Apple Inc.’s (NASDAQ:AAPL) major hardware releases are momentous events with people clamoring to see images of the company's new phones, tablets and desktops. And when Apple releases new versions of hardware, like Wednesday’s new lower-priced iMac, it gives analysts a glimpse of the company’s business strategy.
The new entry-level iMac is nothing more than a sheep in wolf’s clothing, as it contains the same internal hardware as Apple’s second-level Macbook Air. Both priced at $1,099, the iMac and the MacBook Air contain the same 1.4GHz dual core i5 (Turbo Boost up to 2.7GHz), 8GB of RAM on board memory, internal HD Graphics 5000 and are configurable to a 256GB solid state drive.
With the two computers almost exactly the same, it looks like Apple just took the 13-inch MacBook Air and put it inside the much larger 21.5-inch iMac. So why is the company rebranding the MBA as an iMac? The answer most likely comes down to CEO Tim Cook’s overall business strategy.
In the past three months, Apple has released updates -- that happen to be downgrades -- to both lines, slicing the price in the process. For a long time, the Cupertino, California company steered clear of offering lower-priced models with inferior specs as a way to secure Apple’s value. But that was when the late Steve Jobs was CEO.
According to Forbes, Jobs’ strategy had four pillars.
1. Offer a small number of products.
2. Focus on the high end.
3. Give priority to profits over market share.
4. Create a halo effect that makes people starve for new Apple products.
Now that the company is run by Cook, those tenets -- specifically Nos. 1 and 4 -- are out. And his strategy seems to be to make the company and shareholders more money, rather than produce the best products on the market.
Since succeeding Jobs in 2011, Cook has paid shareholders eight dividends in two years. By contrast, in the 14 years that Jobs was CEO, he never paid a single dividend. Cook recently split Apple’s stock seven times to entice new investors, which effectively increased the stock 25 percent over the two months after the announcement. Jobs only split the stock twice in his tenure, and only 2-for-1 splits. In 2013, Cook began offering cheaper models of the iPhone and has now released cheaper models of a desktop and notebook, something Jobs would probably never have done if he was focused on the high end.
With the release of the inexpensive iMac, it's clear that Cook is sticking to his strategy and moving further away from the Jobs model. Whether new is better is still to be determined.