Russell Beattie: The $500 Mac. I found this article via Alex King, but really, the whole web is abuzz with the idea that Apple may announce a $500 Mac without a monitor at Macworld San Francisco tomorrow. Russell digs into the idea a bit more than the typical “I want one!” histrionics to really consider what the benefits would be to Apple’s business.

I’ve been watching Apple for a long, long time. I pine away over their product announcements, invite my friends and loved ones to consider a Mac before they buy a PC, and proselytize the adamantly ignorant over the strides Apple has made in the past few years. Apple doesn’t suck any more. There’s serious innovation going on in Cupertino these days–Steve Jobs put it best at MacWorld a year or two ago, “Microsoft is copying us again, it’s great!” I even own a couple of Apple products.

But neither of them are computers, and both of them were gifts (namely, my iPod and my Airport Express). I’ll gladly spend an afternoon in the Apple store playing with the latest and greatest products, but I’ve never left having spent more than $50–usually for some iPod accessory or something. To make matters worse, I’ve directly purchased, or given advice over purchasing, six computers in the past three years. Three of them were Dells, for which I’m still doing penance. There were also two Compaqs and an IBM. All were new except for the IBM Thinkpad. Why? Because in every case, though I would have preferred or recommended an Apple, it always came down to the barrier to entry. And, in almost every case, that barrier to entry came down to a dollar number.

There were two situations where the purchasers just would not consider an Apple because they were “used to” or had a significant investment in Windows. In the remaining four cases, Apple would have been a fine or even preferred alternative–but it came with a high premium. We bought my mom a computer for Christmas last year. It came with a monitor, CPU, and printer. Total cost including shipping and tax? About $360. Three hundred and sixty dollars! It was almost criminal. Sure it was a special case, and Dell was running some great deals leading up to the holidays. Consider, though, my sister Jaime, my wife Sarah, and our friend Alex, all of whom looking for laptops. For Sarah, we found a $300 Thinkpad on eBay, and I loaded a copy of Windows 98 for which I’d already had a license. To spend $1,200 on a new iBook was just too much money. Alex and Jaime, on the other hand, were willing to spend serious cash, and this is where Apple tends to win out over competitors. That is, until you consider the additional $340 you have to spend on the Mac edition of Office 2004. You know, if you actually want to collaborate with classmates or coworkers. Both of them went with PC alternatives.

Beattie notes that by leveraging the existing monitors, keyboards, printers, and other PC hardware, Apple has turned a hindrance into an opportunity. Rather than demand that PC users cast their investments into the closet and buy a Mac, it would seem that they’re inviting PC users to use their existing hardware the next time they upgrade their desktop machines. One might wonder if they’ve taken a key learning from their foray into the consumer electronics market–namely, the art of parlay. With the iPod, Apple is taking a fantastic product and leveraging it to present to us, their new-found adoring fans, another fantastic product: the iTunes Music Store. John Gruber makes this argument more coherently than I, but the point is this: the more barriers Apple tears down, or leverages to their advantage, to break into the wider PC market, the more likely people will be to buy a Mac.

I would go even further and suggest, if there really will be such a thing as an Apple-branded office package called iWork, that Apple offer upgrade pricing to users of Microsoft Office. Provide the discount in the form of a price break at the register or in the form of a rebate. Either way, continue to parlay the investment in PCs as an investment in Apple. If I get iWork for a discount because of my copy of Microsoft Office 2000, I won’t just see Apple taking my initial investment into consderation, but I’ll also believe I got a great deal.

Will I buy a $500 Mac? Probably not this time around. Sarah and I are huge fans of WiFi, and I love having a desk uncluttered with desktop equipment. But, for my in-laws who upgraded their desktop CPU for some $400–and countless others like them–an extra hundred bucks might seem quite justifiable if the machine has enough perks.

What do you think?