Why is the MP so expensive?

[Loa]

Hello,

I don't want to start a Mac/PC/Hackintosh debate. Yet what those hackintosh prove is that Apple is charging a "Mac Pro tax" of around 1000$, +/- a few hundreds depending on configuration. Even if that tax was only 500$ +/- a few hundreds, the question remains: why?

Now don't answer that it's the general Apple tax. How can Apple sell the iMac, which offers very good power (some even rivalling the MP), very good graphics on everything but the base model, an incredible display, more RAM than the base MP model, for a very very good price? Add to that the fact that iMac are rumored to be upgraded in the next few days/weeks with Sandy Bridge.

So again, why does Apple charge that MP tax?

Loa

 

[Umbongo]

For a number of reasons, some of which may or not be:

• To price it above the iMac in Apple's line-up of Macs.
• To give them the large margins they desire on all products.
• Most workstation vendors put a big premium on dual processor systems compared to say the retail cost of components to make a similar system. So Apple price the DP Mac Pro in-line with these. They then price the single processor Mac Pro between that and the iMac, and it makes them get similar profits on all Mac Pros.
• The price premium over alternatives isn't enough to prevent the vast majority of potential buyers from buying a Mac Pro. Whether reality or just how it is seen by Apple.

 

[diamondschwin]

Hello,

I don't want to start a Mac/PC/Hackintosh debate. Yet what those hackintosh prove is that Apple is charging a "Mac Pro tax" of around 1000$, +/- a few hundreds depending on configuration. Even if that tax was only 500$ +/- a few hundreds, the question remains: why?

Now don't answer that it's the general Apple tax. How can Apple sell the iMac, which offers very good power (some even rivalling the MP), very good graphics on everything but the base model, an incredible display, more RAM than the base MP model, for a very very good price? Add to that the fact that iMac are rumored to be upgraded in the next few days/weeks with Sandy Bridge.

So again, why does Apple charge that MP tax?

Loa

You are comparing consumer chipsets to workstation grade chipsets. Spec out an HP z800 against a Mac pro and you will find the prices extremely similar and competitive, the only thing Mac Pros have been off with is the graphics card selection, but that is getting better as of late.

 

[Cindori]

there is no "mac pro tax"

there is


Brand tax - what all brands (HP, Dell, etc) charges extra VS buying loose components

Workstation grade component tax - the price you pay extra for workstation components, ECC RAM, Xeon CPU, etc, vs desktop components

Apple update tax - Apple does not lower price (rarely) on the model cycles, making it out of sync (read: more expensive) against component and competitor prices towards end of cycle

 

[TheStrudel]

When you look at component pricing and workstation pricing, you'll find that where  really jacks up their margins, especially compared to the competition, is in the CPUs. That said, any upgrades over the base model,  again really increases their margins - an upgraded CPU would cost far more than the equivalent upgrade in a competitor's workstation.

Also, don't ever buy RAM from .

Some people do appreciate the design decisions  has made, and it seems like it would cost a lot for competitors to replicate the case, so there's that.

 

[Loa]

For a number of reasons, some of which may or not be:

• To price it above the iMac in Apple's line-up of Macs.

• 
  Agreed.
  

  [*]To give them the large margins they desire on all products.

  How can they sell a "cheap" iMac and a very expensive MP if they want large margins on their products? Shouldn't the iMac be at least 500$ more if that were the case?
  
  And as for the "workstation" reality. I'm sure there are MP buyers that actually need Xeons over hex i7 chips. But how many. Really. Compared to the number of Mac users that want an iMac that has expansion slots.
  
  Also, has anyone looked to the latest financials to see how many MPs have actually been sold? And how much money they gained by keeping that MP tax?
  
  Loa

 

[nick9191]

Yet what those hackintosh prove is that OEMS is charging a "Workstation tax" of around 1000$, +/- a few hundreds depending on configuration. E

Fixed.

Dell, Apple and HP all charge around the same price for their Xeon workstations.

 

[cube]

Because it's Intel.

 

[alust2013]

It's because it uses server CPUs, all of which, except for the bone-stock model will outperform the iMac i7. They are considerably more expensive, and are required for dual CPU systems. They also use far better GPUs, have expandability, etc.

I understand the i7 vs Xeon argument for the single CPU systems, however, a pro buying a workstation will be expecting a workstation-grade CPU, not a consumer model.

Go check out workstations from Dell or HP. They are more expensive than the Mac Pro, believe it or not.

 

[TheStrudel]

Agreed.

How can they sell a "cheap" iMac and a very expensive MP if they want large margins on their products? Shouldn't the iMac be at least 500$ more if that were the case?

And as for the "workstation" reality. I'm sure there are MP buyers that actually need Xeons over hex i7 chips. But how many. Really. Compared to the number of Mac users that want an iMac that has expansion slots.

Also, has anyone looked to the latest financials to see how many MPs have actually been sold? And how much money they gained by keeping that MP tax?

Loa

They can sell a cheap iMac because their costs are lower and crucially, that market is far larger, so they can "Make it up in volume." I would imagine that their financial analysis did not lead to a similar conclusion vis-a-vis the Mac Pro.

As to "workstation," It's Xeons because Xeons are the only way to get dual-CPU machines on the intel platform.  really doesn't like overly complex product lines, so they don't want to split the Mac Pro off into a Xeon and non-Xeon configuration, having already split it off into dual and single processor lines. I imagine similar reasoning is keeping them from making the "X Mac", which is what you really seem to want.

Finally,  does not release sales figures for different portions of their market - just "Portables," and "Desktops," so only they can answer that question, and they have not seen fit to do so.

 

[Hellhammer]

Fixed.

Dell, Apple and HP all charge around the same price for their Xeon workstations.

Dell Precision T3500

Intel Xeon W3530 2.8GHz
3GB 1333MHz DDR3 ECC
256MB ATI FireMV 2260
1TB 7200rpm hard drive

Price: 1389$

Mac Pro

Intel Xeon W3530 2.8GHz
3GB 1066MHz DDR3 ECC
1GB ATI 5770
1TB 7200rpm hard drive

Price: 2499$

The ATI FireMV 2260 costs 120$ on Amazon so price wise it is similar to ATI 5770. You can add a lot beefier GPU and still save a fortune compared to Mac Pro.

 

[Newbe]

Why is the MP so expensive

Loa,

Only Steve and his principals can give you the real response to your question. Generally, most owners of Apple products tend to believe that their products are superior. Regardless whether that is true or not, Apple owners have bought the hype. It is not just the MBPs. Presently Apple products set the standard to which other products are compared. Apple owners are very satisfied with their iPods, Computers, iPhones and iPads. Clearly, Apple's customer service stands shoulders over the competition. Additionally, Apple's marketing plan is aimed at higher income consumers and not at the general public. Accordingly, you pay the premium price or what you deem as the MP Tax. Take a look at the Apple Stores. New consumers are lined up around the block to place their orders for a new iPad2. And that order may still have a two week wait.

 

[Umbongo]

How can they sell a "cheap" iMac and a very expensive MP if they want large margins on their products? Shouldn't the iMac be at least 500$ more if that were the case?

They sell a lot more iMacs than Mac Pros, volume makes a difference. I'd think the margin on the Mac Pro $2,499 base models is the highest percentage of any Mac right now, but I'm not sure why you think the iMac ones are low.

Also, has anyone looked to the latest financials to see how many MPs have actually been sold? And how much money they gained by keeping that MP tax?

Apple just list desktop sales numbers and earnings for them. The average price per unit sold is under $1,500 so we know Mac Pros make up a very small part of that.

 

[alust2013]

Dell Precision T3500

Intel Xeon W3530 2.8GHz
3GB 1333MHz DDR3 ECC
256MB ATI FireMV 2260
1TB 7200rpm hard drive

Price: 1389$

Mac Pro

Intel Xeon W3530 2.8GHz
3GB 1066MHz DDR3 ECC
1GB ATI 5770
1TB 7200rpm hard drive

Price: 2499$

The ATI FireMV 2260 costs 120$ on Amazon so price wise it is similar to ATI 5770. You can add a lot beefier GPU and still save a fortune compared to Mac Pro.

Interesting. Last time I looked at dell, the upgrades were a bit steeper though.

 

[Transporteur]

All this XEON and workstation parts talk is fine for the DP systems, they are competitively priced, we discussed this probably a thousand times before.

However, if you look at the base Mac Pro (SP), you will find out that this machine is about $1000 more than comparable machines from Dell or HP.
There is an Apple Tax on that machine, a fairly large one to be honest.

And why do they charge this tax? Simple, because they can! Apparently their margins are high enough.

Edit: Beaten by Hellhammer (and some others ), just take a look at his example.

 

[zephonic]

Apple update tax - Apple does not lower price (rarely) on the model cycles, making it out of sync (read: more expensive) against component and competitor prices towards end of cycle

This is in part offset by the ridiculously high prices of used MacPros. Unparalleled by any other computer. A two year old Nehalem base spec still goes for close to $2000. Nearly 80% of original retail value.

But yeah, the single CPU model is horribly expensive. There is no reason why it can't be priced at $1999

 

[sbb155]

hmmm

So much ignorance in this thread...
Have you ever looked at a financial report? Apple's GROSS MARGINS are reported. They are higher than other manufacturers.

Apple is charging a lot EXTRA because they can charge it. It is simple economics and supply/demand.

The MP is not broken down in the reports, but apple in general has very high GROSS margins.

I think it is hilarious that people think that apple is some benevolent company and that somehow the cost is extra for osx, etc. Frankly look at the GROSS margins in their financial reports! It is all about how much apple can charge and how much money they can make off of you!!!

I am a corporate customer. I accept the margins, and I pass the margins on to my customers in terms of higher prices for my goods. But, if I were going to buy a mac for surfing the internet, email, and MS word then the mac offers no benefit over a PC except for the name/style. Some will think the style is worth it (just like someone may buy an armani suit over a brooks bros suit), but in the end, it becomes a fashion issue.

So, the reason the MP is "overpriced" is simply: corporate profits.

Also note that most owners of the company - i.e. most owners of apple stock - are institutions - and they use PCs! The owners of the company use mostly pc's not macs. Sure the management uses macs, but not the OWNERS of the company.

The owners are more concerned with the profits.

Ok I will relax now. thanks guys.
samantha

 

[scottsjack]

http://configure.us.dell.com/dellstore/config.aspx?dm=true&oc=bw1s14a0&nc=true&c=US&l=EN&cs=04

I don't know, looks to me like a Dell T5500 with no monitor and configured fairly close to the base Mac Pro costs $2962.00 after a $520 discount. Its three-year warranty is more like Apple Care. The processor is slightly faster and the RAM runs at 1333MHz. The Dell needs an optional FW card but doesn't say whether it's FW400 or 800. Also I didn't see a mention of optical sound.

BUT! It's a Dell. Look up the reliability of Dell workstations online and the decision to get a Mac Pro is a huge no brainer. Even several hundred dollars more for the MP's great chassis and Mac OS with the ability to run Windows 7 is still a great deal.

 

[Transporteur]

http://configure.us.dell.com/dellstore/config.aspx?dm=true&oc=bw1s14a0&nc=true&c=US&l=EN&cs=04

I don't know, looks to me like a Dell T5500 with no monitor and configured fairly close to the base Mac Pro costs $2962.00 after a $520 discount. Its three-year warranty is more like Apple Care. The processor is slightly faster and the RAM runs at 1333MHz. The Dell needs an optional FW card but doesn't say whether it's FW400 or 800. Also I didn't see a mention of optical sound.

That's a dual processor version, you can compare that machine with the octad or dual hex Mac Pro when you select the same processors, but not with the base Mac Pro.

 

[TheStrudel]

Also note that most owners of the company - i.e. most owners of apple stock - are institutions - and they use PCs! The owners of the company use mostly pc's not macs. Sure the management uses macs, but not the OWNERS of the company.

The owners are more concerned with the profits.

Ok I will relax now. thanks guys.
samantha

What would that have to do with the group of people who buy Mac Pros? They're not business people. They're primarily photographers and video people.

"What the shareholders use" is possibly the most irrelevant point raised in this thread.

Also, as has been pointed out, the iMacs are not that overpriced; especially given the cost of 27" IPS displays.

That said, people have always assumed  cinema displays to be more overpriced than they actually were, if only because they weren't making like-for-like comparisons. It's less true now that LCD prices have been adjusted downwards after the price-fixing scandal, but a Dell 27" IPS display is still pretty expensive.

I'm not saying that  doesn't have high prices - they do - but very frequently, people are not making a like-for-like comparison. Most notably in screens. I don't know of any iPad competitors that use IPS displays, and make no mistake: IPS displays are more expensive than the competition. Most people also don't care about display technology, but it matters to people in the photo/video field.

 

[zephonic]

http://configure.us.dell.com/dellstore/config.aspx?dm=true&oc=bw1s14a0&nc=true&c=US&l=EN&cs=04

I don't know, looks to me like a Dell T5500 with no monitor and configured fairly close to the base Mac Pro costs $2962.00 after a $520 discount.

No. Hellhammer is right. The T3500 is comparable to the base-spec single-CPU MacPro. Same CPU, same RAM, just a different graphics card.

http://configure.us.dell.com/dellst...&s=bsd&cs=04&model_id=precision-t3500&vw=icon

 

[CaptainChunk]

And as for the "workstation" reality. I'm sure there are MP buyers that actually need Xeons over hex i7 chips. But how many. Really. Compared to the number of Mac users that want an iMac that has expansion slots.

Well, anybody who needs a DP workstation, anyway (you can't do dual i7s). I suppose you can make this argument for SP machines (SP i7 vs. SP Xeon), but two things:

1. SP workstation Xeons practically have pricing parity with their i7 equivalents, so it doesn't really matter much in the end. In reality, they're the same processors, only one has ECC memory support and one does not. Also, the W35xx Xeons run on the same Intel X58 chipsets the i7-9xx chips do. Overall manufacturing cost is essentially the same.

Example: The Xeon W3530 (2.8GHz) used on the base quad-core model is $294 (1000-part tray quantity) from Intel. Its i7 equivalent, the i7-930 is priced identically, at $294. Spec for spec, these chips are IDENTICAL, save for the Xeon's ECC memory support.

2. As mentioned before, workstation computer buyers expect workstation-class hardware, not consumer-class. So that means Xeons, ECC memory and a heavy duty platform.


Perhaps the biggest anomaly with Mac Pros is Apple's continued use of consumer-grade GPUs in their configurations. With PC workstations, it's practically given that you'll get a FireGL or a Quadro. But that's an entirely different discussion...

 

[linuxcooldude]

Dell Precision T3500

Intel Xeon W3530 2.8GHz
3GB 1333MHz DDR3 ECC
256MB ATI FireMV 2260
1TB 7200rpm hard drive

Price: 1389$

Mac Pro

Intel Xeon W3530 2.8GHz
3GB 1066MHz DDR3 ECC
1GB ATI 5770
1TB 7200rpm hard drive

Price: 2499$

The ATI FireMV 2260 costs 120$ on Amazon so price wise it is similar to ATI 5770. You can add a lot beefier GPU and still save a fortune compared to Mac Pro.

Still a few differences. Have to factor in more things.

Mac Pro two network cards.

No bluetooth on Dell Precision T3500?

Seems the Dell Precision T3500 power supply is 525 watts where the Mac Pro
is 980Watts. As far as I could find.

Have to factor in Heavy duty aluminum case vs thin sheet metal & plastic. Mac Pro cases are not cheap.

 

[nanofrog]

Well, anybody who needs a DP workstation, anyway (you can't do dual i7s). I suppose you can make this argument for SP machines (SP i7 vs. SP Xeon), but two things:

1. SP workstation Xeons practically have pricing parity with their i7 equivalents, so it doesn't really matter much in the end. In reality, they're the same processors, only one has ECC memory support and one does not. Also, the W35xx Xeons run on the same Intel X58 chipsets the i7-9xx chips do. Overall manufacturing cost is essentially the same.

Example: The Xeon W3530 (2.8GHz) used on the base quad-core model is $294 (1000-part tray quantity) from Intel. Its i7 equivalent, the i7-930 is priced identically, at $294. Spec for spec, these chips are IDENTICAL, save for the Xeon's ECC memory support.

Exactly.

Apple's charging quite a premium for the SP systems vs. other vendors. DP systems are far closer in costs, but the PC versions do offer better warranties, better graphics choices (professional grade, not just consumer), and additional options (if purchased from the system vendor for a single point of contact for support needs).

2. As mentioned before, workstation computer buyers expect workstation-class hardware, not consumer-class. So that means Xeons, ECC memory and a heavy duty platform.

Generally speaking, this is true. But ECC isn't needed by all workstation users, such as creative professionals (don't use software based on recursive algorithms). Thus such users don't actually require Xeons (SP systems; no choice for DP models) or ECC memory of any kind (well built, reliable system Yes, but an Enthusiast Desktop part and standard non-ECC memory would suffice).

Perhaps the biggest anomaly with Mac Pros is Apple's continued use of consumer-grade GPUs in their configurations. With PC workstations, it's practically given that you'll get a FireGL or a Quadro. But that's an entirely different discussion...

In terms of using consumer grade graphics cards in workstations, it's definitely an anomaly.

As per whether or not it's a separate discussion, it would depend on the user's specific needs IMO.

 

[sbb155]

What would that have to do with the group of people who buy Mac Pros? They're not business people. They're primarily photographers and video people.

"What the shareholders use" is possibly the most irrelevant point raised in this thread.

Also, as has been pointed out, the iMacs are not that overpriced; especially given the cost of 27" IPS displays.

That said, people have always assumed  cinema displays to be more overpriced than they actually were, if only because they weren't making like-for-like comparisons. It's less true now that LCD prices have been adjusted downwards after the price-fixing scandal, but a Dell 27" IPS display is still pretty expensive.

I'm not saying that  doesn't have high prices - they do - but very frequently, people are not making a like-for-like comparison. Most notably in screens. I don't know of any iPad competitors that use IPS displays, and make no mistake: IPS displays are more expensive than the competition. Most people also don't care about display technology, but it matters to people in the photo/video field.

All that matter is GROSS MARGINS on the financial reports. Apple's gross margins far exceed dell or hp's gross margins. HENCE, apple is making more profit for any piece of equipment they sell. The prices could be lower, but they are going to charge higher because they can charge higher, and people will still buy them. I wonder how many people here really can read a financial statement from a corporation. The answers are there, not in component costs. It is basic business to any MBA.