How Apple can use a Billion

Bob Cringely has an interesting idea: “With almost $6 billion in cash, Steve Jobs hinted to a group of employees not long ago that he might want to buy something big, though I am at a loss right now for what that might be. Or Apple might decide to throw some of that cash into the box along with new computers by deliberately losing some money on each unit in order to buy market share…We might see that as early as next week with the rumored introduction of an el-cheapo Mac without a display. The price for that box is supposed to be $499, which would give customers a box with processor, disk, memory, and OS into which you plug your current display, keyboard, and mouse. Given that this sounds a lot like AMD’s new Personal Internet Communicator, which will sell for $185, there is probably plenty of profit left for Apple in a $499 price. But what if they priced it at $399 or even $349? Now make it $249, where I calculate they’d be losing $100 per unit. At $100 per unit, how many little Macs could they sell if Jobs is willing to spend $1 billion? TEN MILLION and Apple suddenly becomes the world’s number one PC company. Think of it as a non-mobile iPod with computing capability. Think of the music sales it could spawn. Think of the iPod sales it would hurt (zero, because of the lack of mobility). Think of the more expensive Mac sales it would hurt (zero, because a Mac loyalist would only be interested in using this box as an EXTRA computer they would otherwise not have bought). Think of the extra application sales it would generate and especially the OS upgrade sales, which alone could pay back that $100. Think of the impact it would have on Windows sales (minus 10 million units). And if it doesn’t work, Steve will still have $5 billion in cash with no measurable negative impact on the company. I think he’ll do it.”