• The Apple/Intel Report: Should Apple Cut Prices?

    June 25th, 2005

    The other day, I wrote to an online columnist who, in a supreme fit of ignorance, suggested that you should hold off purchasing new Macs until the new models with Intel chips appear. Since I once worked for the same company he did, I thought he’d have the courtesy to respond, but I wasn’t surprised when he didn’t. No matter. The real issue is whether or not Mac users will listen.

    It’s probably far too early to see if there’s going to be any impact on sales, and I have little doubt Apple is watching the situation carefully. At the same time, maybe it’s a good time for a smart, preemptive strike, one that would ensure decent sales of new Macs and make you think twice about waiting.

    In other words, cut the prices.

    Now it’s obvious that price cuts reduce profits and shareholders might object strenuously. On the other hand, Apple has a huge war chest of cash on hand, and it can withstand a few quarters of reduced profits without hurting the company. The problem, as you probably realize, is one of psychology, and it explains Apple’s reluctance to announce new products prematurely. If you know that something better is close at hand, you might put off purchasing the current model, or wait until the new one appears to take advantage of the inevitable closeout sales on older stock.

    If logic prevailed, and it seldom does, it would be clear to one and all that it doesn’t really matter what kind of chip it puts into new Macs a year or two down the pike. You know there will always be something faster on the horizon, and if you kept waiting for something better, you’d never buy a new computer. There will never be a point where Apple or any other PC maker will simply decree that there will never be a newer model unless the company is about to go out of business.

    Carrying logic to the next step, the Mac you buy with Intel Inside a year or two from now will, aside from the normal exterior design updates, still be a Mac. It will still run Mac OS X. If anything, the transition won’t exactly be seamless. There’s no present indication that Apple plans to offer some sort of Classic environment for applications that predate Mac OS X. The Rosetta emulation technology that lets you run PowerPC software evidently won’t deliver that support. So if you depend on those older applications, and there is no Mac OS X equivalent, you may, in fact, be better off grabbing a Mac with PowerPC before they go out of style.

    What’s more, even though it appears that developers are not having a terribly difficult time recompiling their applications to run as Universal Binaries, to run on both PowerPC and Intel, there are going to be bumps along the way. If a developer didn’t use Apple’s Xcode to build those programs, they will have to be brought into the new programming environment first. Maybe it’ll take a few weeks, maybe it’ll take a few months, and maybe some companies will decide not to make the investment until real Macs with Intel processors actually appear.

    It’s also inevitable that the first Macs with the new chips might have bugs of one sort or another that won’t be massaged out of the system for a while. Sure, Apple has clearly taken great care to make the transition as seamless as possible, but let’s not forget that the chips Apple plans to use have not been released yet. Version 1.0 of anything tends to have unexpected issues. In the auto industry, it’s often a good idea to wait for the second year of a new model’s lifecycle to escape possible early production and reliability issues.

    If anything, it may be a good idea to be cautious about buying the first Mactels, to use the new vernacular for such devices. Wait for others to become the early adopters, and watch the reactions on your favorite Mac troubleshooting sites to be sure there are no show-stopping problems before you buy one. This is particularly true if your Mac is a business tool. In fact, I rather suspect Apple will have to keep some PowerPC models in production longer than they want just to satisfy the needs of companies who are reluctant to take a gamble on a new, unproven architecture.

    At the same time, I’m sure it won’t stop some of you from setting aside your purchase plans. Sure, it’s probably too early to gauge the impact, but if Apple begins a slow and steady program of price reductions, it will help fuel sales of existing models. What’s more, as new models with PowerPC chips appear, Apple ought to make an especially big deal about the new features, whatever they may be, to help divert attention, so that the arrival of the Mactels will not seem so important.

    And, except for the psychological impact, the switch to Intel shouldn’t be that big a deal. Unfortunately it is, and the situation isn’t being helped when some technology commentators continue to stumble over facts and logic.

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