Apple’s New Entry-Level iMac Will Create Heartburn in PC Land

| Editorial

When Apple saw what the iPad was doing to the sales of PCs, the company must have been very pleased. And with the Mac gaining market share against PCs as well, why not pour on the coals?

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Apple, it seems to me, has been about the business of inflicting increasing wounds on the PC market. The first salvo, of course, was when the iPad ushered in the Post-PC era in 2010.

The second salvo came when Apple introduced the awe-inspiring Mac Pro in 2013. If you recall the Steve Jobs analogy about PCs being trucks, Apple intends to be the last man standing when it comes to building trucks for customers who still need them. And awesome trucks at that.

The next round came when Apple introduced the latest MacBook Air in April with a lower price. "MacBook Air Gets Faster, Cheaper." Instead of adding the Retina display, which would have made the geeks happy, Apple passed on an expensive Retina display and found a way to lower the price. That put even more pressure on the faltering PC market.

And then today, Apple announced a new entry-level iMac that has most of the modern technologies: a dual-core i5, a 500 GB drive, 8 GB of RAM, and 802.11ac Wi-Fi, USB 3 and Thunderbolt. All wrapped in a drop-dead gorgeous 21.5-inch IPS display.

While it may seem that a little more money gets you a lot more computing power, my take is that there are a lot of Apple customers who, with iPhone in hand, go into a local Apple retail store and start drooling over this new beauty. Saving US$200 over a more powerful model is hard to resist when one can rationalize that ultimate computational power isn't really necessary for most of the tasks that this entry-level Mac is designed for.

Why not $999 to keep the number in triple digits? Kelly Guimont asked me that in the TMO Daily Observation Podcast for June 18. The answer, I think, is in the proper tiering and pricing of all of Apple's offerings. A $999 iMac would be out of sync with the perceived value of an entry level MacBook Air. So while miniaturization comes at a price, a much larger display on the iMac must be perceived to offset that a little. The bigger iMac should cost as much or more, even though it has the same motherboard as the MBA.

The Market Share Trend

How is Apple doing with this strategy of carving out a larger and larger piece of the PC market place? Horace Dediu shows the trend in "When Apple reached parity with Windows." The second major chart, excerpted below, shows that the ratio of PCs-sold to Macs-sold has continued to decline since 2004. The ratio in 2012 was about 19:1 and dropping, down from a high of 56:1 in 2004.

Image credit: Asymco.

Of course, Mr. Dediu's point is that if you add iPads and iPhones to Macs, the ratio drops to about 1.18:1 and is heading towards 1:1. Even so, so long as the iPhones and iPads are going to contribute greatly to Apple's revenues and total market share, why not pour on the coals and make life even more difficult for HP, Dell and Toshiba? (Lenovo seems less susceptible.)

In the end, this new iMac is a quality Mac. There's nothing cheap about an entry level iMac, and it doesn't diminish Apple's brand, as some might foolishly suggest. It will last just as long as its more powerful brethren, run Yosemite and beyond, and be a pleasing, beautiful, and well-crafted thing to own. The Intel Turbo boost to 2.7 GHz seals the deal.

It's like the BMW X1 and X3 SUVs. Of course, they're not in the class of the X5, but they're still BMWs — a pleasure to own. Also with turbos!

All in all, I am pleased to see Apple taking this approach: Offering the customer a quality iMac for a little less and bringing it more in reach, will make Apple's customers very happy while creating serious heartburn for the PC makers who see their market slowly slipping away.

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Heartburn teaser via Shutterstock.

Comments

iJack

Enterprise. Work stations. Last IT objection removed.

mhikl

I agree, John. Your title sent me back to re-review the cheaper iMac. I should have figured out first time round had I taken the time to assess unbiasedly.
I wonder if many might opt for double the hard drive space for only $45. This would be a smart move if the iMac were intended to be the mini server or holder of your data.
Michael

Jamie

I dunno, John. What do you think about the soldered-in RAM? I understand the logic, the heart of the iPhone/iPad crowd (read: non-tech savvy/non-caring) will likely view it as a similar device to those; now more than ever tech is invisible and people just don’t think about stuff like that. Still, I thought it was a little suspect, all the same. I guess they will do what they will do. With the Beats deal, Apple is now, more than ever, a consumer company. I suppose in a sense that was their goal all along, though, to make technology usable, fun, and as easy as possible for people to enjoy for the betterment of their lives. And yet, my inner geek weeps. wink

vpndev

X5s are NOT BMWs even though they have the roundel on the hood. Nor are X3s and X1s.

Nothing but impostors, with BMW engines !

iJack

“Nothing but impostors, with BMW engines !”

The engine is the only thing that distinguishes a BMW.

ctopher

iJack: I agree. Have you seen the cup holders in a BMW? They’re a joke! pfffttt. haha

vpndev

ctopher: they’re there primarily because American customers demand them. Germans don’t seem to use them, in my experience.

I will say, however, that the ones in recent BMWs are WAY better than the ones of a few years ago. I guess the Californian design center is having an impact!

iJack

I think the analogy should have been made using Mercedes-Benz. Elegant, beautifully built, and finally, very powerful.  The sweet spot for me is the CLS63 AMG. http://bit.ly/1ps6swN

Alex Santos

This is one of the most intriguing macs Apple has ever brought to market. There is no doubt that the price point opens a window for new mac users. This new model is perfectly positioned on price, features that it will draw a lot of new users to the Apple platform. I am delighted that Apple has focused on delivering an affordable iMac. These are truly wonderful computers. If you are thinking about one I would encourage you to get one with an SSD for ultimate performance. If I buy a new mac for my kids, this will be the model. One thing is clear, the displays Apple bundles with their iMacs are industry leaders in quality. This iMac is a no brainer, get one!

Alex Santos

I would like to summarise. I think this mac and the ilk will be a Post PC blockbuster.

Adam OtherButter Butterick

I’d love to see this same approach to the Mac Mini. Imagine a Mac desktop for $299-$399. Just toss that hunkin’ PC tower and replace it with something size of an old Sony DiscMan. Now we’re talking.

Alex Santos

Adam, not to scare but after this mac came out I was left wondering if Apple might even be contemplating the end of the mini. After further thought, I don’t believe this is the case.

Yes, a mini for 300-400 would be amazing. I think Apple can make some low cost, high quality macs if they choose to sacrifice something.

This iMac bring some controversy but I believe it’s the power users that are complaining. This is not the machine for them, neither would a mac mini. This iMac and new mini rev (long awaited) would be a fantastic addition.

I second the emotion!

Adam OtherButter Butterick

Yes the Mini remains geared toward PC converts as they typically have monitor, mouse, and keyboard, and it also appeals to the home theater folks looking for a little more than an Apple TV. I (had) a Mini hooked up to my 55” TV in the living room. Best little home theater server I’ve ever had, but still whopping expensive for JUST that singular purpose. I wouldn’t blink at a Mac Mini with a little i3 or i5 dual core processor in it. (I’d even be ok with a Core 2 Duo from WAY back if it drove the price down).

People like me who went to Mac way back in the day just want a computer for the eco-system. I’m waiting for the day Apple decides to put low cost Air and Mac Mini’s on shelves at Walmarts and Targets, with competitive pricing and selling mouse and keyboard type accessories.

I’m in need of a cheap computer right now for my vinyl cutting business, but can’t justify the cost of a new Mac. I am forced to go second hand. It would be cool if there were a Mac Mini option brand new from Apple. It would be great if they would continue to make the previous years for a cheaper price, much the same as their iPhone model is. Although it is changing slightly, I always loved the discounted, yet still very capable, previous generation.

Imagine when people have the opportunity to purchase a sleek little Mac Mini with it’s small footprint or a massive Walmart Dell for $400. I’ll be they would go with the Mac nine times out of ten. Especially if they already have other Apple products.

Adam OtherButter Butterick

*bet they would*

(can’t seem to find how to edit my typo).

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