"While Apple said its education channel experienced year-over-year growth in net sales of approximately 19%, it acknowledged the education market remains "challenging" due to multiple factors including funding pressures due to weak economic conditions, large budget deficits in many states, and increased competition from Windows-based PCs. "Although the Company has taken steps, and will continue to take steps, to address weakness in the U.S. education channel, it remains difficult to anticipate when and if this trend will reverse," the report said."

You know when? When Steve Jobs gets his head out his a$$ and makes a cheap headless Mac. Read, never. Marketshare will continue to slide. Get used to it.

Did anybody else get a little giddy upon reading bullet item 2?

Wait!

Almost half a billion in R&D and growing. Little old Apple with only 2% of market share in he top 100 of ALL companies in the US for R&D spending. That's awesome.

One thing for sure -Steve J ain't finished yet. And we are going to be the winners.

You are on a Mac. You are already a winner. My PC gives me endless problems.

Yes, I think it would be a good idea to come out with a minitower/"son-of-cube"-like headless box (perhaps reverting to the old "pizzabox" Performa style?); they could basically lop the monitor off of the eMac--leaving everything else in place (including the internal speakers!), and bring it in at perhaps $399.

HOWEVER,

If you take a look at Apple's Education Store pricing (for institutions, not individuals), you see that they're already listing a bare-bones eMac model (no optical drive at all--netupdate only!!--and no modem--ethernet/wi-fi only!!) for $599. Now, I'm going to assume that Apple is *not* taking a loss on *any* of their models--that isn't their style, and even if it is, they'd do that in a larger "backroom" deal, not on their official online store (even the educational one). I'm gonna figure perhaps a 5% profit margin on that model--which would mean the total actual cost to Apple would be perhaps $570.

Since the OEM cost of the two missing elements--the combo drive and the modem--can't be more than $30 between the two, I'm going to assume that the total actual cost of the "standard" $799 Combo Drive Model is right around $600 even.

If this is the case, they could chop another $100 off the price of the current eMac (while beefing it up a bit--say, 1.5 GHz G4). If there's any model which should be a loss-leader (or at least a break-even model), that's the one. If my cost estimate is correct, they could lop it down from the current $799 consumer/$749 educational to $699 consumer/$649 educational, and still make a decent 7-14% profit.

Of course, I'm pulling some of these numbers out of my behind, so nebbermind!!

If we combine items 2 and 7, the end result is my Tivo playing iTMS files. Cool.

Time was that Apple had education vendors that were not under the Apple corporate governance.Those folks were motivated to get Macs in schools and compete. Apple lost a lot when they moved education in-house since they don't have the number of sales bodies to serve the education market.

Second, Apple needs to be more competative in the education marketspace. All too many a administrator is buying technology (that they themself don't use) and foisting it on the teachers. Usually that's PC's because they're CHEAP,but not what teachers want. Of course they're listening to MSCE's and Novel CNE/CNA's who recommend what they know.

We NEVER hear from the schools who've gone PC from Mac and what they're now spending in daily administration and maintenance. NEVER. That would be far too telling, but I digress.

Apple needs, more than ever,to be more proactive.Schools can get Macs for nearly the same price as the cheap PC, and win in the bargin with lower admin costs and use Apple's financing offers which are a GREAT deal. But schools seem to avoid those options when pricing.

Want to see how some perceive education. Read this at Macsimum News about the situation in Florida where a schoo superintendent just decided to go Wintel at a cost of some 7 Million, because business uses PC's.

http://tinyurl.com/5yxy7

There's links to the actual article in the Florida papers.

Apple has to answer situations like this.They just can't let it drop.

I volunteer my spare time to care for the PCs at a local elementary school and can attest that PCs require much more intervention than the Macs at this school. Granted, the Mac population is dwindling quickly there but *this* Windows Guru has opted sell his XP Pro screamer-of-a-cutting-edge-PC so I could buy a 1.8Ghz iMac G5.

It’s been in my house for 2 months now and I’m amazed at how stable it is. At one point, I was missing a few things about Windows and mentioned to my family I was considering selling the iMac and going back to XP - I was surprised when everyone screamed “Don’t sell the iMac!� at me! It seems they appreciate having Dad (me) on the couch for a change instead of playing the Windows support equivalent of “whack-the-mole.�

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BlueDjinn wrote:

If this is the case, they could chop another $100 off the price of the current eMac (while beefing it up a bit--say, 1.5 GHz G4). If there's any model which should be a loss-leader (or at least a break-even model), that's the one. If my cost estimate is correct, they could lop it down from the current $799 consumer/$749 educational to $699 consumer/$649 educational, and still make a decent 7-14% profit.

BlueDjin,

Companies like Dell can go along very well with a 14% gross profit margin. Apple needs a GM in the 27%+ range in order to continue being Apple. They could go with 14% if they switched to the Intel platform and used WinXP instead of OSX. That would cut the R&D money well down, but it wouldn't be Apple.

The cheap range isn't really that good. Compaq (basically) gave up and now we are reading that IBM is going to sell off it's PC line. Very few companies survive at the lower end and I think even Dull will be in for some problems if the makers in China flood the market with PCs that are $100+ less than Dull.

The issue really needs to focus on what you get for your money. Apple has put a ton of money (read gross margin dollars) into developing OS X, iLife and a wide range of pro apps. No computer company in the consumer area really gives a stuff about spending money for consumers like Apple does and you benefit.

You also benefit from not getting the cheapest components stuffed in a super cheap box. You benefit from the gross margin dollars spent over the past 3+ years on the G5's and, from an emotional point of view, you benefit from the elegance in design that actually brings pleasure to just loking at your Mac or iPod.

Another rather important factor is that you benefit from Apple spending more per computer on support infrastructure. I've used others and Apple is a mole ahead of both Dull and IBM. Dull was outsourced to people who don't give a damn and the one guy at 1BM looked down his nose at the one man company guy with a problem. Would probably have been treated well in I worked for a major company.

14% GM is the basic low end PC business - no real R&D, no innovation, no elegance in design, no OS X, no Apple.

Maintaining marketshare in education is more of a mindshare than a profit issue. I would propose Apple sell eMac at cost or as a loss leader, if necessary, to maintain the marketshare. Perhaps, include an option not to buy the keyboard and the mouse.

Btw, I don't understand how a headless Mac will help as most schools have all-in-one. You would need to buy a monitor for each headless Mac.

If Apple could not have the huge profit margins on the macs, they would not be able to put so much R&D into the OS and still sell it for $129. Look at how much WinXP costs. It is astronomical by comparison if you have to buy it without buying it preinstalled on a computer.

Two things:

A) In the real world, a healthy manufacturing business has margins OF AT LEAST 20%.

B) Currently, in the personal computer world, we're seeing the eventual end result of manufacturers who try to go under that level (that is, there can be only one....).

*sigh*

Prediction: we will ALWAYS hear yammerheads talking about cutting the margin to "compete."

You're right, schools buy whatever is cheapest. Period. Doesn't matter how crappy the hardware is, how many parts need replacing, how expensive it is to get it fixed, let alone the fact the OS stinks and kids don't get much of anything interested done on it.
It was the cheapest.

The link above mentions one of the more frequent reasons, that Windows PCs are what people use in the real world. The decisions are made usually by one high-ranking administrator who works secretly with corporate IT guys. There have been several instances reported where the Apple rep was kept in the dark about the fact that the school was buying at all, usually until a teacher asked them to confirm a rumor about a switch to Windows.

No hardware that Apple could roll out can counter this. It's not about hardware. This is about the corporatization of education, the narrow-mindedness and selfishness of some IT people, and the egos of some administrators. When the people who actually used the computers bought them, Apple did fine.

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Anonymous wrote:
... The decisions are made usually by one high-ranking administrator who works secretly with corporate IT guys. There have been several instances reported where the Apple rep was kept in the dark about the fact that the school was buying at all, usually until a teacher asked them to confirm a rumor about a switch to Windows ...

Good observation. I miss this very important observation. Every time school district employs a full time IT guy, that IT guy always want to replace all Macs with PCs. Sometimes I wonder is it because the IT guy need to show/justify his appointment.

part of the problem is the IT guy has had most of his network training investment in his windows certification. these monkys think deleting 4000 push and spyware files a week is normal "it only takes me an hour a machine"

our windows geekat work (former ericson engineer who developed the mainline packet switchers)finally had to take the browser out of all but one machine last week.he seems to be quite happy charging 60 dollars an hour to clean up sluggish dells. I can't see how the users put up with a situation where simply turning on your box connected to a network causes so much trouble. all they need in the stupid system os is an ok button before an application installs itself.that would stop 90 percent of the pc bull. my kids school spends most of their computer class time on teaching them to type. no coding in this high school!

Apple might sell more computers if they came up with a cheap, headless Mac, but nobody else is making a lot of money selling at that end of the market. I just read an extensive interview with Michael Dell (I think it was Forbes, but I'm not sure) and he pointed out that the common belief that Dell makes their money selling computers at the low end was not true. Dell makes the lion's share of their sales and profits selling computers in the $1,500 and up range. In other words, the same price range as most Macs. The loss of market share in education is due to the movement (mentioned repeatedly above) to bring in corporate-style technology people who don't know how to use Macs and don't consider them real computers. They're not evil people, but they are misinformed. One district of 10,000 students here just moved their entire district from Macs to Windows over the summer. The new CIO did that because he wanted to be able to create a system where the teachers' stations could be centrally managed and supported, so they would work every day. He just didn't know you could do that with Macs. Unfortunately, individuals like him have regularly tossed away years and years of teacher training and experience because they don't show up on the budget at the end of the year.

Well, hopefully such misinformation is reduced now that iPod has greatly increased Apple profile.