TMO Reports - Analysts Upbeat On Cheaper eMac

by , 9:00 AM EDT, April 14th, 2004

Apple announced new, less expensive eMacs on Tuesday, and analysts we spoke to are upbeat about the new models. Boasting faster processors, a faster system bus, more RAM, better video cards, and more L2 cache, the new models make Apple substantially more competitive in the entry level market.

"I was a little surprised in that the new pricing is aggressive," Tim Bajarin of Creative Strategies told TMO in an interview. Roger Kay, research manager of IDC, echoed the same reaction, saying "It looks like a rich bundle for an aggressive price."

With a price point starting at US$799, Apple is still not competing in the ultra-cheap market targeted by Dell, eMachines, and other Wintel makers. According to an Apple spokesperson, however, price is not all that consumers are considering.

"There are two main constituencies [that are buying the eMac]," Tom Boger, director of desktop marketing for Apple told TMO in an interview. "Along with the iBook, the eMac is far and away the most popular Mac in schools. The other constituency is consumers, people who are switching to the platform, or people who want to start using the iLife suite."

He added, "When we talked to customers, and asked if they look at the competition, [they said] when you add in all the things they want to do with their computers, we do become price competitive. We offer things our competition simply can't; iLife is only available in this price line on the eMac."

While one might expect such comments from a marketing exec, we found that analysts agreed. Tim Bajarin says that Apple has been successful in targeting consumers with its iLife suite. Calling iLife "a big winner for Apple," he says that Apple's software integration and ease of use are bringing people into Apple's fleet of retail stores.

"We did surveys during the Christmas buying season," said Mr. Bajarin, "and we were surprised at how many people were drawn into Apple's retail stores. Video, pictures...Now that you have inexpensive DV cams, the whole idea of using moving images as part of a family gathering is really gaining ground."

Targeting this market, Apple's Tom Boger said "We now have a complete DVD burning system for US$999. If you think back to the time when we introduced the SuperDrive in the eMac family, it was priced at US$1,499.We have now managed to bring it down to a sub-US$1,000 price point."

Creative Strategies' Tim Bajarin thinks that price point for a SuperDrive-equipped eMac should do well with consumers.

He added, "Apple has done a very good job of showing how easy it is to do all the things you would expect on a computer. Even if there's a bit of premium, we're still seeing a lot of interest in the software side of things. They're doing their best to meet the [low end] price range, but the bottom line is that what's bringing people to the Mac platform is the integration application and user interface for ease of use."

Roger Kay agreed, saying "I think the idea is that Apple has always positioned the Mac as a premium product. They think there is value in that they can charge for."

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