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  • So What About a Cheap Mac?

    May 19th, 2009

    The critics say Apple needs to reduce the price of Macs. Apple says they won’t build junk. So between these two extremes, is there a happy medium that would make your next Mac more affordable?

    Today’s Mac begins at $599, for the entry-level Mac mini. You can customize it after a fashion with a larger hard drive and additional memory, but that’s pretty much the extent of the hardware changes. However, this is the sort of computer that is closer in concept to an appliance. You would probably have it configured on Day One the way you want and the only internal changes you’re likely to make after that would involve repair of a defective part, such as a failed hard drive.

    Although lacking a keyboard and mouse, the Mac mini is a pretty complete package, and it’s really designed for people who already have input devices and a display. Since it comes with built-in gigabit Ethernet, Bluetooth and Wi-Fi, along with a fair selection of basic consumer apps, a fair number of new owners can use it without installing anything extra.

    If Apple were to make the Mac mini less expensive, how would they go about accomplishing that task? First and foremost, they could, I suppose, just reduce the price for the same two models, and hope that increased sales would compensate for lost profits in terms of volume. That is the approach taken by most of the PC makers who don’t earn a whole lot of cash from their low-end models. They also provide rich customization options, hoping that if you check enough boxes on the ordering slip, you’ll help make up the difference for those who want their cheap PCs without any extras whatsoever.

    Absent profits, what else can Apple ditch? Unfortunately, less memory and a smaller hard drive would, while saving a small amount of money, simply make the product less usable, particularly for the Mac user who has big photo and music libraries. Suddenly you’d be forced to upgrade a hard drive, which doesn’t make your Mac mini so cheap.

    Yes, slower Ethernet, and dropping Bluetooth and Wi-Fi might knock another $40 or $50 off the purchase price, but that’s trivial. And, again, if you need any of those things, the upgrade expense would exorbitant, since the mini isn’t easy to open and take apart for a non-technical audience.

    Indeed, a $549 Mac mini, or even a $499 version, which removes those extras and reduces Apple’s profit margins, might sell more units in the end, but would that compensate for the inconvenience of forcing people to pay a lot more for possible upgrades later on? Is a $100 price difference the deal breaker?

    On the software side of the ledger, I’m sure Apple allocates a certain percentage of the cost of building each unit for the bundled software. On the practical side, when it comes to manufacturing costs, it doesn’t matter what’s on the factory disk image, so removing iLife makes little sense. Besides, having it preloaded is one of the attractions to the new Mac user, particularly the ones migrating from Windows and accustomed to the ever-present crapware loaded on their new hard drives.

    Another way to cut costs without building junk is to find ways to produce the same product less expensively, aside from the savings from higher production levels. One way might be to bundle a 3G connection card and then arrange for a subsidy from AT&T or Apple’s wireless partner in your country, whatever it might be. That can reduce the price of admission by $100 to $200, and suddenly put loads of new Macs into the homes of people for whom price was once a serious obstacle. Then again, that’s probably an approach for which a note-book is a better fit.

    As a practical matter, Apple could, I suppose, produce knock-offs of a cheap PC, only preloaded with Mac OS X. That would enable them to take advantage of the same quantity pricing as all their competitors, but would it be the same solidly built Mac or just another piece of electronic junk?

    No, that doesn’t make much sense. But Apple could also return a 17-inch iMac to their consumer lineup. Maybe a screen that small wouldn’t be quite so compelling, but at $799 or $899, it might make an awful lot of sense to those who want a complete package but are faced with the typically tighter budget caused by the world’s economic crisis.

    As far as a note-book is concerned, Apple seems to feel we require a 13.3-inch screen, and maybe that’s true for most customers. But there are a fair number of people who loved the original 12-inch PowerBook, and building a MacBook nano with that sort of form factor would also let Apple reduce production expenses somewhat. The cheapest MacBook, last year’s model with a faster graphics chip, is $999. An $899 12-inch MacBook might seem less of a stretch to folks paying just a little bit less for the low-end piece of garbage that PC makers hawk.

    Overall, however, I don’t see Apple making serious inroads in the low end of the PC market. There’s just not enough profit in it, and I doubt any of you would like to see Apple sacrifice earnings in the hopes of making a few more sales. They’re doing quite well right now, thank you.



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