Friday, May 17, 2002

Durable goods Apple's new iBook comes with the slower G3 processor, and customers are complaining. They are also wondering whether it will ship with the old 8 MB ATI Rage 128 Mobility graphics card or something newer which will take advantage of the graphic acceleration system that will ship in Mac OS X.2.

For Apple to keep charging high-prices for its TiBooks, it has to keep prices of iBooks high (so people have less incentive to trade down) and the power of iBooks low (so people have more incentive to trade up). And it wants people to buy new hardware. The technology industry was always susceptible to the durable goods problem (i.e. stuff never wears out) but this has only become a major issue recently. As Apple has always understood, OS X's greatest competitor isn't Microsoft but OS 9. And given the healthy margins it makes on hardware, Apple has more incentive to use bloated software to drive new hardware sales than Microsoft, even though its integrated platform can supposedly run stuff more efficiently.

And besides, what are irate OS 9 on old hardware users going to switch to? If they're still using Mac's in 2002, their demand has to be pretty inelastic, so I'm betting Apple will include a powerful graphics card to encourage people to upgrade their hardware and enjoy the graphics accelerated goodness of OS X.2, but I wouldn't expect a G4 in iBooks until TiBooks ship with a G5.


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