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  • The Mac Hardware Report: Apple and the Entry-Level PC

    September 1st, 2006

    As I expected, as soon as I disposed of the myth that Macs were more expensive than comparably-quipped PCs, a few readers tried to dispute my arguments. In the end, however, their claims were limited to saying that the PC was generally cheaper, so long as some of the features that were standard issue on the Macs were eliminated.

    Of course, that changes the nature of beast, so to speak. Besides, I realize that you can buy a PC for less than $300, whereas the cheapest Mac mini is $599. But Apple isn’t playing in that sandbox. It’s a hotly competitive arena, and the companies who do produce the cheapest models aren’t making a whole lot of money on them.

    Besides, they might lack the features you take for granted on today’s Macs, such as wireless networking, digital audio input and output, gigabit Ethernet. You want to add those features, you pay extra, and even if you have a free peripheral slot or two, they’ll fill up real fast with just the essentials. What do you do when you run out of expansion room, and there’s no USB-based alternative?

    For a home or small business PC, the latter perhaps serving duty in a home office, having a great bundle included in the purchase price is a great idea. But what about the largest business where a remote control, Webcam, Wi-Fi and all the rest are unnecessary? Can they order a stripped version without these things from Apple, if not individually, in quantity?

    The answer is, of course, no. Although there are lots of ways to configure your new Mac, and the choices are much more extensive on the Mac Pro, there are only so many features you can remove. The cheapest Mac mini is immutable in the sense of dropping a few things to get the price down.

    So what happens if a company’s purchasing manager calls up an Apple rep and says they’d like to order a couple of thousand computers, but they don’t need the fluff? Would Apple say, yes, we’ll get on it right away, or just attempt to explain why these add-ons are essential? Or just say take it or leave it?

    Alas, I suspect larger businesses, assuming you can even persuade them to go Mac, will just choose to leave it unless they can get some killer prices. Worse, I don’t think Apple is in to heavy discounting.

    It raises the larger question, however, of whether Apple means to enter the business arena to a greater extent than they’ve done before. It hasn’t worked so far, and Apple, over the years, made enough marketing mistakes to fill a book or two. For all practical purposes, Windows countries that arena, and that isn’t going to change in the foreseeable future no matter how many “Get a Mac” ads Apple produces.

    Whether Apple gains any traction at all depends on their business strategy, and they’re here to make a profit, not to cater to a marketplace that won’t yield a solid return on their investment. So if they decide they can’t make enough money on watered-down PCs, they simply won’t do it, even if they could make a killing in terms of volume.

    What’s more, it’s not as if other PC makers are raking in profits at the low-end of the market. Even Dell is suffering somewhat these days, and they are the biggest box maker on the planet. Certainly competing on price alone isn’t always profitable. Apple only produced the Mac mini when they found a way to build them and get the proper rate of return.

    On the other hand, I agree with some of you that a lot of people do not want or need some of the frills that are built into today’s Macs. But bombarding Apple with letters asking for fewer options isn’t going to deliver pay dirt. The only thing that will convince them to shed features on some models is a few solid promises of large orders. That’s the language everyone understands.

    Right now, however, I don’t see it happening. Of course Apple has surprised me before, but they clearly have other priorities when it comes to this question. On the other hand, they once denied they’d ever produce a $500 Mac during a financial analysts’ meeting, and that was only three months before the original Mac mini debuted.



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