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Say Apple makes iMovie for Windows, makes $50 gross profit on each copy, and makes $200 gross profit on each iMac. (Totally random made up numbers.) The simple calculation is that if Apple sells more than 4 times as many copies of iMovie for Windows as they lose in hardware purchases, they come out ahead.
BUT, as Apple loses those hardware sales they lose manufacturing economies of scale, and positive network effects.

Loses what sales exactly? That seems to assume that Windows users are buying Macs just because of iMovie. I don't think that's happening. It's not enough to make people convert platform unless they were already going to buy a Mac anyway.

I think the vast majority of Windows users just think "Oh, iMovie's not available for PC, I'm not going to bother with video, I'm going to download some more MP3s, or use Sony VideoShaker or whatever."

So I think it's a great way of getting revenue from those who would not buy a Mac. If they are impressed with Apple software, then they might consider buying one. People have to try an Application before they buy. Who's going to spend $2,000 on a Macintosh for one piece of software that they haven't even tried? As much as we'd like it to be true, I don't think iMovie is having much influence on sales, but especially not on WinTel conversions. It's too cheap to simply put a Firewire card in your PC. Has anyone noticed how many inexpensive video digitizing cards there are for PC?

If anything, iMovie for Mac only might inspire people to be interested in DV. They see a Geoff Goldblum ad on TV. Then they go to the store and find out they can't run iMovie on their PC. "Bloody @@##$$*& Apple!" they scream and go buy some other software. Effectively Apple has made a sale for someone else. Contrast this with them being able to buy a Windows version, and discover that Apple software is good, and not the "toy" they thought it was before. Apple gets to sell the title. Mac users get a bonus because they don't have to pay for iMovie.
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