Thoughts About the New iMac Pricing

I made some price comparisons this evening following the release of the new iMac. So, here is what I discovered, by trying to build an “iMac”-like PC (I targetted the configuration of the middle range iMac which sells at $1500), consulting prices from PriceWatch & PriceGrabber. The mentioned prices are retail and the individual components probably have costed even less for Apple, but I am going to overlook that and give the benefit to Apple. Update: Some good comments and further clarifications on the subject, can be found here. Update2: And speaking of eMachines (whose quality is not bad, neither the company is out of business (yet)), check out their brand new systems and prices. They even prepare for sale a NorthWood P4 system at 2Ghz. NorthWood is the new P4 CPU model which is much faster than its P4 predessesor at the same clock speed.This article is marked as an editorial, and therefore should only be treatent as the personal opinion of the author. Grammar/syntax errors are to be expected. 🙂

Case 10 USD
LCD 250
Firewire 20
Motherboard 50 *
NIC 10
Modem 20
GeForce2mx 40
256 SDRAM 40
Sound 10
Speakers 10
Keyboard 10
Mouse 10
40 GB Hdd 70
G4 700 Mhz 80 **

[Software 50] ***

* (most of the addon elements found on the motherboard are
actually counted individually – like firewire capabilities
for example)

** (OEM Motorola prices are similar to equivelant Athlons or PIIIs)

*** (OEM Windows license, Ms Works etc, the usual stuff – For
an iMac the included software cost is close to ZERO
because it is considered strategic development and it is
included indeed for free)

So, the price to create an EQUIVELANT middle range iMac in the PC world is less than $730 (the prices above are retail prices, Apple gets EVEN better price deals than the ones I mention), but I will give Apple the benefit of the doubt.
The $730 price includes the R&D, marketing, support, markup, packaging, insurance etc etc as these individual prices found at PriceWatch were retail.

Now, how much money are they making? The same $730 USD system above, if it was the middle range iMac, Apple sells it for $1499. There is way more than 50% profit there. I call that a rip off and I am certainly not going to pay so much for such a system.

Now, I have to explain something here and please pay attention. We have to understand here that the notion of a rip off is a very subjective notion. Why, you ask?

Well, let’s say that I know someone that sells an authentic Madonna autograph. For me, if I wanted to buy it, I would not pay for more than $10 USD because that’s how the glossy paper that Madonna’s picture is printed on, costs. For a big Madonna fan though, this is different. He/she may actually pay $200 in order to obtain it. And there are some other variables we have to think. What if the picture that Madonna has signed on is a very rare one? Suddenly the autograph will cost more for the fan, while it won’t change my world and I would still not pay more than $10.

So, for me, that iMac-like product is worth $730. And exactly because I do know that, because I do have this information, if I have to pay more than $950 to $1000 for that system (giving a breathing space of more than $200, again for Apple’s benefit to use for excuses like Research and Modern Design), I will consider it a major rip off. However, a Mac user, or an LCD lover, or someone who likes the new modern iMac design, or someone’s first computer, or because it is easy to use, he/she would pay for such a device up to $2000. So, buying it for $1500 (which is the price Apple sells it), it may even sound like a steal to him/her!

The problem is that such machine, when compared to today’s similar config PCs, it is expensive and overpriced. The problem may not even be that Apple has expensive machines, but the problem may be that PCs are cheap! Have you ever thought of it this way?

On the other hand, PCs are computers, and iMacs are computers as well, doing the same basic things. So, paying $500-600 more just for being an Apple iMac, it is just not justifiable for my opinion and my wallet.

If you still have doubts, this eMachines model is a good example, with the *same* product quality/configuration as the middle range iMac. And it also has loads of software in it as the iMac does. Without a monitor it costs $800 (and eMachines even pay for a more expensive CPU, plus the OEM software). With a $160 19″ CRT monitor, 0.26 dp, capable of 1280×1024 @ 85Hz and 1600×1200 @ 75Hz, the whole system costs $960 USD. Retail. PLUS, that eMachine comes with a whole Pentium 4 at 1.5 Ghz, not at 700 Mhz (as OSNews reader Mario correctly spotted in our forums, a 700 G4, is equivelant to a 900-933 Mhz PIII – already far cry from the expensive and fast P4 that eMachines is offering for less!). eMachines is a perfect example to compare to the iMac, Dell, Gateway, Compaq etc machines are not. Both iMac and eMachines are targetting exclusively the home user, both have reasonable amount of software, both have a nice design, they are the low end machines of both worlds, but with considerable quality and speed.

Maybe I’m picky, but I would expect a better treatment from Apple when it comes to an iMac, which is supposed to be their “home hub device” affordable by families and all that marketing blah-blah and enourmous hype (hype that I personally dislike as much as cats hate the water). This should have been the machine that could attract and convert x86 users, like me. While the iMac may sell well to the already Mac users, I highly doubt that will grab any significant market share from the Windows/x86 world.
Point is, I am disapointed by their pricing decisions and I am even more dissapointed about the way they tried to manipulate the crowd with enormous hype (“where no PC has gone before” etc) the past week.

The middle range iMac features the hardware configuration I really want, and despite the fact that I do want a cheap G4 to run MacOSX, I ain’t gonna buy it. Not in this lifetime.


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