Path: utzoo!utgpu!news-server.csri.toronto.edu!rpi!usc!apple!bc
From: bc@Apple.COM (bill coderre)
Newsgroups: comp.sys.mac.system
Subject: Re: May 13th yesterday (was May 13th Today)
Message-ID: <52943@apple.Apple.COM>
Date: 16 May 91 01:43:24 GMT
References: <52920@apple.Apple.COM> <52923@apple.Apple.COM> <1991May15.205525.19265@m.cs.uiuc.edu>
Organization: Apple Computer Inc., Cupertino, CA
Lines: 129

gillies@m.cs.uiuc.edu (Don Gillies) writes:
|I think that clearly, apple would like to sell $99 upgrade kits, since
|it makes profits for the corporation.  Also, apple needs to put system
|7.0 disks into hardware boxes ASAP so that they don't lose more money
|mailing 7.0 to people purchasing new hardware.

OK gang, settle down for Marketing 101.

Ever heard of a "loss leader"? It's a product a company sells at a
loss to gain sales of other products. In this case, Apple hopes to
sell System 7 at a tiny margin over its cost so that you will be a
happy, satisfied, knowledgeable System 7 user, tell all your friends,
and get them to buy Macs.

But wait, I can see hands in the back already: "But, that must only
cost them, oh, 60 or 70 cents a disk, and a coupla bucks for paper..."
Yeah, i get the point. And the human body contains about $0.67 worth
of raw materials too.

Products have what is called a "standard cost" which basically
accounts for the total cost of the product -- the marginal cost, which
is the disks and paper, PLUS the toll free tech support, PLUS the
product development costs, PLUS the manual developement costs, PLUS
the tech support development costs. The "standard cost" is usually
much higher than the marginal cost. No big surprise here. For
instance, the "standard cost" of a 21 year old computer hacker exceeds
$100K -- food, schooling, medical, and Macintoshes are all standard
costs for this creature.

Oh wait, there's still someone complaining. "But that's still gotta be
far less than $99." Well, that's probably true, but then you have to
figure in the "channel costs" -- the distribution costs PLUS the
DEALER PROFIT. The dealers are entitled to make some money off this,
after all, if you buy from a dealer, you get his/her help installing,
and the wonderful experience of his plush carpeting. Probably a nice
big, environmentally-unsound plastic bag, too. Chances are, the dealer
makes more than Apple on these upgrades.

|If apple sends every dealer three disks, then every user will get the
|software for free, and apple will sell absolutely ZERO system 7.0
|upgrade kits.  That's why apple doesn't Fed-X floppies to every dealer
|in the USA.  It takes money and time make shrink-wrap boxes, which
|must account for about $70 to the $99 price.

No, you're way off base. Plenty of users like nice manuals and Toll
Free Tech Support enough to wanna pay $99 for the whole set. And Apple
DID FedEx disks to each reseller, which then took its own sweet time
distributing them to stores. And it IS AOK to copy the disks and use
them, providing your dealer is a swell dude, and lets you. He is not
required to. He is also not required to sell anything to you, but if
he doesn't, he won't be able to keep renting his carpet, now will he.

End of Marketing 101

|I'd be willing to pay $35 for a new manual, non shrink-wrapped (as
|long as it's better than most of apple's current documentation).  But
|$99 is too much for a manual, especially apple manuals, which omit
|critical information like "What are the secret function keys?" or "How
|do I print a postscript file on a non-apple printer?"  or "How do I
|customize my finder?"  It's too bad that Apple doesn't take its market
|share and price competitiveness more seriously.  I guess the recent
|hardware price drops were more of a cruel joke than a true shift in
|corporate strategy.

Gee, I found all those answers pretty quickly, but when you pay $99,
you get MORE than just a manual. You get Toll Free Tech Support, which
gives you the opportunity to call and ask questions to a human being
as often as you want for 90 days after you first call, for as long as
Apple continues the service, which I think is at least a year or so.

There are plenty of manuals for System 7 available from other
companies for less than $35 (I know of about two so far, and they
should be hitting store shelves someday soon). If you would rather go
that route, and save $64, and not get dealer support, and not get Toll
Free Tech Support, that's AOK with Apple. They'll even STILL let you
listen to the pre-recorded help messages for the price of the call
(ie. FREE if you are in the local Cupertino calling area -- and the
phone company gets all the money), and even still let you talk to a
human being for $2/minute, of which the phone company gets half,
remember.

|I predict that many people will buy 3rd-party manuals or rely on
|magazines instead of getting the apple documention, because of this
|shortsighted marketing move.

Considering the basic flaws in your argument, I can't agree. 

Apple is not interested in discouraging people from installing System
7. Nor are they interested in people having trouble with installing
System 7. They are much more interested in getting as many people to
use and understand the product as possible, so that they can go around
with big, happy smiles on their faces, and tell all their DOS buddies
just what they're missing. 

If you buy a $99 upgrade, you stand a very high chance of being happy.
This is because your dealer and Apple will both provide you with
support -- answer your questions, help resolve problems, and even help
set the computer up and teach you how to use it.

By making you happy, giving you powerful new tools, and supporting
you, Apple knows that you will be a very satisfied customer and might
buy more Macs, or convince your friends to.

So far, they've been right. More people buy Macs again than any other
kind of personal computer.

Now, as far as usenet people, I imagine a vast majority will buy disks
from a user group (appx $25), or borrow them from friends. They may or
may not buy a manual (appx $30). Therefore, their total cost is
anywhere from $0 to $55. They also won't get Toll Free support from
Apple, but might get some from the user group. They might or might not
have troubles installing or using the system. But that's their choice
and Apple doesn't mind that they wanna be stingy and not get the
support.

Now tell me, does Windows 3.0 give you anywhere NEAR as much support
for the money? Do they let you copy it for free?

And, do they provide the features you need with an interface that's
fun to use?

If you think so, save yourself some money and buy a cheap PC clone.
Apple won't mind.

They'll make the next model even better, for an even better price.

That's the American Capitalist Pig EcoFascist way, and I'm proud of it.

bill coderre
very much in agreement with Apple's Evil Plan