The Downside of a $500 Dollar Mac

With the legal department yet again flexing its litigation musculature the cheap Mac rumor seems pretty solid. Unfortunately no rumor site has come up with anything more than a code name for the Mac for the broke of us (except the code name Q88) and since this article will necessarily make reference to said rumored Mac it is necessary to come up with something. For the purpose of the article the Mac will be referred to as the YugoMac. The name is somewhat fitting: it is said to be cheap, said to cause people to switch and rumored to be fairly sparsely equipped.

The first thing one needs to ascertain is whether or not Apple could produce a sub $500 Macintosh. The answer is easy: Of course they can. You’ll read articles at other places that go into the vaguaries of shipping costs and the savings from removing the monitor, ignore these rants. It is nice analysis but strictly unnecessary. Macs use fairly standard parts and if Dell can ship a $499 Dell Apple can do the same without too much trouble. Here people might argue economies of scale and such but Apple moves enough computers to bring the cost of manufacturing in line with the rest of the industry. The real question is: Can Apple retain the profit margins they’ve become accustomed to by selling such a low priced computer? An interesting question for investors but of questionable utility for the average computer buyer. If Apple introduces the YugoMac you can be fairly certain they’re going to make a tidy sum off each unit sold.

On the other hand I just can’t see Apple selling too many YugoMacs to former Windows users. There are a great many, perhaps the majority, of computer shoppers who shop solely on price. These people will not be impressed by the YugoMac because Dell sells a computer with a monitor for the same price AND it includes a boatload of software. For those who are, erm, more technically minded they’ll note that the Dell has a much better processor than the YugoMac. The YugoMac supposedly sports a GHzish G4. The Dell sports a blazing 2.40 GHz Celeron. Now the processors being what they are a direct GHz to GHz comparison is a best specious but to the average buyer a 2.4 GHz is going to seem a fair bit faster on paper than a 1 GHz G4, particularly when the CompUSA guy earnestly opines that both computers feature low-end processors.

Of course there are other reasons Window users won’t be buying the YugoMac. A lot of people desire nothing more than to run a copy of some game at a little better frame rate. These folks have thousands of dollars invested in various first person shooters, hack and slash D&D style games and the like. Others may have genealogy programs they invested copious amounts of time in to figure who slept with whom that resulted in their tiny spot on the planet. If either of these consumers ask if the YugoMac will run VeitNam: The Frag Your Louie Experience or Acorn Doesn’t Fall Far From the Tree Lite then that is one missed sale you can chalk up to software incompatibility. And you can count “steals software from work guy” straight out.

I suppose the most pertinent question is whether or not iPod owners that depend on PCs will switch. While there are some fairly dubious studies that say they already are it would be wise to reserve judgment until Apple’s sales of computers actually reflect the supposed momentum. Honestly if you’ve got somewhere between $250 and $600 dollars to spend on a portable hard drive with nifty white headphones you can probably scrape together the $799 it costs to get an eMac.

So who will buy the new YugoMac? Mac users who want a cheap option. Instead of the usual wait and save approach I suspect a ton of Mac users will jump on the YugoMac. Get one for their kids, or buy one to complement the PowerBook. After all everyone loves getting a new computer. But that is just selling to the already converted, sure you selling a computer to them more often but it is like getting the people who frequent MacDonalds to buy two Quarter Pounders a week instead of one. Good for you bottom line but all you’ve really done is separate more of the faithful from their money. And the pre converted won’t be happy with their purchase, they’ll see the YugoMac as underpowered and lacking. They’ll complain in droves about the quality and the specs and that will result in a black eye for Apple.

The big downside for Apple is in the failure of the product. Currently people believe that the Mac is saved for hippies, artists, rich folks and scattered geeks. When this thing doesn’t move like hotcakes at a NORML convention people are going to think the Mac inherently worse. After all there is no longer a “legitimate” reason not to buy a Mac after all the biggest hurdle has been removed. Time to face reality and realize that not everyone cares about the computing experience. Those folks are the people Apple will never reach and the same people who they most need to boost their business.