% fortune -ae paul murphy

Those cheaper Apples

Apple's late December 2006 10-Q filing covering the three months ending July 1, 2006 has some fascinating information despite being mostly about legalistic corrections to previously filed documents.

In particular, the report shatters the long standing myth that the PowerMacs cost more than their Intel counterparts - and, correspondingly, that Apple's Intel decision would lead to lower cost Macs.

Specifically, the "Net sales and Macintosh unit sales by operating segment" table shows us that Apple's average revenue per MacTel sold in the quarter ending July 1, 2006 was $1,406 - versus $1,324 per MacPPC unit sold in the comparable quarter from 2005.

On average, therefore, Apple's revenue per Mac shipped rose by $82 (6.2%) during the PPC to x86 transition.

  3 Mths to June 25/2005 3 Mths to Jul1/2006
Desktops (Units) 687 529
Desktops (Revenue) 845 705
Desktops (Selling Price) 1,229 1,333
laptops (Units) 495 798
laptops (Revenue) 720 1,161
laptops (Selling Price) 1,454 1,455

The story here isn't simple. Notice first that the average price change reflects a change in product mix: from desktops to notebooks. Second, notice that the price changed most dramatically for what had been Apple's cheapest machines: the G5 desktops, and stayed about the same for the premium notebook product line.

Unfortunately maintaining price parity in a market where everyone else's prices dropped amounts to a price increase because what counts in a competitive market is relative industry pricing.

HP does not report unit sales in its comparable 10-Q filing but points out that personal systems revenue grew by 9% between the two quarters mainly on the basis of customer preference for larger LCD screens while unit volume grew by 14% - meaning that its average price fell by roughly 5% despite the move to larger, more expensive, screens.

Similarly, Dell doesn't report unit sales but gives both the revenue and percentage change information needed to estimate their average selling price drop over the year at 8%.

That's Moore's law at work - with the overall Intel PC industry seeing an average unit price drop in the 6%+ range over the year. Great, except Apple switched from PPC to x86 and raised its average price by about that same 6%: offering less for more while everybody else offered more for less.

Bottom line? Mactel costs the customer an average of $82 more than MacPPC did despite the operation of Moore's law for a full year.

So what does this prove? It proves that the people who knew for sure that Macs used to cost more than PCs were wrong, that the people who trumpeted MacTel as certain to lead to cheaper Macs were wrong, and that the people who see MacTel today as cheaper than MacPPC then are wrong too.

Of course, given that Intel CPUs cost considerably more than PPC products this should not surprise anyone, but what should be surprising is that you'd never guess any of this from the Mac press - a group that has set new records for getting along by going along with all critical faculties firmly turned off.

Paul Murphy wrote and published The Unix Guide to Defenestration. Murphy is a 25-year veteran of the I.T. consulting industry, specializing in Unix and Unix-related management issues.