🚀 go-pugleaf

In article <70@bridge2.3Com.com> ngg@bridge2.3Com.com (Norman Goodger) writes:
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Not that I want to pick on Norm in particular, but I had to reference somebody:
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>The Boo-hiss should perhaps come on the products that seem to have no real
>reason to be increased. But on CPU's Apple is justified, did they go to high?
>Perhaps on some systems, like the Mac II, but also from what I hear and read
>Apple cannot meet the demand of the Mac II sales, so does this justify raising
>prices?  Perhaps it does, it will allow a cooling off period so that supply
>can meet demand until new CPU's are released probably sometime next year 
>hopefully after dram prices have normalized. So that they will be priced
>competatively. And then price reductions on the Mac II will be pretty good
>one might hope.

While I can't disagree with the facts, I think Apple's thinking is strictly
short sighted.  Apple is in the position of having made two mistakes:  
(1) Going with an outside supplier for their memory  (2) Having
underestimated the market demand for their product.  I won't say they
should have avoided the first one (since Apple isn't alone in making
this mistake), but they seem to have missed the mark on the second one
pretty badly.

Now that we HAVE the situation, the question is who should pay for it?
Answer:  all of us.  However, that's not the view Apple has taken.  Yes,
the shortage of Mac II's does dictate a price increase and again yes
Apple is going to need some cash to get those two memory plants on-line,
but why dump the whole bill on the customer?  A $1,000 increase on Mac II
CPU's?  Come on, I can BUY a PC SYSTEM (albeit a cheap 8088 machine) for
that amount of money.  In view of the two strategic blunders, Apple should
bite the bullet and go into the red a little bit (or at least take a drastic
reduction in profit).  No company should expect a rosey profit picture in
a year they need to build three major production facilities to continue
their business.  However, if you're an Apple stockholder, I wouldn't
worry about that, yet.  Apple's raising prices pretty much across the line
indicates what they're trying to accomplish.

Can they get away with it?  Well yes and no.  Yes in that people are
perfectly right in that Apple is free to charge whatever they like and
we're free to take our business elsewhere.  I can't argue with that, but
that's short sighted thinking.  The "phrase of the day" is:  pay me now
or pay me later.  Apple (wittingly or not) has choosen to pay later and
pay they will.  It's no mystery why more Macs don't adorn the desks of
corporate America.  With their current move, they're insuring that more
of these desks will get IBM/Compaq/Tandy machines.  Worse, more Macs won't
be adorning the desks at home and people will then want an IBM machine
at work.  And look at Apple's position:  for the first time, they're making
signigicant inroads into the business market.  The reason is the unique
advantage the Mac Interface offers for graphics and desk top publishing.
But, the IBM machines are getting this ability.  Right now, it isn't as
good as the Mac system, but Apple is handing them the time to get it
right.

So, should Apple increase it's prices?  Well, yes.  Demand is up, the
whole industry is experiencing upward price pressure, etc.  However, now
isn't the time for *safe* thinking.  Apple has the opportunity they've
always wanted and they should strike while the iron is hot.  If Apple
wants to expand and succeed, they need to speculate with more plants and
products.  This means producing Macs 140 hours a week, savagely buying
all the memory they can lay their hands on, taking a plunge into the
bank for the capital to build those plants, and grimly holding the line
on prices, yielding increases only when necessary.  Increasing the price
to what the market can bear will produce the advertised result: demand
will go down.  However, this demand may go away and never return.  What
I'm advocating certainly isn't safe or appealing, but no one is going to
topple the MS-DOS world by wielding a pillow and Apple's chances will
probably never be this good again. 

That's my two cents,

Jim Kweeder
kweeder@sun.soe.clarkson.edu