Is this Apple Forbidden?



How do you measure success? Would selling six million units in a short span
of four years be a good measure? A product saving the company from the dumps or
forcing competition to contemplate about its products and driving it to bring
more life to the beige box mean success? Look at it in any way, the iMac has
been a great success story with few parallels in the PC business. Apart from
generating revenues to the relief of the beset Apple Inc, critics and users
lauded iMac’s bulbous design and exalted the initiative of bringing unknown
elements of design and color elements to the beige PC box. Given the backdrop,
Apple Inc had a tough task ahead in creating the new iMac. But again Apple has
lived up to its name of being the ‘innovator non-parallel.’

‘Will
consumers lap it UP’ IS THE QUESTION…
In
the cost-conscious Indian market, pricing the new iMac in the Rs
94,495-to-Rs 122,495 range is a bold step. Will the gamble pay off
for Apple and iMac?

The new iMac can be best described as a work of art but like all works of
art, it comes with a price which takes us back to the key question- Can it
change Apple’s fortunes in India? While the iMac did change Apple Inc’s
fortunes, the Indian operations cannot flaunt of a similar success story.
According to industry sources, Apple managed to sell less than 15,000 units in
2001.

Even though Apple India is confident about creating the case study material
with its offerings, cynics are skeptical of such claims.

Cynics claim that Apple’s biggest issue is price. Starting at Rs 58,000 for
the iMacs and ramping up to over Rs 1,20,000 for the iBreast (the base of new
iMacs), it does seem a long shot. Parminder Singh, marketing manager, Apple
India, says "With a starting price of Rs 57,000, iMac is priced
competitively enough for the Indian market." Compare that with the beige
boxes. Today assembled and branded PCs start upwards from Rs 20,000 and Rs
30,000 respectively. Of course this cost includes the hardware alone. Apple does
have an advantage here. If one starts adding the software prices, the user would
have to pay about Rs 45,000 and above for the desktop. While it sounds great
theoretically, realistically speaking and Apple will have to factor the same. It
is time for Apple to work with arch enemy Microsoft in the latter’s war
against piracy. No doubt it will help Microsoft and it will be for Apple’s
worthy cause.

The other issue Apple is precariously trying to tackle is expanding niches.
Globally, the company has a dominant market in the education, retail and
creative segments. However, the education market is virtually non-existent in
India and is dependent on grants and funds. Also, cash rich Intel is making its
mark in the market. The retail market is highly price sensitive with a high
level of piracy and in the creative segment, Apple has been a force to reckon
with for a long time. So, if it has to increase numbers, it is imperative to
find acceptance with the corporate segment. Singh comments, "Corporates
would find iMac a great buy at Rs 57,000 as there are various advantages that it
offers vis-à-vis a conventional PC." Singh explains that iMac, with its
better space saving design, reliable hardware and a UNIX based operating system
Mac OS X that offers greater stability than other operating systems, stands a
better bet.

The iMac does have an edge against the PC on a MS domain. Since iMac is fully
loaded, rather too loaded from the corporate perspective, the enterprise does
not have to pay for the MS office license fees costing approximately about Rs
12,000-15,000 per user. So economically it does make sense to have a fully
loaded iMac. But will the consumers bite? Wait and watch.

While the retail market is driving Apple’s fortune in the US, it will be a
different ball game in India. The ultra-price sensitive Indian consumers may not
readily bite the Apple. Apple has to fight the mindset issue of the iMac being
much more than about creating a digital lifestyle. Apple has to create an iMac
that can fit into the corporate world as a robust corporate workhorse. Until
issues like service, after sales service, compatibility and software
availability are addressed, Apple India will have the unique distinction of
owning great products but not many customers–digital or otherwise.

Yograj Verma in New Delhi

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