I mean, come on now. What exactly are you going to be able to do besides browse the web, type in Word, or play Hearts on a $400 e-Machine (AMD Athlon 2650e), Compaq Presario (AMD Athlon X2) or a DELL Inspiron (Intel Celeron)? These machines are so cheap, I doubt even World of Warcraft would run smoothly on them ... and that's pretty bad.
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Well, that (plus run a spreadsheet or do a powerpoint) is all that the vast majority of computer users do, so it's not the worst thing in the world that there are computers appropriately priced for these folks.
And, yeah, there are people who don't realize the difference between a cheap computer and a more expensive computer and find that they can't do what they want (video editing, gaming) with the cheaper computer.
Apple certainly shouldn't ignore the second group...but they shouldn't be in the position, ideally, of having to tell the first group that, despite the fact that their computer needs can be met by a $400 computer, all we can offer you is a $1,000 computer.