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  • The Mac Value Equation Revisited

    January 9th, 2008

    Year after year, I’ve been battling the eternal falsehood that Macs cost more than similarly-priced Windows hardware. This ongoing war rages long and and hard, but at the end of the day, I believe I win the argument on the basis of a simple and supremely logical method of comparison: You have to match the features of the competing computers as closely as possible.

    That, of course, raises the hackles of many of you, because you still feel Macs are somehow overpriced. Why? Well, because you would like to be able to buy a stripped version without some of the frills that you may not need, such as the Web cam on the iMac and note-books, plus bundled AirPort and Bluetooth.

    I suppose that makes a whole lot of sense for a business that buys thousands of boxes at a clip, and needs to keep the prices as low as possible. Therefore, they don’t want to equip those boxes with extra stuff they don’t need. But that’s not the sandbox Apple plays in, and they have indicated time and time again they aren’t going to change.

    You see, bundling all the extra goodies as standard equipment simplifies production, since there are fewer possible variations in a build-to-order configuration. That allows Apple to buy larger quantities of the parts they need, so they can offer good prices and still make a boatload of money on them.

    Besides, I think that most of you appreciate having a computer that has much of what you need preinstalled, so you just have to turn it on and get to work, other than to add the third-party software you need. And the Migration Assistant that’s part of the standard setup routine makes moving your old stuff to your new Mac pretty simple — although it’s rather more complicated when you switch from a PC.

    Now with the release of a new Mac Pro, the question of price comparisons rears its ugly head again. You see, the standard configuration, with a pair of 2.8GHz quad-core Intel Xeons, costs $2,799, $300 more than model it replaces. On the surface, that means a price increase. Sure, you can custom order a version with a single quad-core processor at $2,299, but that’s $100 more than the former entry-level option.

    However, as I explained in yesterday’s commentary, Apple really hasn’t increased its prices if you look at the sometimes ephemeral value equation. You see, standard RAM is now 2GB, compared to 1GB previously, and that, at Apple’s inflated pricing structure, already represents a fair savings. The hard drive is now 320GB, compared to 250GB previously, but I’d expect that prices on such components are down sufficiently to make it a wash. And lets not overlook the fact that Bluetooth is now standard.

    What’s more, the updated Mac Pros, with the Harpertown or “Penryn” chips, are up to twice as fast as the previous models, partly the result of supporting a faster system bus, and having larger onboard caches. But benchmarks can be misleading and, in fact, are so dependent on the application and the functions that this difference might not be significant to you in real world use. Both computers are plenty fast.

    So here we have a situation where there’s a modest increase in prices, but when you compare the hardware, it’s actually the equivalent of a price reduction. That can be mighty confusing, and I’ve already read some reports from Mac sites where they succumb to the illusion of a costlier product. I think I’ve made my case pretty clear, however.

    However, whether or not the Mac Pro is a better value still raises the question of how many Mac users need one, and how many of you can get by with an iMac. More to the point, there’s still a huge product gap in Apple’s desktop Mac lineup.

    I can surely see where Apple is coming from here. Two thirds of all Macs sold are note-books, so there’s not a whole lot of incentive to develop additional desktops. Maybe they feel that the Mac mini fulfills the need for an affordable version, but it’s so bare bones that I can see where a lot of you prefer something that is more powerful, and then you may have to buy hardware more than you need.

    My own preference for such a situation would be something I’ve long advocated, and that’s the headless iMac. Call it a minitower, with the note-book-based guts of the iMac, but without the display. Add to that two high-performance PCI slots, four RAM slots, but it would be otherwise identical to the all-in-one model to which it’s related.

    The price for such a box would probably come in at $899 or $999 for a basic configuration. It may cannibalize some iMac sales, but it would more likely give the faltering Mac mini a long-deserved burial. Or perhaps Apple could knock $100 or more from the Mac mini’s price and keep it in the lineup, or would a revised Apple TV foot the bill?

    That, my friends, also raises the possibility for another product announcement at the Macworld Expo next week, but can you really call this a prediction?



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    7 Responses to “The Mac Value Equation Revisited”

    1. Joe S says:

      I am so glad that someone else noticed the savings in process, documentation, and work in progress that a simplified product line brings. The Dell model of every feature is optional makes figuring out manufacturing a total nightmare. Does it make that much sense to cater to the world with your high runner being less than 10% of the line? This ignore the bait and switch sales methods that goes along with it trying to steer you into a higher volume line. I suggest there is an advantage to having simple and understandable pricing, perhaps at missing the rock bottom cost. Also, notice the trend in autos, optional items eventually become universal. It would actually cost the company money to make them optional.

    2. Andy Carolan says:

      There does appear to be a gap in the lineup for your “Headless iMac” – At the moment, if you are looking for a desktop mac, you either go for a Mac Mini, which could appear a little underpowered or at least lacking in expandibility or you spend your money on an iMac for which you have no choice but to settle for its in-built lcd panel (im still not sure if thats a good or a bad thing). The next choice would be the Mac Pro, but that is out of the justifiable price range of many. I guess thats why so many people go for the Macbook/Pro :/

    3. Andrew says:

      We’ve had this discussion many times. First, adding features to make a fair price comparison is only fair if you want those features. If you do not want the feature then you should not add it, compare the prices of what you want, and ignore the presence of what you don’t. Don’t want or need bluetooth, then rather than adding $40 to the price of machine A, ignore its presence on machine B, simple.

      This argument usually relates to the Mac being the better-equipped model and thus the Mac being considered overpriced compared to the stripped PC. This isn’t always the case, however.

      That does not in any suggest that Macs are more expensive than PCs. My 14″ non-widescreen Lenovo ThinkPad T60p was actually more expensive than a comparable 15″ widescreen MacBook Pro. Of course, there is no way to add a swappable drive bay, second battery or docking station to the MacBook Pro. How can I price compare those two machines then?

      I want a non-widescreen display. I want an optical drive that can be swapped for a second battery. I want a docking station. I want a high capacity battery option. These are all items that I wanted on my laptop and which no amount of money would add to an Apple. It cuts both ways. I actually would like a webcam on my laptop, but Lenovo doesn’t offer one on non-widescreen ThinkPads, so like my dock or battery options for Mac, I was out of luck.

      So to price compare these models, which are actually very similar in most specifications (my ThinkPad even can run OS X with a bit of tweaking), which machine should I apply bias to? Should I adjust the ThinkPad’s price to that of the cheaper widescreen version? Should I add an imaginary sum to the MacBook Pro to cover the unavailable docking port?

      The answer is simple, these machines, while both aimed at users requiring serious graphics and processing power (both have 256MB ATI graphics and very high resolution screens), both also were designed with different goals resulting in different machines. They are definitely competitors, with different versions of each at fairly similar price points, but I will submit that they, like many other Macs and PCs, simply cannot be directly compared on price.

    4. Dana Sutton says:

      Okay, Gene, points taken about bigger h. d., bluetooth, etc. Still and all, the concept of “value”
      really comes down to “how valuable is this to me, is it worth the investment?” Eight processing cores? Heck, I have four now and I’m far from convinced I’m getting very much benefit from even that many, somebody would have to give me a pretty darned good reason to want any more. Speed? Well, I’m old enough to remember the advent of Hi-Fi. At first it was darned valuable to get a sound system with 50% less distortion, the difference was dramatic. As distortion kept getting halved over and over, the difference became progressively less noticeable, and in the end it got almost meaningless (do you really care whether your amp’s distortion figure carries out to four decimal points or out to five?), and low distortion eventually disappeared as a talking-point in marketing and advertising, because ALL amps had very low distortion. For most of us folks without very specialized needs, if you keep doubling the speed of computers something of the same sort is going to happen, or is probably happening already. If you’re using standard consumer programs, how much are you willing to pay for 2 x pretty damn fast? (With a lot of programs the real limit on speed is how fast you can operate your pointing device and keyboard, the program you are using on your current computer probably spends most of its time sitting around waiting for old lazybones to tell it to do something, and how “valuable” is it to have a program launch in one second rather than two or three? It’s possible to become hypnotized with numbers for their own sake, and spending money just to buy more impressive statistics is just plain silly. (As for Joe’s remarks about options, the hidden cost of going that route is that you have to set up more assembly lines, or at least more complicated ones. Eliminating options minimizes production costs.)

    5. We’re all getting older, Dana 🙂

      In any case, I agree that any of today’s Macs can be regarded as fast enough for 95% of you.

      But when it comes to content creation, such as 3D rendering and such, it’s never fast enough.

      Peace,
      Gene

    6. Karl says:

      I am actually on the opposite end of Dana’s post. I often find myself waiting for the computer to do stuff… start up, wake from sleep, mount hard drives and CDs, websites to load, copying files, launch programs, photoshop files to be applied, etc. Granted not all of this is because my processor isn’t fast enough.

      So when going to purchase a new computer, speed counts (at least for me). So I take it into consideration and weigh the value just as anyone else would. As much time as I spend on computers, If I can shave seconds/minutes off of doing something then it gets more weight.

    7. Adam says:

      I am actually on the opposite end of Dana’s post. I often find myself waiting for the computer to do stuff… start up, wake from sleep, mount hard drives and CDs, websites to load, copying files, launch programs, photoshop files to be applied, etc. Granted not all of this is because my processor isn’t fast enough.

      So when going to purchase a new computer, speed counts (at least for me). So I take it into consideration and weigh the value just as anyone else would. As much time as I spend on computers, If I can shave seconds/minutes off of doing something then it gets more weight.

      So I actually run in the middle ground on this one. I value speed increases, and until about 2005 I would upgrade every time I could afford to in order to get whatever bumps I could. At the time this meant that my upgrades were still years apart as my expendable income was restricted, but I would lust after every product Apple announced. Now my MacBook is fast enough for the majority of what I do, and my MacPro is true overkill with the exception of the few tasks the MacBook doesn’t handle well. My needs don’t change all that much over time and I feel, for the first time, that the hardware has caught up with the need for me. I expect to be very happy for a long time.

      When I do experience slow downs it is very rarely a result of processor deficiency. I watch my MenuMeters (excellent tool BTW) and the bottleneck is typically drive speed. Even this is a rarity since I bumped the RAM in the MacPro, though as there is much less cacheing going on. Drives, bus speed, and available RAM are the things that really clog a system if they are insufficient, IMHO. Depending on what I am doing I will also modify my Energy Saver preferences to allow hard drives to sleep or not. Normally I let them snooze but there are a few projects where a sleeping drive will be accessed just enough to irritate me. I could probably mediate this by re-arranging where I keep my data but my system works for me so I don’t want to do that.

      What it comes down to is Dana’s question of “Is the benefit worth it to me?” As a Mac Genius I actually talked quite a few of my customers out of buying a new Mac if I didn’t think it was in there best interest. A new iMac compared to a 2 year old iMac is generally not going to improve your web surfing speeds unless you are doing a LOT of Web 2.0 stuff on FIOS. By the time most cable connections load the data, the computations to render it are just about done anyway.
      What I have always told people to ask themselves is “Does my Mac do what I want to my satisfaction?” If it does, and it shows no signs of in-progress hardware failure, I tell them to keep it. If it does not then I advise them to evaluate the upgrade -test drive the new Mac if you can- and decide for yourself if you think the boost is worth the cost. For multi media production the answer is almost always yes. For less demanding tasks, not so much.

      Am I glad that the MacPro line is updated? Yes. Do I think Apple needed to do it given their core markets? Yes. Would I be likely to go out and buy one even if I had the last gen PowerMac as opposed to my MacPro? No. My choice.

      Cheers!

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