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  • Mac and PC Price Comparisons Revisited: Eight Cylinder Versus Four Cylinder

    August 30th, 2007

    You know it makes an awful lot of sense. When you are price shopping for a new car, you’ll check off the options list and see that both have similarly powerful six-cylinder engines, air conditioning, perhaps a navigation system, satellite radio and so on and so forth.

    At the end of the process, you tally up the sticker price, or whatever the dealer gives you as his “final offer,” and see where you stand. I’m assuming here that we’re talking about two similar makes, such as a Honda Accord and a Toyota Camry, and you’re making the final decision on price alone.

    But what if one dealer said he could save you a few hundred by giving you the four-cylinder version, that changes the basis for comparison, and it’s up to you to weigh slightly better fuel economy against additional power.

    You cannot, however, say the two vehicles are comparably equipped.

    Yet when I made the standard argument about Mac versus PC pricing, using comparable features as the means for calculating the cost, that’s exactly the stunt some of you readers tried to pull on me. You began to argue that the Dell I used for a price match against a Mac mini could function almost as well with a cheaper AMD processor, and did I really need gigabit Ethernet, a high-end version of Windows, digital life apps, a remote control and all the rest?

    Well, maybe you don’t. That’s a decision you have to make, but Apple doesn’t play that game. They provide a small number of models, with fairly limited configuration options, except, perhaps, for the Mac Pro. By unifying the manufacturing structure in this fashion, they can buy higher quantities of each part, and earn more money. You get a fair price for the Apple product you buy, and they make a fair profit that keeps their employees and stockholders happy.

    Nothing wrong with that, right?

    Yes, but every single time I criticize the bogus claim that the Mac costs more than a comparably-equipped PC, I am attacked because Apple doesn’t cripple its products.

    Understand, however, I am not saying Apple shouldn’t let you downgrade your Mac if that’s what you want. However, in a consumer environment, that puts you on an unequal footing. Apple’s own applications assume a minimum configuration, and if people are buying Macs with all different network speeds, loads of additional processor configurations, RAM and all the rest, they end up with the situation that exists today with Microsoft and Windows, and that’s a greater danger of incompatibilities of one sort or another.

    So it makes sense, from Apple’s point of view, to have locked down systems with a limited number of configuration choices.

    On the other hand, it would make perfect sense to provide a “dumbed down” version for business users, who may not require AirPort, Bluetooth, remote controls, or even the iLife applications. That could reduce the price by, say, $100 or so, which may not mean much to you and me, but certainly can account for a lot to a company that’s ordering 10,000 units. You see, that’s where the PC box makers have their biggest sales advantage over Apple. They have no problem configuring commodity hardware in this fashion. That’s probably where the majority of their profits come from. They certainly don’t make much on the $399 PC bundle you buy at Wal-Mart.

    Yes, it makes perfect sense, but not to Apple, which has no enterprise-based plan of that sort. If a business wants Macs, they have to choose from among the regular models. You could argue until you’re blue in the face for a different marketing scheme, but it probably won’t come from Apple. I have argued, for example, for a mid-range minitower, with iMac power and some limited expansion options, such as room for a second hard drive, replaceable graphics card, and an extra slot for other sorts of add-ons, such as a second network port or a hardware RAID installation.

    I think that there has long been room in Apple’s product mix for such a model, just as some of you suggest that Apple needs to allow you to shed unwanted features to reduce the price. But I also try to be the realistic Virgo, which means I do not really expect anything of this sort to happen.

    Consider that Apple’s stock is soaring once again, with sales continuing to rise, and all eyes are now on the expected revision to the iPod that’s due next week.

    In that climate, we can talk all we want, but let’s not forget that opinions are a dime a dozen. Or is that now fifty cents because of inflation?



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    14 Responses to “Mac and PC Price Comparisons Revisited: Eight Cylinder Versus Four Cylinder”

    1. Dana Sutton says:

      Everything you say is dead right, Gene. There’s something else–Apple may be a bit gun-shy about putting out too many models in too many configurations because that was one of the big faults of Apple in the dark days before Steve came back. They had so many models (and sometimes essentially the same models offered to different markets under different names) that their own sales force couldn’t keep them straight. They had so many different assembly lines tied up making so many models that if any particular one started selling very well they couldn’t put out enough to satisfy customer demand. The simple truth may be that, unlike, say, Dell, Apple has never figured out how to make the multi-configuration Macs you’d like to see, without getting tangled up in its own feet. So Steve ruthlessly applied the KISS principle, and this was one of the big reforms that helped him turn the company around.

    2. steve says:

      I would imagine that Apple would spend about as much maintaining different assembly lines and warehousing different configurations to have models with and without Bluetooth, Ethernet, Airport, and such as it costs to include them. So I don’t see Apple or the customers benefiting from those choices financially.

    3. Everything you say is dead right, Gene. There’s something else–Apple may be a bit gun-shy about putting out too many models in too many configurations because that was one of the big faults of Apple in the dark days before Steve came back. They had so many models (and sometimes essentially the same models offered to different markets under different names) that their own sales force couldn’t keep them straight. They had so many different assembly lines tied up making so many models that if any particular one started selling very well they couldn’t put out enough to satisfy customer demand. The simple truth may be that, unlike, say, Dell, Apple has never figured out how to make the multi-configuration Macs you’d like to see, without getting tangled up in its own feet. So Steve ruthlessly applied the KISS principle, and this was one of the big reforms that helped him turn the company around.

      Then again, there’s something to be said about having too many different versions of a product with the very same name, such as the Power Mac G4. And I challenge almost anyone to figure out which is which without cheating.

      That’s the wrong way for simplification. Maybe they could use the car maker’s method. The 2008 Mac Pro, the 2008-1/2 Mac Pro, etc.

      Oh well, I’ll talk about this in more detail some other time.

      Peace,
      Gene

    4. Andrew says:

      Gene,

      Clearly we still disagree on this one (with a fellow Virgo no less, imagine that). Looking to your 4 or 6 cylinder example, the differences are dramatic on the two models you mentioned. It isn’t always so, such as with the AMD and Intel processors.

      I bought a new pickup truck some months ago and had the choice between a V6 and a pair of V8s. The price differential was about the same at each step, from the 6 to the small 8 and from the small 8 to the large one. What was not similar, however, was the performance difference. The V6 was only about 20 horsepower shy of the small V8, and also very close in torque. Performance on the road is similar, with the six actually a bit better off the line (more low-end torque) and the 8 better for passing (more high-RPM power). Fuel economy is within 1 MPG. In all, no significant trade-offs in either direction. Move to the larger V8 and the difference, like in your Honda Accord example, is dramatic. I bought the V6 truck.

      Some people do buy on price, and others on features, but NOBODY adds features they don’t need to the price when they are shopping. Put another way, Compare that Honda Accord to a different car, say a Chevy Impala, a car available ONLY with a V6. If I didn’t have any want or need for extra power, I certainly wouldn’t add the expense of Honda’s V6 when shopping the Accord against the Chevy, I would compare the model that I actually was thinking about buying.

    5. Then again, some auto makers do not sell stripped models. They provide a basic level of standard equipment, and it’s up to you to decide if that’s the way you want it or not. You can’t, for example, order one without a specific option or one that’s of lesser quality. Sort of reminds you of Apple, right?

      Peace,
      Gene

    6. -hh says:

      Gene,

      Clearly we still disagree on this one (with a fellow Virgo no less, imagine that). Looking to your 4 or 6 cylinder example, the differences are dramatic on the two models you mentioned. It isn’t always so, such as with the AMD and Intel processors.

      I bought a new pickup truck some months ago and had the choice between a V6 and a pair of V8s. The price differential was about the same at each step, from the 6 to the small 8 and from the small 8 to the large one. What was not similar, however, was the performance difference. The V6 was only about 20 horsepower shy of the small V8, and also very close in torque. Performance on the road is similar, with the six actually a bit better off the line (more low-end torque) and the 8 better for passing (more high-RPM power). Fuel economy is within 1 MPG. In all, no significant trade-offs in either direction. Move to the larger V8 and the difference, like in your Honda Accord example, is dramatic. I bought the V6 truck.

      Some people do buy on price, and others on features, but NOBODY adds features they don’t need to the price when they are shopping. Put another way, Compare that Honda Accord to a different car, say a Chevy Impala, a car available ONLY with a V6. If I didn’t have any want or need for extra power, I certainly wouldn’t add the expense of Honda’s V6 when shopping the Accord against the Chevy, I would compare the model that I actually was thinking about buying.

      .
      What attracted me to Andrew’s comment was his statement, “NOBODY adds features they don’t need to the price when they are shopping.”
      .
      Apparently, Andrew has had the amazingly good fortunte to always find the exact vehicle options permutation (including color) right on the Dealership’s Lot. 🙂
      .

      Unlike Andrew, a lot of folks have bought from the Lot, which requires making a different decision: to buy not quite exactly what they want but have it now (and maybe with a cash discount) – – versus – – special order the car they want but have to wait for it. That’s an apples-oranges tradeoff decision.
      .
      The bottom line, however, is that we all frequently try to make multi-dimensional decisions, which can be quickly overwhelming. This is where the approach of “same exact engine” for A vs. B comes in, for it simplifies the complex to something less complex. It doesn’t matter if we later choose to ‘downgrade’ for our final selection, because by making the comparison, we gain insight into the different trade-off dimensions and thus, are able to make a *more informed* final decision.
      .
      This is an “all other factors being equal” approach that has been fundimental to Applied Science for centuries and can be clearly seen in high school Physics, Chemistry and Math books for the past 50 years. That organizations such as CNET can’t be bothered to use objective scientific principles merely reveals their unprofessionalistic disregard for objectivity, which is what I, as a consumer, am interested in.
      .
      .
      -hh

    7. MichaelT says:

      Andrew, this is not a “shopping” exercise. This is a price comparison. To make the most accurate comparison, you have to have the most similar products. It is not a matter of, “Do I need 6 or 8 cylinders?” It is, “Which of these 6-cylinder trucks costs more when they have the same features?”

      I think you and Gene are simply looking at this from two perspectives, and both of you are right in the contexts that you are speaking from, but they are still different arguments.

    8. Dana Sutton says:

      “I would imagine that Apple would spend about as much maintaining different assembly lines and warehousing different configurations to have models with and without Bluetooth, Ethernet, Airport, and such as it costs to include them. So I don’t see Apple or the customers benefiting from those choices financially.” Steve’s observation is interesting. Not being a production engineer, I have no idea if it’s true. Presumably he’s right to point out that adding/subtracting options entails certain expenses, and you can save that money (hopefully passing on the savings to the consumer) by putting the same features in every unit you make. But I still like Gene’s point that although the amount you can shave off the unit price by eliminating these kinds of thing seems like a trifle to the individual consumer, when you apply some huge multiplier (as a purchaser for a large corporation or school district would do) they aren’t trifling at all, and might very well be decisive for his final decision. One the other hand, when you consider the “digital lifestyle” binge that Apple is currently on, with its stress on marketing to individual users, one wonders how much they keep in mind the perspective and needs of that kind of large organizational purchaser. It would be a huge mistake to lose sight of him, a mistake Dell certainly doesn’t make.

    9. Apple seems pretty profitable to me … they must be doing something right. 🙂

    10. Elton Wallace says:

      While one can upgrade a Dell to compare with a Mini and its features, there is no way to upgrade the Mini to compete with the Dell. The Dell comes with a larger, faster hard drive and it has PCI slots. The Mini can only use laptop drives internally, and it’s a slotless wonder.

      The Mini is far too limited for me to consider, and the Mac towers are too darned expensive. How about a new Mac that’s somewhere in the middle? Naw, that’s too sensible.

    11. Andrew says:

      That shows my main argument, that these comparisons are being done backwards. We shouldn’t add the cost of unneeded features to low-cost machine, but rather ignore their presence on the high-price machine. If you need Firewire, by all means figure its price into your cheap Dell. If you don’t need it, ignore its presence on the Mac Mini.

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    13. | pccomparisons.info says:

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    14. dee says:

      can someone direct me to a web link where there is a quality comparison and not a price comparison. i know money can be a factor when you are shopping, but for me, quality is much more ideal. thanks to anyone who can help….

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