I find it hard to believe that Apple's financial survival depends on
charging for iTools. If it continues to provide the service but charges and
then most of the punters spit the dummy and don't sign up for the service -
it still incurs the costs of providing the service, it doesn't bring in much
revenue from it and it suffers the intangible (but real in terms of future
revenue) cost of loss of customer loyalty. It doesn't sound like good
business to me!
Just my 2c worth.
Neil
John's earlier e-mail contained the details.
Apple's financial survival depends on public perception. If it has a
bad quarter (or indeed, even when it has a good quarter!) it's
perceived as being 'doomed', share prices plummet, reporters start
using words like 'death spiral' etc. Pretty soon people actually
begin to believe the garbage that's fed to them by uninformed
reporters and 'market analysts.
So, to make this quarter profitable, Apple needs more income.
Hardware sales are down more than expected. So they ship a Windows
version of the iPod, and they start charging for iTools.
At 8:12 +0800 1/8/2002, John Currie wrote:
>iTools is estimated to cost Apple between $10 and $15 million
If all the current subscribers pay $99, the return would be of the order of
$220 million
>If all the current subscribers paid $20, the return would be $40 million
Then Geoff Duncan replied:
Yep: that's about right. And if 10 to 15 percent of iTools users
convert at $50 (as our poll may or may not indicate), the first year
would bring Apple from $12 to $16 million. Conversion from "free" to
"paid" online services has typically been around ten percent; if
Apple can convert fifteen percent, they'll be ahead of the industry.
In theory.
The changeover also allows the service administrators to do a
shakeout and drop all the accounts that are abusing the system (warez
dudez etc.)
To quote MWJ <http://www.macjournals.com/>:
Most iTools users, faced with the glory that is
.Mac, seem stunned that there is no less expensive
option to maintain iTools-like status. If you just
want your mac.com E-mail address or a couple of
home pages, why do you have to pay for Backup,
Virex, iDisk space you may not need, or the other
.Mac amenities? This goes back to the prologue of
our Macworld Expo story: for the rest of this year, as
little as US$3 million in profit may make the difference
between Apple's perceived success or failure. In
an interview with CNet News, Phil Schiller, Apple's
head of marketing, said that free-to-fee conversions
typically see about a 10% retention rate, but that he
"certainly hope[s] we do better than the industry average."
Do the math. The major target for .Mac right
now is existing iTools subscribers. Apple says there
are 2.2 million of them. If 10% of those convert at
US$50 per year, that's US$11 million in extra revenue
this quarter. The promotion to provide your first year
of .Mac for half-price expires on 2002.09.30, within
a day or two of the end of Apple's 2002 fiscal year.
Presuming that 90% or more of that revenue is profit,
given the vastly reduced bandwidth and management
costs Apple will incur from a system that's 10%
of its existing size, that would have been enough for
the company to meet its estimates in the June quarter
without amortizing R&D expenses over three years.
Have fun,
Shay
--
=========================== Shay Telfer ================================
Perth, Western Australia Technomancer It must be bunnies!
Opinions for hire [POQ]
[EMAIL PROTECTED] fnord
