From: ALGER@AppleLink.Apple.COM (Alger, Jeff,VCA)
Newsgroups: comp.sys.mac.oop.macapp3
Subject: Re2: Takeover
Date: 28 Dec 92 22:11:00 GMT
Organization: AppleLink Gateway

MacAppers,
 
I don't have any particular interest in taking over MacApp, but it would be
nice to see _someone_ do it.  So, in the interest of moving things off the
moral plane and on to business issues, let's put some real numbers on this
"takeover" business.
 
Market size: No matter how you slice it there are only 2000 to 5000 MacApp
programmers around.  Let's use 3000 for a working number.
 
Fixed costs (read: labor): An organization capable of supporting MacApp
properly would have to include at a bare minimum two programmers (one only and
you are at the whim of sickness, vacation, and the attractions of greener
pastures elsewhere), one documentation person, one QA person (two would be
better) and at least one full-time manager (better two, one technical and one
business).  And this is bare bones; it assumes, among other things, that tech
support is provided by the programmers, QA, and documentation folks; that
secretarial & etc. are part of some existing business structure; and that
training is provided by third parties.  That's five to seven full-time people,
or an annual budget on the order of a million dollars +/-$200K, not including
direct production and distribution costs.
 
Revenues: As a working number, it would take revenues of about $1.5 million
annually to cover fixed and variable costs, risks, and make a profit.
 
Pricing: Let's assume that these costs have to be born by the MacApp user
community.  If 3000 subscribers pony up to the table, that's about $500
annually.  Not likely.  If 1000 subscribers sign up, that's about $1500
annually.  If 500 subscribers, $3000 each, and so on.  The model isn't strictly
linear, but that's not a bad approximation given that most of the costs are
fixed.
 
So, here's my question.  Just how much is MacApp support worth?  Would you pay
$500?  $1500?  $3000?  $10,000?  What would you expect in return, just
maintaining the status quo or ongoing evolution to keep pace with the Toolbox
and OS?  Immediate answers to problems or 24 hour email support?  Consulting
and training as part of the bundle?  How long would you expect MacApp to remain
viable (i.e., how long would the business last)?  No one of sound mind would
start up a venture of this size unless it were going to be a multi-year,
ongoing business with growth potential, yet Apple itself is publicly committed
to making MacApp obsolete.  Would you invest in such a venture?
 
My suspicion is that a survey that posed these questions would come up with a
viable - that is, profitable - business model, though that is just a hunch.
But this begs the ultimate question: if MacApp can be made profitable, why
shouldn't Apple just overhaul its pricing and do this themselves?!
 
Finally, seconding Robert Lenoil's comments, I can't see how this is within the
scope of what MADA can do.  This is several times the entire annual budget of
MADA.  MADA can play a role in keeping marketing and distributions costs down,
but even that would have to be done in an arms-length way, in particular no
deal could be cut that isn't also available to other vendors.
 
Regards,
Jeff Alger
SBM International