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Apple Vs. Dell On The Desktop: Pricing To Make Your Eyes Pop

While Dell continues to battle its rivals in the desktop space with aggressive pricing, it's now facing an emerging threat in the price-slashing business from none other than Apple.

Fueled by design enhancements and its switch to lower-priced Intel processors, Apple has managed to cut pricing in its iMac all-in-one desktop series by an eye-popping rate over the last two years, a time span that for many represents a typical upgrade cycle.

Taking a few clicks back in time, via, and looking at Web-based pricing from Apple then and now, here's how the company's pricing on the iMac has broken down:

July 2004: iMac with a 1.25GHz PowerPC G4 processor and 17-inch monitor, $2,448.

July 2006: iMac with a 1.83GHz Intel Core Duo processor and 17-inch monitor, $1,299.

Now, let's take the same stroll down memory lane via and look at how Dell has priced similar systems in its Dimension desktop line:

July 2004: Dimension 4600c with a 2.8GHz Intel Pentium 4 and 17-inch monitor, $909 (with Web special).

July 2006: Dimension 5150c with a 2.8GHz Intel Dual Core and 17-inch monitor, $889.

Even conceding differences in how customers could configure particular Dimension desktops, and conceding iMac vs. Dimension isn't a perfect apples-to-apples comparison (forgive the word choice), this begins to provide a glimpse at how Apple has begun to disrupt the desktop space. It also begins to explain how, after years of tepid growth, Apple is now seeing its U.S. desktop business grow by more than 15 percent, while Dell's desktop business in the U.S. is growing by a little more than 6 percent.

While Apple has a much smaller user base and its pricing is still higher than comparable Dell machines, its ability to cut pricing with Intel-based systems could lead to much shorter upgrade cycles on the Mac platform.

And all of this has been happening while Adobe has yet to ship its upgraded software suite, which Apple power users have come to rely on in the graphics space. Both Apple and Adobe executives say their sales have been held back because current Adobe software doesn't work all that great on the Intel-based Macs. Adobe's new software suite is set to ship in 2007.

Note: Updated to correct "Core Duo" reference to Dual Core.

A reader emails: "Another point of comparison your article does not mention and which could make the difference in price between a Dell and an iMac even less is the bundled software package. Apple's iLife blows away anything Dell may offer." 2:06 p.m.

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