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Wed, Jan 07, 2009 - 05:14 PM EST  —  AAPL: 91.01 (-2.01, -2.16%)  |  NASDAQ: 1599.06 (-53.32, -3.23%)

Bear Stearns: Apple’s new Mac Pro, Xserve pricing well below comparable Dell systems
Wednesday, August 09, 2006 - 08:54 AM EST

"Bear Stearns analysts Andy Neff, Bill Hand and Ted Chung sent a note to clients on Apple Computer's (AAPL) new product announcements yesterday," Seeking Alpha reports.

Key points from the note:
• Some investors came away disappointed given the lack of any surprises (i.e., “one more thing”), we believe that the compelling pricing of AAPL’s new Mac Pro and Xserve was overlooked. Contrary to the popular belief that AAPL’s Macs are premium priced and above its major Wintel competitors, our analysis indicates that AAPL’s pricing of its new professional systems are well below comparable systems from DELL.
• Priced at $2,499, AAPL’s Mac Pro is 28% less than the comparable system from DELL (Precision Workstation 690) which is priced at $3,471 (see detailed comparison in full article).
• Priced at $2,999 for the base model, AAPL’s Xserve is 10% less than the comparable system from DELL (PowerEdge 1950) which is priced at $3,333... AAPL’s Xserve comes with an unlimited client edition of its [Mac OS X Tiger] operating system, while DELL’s MSFT Server 2003 edition is limited to 5 client seats. (see detailed comparison in full article).

Full article here.

[Thanks to MacDailyNews Reader "LinuxGuy and Mac Prodigal Son" for the heads up.]

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MacDailyNews Take: Comparable Dell? Fact: There is no such thing as a comparable Dell box to any Apple Macintosh. Dell PCs are OS-limited and cannot run Mac OS X and best-in-class Mac-only applications like iMovie HD, iDVD, GarageBand, iPhoto, iChat, Safari, iWeb, and so much more. Why would anyone settle for only being able to run some programs when Apple Macs can run them all?

Related MacDailyNews article:
Dude, you got a Dell? What are you, stupid? Only Apple Macs run both Mac OS X and Windows! - April 05, 2006

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Aug 09, 06 - 08:16 am Comment from: macnut222

Don't nitpick so much MDN.

Aug 09, 06 - 08:21 am Comment from: Jake

If this is widely publicized, Dell is f#*ked. They will be pressured to reduce margins on their high-end systems, which currently subsidize their money-losing low-end sales.
GO APPLE!

Aug 09, 06 - 08:27 am Comment from: me

news flash - if Apple can make money selling these boxes at these prices, so can Dell.

Aug 09, 06 - 08:27 am Comment from: R

It's nice to see this reported. About the missing "one more thing" thing... it's behavioral conditioning. If you reward behavior (like paying attention to an Apple event) every time with a "one more thing," you'll increase the frequency of people paying close attention to an Apple event. But if you reward people every once in a while with a "one more thing," they're even <u>more<> likely to pay attention to an Apple event.

It's like gambling. Slot machines only pay out every so often-- that's why people will sit there forever, waiting for a pay-off.

Apple is not filled with dummies. They're as deliberate as you can be, even if it's just acting on intuition.

Aug 09, 06 - 08:29 am Comment from: R

Dell makes it's money off these high priced products, not the cheapo boxes. Apple's strategy seems to be to strangle their cash cow.

Aug 09, 06 - 08:31 am Comment from: me

TWO errors in the compare article:

- the Mac Pro ships with a Superdrive which is a DVD-RW, not just DVD-R. The Dell is configued with a DVD-R.

- the XServe comes with a 1 year warrantee and the Dell with a 3 year. He needed to add the cost of upgrading to a 3 year to the Xserve, which will pump it past teh Dell's price.

Aug 09, 06 - 08:36 am Comment from: Dirty Pierre le Punk

me -

You should forget about factoring warranties into the price. With the Apple, a one year warranty will suffice. With the Dell you're gonna need that three year deal (and more).

Aug 09, 06 - 08:40 am Comment from: Poppycock

Analysts and IT people live for comparability. Even when they make some errors, it is an fscking great thing that they reach and publicize this conclusion.

Aug 09, 06 - 08:41 am Comment from: Martin

Bear Stearns forgot one big big difference between Dell and Apple.
Look at the inside of any Dell, if you can see past all the wire that is going from point A to point B. You will really see that no pride is taken, just put together like anyother box. Now look at the inside of a Mac, no wire clean, sharp and quality, makes you want to show off the inside to everyone.

Aug 09, 06 - 08:41 am Comment from: coolfactor

MDN, most of your Takes are good, but this is just another one for the wastebin. This article is clearly about the "hardware". The OS is secondary and not the focus of the value calculation. The OS only becomes important when the hardware is in the hands of the end-user, at which point another level of value is realized (for Mac users).

Aug 09, 06 - 08:43 am Comment from: Norm e

To "Me".
About the Xserve. Yes you are right but you forgot the number of licenses. If you are running a server and need 20 licenses Dell has you by the short hairs. \

Apple - unlimited number
Dell 5 licenses.

The truth, THE WHOLE truth and nothing but the truth. grin

Aug 09, 06 - 08:44 am Comment from: KB

The big thing that people miss when pricing these servers (And it doesn't matter where you get it from) is the OS X server Unlimited vs Windows Server 5 client license. To upgraded to a 25 client license will cost you another $2496.

Aug 09, 06 - 08:45 am Comment from: Scott

Some might disagree that Safari is best in it's class. I'm sure a big portion of the Mac users use Fire Fox.

Aug 09, 06 - 08:47 am Comment from: Gregg Thurman

Dell makes it's money off these high priced products, not the cheapo boxes. Apple's strategy seems to be to strangle their cash cow.

Well over a year ago I speculated that Apple could compete on price if they wanted to. Apple's gross margins are in the 28.5% range, while Dell struggles to get 19%.

But these price reductions surprised even me for they represent much more than a 10% cut in margin. They represent an elimination of margin. Is Apple going after the power users they lost eleven years ago to Win 95 and cheap boxes?

Aug 09, 06 - 08:48 am Comment from: Mac Genius

Norm e, me, MDN - YES! The unlimited OS X licenses vs. 5 Windows licenses is HUGE, and too often overlooked. I could see a server argument on this alone (obviously), not just on the xServe's lower price.

Aug 09, 06 - 08:52 am Comment from: Allen

Anyone notice that in the HP advertisment next to the comment box on this page, their new slogan is "It just works."

Can they get away with that?

Aug 09, 06 - 08:52 am Comment from: R

I think so, Gregg. Steve has commented about Apple's mistakes in the past, one of them being their failure to pursue market share. Apple is very profitable now, so this seems to be a push to raise numbers, temporarily sacrificing a few bucks.

Hope it works!

Aug 09, 06 - 08:53 am Comment from: jay

Unfortunately, I'm not sure lower prices for the new Apples means Dull is "f****d". What it probably means is that most IT shops will not buy anything until Dull lowers prices to meet Apple.

Aug 09, 06 - 08:55 am Comment from: Allen

Anyone know the difference in price in the GPU cards used between the two being compared?

MacPro = GeForce 7300GT
Dell = Quadro FX 3450

Aug 09, 06 - 08:57 am Comment from: LinuxGuy and Mac Prodigal Son

Posters mentioning the MS licensing issue raise a vital point. Apple's going with multiple CPUs, not just multiple cores, is a clever move. If MS wants to hurt Apple's sales of multiple CPU Macs, it will have to change its licensing policies and lose a lot of profit. I suspect that is why there are no low end Mac Pros with a Conroe CPU.

Aug 09, 06 - 08:58 am Comment from: Allen

Apple is very profitable now, so this seems to be a push to raise numbers, temporarily sacrificing a few bucks.

------

Or maybe Intel is pissed at Dell because of their AMD deal and is offering these chips at a discount to Apple. Plus Apple doesn't have to pay any licensing fees to MS.

Aug 09, 06 - 09:08 am Comment from: MacDailyNews Webmaster

coolfactor,

Computer hardware without software is a paperweight.

Aug 09, 06 - 09:08 am Comment from: LDM

R: You are right about the "one more thing." BF Skinner discovered the same thing in pigeons over 50 years ago.

Aug 09, 06 - 09:08 am Comment from: Alec

MDN, most of your Takes are good, but this is just another one for the wastebin. This article is clearly about the "hardware". The OS is secondary and not the focus of the value calculation. The OS only becomes important when the hardware is in the hands of the end-user, at which point another level of value is realized (for Mac users).

I have to strongly disagree with the above statement, especially when you are talking about servers. The OS can easily end up costing more than the server itself if you have to pay for a license per seat.

Aug 09, 06 - 09:12 am Comment from: Fanatic Realist

macnut manages to be right and a little wrong all at the same time.

MDN should nitpick, but not on dumb ass subjective crap that nobody really cares about - unless they're unbelievably anal – but on real information that makes a difference.

The Dell server in this article is packaged with a copy of Microsoft Windows Server 2003. BFD. With Windows Server 2003, I can file documents, print documents and run a simple web server. With OS X Server - as it currently stands - I can file, print, run a mail server, run a webserver, run a blog server, deliver multicast streaming media and I get a semi-reasonable firewall as well.

Come Leopard Server, with built-in Wiki, Cyrus IMAP server and iCal server, the Xserve will be more like Small Business Server 2003, which costs a darn site more.

You don't seem to be able to buy SBS 2003 as an OEM install option from Dell's website, so let's start with a raw system at $2,544.

Add in a copy of SBS 2003 with 5 CALs and that's another $1,300.

So now we're up to $3,844.

Now, let's go back to the unlimited license advantage of Mac OS X Server.

The average business in the USA has about 27 employees, if memory serves. So that'll be 30 CALs required. We already have 5 to begin with, so we need another five 5-user packs. That'll be $2,250 thanks very much.

So, a 30-user system on the Dell side will cost you a minimum of $6,094 - let's call it $6,000 for cash. And the Xserve will be $3,000.

Now admittedly, both machines will need more RAM and more disk space to cater for 30 users. But given that the Xserve is starting with a $3000 advantage, I'm thinking that's not going to be much of an issue.

Aug 09, 06 - 09:18 am Comment from: Fanatic Realist

For the benefit of Me, I'll add in AppleCare.

So now the difference is only $2000.

Happy now.

Aug 09, 06 - 09:22 am Comment from: Fanatic Realist

And a quick question to end…

Why would you spend 50% more (and that's only at the front-end and that doesn't include anti-virus software, cos I'm being generous and I can't be arsed to do the research) to land up with Windows and Dell.

Are people really that stupid?

Aug 09, 06 - 09:36 am Comment from: Luc Scholte van Mast

I really like it when people get their facts right. It's even more fun to watch when people get the right facts thrown all over them.
As for today, we have a fanatically realistic winner for this.

Great Job(s)
Amen

Aug 09, 06 - 09:40 am Comment from: Spark

I have ASP and .NET web apps running on a Win Enterprise server with MS SQL DB. How can I move this to an Xserve?

Aug 09, 06 - 09:58 am Comment from: G-Spank

news flash - if Apple can make money selling these boxes at these prices, so can Dell.

newsflash - Dell has to pay for a windows license, Apple doesn't.

Aug 09, 06 - 09:59 am Comment from: AS

Apple Pricing:
Here's the problem with Apple pricing. If you look at base systems, such as the MacBook with a "comprable" Dell 14" laptop (they don't make 13"), the Mac is actually cheaper in cost. However, if you start customizing it, such as adding a 120 GB hard drive to the MacBook, suddenly you start getting substantial price differentiation. For example, adding such a hard drive to the $1299 MacBook cost $250. Adding the same feature to a Dell Inspiron E1405 Laptop (with a base drive of 80 GB) costs $40. I know that Apple uses better quality and all that jazz, but that is a huge difference in cost, a gap I wish Apple would look into closing down.

Aug 09, 06 - 12:17 pm Comment from: mike

news flash - if Apple can make money selling these boxes at these prices, so can Dell.


~~~~~~~~

Huh? Subsidized by Software and iPod sales, dumbass. Also dell has a massive sales team handling all their sales. Apple uses a profitable retail store but also lets others sell their stuff.

Aug 09, 06 - 12:21 pm Comment from: rasterbator

When the first G5 aluminum towers came out, I thought that eventually Apple would need to make a Mac Pro mini. It could have a single dual core Intel chip, and half the hard drive space for half the price. This would kill off the rest of Dell.

Also I have a xServe mini, which I thought would be utilized not in the office, but as a home theater system and run all of your necessary server apps. The PhotoShop images are old but I posted them to a new Flickr account a couple of months ago.

Check them out here:
http://www.flickr.com/photos/rstrb8r/sets/72157594152270838/

Aug 09, 06 - 01:34 pm Comment from: 3rdKidney

MDM's take is going in the right direction, but misses the mark IMHO. I think most pro users could care less about iLife apps, so using them as an example make their take irrelevant.

A better choice of apps would have been Final Cut Studio, Logic Pro, Aperture and Shake. THESE are the mac only "can't live without" apps that make the mac a slam dunk for a large majority of pro users over ANY Windoze box.

Sure iLife is great and requires a mac, but who's going to buy a $2500+ workstation just to be able to run iMovie?

Aug 09, 06 - 02:42 pm Comment from: Frankie

The GPU difference is a minor problem. GF 7300GT has about the same clock & pipes as QFX 3450, but much lower memory bandwidth. However, if you pump the Mac Pro up to the ATI X1900 for $350, it's still $600 less than the Dell but has more GPU power.

Aug 09, 06 - 02:54 pm Comment from: Frankie

However...

Apple still has a huge hole in its lineup when it comes to mid-range mini-tower units that make up the vast majority of PCs you see in homes and offices. The non-upgradeable Mini and iMac are insufficient for a lot of needs, and the Mac Pro is over $2K.

Aug 09, 06 - 06:39 pm Comment from: Fanatic Realist

With the death of the G5 and its monstrous requirements for climate control, Apple could now build a cut-down tower designed to give dual-core perfomance in a more wallet-friendly, yet still vaguely expandable format.

Personally, I think such a machine should look something like…

• Conroe (Core2Duo) powered machine (two cores, but not two way), then again Apple could drive cost & price down even further by using Allendale which has 2MB of L2 cache as opposed to 4MB.
• Maximum of 8GB of RAM (4 x 2GB, non-ECC, not fully-buffered)
• 1 x SATA drive bay
• 1 x 10/100/1000-BaseT Ethernet port (as opposed to the two on the Pro units).
• 1 x optical drive bay
• 2 x double-wide capable PCI Express slots, so you can have up to four displays or two displays and a card from Digidesign
• External bus expansion: 1 x FW800, 2 x FW400 (1 at front, 1 at back), 4 x USB (3 x back, 1 x front)
• Optical/analog audio in/out

Such a unit could be very aggressively packaged, in a re-intepretation of the Mac Pro case.

The SATA drive bay could sit behind the optical drive bay, and the case would immediately lose the volume currently committed to the 4 x drive bays and the second optical device - that's about 3.5 inches in height gone.

Another 3.5 - 4.0 inches probably goes by using only one processor and one riser card for RAM, so that's at least 7 inches disposed of out of just over 20 inches on the Mac Pro.

The aim should be to bring the system to market for around $1500, or just under £1000.00 in the UK, with the aim of delivering a complete Mac Pro + Cinema Display solution to customers for a price of around $2200.00 or a premium of around $500 over a 20" iMac. I think this is about right considering the flexibility that having an expandable Mac mini-tower would give you, plus the extra I/O ports and the more powerful processor.

Aug 09, 06 - 08:50 pm Comment from: macaholic

Fanatic Realist: "are people really that stupid?"

In a word. yes.

Aug 10, 06 - 07:18 am Comment from: Fanatic Realist

Spark >

I can't tell whether that's a troll question or not, so the reply I'm going to give is going to be a little controversial.

Your problem is the problem that's faced by any developer who commits to a proprietary technology thats tied to an abusive monopolist who only wishes to recognise their own homogeneous monoculture.

Whether this was your choice or some else's, the simple fact of the matter is there was a screw-up because someone failed to take into account that nothing lasts forever, kingdoms rise and fall, and today's technology leader is tomorrow's laggard.

Anyhoo, you might want to go and check the Mono Project for your .NET on Mac needs, there is an open project for ASP under Apache, and I can't believe that once you've gone through that you couldn't replace SQL Server as a persistent data store with MySQL.

Then again, you might just want to look at WebObjects and find out how you could port your projects onto a more inclusive web application development environment.

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