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Can Intel Help Apple Close Its Price Gap?
Computers | Jun 8, 05
Most of the press on Apple's recent decision to switch from chips made by IBM (in partnership with Motorola) to Intel's x86 line has been discussed in the context of Cupertino's desire to obtain processors that run faster and cooler (the heat problem has been particularly acute for PowerBooks, limiting the speed Apple can offer). Yet perhaps the larger impact may be on the traditional premium Mac users have had to pay to stay out of the Wintel world. To understand just how steep the price of Intel-comparable Apple performance has become, consider that the price of a top of the line PowerBook G4 with a 1.67 Ghz processor, 512 RAM, 100 GB HD, DVD-R drive, modem, 100 BT/802.11g connectivity and 15.2 inch active matrix display is at least $2,250, whereas the Toshiba Satellite M45-S351 with a 1.73 GHz Pentium M, a 15.4 inch active matrix display and comparable other stats goes for a relatively paltry $1,280. To be sure, the PowerBook commands a design premium – it comes in a sleek chassis and weighs only 4.6 lbs compared to the only slightly faster and larger-screened Satellite's 6.5 lbs. But is that design difference worth a grand?
Now, Apple will no longer be buying a niche processor, but rather building their machines around the more commodity-like Intel product. By purchasing x86 processors, Apple should be able to avail itself of Intel's production economies of scale. This should reduce Apple's costs and allow it to lower prices, even accounting for some design premium (hopefully they can switch notebook processors without increasing weight).
In the past, Steve Jobs has had something of a deaf ear when it comes to what price point the market will find acceptable. You know what I mean if you recall the Lisa and Jobs' proposed pricing of the first Macs, not to mention the NeXT machine. Lately, however, he's been spot-on in gauging how to position the iPod, and the rollout of the Mac Mini shows an obvious new interest in low price machines. Apple may even be looking down the road to devices to compete with the IBM-based Xbox. The real question is whether Jobs will choose to pass on his savings on processors to the consumer, sacrificing per unit margin to market share.
Posted by jeffrey.trester (Permalink)
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