CS656@OUACCVMB.BITNET (02/28/89)
>How is it that Laser can make a profit selling "basic computing" at prices >Apple seems unwilling to compete with? I suppose that letting another company sink millions into research and then "borrowing" the ideas that work out best could cut down on some overhead. Bob Church CS656@OUACCVMB
SEWALL@UCONNVM.BITNET (Murph Sewall) (03/01/89)
>>How is it that Laser can make a profit selling "basic computing" at prices >>Apple seems unwilling to compete with? >I suppose that letting another company sink millions into research and then >"borrowing" the ideas that work out best could cut down on some overhead. NO, NO, NO!!! That's the sort of faulty economic logic that has abdicated so many products and markets to Asians who understand that the idea is to have MORE MONEY COMING IN THAN IS GOING OUT! R&D costs are SUNK (gone, kaput, spent years ago!). Development is ALREADY PAID FOR (whether or not in retrospect it was a good idea). Besides, the Apple 2 line already has profited Apple enough to make Midas jealous. If Apple can't manufacture a //c with all the features of the Laser line and sell it (to school systems and other volume purchasers anyway) for at least as little as the Lasers then something is seriously wrong with either Apple's engineering or their bookkeeping (the latter more likely). If a concern exists about full service dealers being unhappy with a source (Apple) manufacuring low margin competition, the clasic market response is to launch a new ("fighting") brand (you'd be surprised at how many makers of famous department store brands make less well-known substitute brands for the likes of Walmart and K-Mart). How about a //c with an expansion box option and a "Rocket chip" processor named the "Robust?" (maybe in a James Bondish "gun metal grey" case?). School systems also need a built in bracket for securing the machine to something heavy (like the walls, or the floor). Murph Sewall Vaporware? ---> [Gary Larson returns 1/1/90] Prof. of Marketing Sewall@UConnVM.BITNET Business School sewall%uconnvm.bitnet@mitvma.mit.edu [INTERNET] U of Connecticut {psuvax1 or mcvax }!UCONNVM.BITNET!SEWALL [UUCP] -+- I don't speak for my employer, though I frequently wish that I could (subject to change without notice; void where prohibited) According to the American Facsimile Association, more than half the calls from Japan to the U.S. are fax calls. FAX it to me at: 1-203-486-5246
lsr@Apple.COM (Larry Rosenstein) (03/01/89)
In article <8902281447.aa18108@SMOKE.BRL.MIL> SEWALL@UCONNVM.BITNET (Murph Sewall) writes: > R&D costs are SUNK (gone, kaput, spent years ago!). Development is ALREADY > PAID FOR (whether or not in retrospect it was a good idea). Besides, the > Apple 2 line already has profited Apple enough to make Midas jealous. Some part of the cost of a product comes from its cost of development. I don't know how this is allocated over the life of the product, but presumably it declines as time goes by, and eventually becomes 0 (or close to 0). In addition, some part of the cost of a product goes towards future R&D. Larry Rosenstein, Apple Computer, Inc. Internet: lsr@Apple.com UUCP: {nsc, sun}!apple!lsr AppleLink: Rosenstein1
jac@paul.rutgers.edu (J. A. Chandross) (03/01/89)
lsr@Apple.COM (Larry Rosenstein) writes: > Some part of the cost of a product comes from its cost of development. I > don't know how this is allocated over the life of the product, but > presumably it declines as time goes by, and eventually becomes 0 (or close > to 0). > In addition, some part of the cost of a product goes towards future R&D. This isn't really appropriate to this group, but I'll contribute to the noise anyway. RCA made enough off the television patents developed by their David Sarnoff Research Lab to *PAY* for the total costs of running the lab forever (at least until they gave it to SRI) and *STILL* make other money off those patents. R&D does pay. Jonathan A. Chandross Internet: jac@paul.rutgers.edu Uucp: rutgers!jac@paul.rutgers.edu
gwyn@smoke.BRL.MIL (Doug Gwyn ) (03/01/89)
In article <8902281447.aa18108@SMOKE.BRL.MIL> SEWALL@UCONNVM.BITNET (Murph Sewall) writes: >>>How is it that Laser can make a profit selling "basic computing" at prices >>>Apple seems unwilling to compete with? >>I suppose that letting another company sink millions into research and then >>"borrowing" the ideas that work out best could cut down on some overhead. >R&D costs are SUNK (gone, kaput, spent years ago!). Development is ALREADY >PAID FOR (whether or not in retrospect it was a good idea). Besides, the >Apple 2 line already has profited Apple enough to make Midas jealous. You talk about faulty economics, then come up with a lulu. I don't know all the reasons that make Apple products seem over-priced, but in addition to having to maintain the corporate operation (including R&D), it must include financing whatever customer support advantage Apple theoretically offers over "clone" manufacturers. (The support might not really be what it should be, but it probably IS a factor that influences many purchasing decisions.)
millerje@handel.colostate.edu (jeffrey scott miller) (03/02/89)
>In article <8902281447.aa18108@SMOKE.BRL.MIL> SEWALL@UCONNVM.BITNET (Murph Sewall) writes: >>>>How is it that Laser can make a profit selling "basic computing" at prices >>>>Apple seems unwilling to compete with? All I know is that in the 6 years I owned an Apple //e (I now own a gs) I never had it, or any Apple peripheral in the shop ONCE. If Apple were to make a sports car with the quality of their computers, I'd buy it tommorrow.
asd@mentor.cc.purdue.edu (Kareth) (03/02/89)
In article <1305@ccncsu.ColoState.EDU> millerje@handel.colostate.edu.UUCP (jeffrey scott miller) writes: >>In article <8902281447.aa18108@SMOKE.BRL.MIL> SEWALL@UCONNVM.BITNET (Murph Sewall) writes: >>>>>How is it that Laser can make a profit selling "basic computing" at prices >>>>>Apple seems unwilling to compete with? > >All I know is that in the 6 years I owned an Apple //e (I now own a gs) I >never had it, or any Apple peripheral in the shop ONCE. If Apple were to make >a sports car with the quality of their computers, I'd buy it tommorrow. Ditto. I've had a II+ since slightly before the IIe came out. I've pounded on it, smacked it around, done power on-offs in rapid succession (to see what the drive was doing and to get a slightly toasted Lode Runner to boot), fiddled with the cards WITH the power ON (pretty wild things happen here!) and all kinds of other things. So far, not one problem. It still is currently making a living with my dad at the helm. Sure like to see another computer handle this type of long-term abusin'. kareth. ps. anybody recall the adds A LONG TIME AGO with the II+ that got toasted, literally melted down, and supposedly just had the case & keyboard replaced and it worked fine. a supposed true story...anybody at apple care to validate?
brianw@microsoft.UUCP (Brian Willoughby) (03/03/89)
In article <8902281447.aa18108@SMOKE.BRL.MIL>, SEWALL@UCONNVM.BITNET (Murph Sewall) writes: > >>How is it that Laser can make a profit selling "basic computing" at prices > >>Apple seems unwilling to compete with? > >I suppose that letting another company sink millions into research and then > >"borrowing" the ideas that work out best could cut down on some overhead. > NO, NO, NO!!! That's the sort of faulty economic logic that has abdicated > so many products and markets to Asians who understand that the idea is to > have MORE MONEY COMING IN THAN IS GOING OUT! > > R&D costs are SUNK (gone, kaput, spent years ago!). Development is ALREADY > PAID FOR (whether or not in retrospect it was a good idea). Besides, the > Apple 2 line already has profited Apple enough to make Midas jealous. > Wait a minute... you mean that you want Apple to cease all current R&D on products for the next ten years? I mean, who is going to develope the IIGS+ or the Apple IInxt? Are you going to leave all R&D to Laser? Sure Apple has finished R&D on the Apple II Plus, but they aren't nearly finished with the IIGS! Laser is just waiting in line to copy the NEXT Apple product. They still are preparing to "borrow" yet again. I am glad Apple is continuing to look into the kinds of products which aren't in development by any other company right now. It costs money to research ideas that no one else is even thinking of. I certainly hope you don't think that Apple's first 16-bit Apple II is the last!! Brian Willoughby microsoft!brianw@uunet.UU.NET or just microsoft!brianw > Murph Sewall Vaporware? ---> [Gary Larson returns 1/1/90]
SEWALL@UCONNVM.BITNET (Murph Sewall) (03/03/89)
>In article <8902281447.aa18108@SMOKE.BRL.MIL> SEWALL@UCONNVM.BITNET (Murph > Sewall) writes: >>>>How is it that Laser can make a profit selling "basic computing" at prices >>>>Apple seems unwilling to compete with? >>>I suppose that letting another company sink millions into research and then >>>"borrowing" the ideas that work out best could cut down on some overhead. >>R&D costs are SUNK (gone, kaput, spent years ago!). Development is ALREADY >>PAID FOR (whether or not in retrospect it was a good idea). Besides, the >>Apple 2 line already has profited Apple enough to make Midas jealous. > >You talk about faulty economics, then come up with a lulu. > >I don't know all the reasons that make Apple products seem over-priced, >but in addition to having to maintain the corporate operation (including >R&D), it must include financing whatever customer support advantage Apple >theoretically offers over "clone" manufacturers. (The support might not >really be what it should be, but it probably IS a factor that influences >many purchasing decisions.) Where's there a "lulu?" User support (and any other services are a CURRENT EXPENSE justified ONLY if customers value them enough to PAY for them (if they permit a price premium that meets or exceeds their cost). That's a quite different reason for an Apple //c (or //c+) costing more than a Laser. HOWEVER, it isn't at ALL clear that current support for the //c and //c+ (as oppossed to the IIgs and Mac line) has very much differential value (perceived or real) to customers (compared to the support for Laser's). Apple also gets some differential value from their greater brand name familiarity (corporate "goodwill"). It's entirely conceivable that the Apple //c SHOULD be priced higher than a Laser model (unless Apple REALLY wants to *zap* Laser). Still, lest we lose sight of the original notion that started this debate, the idea was that the present differential is larger than makes sense. Murph Sewall Vaporware? ---> [Gary Larson returns 1/1/90] Prof. of Marketing Sewall@UConnVM.BITNET Business School sewall%uconnvm.bitnet@mitvma.mit.edu [INTERNET] U of Connecticut {psuvax1 or mcvax }!UCONNVM.BITNET!SEWALL [UUCP] -+- I don't speak for my employer, though I frequently wish that I could (subject to change without notice; void where prohibited) According to the American Facsimile Association, more than half the calls from Japan to the U.S. are fax calls. FAX it to me at: 1-203-486-5246
SEWALL@UCONNVM.BITNET (Murph Sewall) (03/03/89)
>In article <8902281447.aa18108@SMOKE.BRL.MIL> SEWALL@UCONNVM.BITNET (Murph >Sewall) writes: >> R&D costs are SUNK (gone, kaput, spent years ago!). Development is >ALREADY >> PAID FOR (whether or not in retrospect it was a good idea). Besides, the >> Apple 2 line already has profited Apple enough to make Midas jealous. > >Some part of the cost of a product comes from its cost of development. I >don't know how this is allocated over the life of the product, but >presumably it declines as time goes by, and eventually becomes 0 (or close >to 0). > >In addition, some part of the cost of a product goes towards future R&D. An accountant's justification (economists everywhere snicker -- actually academic accountants DO know better -- the citations date back at least to the early 60's). Development costs were GONE the instant the bills were paid. Investments (past, present, and future; advertising, promotion, or R&D) are made to generate income in the FUTURE (the ONLY place money can come from). Those sunk costs are embedded in prices ONLY to the extent they have BEEN earned! Countless inventors and marketers have discovered that it OFTEN isn't possible to recover investment in R&D or anything else (the justification for profit is as an INCENTIVE to encourage entrepeneurs to risk losing it all in the hope of a large reward IF successful). The reason that the point IS important, is that if we don't understand it, we deserve to be whipped by foreign competition that clearly does. A decade ago the tire industry petitioned Congress for protective tariffs on the grounds that they couldn't make enough profit selling bias-ply tires to "afford" the investment in plants to manufacture radials. Perhaps, a surprise (maybe just a convenient place to "hide"), Congress was wise enough NOT to support such a notion (whether Congress recognized that CURRENT profits from bias-ply tires were IRRELEVANT isn't self-evident). IF the tire companys didn't borrow the funds to build the plants they WOULD go bankrupt -- the justification for investment is FUTURE income. They DID borrow the capital, and they continue to survive (making radial tires after all :-). Prices are expression of what CUSTOMERS VALUE. At least SOME contribution to profit is made as long as the CASH FLOW is positive (revenues exceed OUT-OF-POCKET cost). All the "overhead" allocations are accountants' attempts to evaluate past decisions, but they are economically IRRELEVANT. Asian managers really seem to understand that MUCH BETTER than American managers seem to. A REAL irony is that the Japanese say they learned the idea from U.S. business schools!! Murph Sewall Vaporware? ---> [Gary Larson returns 1/1/90] Prof. of Marketing Sewall@UConnVM.BITNET Business School sewall%uconnvm.bitnet@mitvma.mit.edu [INTERNET] U of Connecticut {psuvax1 or mcvax }!UCONNVM.BITNET!SEWALL [UUCP] -+- I don't speak for my employer, though I frequently wish that I could (subject to change without notice; void where prohibited) According to the American Facsimile Association, more than half the calls from Japan to the U.S. are fax calls. FAX it to me at: 1-203-486-5246
SEWALL@UCONNVM.BITNET (Murph Sewall) (03/04/89)
>In article <8902281447.aa18108@SMOKE.BRL.MIL>, SEWALL@UCONNVM.BITNET (Murph > Sewall) writes: >> R&D costs are SUNK (gone, kaput, spent years ago!). Development is ALREADY >> PAID FOR (whether or not in retrospect it was a good idea). Besides, the >> Apple 2 line already has profited Apple enough to make Midas jealous. > >Wait a minute... you mean that you want Apple to cease all current R&D on >products for the next ten years? I mean, who is going to develope the IIGS+ >or the Apple IInxt? Are you going to leave all R&D to Laser? Sure Apple has I didn't say, or even IMPLY that. IF (seems to be 'if' doesn't it) Apple invests in a IIgs+ it will be because the ANTICIPATE profit from doing so. In theory R&D is budgeted until the value of 'discounted FUTURE CASH FLOW' diminishes (at the margin) to the maginitude of the required investment (at the margin). In practice for numerous political and other reasons (not the least of which is one can't really measure the 'discounted value of future cash flows') investment budgets for any reasonable planning horizon (a year is popular) are finite. So, Apple's problem boils down to whether the (currently) available capital is better invested in the future of the Mac or the future of the IIgs (these days it looks like Apple figures the Mac is the better bet, and emotion aside that's not an unreasonable <note: I do not say it's necessarily correct> conclusion). All that has not one whit to do with how Apple might best use EXISTING technology and (present or potential) production capacity to compete with the Laser (or any others including Commodore 128's, etc.). My point was PAST money spent has zilch to do with what's economically sensible. The Apple II line (I suspect INCLUDING the IIgs, but perhaps not the IIgs+) is what is known as a "cash cow." The Boston Consulting Group wasn't being entirely whimsical when the coined the notion of a "cash cow" along with the (isn't it obvious) idea that the appropriate strategy is to "milk it!" I suspect that if you caught senior Apple executives in a really candid moment they'd say "milking" is PRECISELY what they are doing (or at least trying to do). Reasonable people can differ about the degree to which Apple is conceding more of the market to Laser (and others) than they reasonably have to. If you are among those arguing that Apple's prices are too high, then you have only to put your money into negotiable securities for awhile. We have recent and VERY CONCRETE evidence that Apple IS sensitive to sales responses. They charge as much as they do because you all keep buying (complaining yes, but SPENDING too). /s Murph I bought the latest computer; it came fully loaded. It was guaranteed for 90 days, but in 30 was outmoded! - The Wall Street Journal passed along by Big Red Computer's SCARLETT FAX it to me at: 1-203-486-5246