Do Macs Cost Too Much?

Charles W. Moore started a real controversy over on Applelinks earlier this week by writing Macs Still Cost Too Much. As a leading proponent of value computing, I'm inclined to agree.

It's not that Macs are a bad value - if I thought that, I'd be running different hardware today. The real problem is the cost of entry. If you want a current model computer, Apple's least costly option is the 400 MHz iMac. It's a nice machine and one of the least expensive Macs Apple has ever produced, but it costs $899 here in the States.

Compare

Let's compare that to a couple entry level systems from well known Wintel brands as featured in the latest PC Magazine:

• Compaq Deskpro EX Microtower, 667 MHz Celeron, 64 MB RAM, 10 GB hard drive, 15" monitor with built-in speakers, Intel 3D AGP graphics, 48x CD-ROM, Intel audio, 10/100 ethernet, but no modem. $689. ($779 with modem.)
• Dell Dimension L series, 933 MHz Pentium III, 64 MB RAM, 20 GB hard drive, 15" monitor, Intel 3D AGP graphics, 48x CD-ROM, SoundBlaster, no ethernet, 56k modem, and speakers. $799.

The good news is the death of really cheap PCs. A year or two back, everyone was convinced $500 systems were the way to go. (Of course, that was $500 plus a monitor.)

Even if you believe the old Apple mantra that "the G3 processor is up to twice as fast as the Pentium II as the same clock speed," it's hard to sell a 400 MHz computer against a 667 MHz one, let alone 933 MHz at a lower price. Besides, both Celeron and Pentium III outperform Pentium II, while the 400 MHz iMac is using the same G3 processor Apple first used back in 1997.

For the average home user, you need CD-ROM, at least a 15" display, no less than 64 MB of memory, a 10 GB hard drive, stereo sound, accelerated 3D graphics, and a modem. Both the Compaq and the Dell offer that for $100-120 less than the iMac.

Sure, some will object that we have to configure the PCs to match the Macs. That kind of comparison has its place, but not here. Budget buyers tend to buy a system, add a printer, and add very little else until it comes time to replace the computer in 3-5 years.

Shot in the Foot Again

Until it was discontinued on February 22, 2001, Apple had the perfect alternative to these Wintel machines: a 350 MHz iMac with a $799 price tag. It might have paled in the MHz comparison, but it did give Apple an iMac at the same popular price point as several Windows systems. It's too bad the newer 400 MHz model costs $100 more.

The $899 iMac offers FireWire and AirPort, but these are probably not that important to the computer buyer on a budget. These folks are looking at dollars and cents; they don't expect gigahertz processors, megafast peripheral busses, or wireless networking. They probably don't have a second computer to network with.

Feature Rich for the Rich

Stephen Van Esch makes a good point in The Computer for the Best of Us when he suggests Apple can't compete on price alone. Although I think Apple could be more competitive in the cost department (they have the highest margin in the personal computer industry), they are selling a different product.

Some people buy store brand ice cream; others fork out for Edy's or Ben & Jerry's. Some people want the cheapest Korean car on the market; others want a Saturn, Honda, or BMW. Some people just want a boombox; others insist on Sony.

There will always be a market for economy computers - and dozens of large and small companies will beat each other up for a larger piece of the budget market. A lot of them will disappear, while brands that offer good value and good quality will survive the brand shakeout.

Apple has never gone for the low cost market. Commodore did. Atari did. Radio Shack did. Osborne and Kaypro did. Storerooms, garages, and landfills are littered with the rusting corpses of failed PC brands.

As for Macs, while they do have a bit of a premium price, and while Apple could trim a feature here and a dollar there, maybe they don't cost too much. In a world where hundreds of PC brands have fallen by the wayside, there's value in a company that survives by making a profit selling better computers.

Links

• Macs still cost too much, Charles W. Moore, Applelinks, 2001.04.16
• The computer for the best of us, Stephen Van Esch, Mac Scope, 2001.04.18