Apple Computer welcomed new chief Gilbert Amelio by announcing a price cut for its Performa line. The question is: are the price cuts Apple's way of celebrating the ouster of Michael Spindler or is this yet another sign of desperation for the beleagured computer maker?
Apple today announced that it has reduced prices up to 11 percent, from $2,799 to $1,699, on select Macintosh Performas. The company is also offering rebates from $150 up to $500 when consumers purchase an Apple printer, display, and computer.
The price reduction is due to overstock, according to Pieter Hartsook, a veteran Apple analyst and editor of The Hartsook Letter. "I think what we're seeing is the start of an inventory clearance sale," said Hartsook. "They [Apple] want to get rid of these machines prior to the introduction of new models in the spring. I would be surprised if we don't see further price reductions on these models in the next few weeks," he added.
Apple's decision to lower prices is not a sign that the company will pull out of the low-end market, according to Hartsook. "I suspect that Apple isn't going to the leave the consumer market," he said. "They may in fact execute an idea that Spindler floated, which is to consolidate the product line to have fewer models and few design centers," he added.
However, some disagree. Apple needs to rethink its low-end line strategy in order to survive, according to Michael Goulde, analyst with Patricia Seybold Group. "It might make sense to encourage the clone market for the low end and keep the high end for itself," said Goulde. "Apple will sacrifice loyal customers in favor of the power user."