy, so I don’t think this would work.
I forgot to mention, why not have a promotion where a student gets a certain amount off the purchase of a mac when purchasing an iPod, rather than giving the whole thing away? That makes a lot more sense economically.
this is probably the stupidest article I’ve seen so far from apple matters, it looks like you pulled it out of your ass
this is probably the stupidest article I’ve seen so far from apple matters, it looks like you pulled it out of your ass -Nemin
And that was probably the rudest comment I’ve seen so far on apple matters. I guess today is just the day of superlatives!
Stoup’s idea actually makes sense, but only if you give students a discount on a Mac purchase with every iPod bought, rather than an actually free Mac. Why Apple isn’t leveraging the iPod more like this, I don’t know.
if it were, Apple would license OS X, cut the price of their computers, outsource their support and blitz the world with cheap advertising and cheap, commodity machines.
Man, that would be awesome.
I don’t want to get into another clone-vs-closed argument, but Apple has been making hardware for 30 years. If they wanted to make cheapo boxes (like half the mac mini price), they could make them in-house and bypass the “tax” they’d have to pay to outsource the manufacturing to Dell & friends. Why they don’t, I don’t know, but it sure would be more profitable than licensing. And the things would probably look good enough to lick, to boot.
Apple wouldn’t pay Dell or anyone else to manufacture their hardware. That’s what Apple does NOW by outsourcing their products to China. Instead, Dell and others would pay Apple to license the OS. In a sense, it’s pure profit since Apple is making money without really having to do anything.
The downside is that Apple faces the potential of canibalizing its existing market instead of growing marketshare, by allowing others to compete with equivalent but cheaper hardware (lending substance to the assertion that Apple products are overpriced).
But what Apple would lose in hardware revenue, IMO, it would make up for in software licensing. Microsoft became one of the biggest companies in the world with this model.
Sorry if this is a late reply, I went to see Cars
Yes, they would pay Dell in one sense: opportunity cost. Dell will make a profit from the sale of each computer that Apple could’ve kept to itself had it not licensed out. By making hardware in-house, they profit from BOTH hardware and software - combined into a single fat profit margin. They don’t have to share the spoils.
I disagree that Microsoft won due to its licensing model, but that’s probably outside the scope of this discussion (suffice to say, I’m persuaded by John Gruber’s commentary about this).
James, I like your idea. It’s bold, risky and just the right amount of totally insane! Awesome.
I think it could recreate the famous Henrico County Massacre scenes.
Except… c’mon, a FREE Mac Mini with an iPod? You can’t say it isn’t too much of a hit to the margins. THERE IS NO MARGIN in that deal! It’s the total opposite of margin! It’s a ‘minus’ margin! If they were doing a deal where they sold both together in a bundle for $600-700 or something - that would be good.
But they can’t just straight-up give Macs away. If they start aiming at the people who can so easily be swayed to another OS based upon a cheap price, as soon as these ‘switchers’ need their next new computer, they will simply choose the cheapest option all over again. Thus Apple losing 10 billion dollars on nothing.
Dell will make a profit from the sale of each computer that Apple could’ve kept to itself had it not licensed out.
Oskar, indirect loss of profits from competition is NOT the same as paying a hardware manufacturer for outsourcing, which is what you were originally talking about and which is, of course, not correct.
And like I said, my argument is that the increase in revenue from licensing the OS would more than make up for the loss of revenue (which you are NOW referring to) in hardware sales.
And why o’ why must everyone cite Gruber? It’s like referencing Ann Coulter in a political discussion.
Oskar, indirect loss of profits from competition is NOT the same as paying a hardware manufacturer for outsourcing, which is what you were originally talking about and which is, of course, not correct. -Beeblebrox
No, I never meant to suggest that one must directly pay Dell & Friends for the priviledge of including one’s OS, you just misread me. I spoke of outsourcing to them as a “tax” because of the opportunity cost.
And like I said, my argument is that the increase in revenue from licensing the OS would more than make up for the loss of revenue (which you are NOW referring to) in hardware sales. -Beeblebrox
The question is, why would selling OS X on generic PCs sell more copies? Of course, it’s because PCs are cheaper. So why can’t Apple simply make cheaper hardware themselves? They’ll increase volume just the same, and yet they’ll be able to keep all the profits to themselves. That’s the point I’m making.
And why o’ why must everyone cite Gruber? -Beeblebrox
I just agree with him in this instance and would rather just cite him than reproduce his arguments here. Less work.
So why can’t Apple simply make cheaper hardware themselves? They’ll increase volume just the same, and yet they’ll be able to keep all the profits to themselves. That’s the point I’m making.
I see, and that’s a good question. The main reason, I think, is that Apple simply doesn’t do that. They make a premium product and charge a premium price, an assertion which their artificial lock on the Intel hardware illustrates. This has always been Jobs’s philosophy, that people will pay more for a better product.
Therefore, IF Apple is interested in marketshare (which seems to be the case) and IF they simply choose not to compete on the inexpensive PC market (which seems to be the case), then I think it behooves them to license the OS to PC makers who do, for all the reasons I stated above.