Apple Kicks Microsoft Where It Hurts

It hurts so good.....

Apple's announcement this week of new iMacs, software, and services strikes at the Windows platform's core strengths. The new generation of iMacs, priced starting at $1,199, compete on price/performance with midrange PCs. And Apple rounded out its iWork suite with the Numbers spreadsheet software and other capabilities, making it a head-to-head competitor with Microsoft Office.

It's getting hard to find reasons to buy a Windows PC, aside from sheer inertia. Windows PCs used to be far more cost-effective than Macs, but no longer. Macs can now compete hard with PCs on cost, for all but the very cheapest, sub-$600 Windows machines.

This is especially true when you factor software into the price. The Mac comes bundled with iLife software, offering sophisticated video, photo, and audio editing. You have to pay hundreds of dollars to find equivalent software for the PC.

But while Apple is entrenching its position in the midpriced and high-end desktops, it's accelerating its retreat from the bargain basement. Apple is discontinuing the $999 17-inch iMac; the entry-level iMac is now $200 more expensive: $1,199 for the cheapest of the new line.

Even the Mac Mini, priced under $800 without a display, keyboard, or any external components, is an afterthought for Apple. Although the Mini received an upgrade Tuesday, it didn't get any of the love lavished in the iMac and applications.

Apple's retreat from the low end is intentional -- Apple just isn't interested in shipping el cheapo PCs, said Apple CEO Steve Jobs: "[We] just can’t do it. We can’t ship junk. There are thresholds we can’t cross because of who we are," Jobs said Tuesday.

Mac fans will see that as a declaration of Apple's superiority. Mac haters will see it as ridiculous snobbery. I don't see it as either -- just a simple statement of fact. Apple is competing in the midrange and high end PC market, it's not interested in the low end of the market.

http://www.informationweek.com/blog/main/archives/2007/08/apple_kicks_mic.html