Why Apple’s current Mac Mini strategy is failing

August 8, 2007

Mac MiniThe Mac Mini seemed like it had a bright future ahead of itself when Steve Jobs first introduced it at MacWorld 2005. It was introduced as the perfect switcher’s machine, since it was “bare bones”, cheap, and allowed for connection to third party displays, keyboards, and mice. When Steve introduced the new machine, it was available for only $499 and it received a lot of positive press. But the popularity of the low-budget machine has been declining ever since it’s launch. Some analysts and bloggers even predicted Apple was to drop the Mac Mini models from its product line yesterday at the August 7 special event. Steve didn’t make a mention of it in his Keynote, but it survived and even quiet speed-bump to all of its models. But in my opinion, I don’t see how much longer the Mac Mini can continue to survive with Apple’s current strategy.

BYOKMD doesn’t work for low-budget consumers

The Mac Mini hasn’t been a great success in large part because of Apple’s flawed Mac Mini strategy. Yesterday, Steve discussed Apple’s philosophy on consumer products, he said,”It’s an All-in-One World”. But the Mac Mini is the farthest thing from an all-in-one machine. Most low-budgeted consumers don’t already have a display and/or peripherals. So, when checking out the Mac Mini, they don’t understand the Mac Mini’s lack of a display, mouse, or keyboard; and they ultimately look to alternatives because of this. The Mac Mini doesn’t offer everything out of the box, and that turns off many low-budget consumers.

Additionally, customers realize that the price of a Mac Mini with a display, mouse, and keyboard would be around the same price as a MacBook or an iMac.

AppleTV is replacing the Mac Mini as the affordable media center solution

Initially, many Mac Mini users were using their Mac Mini as a home media center. And now, Apple’s cutting into it’s own marketshare, since the AppleTV has replaced the Mac Mini as the preferred Apple media center for half the price. This effect will only snowball as the AppleTV gains more functionality and popularity.

$599 > $499

When the Mac Mini was unveiled, Apple was getting a lot of positive feedback for finally offering a budget-driven Macintosh for only $499. But Apple quietly increased that price $100 for each model on the February 28th special event in 2006 and has yet to lower the models back to their original prices, while other PC manufacturers have continued to lower their prices. That extra $100 makes a big difference for a lot of people, especially when the consumer has to buy a separate mouse, keyboard, and display in order to use the computer.

A proven failure

Right now, the Mac Mini seems to be going through the “Cube effect”. Two Apple-related products, the NeXT Cube and the PowerMac G4 Cube, were both discontinued due to their high price-points and lack of necessary peripherals. Those two products also didn’t survive because consumers prefer functionality over design. And unfortunately, it looks as if the Mac Mini is already on the way to suffering the same fate if Apple doesn’t do anything about it.

How Apple can save the Mac Mini

The Mac Mini’s price-point aren’t targeted toward a big consumer audience. It’s awkwardly priced too high for low-end consumers, and it doesn’t offer some of the features high-end consumers want that can’t afford a Mac Pro and already have a display. Apple could either go two directions with the Mac Mini, lower its value and cater to the really low-end consumer; or bump up its graphics and processing capabilities and cater to a higher-level consumer audience that already have a display. Either way, the Mac Mini would finally be saved from its unfortunate fate and finally have a respectable place in Apple’s product line.

9 Responses

  1. Mongul says:

    In order to maintain decent margins, the Mac mini is sold without a display, a keyboard and a mouse; its components are fairly low-end and are rarely updated. The mini is not much different than the eMac, which was updated about once a year. Apple could include a display, etc, but the Mac mini would cost $999 like the 17-inch iMac. There is not much point.

    If low-budgeted consumers can’t afford a Mac mini, Apple won’t lower its price. The goal is not to cater to the really low-end consumer nor to wage a price war with PC manufacturers. To do so Apple would have to cut their margins, and the gross margin on the Mac mini is already below Apple’s corporate average. For the same reasons, Apple won’t bump up its graphics and processing capabilities or the price would have to increase accordingly.

    As it is, Mac sales are already growing way faster than the market. I don’t think that the mini will survive much longer, Apple will have to rethink its low-end desktop offerings. In a few months a stripped down 20-inch iMac could replace the 17-inch model, or Apple could introduce an aluminium 17-inch iMac, whatever. But I don’t think that Apple can compete in the below $800 price range. They don’t have to save the Mac mini, most of the growth is in notebooks anyway, and the MacBook is doing really well in the $1,000-$1,500 segment.

    August 9th, 2007 at 12:32 am

  2. filipp says:

    Does anyone have any numbers to support the claim that the minis are not selling well? Ofcourse Apple hasn’t made a big fuss about the mini – it’s such a low margin product for them, but that doesn’t mean that would be selling poorly.

    The mini is in many cases the perfect switching machine for the PC user who walks into a Mac store to buy an iPod. It’s also perfect for office users. On the AV side, if you look around you’ll find many reviews and articles comparing Apple TV and Mac minis either recommending the mini for it’s flexibility and relatively low price.

    September 4th, 2007 at 10:36 am

  3. Andrew says:

    I agree that there is no Mac that fits below the Mac Pro, and is not an all in one like the iMac. A headless Mac with dedicated video would fit in for the switchers who want a Mac, but still want games etc.

    September 22nd, 2007 at 11:29 pm

  4. Nate says:

    I think people are missing the point of the mac mini. It was designed to be a low cost mac, thats it. Someone in apple screwed up by increasing the price, which in effect puts them in a whole new category. LIke many people realized… a new mac mini with a decent monitor, keyboard, and mouse is about the same price as an iMac, but with less features and more mess. When it first came out though it really helped make the decision for a questionable switcher. My fiance used to play with my eMac (that was a while ago). When she wanted to buy her own computer, she origionally thought macs were way to expensive. The mac mini @ $499 was low enough for her to consider buying it. With a keyboard, mouse, and relatively cheap monitor we came in around 700 dollars; far cheaper than an iMac, and far better than a windows PC.

    If it weren’t for the small price, she’d be using a dell. Now she’s hooked, and will buy a new mac coming january… which is where apple should be happy. The mac mini helped for the sole sake of a cheap entry point.

    November 4th, 2007 at 7:37 pm

  5. Ian says:

    I agree the mini is my first mac ! So far it’s been a great experience! I could not see the need for a Quad or higher nor the price of the mac pro. I don’t like the imac’s as the mini is easy to hook up and transport to my 50′ TV. I would have liked to have seen a scaled down pro thats upgradable, video ram etc . The box could be much bigger than the mini and smaller than the Pro .

    November 24th, 2007 at 5:06 pm

  6. Daniel Koons says:

    I like the Mac Mini, I completely agree what is stated above. My two sense… I bought the 15″ Macbook Pro which was my first Apple last week, then I wanted a way to access my external hard drive remotely and with leopard I could do that I wanted to switch completely to Mac and bam 2 macs in one week, my new home computer is a mac mini.

    January 22nd, 2008 at 1:29 am

  7. macmini lover says:

    1) Mac mini is very expensive
    2) The low-end model does not have a superdrive

    January 29th, 2008 at 2:00 pm

  8. Jason says:

    As a person who has a display (24″ 1920×1200) wants a mac and is ready to switch, the mini as well as the rest of Mac line is quite frustrating insofar as what Apple offers. While I really like the iMac, the display leaves something to be desired for me and more importantly there is no matte option for it and that glossy glass drives me crazy. The Mac Pro is overkill for what I need and too expensive. The remaining 2 computers in their line that can drive a 1920×1200 display is the 17″ hi-res MacBook Pro and the Mac Mini. Someone else said that Apple’s margins on the mini are low. I highly doubt that. It probably costs Apple somewhere around $100 at the most to make a Mac mini with most of that cost coming from the CPU. What Apple really needs is something like a mini pro. Something like this: 1 PCIe slot for a graphics card, rest of the expandability can be as a back panel of connections, at least 1 user replaceable hard drive, 1 superdrive, and up to 8 GB of RAM expansion, all in a micro/mini tower style enclosure . If they had that for around $1600, I’d buy it in a heartbeat.

    May 23rd, 2008 at 5:40 am

  9. Ubuntu Rules!!! says:

    This is what the mac mini should be like for it to be a good deal:
    2.0 core 2 duo (not much of an upgrade over the current one…)
    1 GB of RAM (as it is now) (make it upgradeable to 2-4GB)
    120 GB hard drive (7,200 rpm) (hard drives are cheap…)
    newest intel integrated graphics (cheap…)
    Superdrive DVD CD burner (cheap)
    4 USB ports (as it is)
    1 firewire 400, 1 firewire 800 (cheap)
    apple remote (as it is)
    apple keyboard and mouse (they rock!)
    wireless draft n (essential these days)

    with these specs…
    and a price of $499…
    i would buy this in a heartbeat and so would everyone else…
    apple doesn’t need such a large margin for this since if they sell a lot…
    they earn a lot…
    and most people would buy a macbook or imac as their second comp since they see how good a mac is…

    June 16th, 2008 at 12:54 pm

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