Apple Computer on Monday broke the 1GHz barrier not once but twice with the delivery of new Power Macs.
The Cupertino, Calif.-based company unveiled faster Power Macs that analysts and Mac users say could close the "gigahertz gap" with PCs. The fastest Intel-based PCs soar past 2.2GHz; Apple had been stuck at 867MHz as its fastest available processor.
Apple shipped three new Power Macs, with the top-of-the-line model packing two 1GHz PowerPC G4 processors. The other new models have single 800MHz or 933MHz processors.
Apple also lowered prices, with the high-end Power Mac selling for about $500 less than its predecessor. The company also shipped Nvidia's GeForce 4 MX graphics processor, about a week before the card's scheduled announcement.
The release of faster Power Macs could be important in preventing Apple's new iMac from cannibalizing low-end professional system sales. Apple largely markets Power Macs to creative professionals, and iMacs at consumers.
In early January, Apple unveiled three new iMacs that incorporate a 15-inch flat-panel monitor in the design. The high-end model--with a 800MHz G4 processor, 256MB of RAM, 60GB hard drive and DVD recording drive--butts up against the retiring midrange Power Mac, which offers only a slightly faster processor, half the memory and no monitor for $700 more.
The new dual-processor Power Mac may still seem a gigahertz shy when pitted against comparably priced Intel-based PCs using single 2GHz, or greater, processors.
"Apple faces the same misperception it has always faced, as far as clock speed goes," said Tim Deal, an analyst with Technology Business Research. "It is a misperception that more clock speed means a better machine. It's a marketing ploy."
Robert Crisler, a Web developer and Mac enthusiast from Lincoln, Neb., agreed.
"Anyone in the market for high-end Apple machines is well aware of the folly of using megahertz as a yardstick for performance, especially between processor families," he said.
Phil Schiller, Apple's vice president of worldwide marketing, dismissed concerns that Macs trail PCs in terms of performance.
"In terms of the real work our customers do, in many cases they will find that the Power Mac with two 1GHz processors and system design is faster for what they do than the 2GHz Pentium 4," he said.
Ed Mikkola, a graphic designer and Mac user from Minneapolis, said he decided to place an order for a high-end iMac rather than go with a professional system.
"I'd been planning to upgrade to a new Mac, and because of my job as a graphic designer and Web site designer and administrator I thought I was going to have to shell out for a high-end G4," he said.
Apple is shipping the top-of-the-line, $1,800 iMac, with brisk orders already causing a backlog of three to five weeks. Advance orders topped 150,000 units, Apple said.
"The new iMacs give you an awful lot for the price, and they certainly overlap with the Power Macs," said NPD Intelect analyst Stephen Baker. "Apple has to get some more value into the Power Mac line other than upgradability, and certainly dual 1GHz processors would be a step in the right direction."
"Yes, there are going to be some business customers that choose iMac because of the desktop design," Schiller said. "The old iMac went into some businesses, and I think the new iMac will do even more so.?
But overall, Schiller dismissed concerns that Power Mac sales would seriously suffer because of the new iMac.
"Power Mac customers, by and large really know what they want," such as the flexibility to use bigger monitors, faster graphics performance or expandability, he said. "There are many features Power Mac offers that are essential to the creative pros.?
The entry-level Power Mac comes with an 800MHz PowerPC processor, 256MB of RAM, a 40GB hard drive, a CD-RW drive and an ATI Radeon 7500 graphics card for $1,599. The midrange model packs a 933MHz processor, 256MB of RAM, a 60GB hard drive, a DVD recording drive and an Nvidia GeForce 4 graphics card for $2,299. The high-end model, at $2,999, has a 80GB hard drive, 512MB of RAM and the twin 1GHz processors.
Waited too long
Rumors that Apple would deliver new Power Macs have been circulating for weeks. ARS analyst Toni Duboise said she believes Apple waited too long to release the new models.
"The gigahertz gap is a problem for Apple, and it has been for some time," she said. "I was very disappointed they didn't release new Power Macs at Macworld" earlier this month.
Analysts and Mac enthusiasts expect faster Power Macs to help sales of Apple's professional line. During Apple's fiscal 2002 first quarter, which ended Dec. 29, Power Macs delivered mixed sales results. Though year-over-year sales increased 5 percent in units and 30 percent in revenue, they declined 15 percent in units and 21 percent in revenue from the previous quarter.
"There will be a small surge in professional sales, simply because there's always a tapering off of demand after the line has remained unchanged for a while, which becomes pent-up demand as people choose to wait," said Crisler, the Mac enthusiast. "We're conditioned to minor refreshes of the lineup every six months."
Any big boost in sales could be tempered by the absence of one critical application widely used by Power Mac users: Adobe Photoshop for Mac OS X. Apple released its next-generation Mac OS X operating system last March, but creative professionals have been forced to run an older Photoshop version under OS X's "Classic" compatibility mode.
"I have a feeling that there are a lot of Mac users like me who want their next big hardware upgrade to coincide with a clean and pristine switch to OS X," Crisler said. "As long as users have to switch back into Classic to run Photoshop...they might wait to buy."
Still, some longtime Mac users said they are ready to plunk down their money now.
"I am looking to buy a new Mac soon, mainly for home use, but I will still want it to be compatible with most of my business/office automation applications," said Tom Grigsby, a security specialist and Mac user in Alexandria, Va.
The elegant choice
Throughout 2001, Apple positioned Macs as a "digital hub" for connecting to digital camcorders, cameras and music players. The company delivered software for editing movies, listening to digital music and authoring DVDs. Earlier this month, Apple added software for retrieving, managing and sharing digital images to the mix.
"Apple is spending a lot of time and effort to get people off the 'speeds-and-feeds' treadmill," Baker said. "All the kinds of software they've released in the last year--iPhoto, iTunes or iDVD--are all designed to say it's not about raw power but how elegantly and how well the system manages these tasks. All the products they're coming out with are about what differentiates the Mac from the rest of the business."
The Mac maker will have to push even harder on DVD recording and other multimedia technologies if it wants to stay ahead of the pack, analysts say.
"In one way, it's good to be Apple right now," Duboise said. "On the flipside of that you have a lot more competition because everybody is jumping on the multimedia bandwagon right now. Apple needs to push that even more than ever--that they've got iPhoto and all this other cool stuff. They're going to have to work harder to differentiate themselves because everybody is going to be doing it now."
But Apple may face an increasingly difficult time communicating the advantages of Power Macs over similarly priced PCs.
"With the Mac, you're paying more for a machine with less processing speed," ARS' Duboise said. "To the everyday buyer that doesn't make sense. I think price is a problem. It's a very important factor."
Gateway's 700XL, for example, comes with a 2.2GHz Pentium 4 processor, 1GB of RAM, a 120GB hard drive, a DVD recording drive, 64MB ATI Radeon 8500 graphics and an 18.1-inch digital flat-panel display for $2,999. Hewlett-Packard's Pavilion 780n packs a 1.8GHz Pentium 4 processor, 512MB of memory, a 120GB hard drive and a DVD recording drive for $1,599. The PCs would appear to offer more than either the entry-level or high-end Power Mac for about the same price.
But rebates of up to $500 on flat-panel monitors purchased with new Power Macs could help to close some of that price gap. Apple has extended an October promotion to March 31.
NPD's Baker noted that consumer PCs are more commonly compared to Power Macs, which with their optimization for graphics, video and multimedia offer a different kind of value. "Apple is about design, ease of use and elegance, and they need to keep it focused on that," he said.
Technology Business Research's Deal agreed, contending Apple has done a good job bringing together a "total package."
"You have to look at all the features, all the functions," Deal said. "It's not just going to come down to one thing. We sort have been conditioned by Intel that more is better or less price is more. But that's not always true."