Despite that omission on my part, the comparison still holds up. Take out $4000 from the price of the Apple and $700 from the price of the Gateway for its 17" monitor, and you still have an $1800 price differential. That's stunning for two computers that do roughly the same thing at roughly the same speed.
As to the other complaints, here is my opinion:
*Clock speed doesn't matter-this is simply not true. I agree that the industry fixation with clock speed has gotten out of hand as Intel and AMD race to get one megahertz faster than eachother. But it is still true that a 700 mgh computer will process commands noticably faster than a 500 mgh computer. Hundreds of billions of dollars in computer buying decisions are based on clock speed issues every year, so it's disingenuous to say that clock speed doesn't matter.
*Apples vs. Oranges-I agree that it's impossible to make a completely fair comparison between an Apple computer and a Wintel machine. The Apple chips are based on RISC architecture that is structural dissimilarities with the manner in which Intel builds its chips (AMD follows the Intel design). Nevertheless, both chips go into a personal computer which is designed to carry out the same essential functions. The argument over which design is faster is a technical one which has no real answer. I use both Macs and Wintels and I can't tell a significant difference in processing speed when using applications like Photoshop and Quark and Microsoft Office--and the PC's that I use were made at a time when Apple had the megahertz edge.There is another argument which I subscribe to: that computing speed has become relatively irrelavant because no software program designed for a PC is able to efficiently use the power of current chips. But from a financial perspective, that argument is unimportant. The fact is that corporate buyers aren't buying Apples because they are too expensive and they don't offer significantly superior performance to justify that price.
*This is an industry-wide phenomenon--All the computer makers, even Dell, are enduring a disappointing quarter. Steve Jobs, in his conference call, tried to say that Apple is being hurt by the same downturn. It's true that Apple is hurting like everyone else. But none of the other computer makers have come close to the enormous shortfall in revenue that Apple is dealing with. Compaq, Dell, Gateway and Micron all had adjustments to the amount of profit they will make because they had been expecting growth to be much higher than it is. Their stocks were all justifiably beaten down because of those relatively minor mistakes in forecasting demand. Apple, on the other hand, drastically reduced expectations a couple of months ago. Then last week they said they are still going to end the quarter with 38% less sales than they had estimated. That's more than a third less sales! That is a very dramatic mistake. Two months ago, Apple executives told investors that the company would be able to sell more than $8.5 billion in 2001. Today, they are saying it will be about $6 billion. That's a huge change and means that growth has essentially stopped for the company. That's why the market is now valuing the company at about $4.50 a share, once you take out the $11 a share in cash that the company is sitting on.
*OSX will change everything--I didn't mention anything about OSX in my column but a lot of people sent me comments about how important it is. I don't agree. After covering Linux for the last couple of years, I know how hard it is for an operating system to make a dent in people's consciousness. If you want a technologically superior OS for graphics use, just look at the BeOS, which has had no noticeable impact on even the graphic design market. I'm sure that OSX is better than Apple's current operating system, but it's not going to change the world at large's failure to accept Apples as competent competitors to Wintel machines.
*You're just a Microsoft-paid FUDmonger--I do not own any stocks. I do not recieve anything from anyone except my paycheck from McGraw-Hill. I have never felt any pressure from any of my editors or publishers to support any one technology platform over another. I primarily use Wintel machines to do my work, but I also use Macs because they are very popular among graphic designers and artists in the publishing industry. I have also used Linux and Be machines as part of my reporting. I don't have a personal preference for any one operating system or hardware configuration. I am paid to write an editorial column on stocks that are meant to be opinionated and are not meant to merely recite news events. If the colunn includes an argument that is fundamentally sound and I does not have any factual errors and is interesting to read, then I consider it a success.In the case of the Apple column, I believe that I have accomplished all of the above. Thank you all for your comments and interest.
Sam Jaffe Staff Writer Business Week Online
I agree with you that all the problems that Apple appears to have are important, but you did not note that other PC companies have similar finance issues, and they -do- have some technologies that Apple doesn't have (1GHz processors, CD-RW drives, et al.). In a nutshell: this is an industry wide problem, and Apple has it worse because their systems are more powerful historically and have always been treated like an appliance (not replaced within 3-4 years after purchase).
Your assessment of Apple's technology have little logical basis because your technical assessments are quite faulty.
Nevertheless, Apple and other PC companies need to address the problem of not having a new Next Big Thing that stimulates the industry to build faster, stronger computers to meet the NBT's needs.
To conclude, you ignore the one thing that other writers 2 years ago had ignored as well: Steve Jobs hates to lose, like Bill Gates. They're from the same school. He brought Apple from a near-death once before, and the inforrmation appears to support that he has a few tricks to beat the challenges facing Apple now.K. Spencer, Indianapolis
You would be correct if the machines used the SAME processor, which they do not. You are comparing a 700 MHz CISC processor to a 500 MHz RISC processor. They cannot be compared to in terns of MHz. Especially since they have a completely different architecture. I believe that this statement was made out of simple error and not out of malice, but should never the less be corrected if credibility is to be given to the article as a whole. Just in terms of fairness I would like to point you to a PC Magazine article done a month ago comparing a Dual 500 MHz G4 and a Dual 1Ghz PIII while the PIII was fast the Dual G4 beat it. Mind you a PC magazine did this.
Out of fairness I built a comparable system with a DELL
A DELL Precision Workstation 420 MT Dual PIII at 733 MHz 256 MB RAM 40 GB HD 32 MB Graphics Card Gigabit Ethernet FireWire DVD-ROM CD-RW Sound Card
<sum> I included the CD-RW b/c there is no DVD-RAM option
TOTAL $3,304
Apple Macintosh MT Dual 500 MHz G4 256 MB RAM 40 GB HD FireWire Sound 32 MB video card DVD-RAM Gigabit Ethernet
TOTAL $2,999 (with mail in rebate)
I must apologize but I do not understand how the article can compare ‘similar’ machines and come up with a 1,800 dollar difference.
Thank you,
Vernon
The argument over processor speed is academic as well as pointless. You admit yourself that Wintel and Apples are different machines, with different clock speeds and it's difficult to compare their processing speeds. Yet, you make the mistake of doing just that by saying that Apple's hardware can't compete with Intel's and use clock speed to back your assertion.
I'm not going to argue with your perception of the Mac because it's YOUR perception. I use Macs and PCs at home and work and my perceptions are different. For some things, the Mac is faster; others, it's the PC. Believe me, their are differences in how each platform performs.
However, I believe your perceptions are closer to the typical computer user. For light computer use, such as the Internet and word processing, Macs don't offer significant differences in performance. Macs have intangibles, such as ease of use, superior industrial design and reliable hardware. Does this justify higher prices over PC competitors? I personally think so, you don't.
I also agree about what you say about corporate buyers avoiding Macs. However, price is far from the only reason. Corporations run on NT, not AppleTalk and IT people can't support Macs like they do for PCs.
Your observations about the Apple's financial performance is accurate. Apple did drastically reduce earning expectations. This downturn is the result of market trends and Apple mismanagement, not inferiorities in the Apple hardware.
If you made an argument that the premium that Apple charges is hurting it sales, or the megahertz gap that exists between Macs and PCs is affecting Apple sales, or even that mismanagement was going to kill Apple, I might be inclined to listen to you.
However, when you compare a low end PC to an overmatched Mac G4, say they're comparable machines (false), have the same performance capabilities (false too) imply they're both marketed to the casual user (another falsehood), toss in $4,000 monitor to pump up the price difference and use this to back your weak arguments, well, you destroy your credibility.
Your writing smacks of the Apple bashing that is popular in financial magazines. It's a bias that is uniformed and irresponsible.
Your response was perfect, I mean perfectly build. This is the type of "politically correct" (but still political) response that one should expect in this case. I was certainly not expecting a retraction (one has his ego) and you finely used the old tactic of conceiding (partially) on one point and then making your point on the rest.
You don't really care wether you were right or wrong, because now that you have "justified" yourself, you feel you have done your duty. I know most of the people on this board will not feel satisfied, but that doesn't really matter, does it ? This will probably end up being some religious war (not unlike a presidential one going on) and if some other PC fanatics kick in, everyone will have forgotten about your numerous mistakes (if they are only that, which I doubt).
Finally, as a pure investment analysis, I sure hope as few people as possible listen to your advice. Apple is probably starting to be an excellent buy and I am sure that when good times show up again, a BusinessWeek staff writer will write the infamous "why I always knew Apple would succeed" editorial...
As far as BusinessWeek is concerned, I will continue reading it... at my doctors, when I have really nothing else to do and I have finished People Magazine.
While you have acknowleged what may be your most egregious error, the inclusion of the $4000 Cinema Display, you compounded the problem by citing a "$700" price tag on the 17" monitor that is included with the Gateway. I don't know what stores you shop in, but 17" displays have not been $700 for quite some time - I can pick up a comparable 17" display for $200.
You still have not acknowleged why you compared a 700 mHz Celeron system to a dual processor G4 computer. The celeron is Intel's budget processor, while the G4 is the crown jewel of the desktop PowerPC line. A better comparison would be between a Athlon or Pentium III based system from a leading manufacturer such as Compaq or Dell - or better yet Silicon Graphics, not a manufacturer or such questionable quality as Gateway (yes, I do service on Gateway, Dell, IBM, as well as Apple computers).
And still, such a system would not include any of the features of the G4 based system, like DVD-RAM, Gigabit Ethernet, and 802.11 wireless networking. The only reason I can see for not correcting THAT error would be that it would deflate your key argument.
You say "But it is still true that a 700 mgh computer will process commands noticably faster than a 500 mgh computer." First - not to nitpick, but it is mHz, not mgh. This begins to show your clear misunderstanding of the "clock-speed" argument. It's not that clock-speed doesn't matter - it's that clock-speed between RISC chips such as the PowerPC G4 chip is so much different than the clock-speed of a CISC chip such as the Celeron that you chose to compare it to. Yes, you can get computers with "Intel Inside" that beat the dual-processor G4 - but they will also cost more too. Quite a bit more. You then substitute your subjective judgement of the clock speed differences - "I can't tell a significant difference in processing speed when using applications like Photoshop and Quark" - therefore saying, in a way, that clock speed really doesn't matter.
I also still question your assumption that because Apple hasn't announced something by the time you wrote your article, that they haven't nor will have any new products for "months, if not years." Because I can't get 2002 model year cars yet, does that mean they aren't working on them, and that they won't have them for years?
I'd like to thank you for your response - I would have expected this article to go without any further comment, as does seem the trend with "Apple is dead" type articles from other yellow journalists. However, your response is somewhat lacking, and I would appreciate hearing from you again.
Chris George
If you're truly interested in being accurate in your comparison, you will note that Gateway charges the following for their monitors: US$170.00 EV700 17" Color Monitor US$210.00 EVF720 17" Color Monitor US$250.00 VX720 17" Mitsubishi Diamondtron Color Monitor The default configuration on most of their computers is the $170 monitor.
So that is the price that you should be backing out.
mikel
Your argument is fundamentally flawed and I just can't find the motivation to write the full discourse explaining all that's wrong with it.
The short version is that you're playing both sides of the street.
You indict Apple for serving a niche market, then you essentially disavow that serving the needs of that market matters.
Almost all of your "issues" are part and parcel of the "niches" that the Apple Macintosh serves. The needs of this market are different than the needs of the market as a whole.
PS: Please don't take this the wrong way, but you would be better served by becoming more familiar with your own level of technical competence. Judging by your writing thus far, you're demonstrating "buzz phrase" compliance; however, you're misusing the words and misapplying the concepts. And this strongly undermines your credibility when read by people who actually know what the words and concepts mean.
PPS: Of course, that PS applies to about half of the posts I've seen in this forum. :-( "SISC" vs RISC, indeed!