vantreeck@logic.DEC (07/18/85)
There have been several questions/flames about what some perceive to be
an overpriced Mac. There seems to be a misunderstanding about the cost of doing
business. As noted in an earlier, the cost of the parts is about $350. But
there's the cost of labor (about 300 workers in the plant, telephone support,
marketing, sales, and logistics personnel, besides the engineers designing new
peripherals for the Mac, and others). The cost of the $50 million dollar
factory has to amortized out of the sales of the Mac - the factory will
obsolete in just a few years so the cost has to be regained quickly, which
means you pay a little more for that Mac - it's the cost of a rapidly evolving
technology). There's the expense of electricity (a lot more per month than
you'd probably guess), and other miscellaneous expenses. The company has to
make enough money off the Mac to fund the development and manufacture of the
Mac peripherals and the follow on to the Mac (the BigMac?). And depending on
the type of stock issued, they may have to pay dividends to the share holders.
And there's the cost of advertising, training retailers, etc..
If the Mac were to sell in much larger volumes, then Apple could afford
to lower the price a little. But we all know that the market for low end PCs
is pretty soft right now. You may have also read that Tandy has decided that
it's strategy of sellling very low cost IBM PC compatables has not worked out
well - to low of a margin for the volume sold. So now, they're going to make
packaged hardware/software solutions for specific markets that sell a higher
cost.
If Apple were making a huge profit off the Mac, how come they had to lay
off employs, and show a loss? I wish my Mac cost less too. And I'd like to have
immortality. But for reasons beyond my control (and beyond Apple's control) I'm
not likely to get either.
George Van Treeck
Digital Equip. Corp.jer@peora.UUCP (J. Eric Roskos) (07/30/85)
> If Apple were making a huge profit off the Mac, how come they had to > lay off employs, and show a loss? I wish my Mac cost less too. And I'd > like to have immortality. But for reasons beyond my control (and beyond > Apple's control) I'm not likely to get either. Just basic microeconomics at work... you charge too much for your system ($1000 more than an equivalent IBM PC, according to last night's Sears Business Center ad), not many people buy it... you make less than if you charged less and sold more... So, you either 1) reduce the price 2) reduce the supply by laying off people and reducing production 3) go out of business if you can't do 1 or 2 cost-effectively. Why is that so hard to understand? When the majority of your customers are saying "I won't buy it, it's too expensive", and you go on and say, "we have the greatest system in the world, so you WILL buy it!...and if you try to outsmart us, we'll get even!", you're headed for big trouble. Few customers will buy a product out of sympathy, as you have suggested doing. -- Shyy-Anzr: J. Eric Roskos UUCP: ..!{decvax,ucbvax,ihnp4}!vax135!petsd!peora!jer US Mail: MS 795; Perkin-Elmer SDC; 2486 Sand Lake Road, Orlando, FL 32809-7642 "Fvzcyvsl, fvzcyvsl." -- UQG