Profitable Apple cuts Performa prices

A once more profitable Apple has slashed prices on some lines in the US market.

On the heels of surprising analysts with a US$25 million third-quarter profit after two successive losing quarters, Apple has further surprised with price cuts of up to 30% on its Performa line of desktop Macintoshes.

In the US a Performa 6400 200-MHz machine has been cut to US$2199, and the 6400 180-MHz will now sell for US$1899, US$500 less than its introductory price.

The price cuts, which will initially affect only U.S. machines, took some analysts and industry observers by surprise. Apple, which has always focused on providing high-quality, value-added products, hasn't traditionally made rock-bottom prices its priority, according to Kevin Hause, an analyst for International Data.

"These new prices are definitely competitive with comparable Wintel (Intel processor-Windows operating system) machines. People are going to get very powerful machines at great prices and this will drive Apple’s fourth quarter sales up dramatically," Hause says.

However, some analysts are not surprised by Apple’s bold move to enter the PC price war. Pieter Hartsook, a Macintosh analyst for the Alameda, California-based Hartsook Letter, says he predicted both that Apple would turn a profit in the third quarter and that prices would begin to drop. "The good financials are due partly to an increased margin. Good for Apple that they are passing on the savings to their customers," Hartsook says.

While most analysts agree that Apple is on a rebound and will continue to increase profits over the coming year, they are also quick to point out that the company needs to handle its supply shortage problems. Last May, the company found itself in short supply of Powerbook notebook computers.

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