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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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