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  • The Illusion of the Cheap Mac

    May 20th, 2008

    It’s very clear that the words Mac and cheap don’t align very well. Although you can buy a fair number of note-books for hundreds less, the cheapest MacBook remains $1,099. A refurbished model, or one bought through Apple’s educational channels, can save you a modest sum, but that’s the best you can do if you prefer a Mac.

    The same holds true for desktops. The Mac mini, at $599 and $799, is a forgotten stepchild that seldom receives updates, and never gets any real promotion. The symbol of the Apple computer in the Mac versus PC ad is the iMac, which starts at $1,199.

    In contrast, there are entry-level PC desktops that sell for less than $200, as I’ll explain in more detail later in this article.

    When you combine these factors, you can well believe the long-standing claim by some ill-informed tech and business pundits that Macs are overpriced compared to the competition, but that’s because they’re too lazy to look below the surface and do a modicum of research.

    As I’ve long maintained, consumer Macs are priced very close to PCs that are similarly equipped — and the latter is the key. In some cases, the Mac may cost more, and in other cases it’s somewhat cheaper. As you move up the product line the Mac advantage grows larger. I still see Dell workstations selling for a grand more than Mac Pros with the same basic features. Since the Mac Pro can run Windows as well or better than any dedicated PC workstation, Apple’s value equation is enhanced.

    Not playing in the low-profit segment of the PC market has its benefits. Everything Apple builds is profitable, and its real market share, if you compare the Mac to PCs above $1,000, is reportedly in the higher double digits. Overall, in April, Apple’s U.S. retail sales, as reported by the NPD Group, increased 50% over last year’s, compared to a 17% average for the rest of the PC market. This is a trend that just won’t stop.

    Even more interesting, industry analysts now suggest that even iPod sales have seen an unexpected boost this quarter, after a period of flattening sales.

    So the larger question is whether there’s any upside to building cheap Macs, using yesterday’s parts and perhaps eliminating such features as built-in Web cams, AirPort and Bluetooth to keep costs down. That, and providing the cheapest version of Windows, or omitting Windows altogether, explains why a PC can sell for much less, but you still aren’t getting a better buy for your money.

    Now in all fairness, it may well be that Apple is giving you some features you don’t need. Not everyone requires a Web cam, for example. I know I rarely use the one in my MacBook Pro. In fact, the few times I have used it were to communicate via video with my son. Otherwise, it sits there and does nothing, but the purchase price was the same. I can also see where businesses don’t see a need for that extravagance, since it may only encourage employees to goof off on the company’s time. But Apple won’t build bare bones Macs for anyone.

    Indeed, I expect that you could probably buy one of those Everex Gbook note-books from Wal-Mart at $379 and get a perfectly respectable computer for your money.

    So what does it offer?

    According to the specs at Wal-Mart’s site, this particular note-book has a 15.4-inch screen, a 1.5GHz VIA processor, 512MB of RAM, a 60GB hard drive, a CD/DVD combo drive and built-in Wi-Fi.

    But this isn’t a Window’s computer. It actually runs the gOS version 2 operating system, which is a Linux derivative. Yes, a consumer-level PC running Linux, and it also includes the OpenOffice software suite, which is a pretty capable free Office alternative. You can, by the way, get OpenOffice for your Mac if you strive for a Microsoft-free environment.

    Combine OpenOffice with the fact that the Everex note-book likely includes Firefox as the bundled browser and you have a computer that may indeed be a reasonably usable product that will serve nicely for basic Internet, email and office tasks. In fact, if you stay within its limitations, you may never have to learn Linux or be forced to confront any of its well known user-hostile aspects.

    Now I know nothing of how Everex stands when it comes to product reliability, nor much about its performance on the long haul, though it seems to offer quite a bit for the money. It’s also possible that it’ll self-destruct in a few months, and repairs, despite the one-year warranty, may not be worth the bother.

    By the way, if you prefer a desktop, Everex offers a $199 model with similar specs, except that the hard drive expands to 80GB and there’s no installed Wi-Fi option.

    As to VIA: That Taiwan-based chip maker is reportedly trying to move its processors into the mainstream, the better to compete with AMD and Intel. I suppose we’ll have to wait and see how their plans work out.

    Again, I’m not pushing these computers as a superior choice to a genuine Mac, or even as serviceable computers in the overall marketplace. The specs sound decent, period. But no mainstream manufacturer could deliver a credible competitor and making a profit on such products can be extremely difficult. It may well be that Wal-Mart is offering those deals strictly as loss-leaders to get you into the store, hoping you’ll stock up on clothing and groceries and other items to make up for the missing profits.

    As far as I’m concerned, I still think there are things Apple can do to better compete in the low-cost segment of the PC market. But you’ll never see a $399 Mac, at least not in the foreseeable future.



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    11 Responses to “The Illusion of the Cheap Mac”

    1. Tim says:

      The mini’s already built with yesterday’s hardware, whether that’s because it’s reaching EOL, or they’re working on a spiffy new logic board that’s not quite ready yet is the question. Maybe we’ll get that latter day IICi.

    2. Dana Sutton says:

      I agree that there isn’t any visible need for this kind of cheap Mac for individual consumers. But there’s a strong argument for making a kind extra-cheap, barebones Son of E-Mac to allow schools to set up computer labs. These could do with out a lot of stuff: Web Cam, Bluetooth, Airport Express and optical drives, and would only need very small-capacity hard disks. If Apple could manage to shave off, say, a hundred bucks from the current price of a Mini, this would be extremely compelling for school district purchasing officers who order computers in very large lots.

    3. Actually, Dru, BMW does have a low-cost car on the market, though it’s not in the $15,000 range. It’s known as the Mini Cooper, with prices starting at $18,050, U.S. 😀

      Peace,
      Gene

    4. Steve W says:

      The key to successful innovation is getting your product sales to achieve a critical mass. Like AT&T pointed out in it’s request to become a monopoly, the real value of having a phone is only achieved when everybody that you want to call has a phone, too.

      This is true for things like diskettes, CDs, DVDs, ethernet, internet, office software, and -yes- webcams, too.

      The BIG argument that Mac detractors use when they pronounce iApple’s beleaguered status and imminent demise is that Apple’s market share is below critical mass. One of the ways Apple counters this is by making its innovations standard equipment. In fact, Apple often achieves critical mass faster than the larger WinTel industry. (In addition, the WinTel industry often ends ups supporting long dead legacies – but that’s a different story.) The other way Apple achieves early critical mass is by providing, in Steve Jobs’ words, “the whole widget”.

      The iPod is perceived to be a better value because iTunes software exists, the iTunes store exists, every iPod owner has iTunes and access to the iTunes store. Thus the iPod achieved the critical mass that enabled it’s historic deal with the major record labels before it’s competition.

      Similarly, Apple makes sure that every Mac owner has a webcam and iChat software – whether they use it or not. It’s there, like a telephone. (Speaking of which, when iPhones get user facing cameras and iChat, you will be able to phone home to all iChat equipped Macs as well as to other iPhones.) The webcam increases the value of the Mac compared to camless WinTels; but the ubiquity of the webcam and iChat will increase its value even more.

      In the past, consumers bought WinTel because it was compatible with the computers at work. Perhaps in the future they will buy Macs because they are compatible with school – allowing teacher, student, and parents to have impromptu iChats. Believe me, it will happen in Mac equipped schools first. The WinTel equipped schools will scramble to retrofit once the innovative Mac schools prove the concept. Just like schools once had to retrofit their WinTel computers for Internet access, while their Macs were already equipped.

      It’s penny wise and pound foolish to believe you can save money by cutting out features that you don’t use today, especially when technology is advancing so rapidly.

      I can point to the sad example of my work provided WinTel Notebook computer. The company saved a few ducats by ordering them without Ethernet, because the company standard was Token Ring. The company installed Token Ring cards in the docking stations.

      Of course, nobody uses Token Ring at home. So when home networks came into fashion, workers couldn’t attach their work Notebooks to the network without buying their own Ethernet PCMCIA card for their work Notebook.

      When the company decided to upgrade to a faster network, they ended up rewiring the building for Ethernet. They saved a few more bucks by replacing the Token Ring cards in the docking station with Ethernet cards (PCI cards cost less than PCMCIA cards). End result, users still couldn’t use the laptops at home unless they either bought their own PCMCIA card, or else took the docking station home. Kinda defeats the whole purpose of a docking station.

      Yes, that was a “Fortune 500” company.

      Apple nixes this kind of foolishness by not allowing corporate buyers to delete standard features like Ethernet – and webcams, and by not building docking stations. This is one of the reasons why Macs are not popular with “we know our needs” IT departments.

    5. Andrew says:

      Not making docking stations is a problem. Every morning I have to plug in 5 cables and every afternoon I unplug five cables. When I had my ThinkPad I could just put it on the port-replicator and it instantly was a desktop.

    6. Actually, Dru, BMW does have a low-cost car on the market, though it’s not in the $15,000 range. It’s known as the Mini Cooper, with prices starting at $18,050, U.S. 😀

      Peace,
      Gene

      I was thinking of something in the ‘i’ series. The newly released i128 starts at $28,000.

      Ah yes, if you don’t need anyone to be seated in the rear — unless they are real small. 🙂

      I suppose BMW feels you need to spend more than $30,000 if you choose to have rear passengers of normal size for any length of time during your wanderings in such a vehicle.

      Peace,
      Gene

    7. Chris Jones says:

      It’s true, there’s no such thing as a $399 Mac. On the other hand, the iPod Touch is less than $300 and runs a healthy version of OS X beautifully. I’m still waiting for Microsoft to compete in the sub-$300 market with something that runs a healthy version of Vista.

    8. It’s true, there’s no such thing as a $399 Mac. On the other hand, the iPod Touch is less than $300 and runs a healthy version of OS X beautifully. I’m still waiting for Microsoft to compete in the sub-$300 market with something that runs a healthy version of Vista.

      Consider what the “healthy” version of Vista costs all by itself, without the computer. 🙂

      Peace,
      Gene

    9. Scott says:

      I recently visited the local StapleMaxDepot and found the following laptop on display…

      HP Pavilion dv6830us
      Intel Core 2 Duo
      3gb RAM
      Intel X3100 graphics
      250gb hard drive
      DVD burner w/Lightscribe
      15.4″ display
      Express card slot
      Media card slot
      Dock connector
      Ethernet – WiFi – Bluetooth
      VGA – S-video (no adapters needed)
      Wireless remote
      Vista Home Premium w/SP1

      cost = $800US

      >>Macs are overpriced compared to the competition>>

      I don’t consider *most* Macs to be overpriced, but they are more expensive for the vast majority of consumers. Some of us are willing to pay a premium for OS X. Most folks couldn’t care less about it. Either that, or they just aren’t willing to pay that premium.

    10. Andy Carolan says:

      Consider what the “healthy” version of Vista costs all by itself, without the computer. 🙂

      Peace,
      Gene

      WHAT!!!!! …. Theres a healthy version of Vista?!?!?!?!?!!?

      😉

    11. Joe J says:

      I really need a better computer to work with the AVCHD files from my new camcorder. If I were to opt for a PC, I imagine I could get what I need (or better) for under $1,000.

      What are the chances I could find a Mac that meets my needs for the same money? If I’m wrong, and there is such an Apple product out there, please let me know!!

      Cheers!
      Joe

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