After being hammered for being too pricey, Apple is cutting the prices on the iPhone 3G and MacBook lines. Has the "Apple Tax" shrunk to a size even a Republican could live with?

No one can question the beauty, functionality, and geek appeal of Apple's products. The problem has always been price: they cost so damn much. The so-called "Apple Tax" has been around for so long that it is the stuff of legend, though it certainly hasn't hurt the company's fortunes much. In fact, there is a strong case to be made that Apple's premium pricing has saved the company.

But these are tough economic times, and this week at WWDC, Apple showed it is willing to compete on value, with lowered prices that seem insanely great. It's enough to make me wonder if Apple is finally ready to break out of its tiny, elite market and go mainstream.

Perhaps the most dramatic move is the slashing of the MacBook Air price. The 1.8-GHz MacBook Air now costs just $1,499—a price cut of $300. If that won't spur sales, I don't know what will. For that matter, an SSD model can be had for just $1,799. That ain't cheap, but it's a far cry from the $2K-plus premiums Apple is used to charging.

And the bargain prices aren't limited to products of great beauty—but questionable utility—like the MacBook Air. The MacBook Pro also got some serious price cuts. For example, the 15-inch MacBook Pro now starts at $1,699, compared to the $1,999 it cost a week ago. Better still, the company cut the price of a 13-inch MacBook to $1,199. Compare that to the $1,599 retail price for its predecessor, the MacBook 13-inch Aluminum, and remember that the new version adds faster parts that have earned it the MacBook Pro moniker! That speed bump and $400 price drop is enough to make it our new Editors' Choice. Granted, Windows users will probably go for an even cheaper (sub-$1,000), almost-as-capable system like the Acer Aspire 3935, but it is clear Apple is making its systems affordable for a whole new group of users.

Perhaps the biggest price bomb dropped at WWDC was that the existing 8GB iPhone 3G now costs just $99. Starting now. Way to pee on the Palm Pre parade, which is still $199, but that's after a $100 mail-in rebate. Here Apple will have its cake and eat it too: High-end Apple fanatics will snatch up theiPhone 3G S, while value customers can still get in for the price of a BlackBerry Curve. If you're an AT&T subscriber, there's no longer any reasonnot to get an iPhone. Well, as long as you're cool with the virtual keyboard.

But that AT&T contract is still the dealbreaker for a lot of people, either because of an existing contract with another carrier or due to the weakness of the AT&T wireless network. Gather a few hundred iPhone users in one cell area (say, SXSW 2009) and performance starts to crawl. And remember, it is also pretty expensive to own an iPhone when you include the cost of a data plan and the text messages. At last week's Palm Pre announcement in New York City, Sprint CEO Dan Hesse estimated that owning a Palm Pre would cost nearly $1,200 less than owning an iPhone over two years, just because of the monthly charges. Then again, two years is a long time. And $99 is just one stop at the ATM.

Why is Apple doing this? The economy is certainly one reason. It is also fair to say that Microsoft's shopping commercials may have hit a sore spot as well. There was just no denying the fact that Apple products are more expensive. (Although you may have noticed that no one ever buys a $400 netbook in those Microsoft ads; evidently everyone is looking for a 17-inch screen and internal Blu-ray drive.)

For the most part, Apple products still cost more—often a few hundred dollars more—than competing Windows-based machines. But now that the Apple Tax has been trimmed to a reasonable size, a lot more people will find it worth paying.

from pcmag