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Technology Stocks : Apple Inc.

AAPL 273.67

+0.5%

Dec 19 9:30 AM EST

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To: PoorRich who wrote (21601)	1/3/1999 6:03:00 PM
From: Jonathan Bird	Read Replies (1) of 213177

There has been a lot of talk in the Windows world (see AMD thread) about an "iMac buster," a very inexpensive imitation made in a depressed Asian country (e.g., Korea). A preemptive strike to bust the iMac buster would be an inexpensive iMac laptop for Web use around the home. One of the cardinal rules of marketing is "Never compete on price unless you have a cost advantage." Although it is not as bad as it once was, Apple simply does not have a cost advantage. For the foreseeable future I am certain we will not see any computers from Apple that are priced less then their PC counterpart. "And that's, OK." There are much better competitive advantages to have besides price, because price is the easiest advantage to copy. All your competitors need do is change a few digits and BAM! your advantage is gone and you are both worse off. And they can respond immediately. On the other hand take the iMac. Running the Mac OS is a competitive advantage in its market, still not duplicated after 15 years. The iMac style is a great competitive advantage. Its been many months of happy margins and not yet imitated. The shape and color scheme are certainly trademarked so that it never can be truly copied as price can. Distribution channels are often the hardest competitive advantage to copy. Product image is another tuffy. These are all things that Jobs has been intensively focused on since he took over. Another cardinal rule, "in the absence of information consumers use price as a measure of quality." Whether it's true or not, the iMac's perceived quality is greater to inexperienced buyers because it is not the cheapest. This is certainly why the 500-1000 dollar PC has not caught on like many thought it would. The 500 dollar PC will only become the sweet spot when there are 300 dollar PCs for sale, IMHO. Jon Bird

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