Analysts: Mac Buyers Still Pay More Than PC Buyers for Same Hardware 'Guts'

With most PC makers slashing prices or embracing netbooks, are Apple's intangibles such as the OS, design and coolness factor still worth the extra price?

Apart from "Windows or Linux?" nothing will start an argument in a bar full of techies quicker than, "Which hardware gives you more bang for the buck, Mac or PC?"

A decade ago, it would've been hard for anyone but loyalists to argue in favor of the Mac. The PowerPC's clock speed lagged the Pentium and other x86 CPUs. Meanwhile, components and peripherals for the Mac such as graphics cards and CD drives were limited and pricey because of Apple Inc.'s proprietary designs.

Back then, "for every dollar you spent on a PC, you had to pay about $1.60 to get the same-performing Mac hardware," said Ian Lao, an analyst at In-Stat Inc.

But after Apple switched to Intel processors three years ago, Mac hardware immediately made up a lot of ground against its PC counterparts.

With Tuesday's refreshed Mac desktop lineup, Apple has brought the Mac's graphics capabilities nearly to par with PCs through the addition of new, faster Nvidia and ATI graphics chips and cards, Lao said.

Graphics was a glaring Achilles' heel for the Mac, which was ironic, considering the Mac's wide usage among graphic designers and other creative professionals.

Apple even pushed past rivals such as Hewlett-Packard Co. and Dell Inc. by being the first vendor to introduce a desktop PC with Intel Xeon CPUs featuring the new Nehalem architecture.

The refreshed Mac Pros come in four and eight-core versions and start at $2,499.

Intel Corp. will officially launch Nehalem-based Xeons later this month, according to a company spokesman.

Despite a tottering economy and slowing Mac sales, Apple only cut the entry-level price of its Mac Pro workstation, leaving the prices of Mac Minis and iMacs untouched.

With most PC makers slashing prices or embracing cheaper models such as netbooks, Apple could be dangerously out of step.

"You would think [Apple] would be a little more reactive," said Richard Shim, an analyst at market research firm IDC. "You can't discount the value of the Mac experience and the software. At the same time, the market is getting a lot more price aggressive."

"I would love to see Apple cut their prices to be in line with everyone else, but it goes against the grain of the whole cachet thing they like to sustain," Lao said.

Without significant price cuts, Macs continue to cost between 25% and 40% more than PC hardware of equivalent specs, say both Shim and Lao.

A quick Computerworld analysis found that Macs continue to cost a bit more than PCs, though premiums vary ( click here to see a comparison chart ).

For example, Apple's refreshed $599 Mac Mini costs 40% more than Asustek Computer Inc.'s similar $430 Nova P22 mini PC. The Mac Mini's slightly faster CPU, integrated graphics chip and RAM are somewhat balanced by the Nova's larger storage and faster DVD-ReWriter drive.

Or compare the midrange Mac Pro with Gateway Inc.'s upcoming FX6800-05 PC. Both use quad-core 2.93-GHz Intel processors and ATI Radeon HD 4870 graphics cards, 6GB of 1,066-MHz DDR3 RAM and a 1TB 7,200 RPM SATA hard drive.

The Mac Pro uses a Nehalem-based Xeon chip intended for servers, while Gateway uses the Core i7-940 desktop CPU. The Core i7, introduced last fall, is similar to Nehalem, but it lacks the latter's new memory chip set that, according to Lao, can speed up performance for compute-intensive tasks up to 13%.

That advantage is undercut by the Mac Pro's weaker components and higher price. The Gateway's video card comes with an extra processor and 2GB of "honkin' fast" DDR5 RAM perfect for gamers, said Lao, as well as an 80GB solid-state drive for faster Windows booting. An 80GB Intel SSD costs $380 at retail.

Yet the Gateway, at $2,999, costs $450 less than the $3,449 Mac Pro configuration.

In the case of the all-in-one iMac, Apple's machine had a slim edge over the competing Dell XPS One 24, while being $100 less in price and 15 lb. less in weight.

In the end, Mac fans argue that "speeds and feeds" mean little because they don't take Mac OS X's performance or the Mac's looks into account. But that's a topic for another barroom argument.

Running the numbers

Two mainstream analysts polled by Computerworld said that looking at the hardware alone, Apple continues to charge about 30% more than Windows PC makers. A quick analysis by Computerworld of Apple's refreshed products with their closest equivalents in the Windows world supports the contention that Apple products generally remain pricier, though not consistently in the same range. Prices are good as of March 3, 2009.

This story, "Analysts: Mac Buyers Still Pay More Than PC Buyers for Same Hardware 'Guts'" was originally published by Computerworld.

Copyright © 2009 IDG Communications, Inc.

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