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  • Apple Still Won’t Play the Game — Well, Mostly

    June 11th, 2009

    It’s fair to say that the fairly decent price reductions of the MacBook Pro series will have an impact. People who complain that Macs are too costly will have less ammunition to assert their case. Microsoft will have to recast its lame laptop buyer spots to recognize the new reality. Or maybe not.

    While not unexpected, it’s encouraging to see Apple keep the 8GB iPhone 3G in the lineup, for just $99. Former Apple hardware executive Jon Rubenstein, who now heads Palm, is going to be under severe pressure to somehow match that price cut with the new Palm Pre, and it’s not as if Palm is in terribly great shape these days.

    Regardless, I suppose some of you will feel Apple listened to those Microsoft spots, and the price reductions will spark a trend, that Apple will soon do precisely the same with its desktop line. Cheap Macs — what a concept!

    However, Apple doesn’t always exist in the same universe as the rest of the PC industry. You see, PC makers are by and large taking the same commodity hardware and competing with each other for every single sale. With netbooks, selling sometimes for less than $300, they are making do with paltry profits in the hope that they will make it up on volume, or perhaps by getting you to customize your tiny new box with high-profit extras.

    In fact, you can already see this expansion trend in the netbook space. More and more makers are building in larger keyboards, some extremely close to full size, along with larger displays. True, these products will still be saddled with slower processors, and less memory, but for many normal tasks for a home or small business, that’s just fine. I can think of email, Web browsing and basic word processing, for example. Microsoft is even allegedly fine-tuning Windows 7 to run in acceptable form on these low-end note-books.

    In the end, the netbook will be little more than a slightly cheaper entry-level product, offering most of the capabilities of the full-fledged note-book. For most people, I rather suspect the differences will become extremely difficult to discern in the real world unless you are doing chores that require a more powerful processor or graphics chip.

    As far as Apple is concerned, the jury is still out as to whether they have any desire to enter that business. Certainly cutthroat pricing is not their cup of tea. Even at the lower prices, the MacBook Pros will still earn Apple healthy profits. They are benefiting from the lower cost of raw materials and higher production runs to compensate for all or most of the difference. Nothing Apple builds is designed to sell for a low profit. The possible exceptions are the App Store and iTunes, both of which serve to boost sales of hardware. So if they break even, it’s still a plus.

    In contrast, the PC industry doesn’t seem to understand how to do things of that sort. Certainly Microsoft can’t imagine how to match Apple’s ecosystem, although the whole arrangement seems to make perfect sense to most anyone.

    Looking again at Snow Leopard, it’s clear to me that Apple can make a perfectly decent profit for all its efforts even at $29. I expect lots of Leopard users with Intel-based Macs will upgrade right away, since the fee is so low, and assuming the original 10.6 doesn’t have any significant show stoppers.

    Having a larger portion of the Mac user base on a single operating system also makes it cheaper for Apple to handle support and quality control. Ditching the PowerPC will encourage more people to buy new Macs, even if their older hardware seems to have a long useful life ahead of it.

    That said, if you have, say, an iMac G5 with Leopard, it will continue to be supported and run great even if you can’t take advantage of the enhancements in Snow Leopard, which are largely performance based. Maybe the Finder will be slower, maybe apps will take longer to launch, but you will still have a solid computer that is more than capable of handling a lot of tasks.

    Just the other day, in fact, I upgraded a client’s G5 with Leopard. First I had to boost his RAM allotment from the standard 512MB to 2GB for maximum performance. Even before the Leopard installation began, the improvement was almost startling. The initial startup process and basic app functions were so much faster, it almost seemed as if he’d purchased an all-new computer.

    Upgrading to Leopard 10.5.7 didn’t hurt performance. He will gain the benefit of all the new features, and be able to get the latest and greatest software.

    Except for the growing number of apps that are Intel only. That’s the next migration that’s coming on full force. Apple’s move to Snow Leopard will only accelerate that change. They’ll sell more hardware, all without having to keep cutting prices. That assumes, of course, that the economy will cooperate, and that is a question nobody, not even the so-called experts on Wall Street and Washington, D.C., can answer.

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