March 4, 1999

from the Friends-of-the-Revolution dept

Consumers Bust A Move

By Brian Day - March 4, 1999

The recent outbreak of cheap integrated computers (the iMac being the most visible) has truly been phenomenal.  There is much debate over what this means to the PC industry.  Many people believe that the recent "flavor announcement" from Apple is an unsustainable gimmick.  Perhaps the answer has already been played out... in the '70s and '80s stereo industry.  While the current time frame may be compressed (internet time), the markets have some interesting similarities.

Disclaimer: I am not a stereo guy so please no letters if some of this is blatantly wrong.

PC = Hi-Fi
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The PC is similar to the early days of hi-fi components.  It started with a bunch of enthusiasts who were willing to pay for separate pieces of an overall system that they assembled themselves.  One of my friend's dad in 6th grade had this massive system that had at least 4 components that I had no idea what they did (the only feature was an on/off switch and a joystick).   These stereo aficionados were concerned about everything... right down the the gage of wire used to the speakers (remember Monster Cable?).  There was a strong sense of pride in one's system.  The stereo components were complicated, with little or no styling.

Winners = Performance, Quality, Features (Techniques, Pioneer, Crown)

iMac = Boom Box
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The iMac is a whole different animal.  It is not meant for Hi-Fi lovers.  It's a boom box.  Everyone has a boom box (or two).  They're cheap, stylish, integrated, and easy to use.  They have decent sound and pretty good power.  The box cannot be upgraded, and for the most part people don't care how it works.  In the 80's the boom box grabbed three new segments: first time buyers, low cost second stereos, and portable systems.

Winners = Style, Price, Performance (Sony, Pioneer, Panasonic, Fisher)

What does it mean...
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I believe that the cheap integrated computers are a new segment which will not replace the existing high end segment.  I think the price will continue to drop to around $300-$500.  The winners will be those manufacturers that can make a beautiful, functional, cheap system and still make a profit.  Free PCs (sponsored by advertising or percent of sale) will gain some interest and then die.  If this business model works, why haven't radio stations given away free radios that only play their station?

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Friends of the Revolution
by Brian Day

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