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Analyst: Mac vs. PC Price Gap Closer Than Most Think

TMO Reports - Analyst: Mac vs. PC Price Gap Closer Than Most Think

by , 3:20 PM EDT, May 16th, 2006

Piper Jaffray analyst Gene Munster on Tuesday released a report in which he took a look at Mac and PC pricing, concluding that Mac desktops and laptops are 13% and 10% more, on average, than comparable PCs. That's less than the 20-30% premium he believes most customers and investors see in the price comparisons.

Taking the cost of adding Windows XP Home Edition into account, a Boot Camp-capable Mac desktop or laptop is 22% or 16% more expensive, on average, but the analyst noted that many PC manufacturers offer Windows re-install discs for free or for a nominal fee. "We believe this will make the move to a Boot Camp-enabled Mac more feasible for many potential buyers," he wrote.

The analyst also included a pair of tables, shown below. He compared Apple's 20-inch Intel iMac and 17-inch MacBook Pro against similar offerings from Dell and HP. One of the four competing desktops was more expensive, while one of the three competing laptops was pricier. However, none of them include software comparable to Apple's iLife suite, and the iMac and MacBook Pro also come with built-in iSight, AirPort Extreme and Bluetooth, features that are build-to-order options on many PCs.

Mr. Munster concluded by noting that Apple will be holding an event in New York City this Thursday, in advance of a new retail store opening the next day, but he doesn't expect the company to unveil any new products during it.

He retained his US$99 price target on Apple's stock, with an "Outperform" rating. At 3:23 PM EST on Tuesday, the company's shares were selling for $65.13, down 3.92% for the day.


If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.

Observer Comments

Show: Subjects Only | Full Comments
Close Name:Bosco Posts: 1002 Joined: 03 Jun 2002
Subject: No premium for style, durability?

And no premium for ease of setup and use either. I just bought a Mac Mini (Core Duo 1.66) and a 20" screen. I had been considering getting the Mac Mini and a ViewSonic screen I saw from Buy.com via DOTW. I saw the ViewSonic screen at Office Depot yesterday. It's plastic, flimsy, shakey and $500. The Apple screen has a solid metal case (so you can stick your iSight to it) and does not shake on the desk where it sits. The Mini benchmarks faster than a friend's HP he bought at Best Buy (with 15" flat screen) for $1000 a few weeks ago.

The other guys have all gotten on the price competition bandwagon, and the products are suffering. As Apple's marketshare gains what it's going to gain naturally over the next 6 months, more people will start to see what makes a Mac so nice and elegant on the outside and realize that the price difference, whether 10% or 30% justifies being cool. It's the ultimate iPod Halo effect -- by letting the competition cut corner after corner to compete on price, Apple sits back and collects from people who want nice looking, durable, easy products.

Close Name:Guest
Subject: It's the software...

... stupid :p

I couldn't really care less what costs less, hell I'll even go with a flimsy piece of junk, if the software on one blows the software on the other straight to hell.

I'll tell you right now, I don't care what the quality of Apple's hardware is like (although it is nice) if I get to run the clear winner of the 'best OS of all time' award.

Close Name:Guest
Subject: what's missing from the data

It's funny. I work in higher education. Everbody touts Dell as being the low price leader. Not always. Their higher ed prices actually sky rocket over retail prices! It's amazing. Unless you're buying in bulk and dealing with a rep, just using their education portal for your school really doesn't save you money. It costs more!

HP's prices are reasonably stable. Gateway is now pretty much non-existant. I'm surprised more "analysts" haven't noticed their $2 stock price. A bargain it ain't. It's probably a little more safe than a lawyer hunting with Dick Cheney, but not much.

So as for the "premium" you pay for a Mac? Those days are in the past. Car analogies are still very appropo in fact. Honda's = Dell. Gateway's = Yugo. HP = Ford. Alienware = Ferrari. Apple = BMW.

Close Name:Biff Posts: 1479 Joined: 08 Apr 2004
Subject:

Quote
Bosco wrote:
The other guys have all gotten on the price competition bandwagon, and the products are suffering. As Apple's marketshare gains what it's going to gain naturally over the next 6 months, more people will start to see what makes a Mac so nice and elegant on the outside and realize that the price difference, whether 10% or 30% justifies being cool. It's the ultimate iPod Halo effect -- by letting the competition cut corner after corner to compete on price, Apple sits back and collects from people who want nice looking, durable, easy products.

So as more people get Mac's, more people will know what Mac's are like? And then through some sort of effect, others will hear about how good Mac's are too? How will this effect work? Do you think it will involve words? Perhaps they will come out of mouths? I wonder if there is a common term for this?

Close Name:Ibn Rushd Posts: 51 Joined: 16 May 2006
Subject: Yes, the OS

Quote
Guest wrote:

I'll tell you right now, I don't care what the quality of Apple's hardware is like (although it is nice) if I get to run the clear winner of the 'best OS of all time' award.


Yes it is the OS that keeps me here, I might go generic on canned, condensed chicken soup, but not on my computer. There is also a look and feel to Macs that I prefer over Windows.

Close Name:Guest
Subject: BIFF, I know... I know....

HALO effect... no, no, OSMOSIS!... er, maybe it'll just happen by word of mouth. I don't know, that seems like a fairy tale we were told as children, not sure it works anymore but a lot of people would like to believe in it.

Close Name:Guest
Subject: How about USAGE-based pricing?

I'd like to see the pricing comparison for an out-of-the-box PC that allows me to edit and create HD content and music and then publish it to a polished website or create a fully menu-organized DVD.

*waits patiently*

Close Name:Bosco Posts: 1002 Joined: 03 Jun 2002
Subject:

Quote
Biff wrote:
So as more people get Mac's, more people will know what Mac's are like? And then through some sort of effect, others will hear about how good Mac's are too? How will this effect work? Do you think it will involve words? Perhaps they will come out of mouths? I wonder if there is a common term for this?


You are right. It is called the "Holy sh*t! That is so frigging cool I have to go get one today!" effect. Gene Munster and Shaw Wu wrote about it 2,345 reports ago.

Close Name:Guest
Subject: Finance drives sales.

For most home-computer users I know, it's not the sticker-price that swings them, but the credit/finance package on offer. If Apple really want to get sales moving they should either offer 3 years interest-free credit [like my local store is offering on HP gear] or a "lease-purchase" scheme where you put 1/3 of the price down as a deposit, pay the finance on 1/3 of the price over 3 years and at the end of that period either return the computer or pay off the remaining 1/3 as a cash buyout and keep the computer.

To use an auto-industry comparison - remember that GM's most profitable area for the last decade has been their finance/credit business!

Close Name:Guest
Subject: High end Mac cheaper than equivalent Dell

Check out a PM Quad and a 2 * dual Core Xeon Dell Precision 470. Swedish webstores:

Dell Precision 470
2 dual core Xeon 2,8 GHz
2*1GB ECC SDRAM
250 GB SATA
16x DVD+-RW DL
Quadro FX 4500
20" widescreen Dell 2005FPW
SoundBlaster Xfi
WiFi
Windows XP Pro
3 years Business Support

Price SEK 58 690,50 ex VAT

Apple PowerMac Quad
2 dual Core G5 2,5 GHz
2 GB ECC SDRAM
250 GB SATA
16x SuperDrive DL
Airport Extreme + Bluetooth
Quadro FX 4500
20" Cinema Display
Mac OS X
Apple Protection Plan 3 years

Price SEK 53 556 ex VAT

Difference approx SEK 5 000 = 700 $.

Close Name:Guest
Subject: Cars?

"Car analogies are still very appropo in fact. Honda's = Dell. Gateway's = Yugo. HP = Ford. Alienware = Ferrari. Apple = BMW."

That being very generous to the non-macs. I would put it like this:

Dell = Hyundai. Gateway = Cheap Chinese-made car not yet available in US. HP = GM. Alienware = Corvette. Apple = BMW/Mercedes/Audi

Close Name:Guest
Subject:

Quote
Guest wrote:
"Car analogies are still very appropo in fact. Honda's = Dell. Gateway's = Yugo. HP = Ford. Alienware = Ferrari. Apple = BMW."

That being very generous to the non-macs. I would put it like this:

Dell = Hyundai. Gateway = Cheap Chinese-made car not yet available in US. HP = GM. Alienware = Corvette. Apple = BMW/Mercedes/Audi


that's much better . . .I was very insulted at my Honda being compared to a Dell

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