The only way to stay ahead of this compition is to keep drumming the point that Mac is easy, realiable and most of all looks great (bla bla). The PC will always be faster for the money as they have a larger support base, its all economics.
To the larger part of the general consumer market Macs don't exist in there mind (well here in Australia where the Mac advert machine has not reached).
I have seen this computer in a PC magazine and it very ugly. But on the other hand a consumer has to even consider a Mac in the first place to do a comparison>>>and in that since this PC machine has won.
All Mac can do is to strengthen there "switch" campain which seems to me being a great selling point. Makes PC users look over the fence in interest.
Also consider as well is that this type of machine is Mac's forte' and previous PC like gateway have from my understanding not gone as well as they liked.
Other than geeks like use, performance is not everything. Most people buy a computer (I am basing this on the people of my home town of Bucyrus, Ohio it is a fairly small "run of the mill" type of town) because of price, unless something else offers them a different exerpiance.
Here is my example. I have used it before. My parents have owned 5 PC's since I first got one when I was in middle school. Each one they have bought, has progressively gotten cheaper and more powerful. Each one has also lasted half as long as the previous one. My parents have had no interest in a mac, until they came up to visit me, and played with my iMac. Now the next computer they are getting is a mac.
Point of the story. My parents are very frugal. My parents could get a much cheaper and much faster machine. But they have seen something they like. They hear me speak well of it. They hope with it they will not have to IM every 3 days for tech help!
It is all about perception! My parents perceive macs as being more money, but they also perceive it as being a better use of their money. They have the perception (wether it is right or wrong) that PC's are hard to use. They also hate Windows XP and will not buy a computer that has it installed.
Something to also note about the Profile. Its high end is the same price as apples $1999 and it does not include DVD burning drive. Just a combo. And the low end $999 only has a CD ROM drive. So I am not sure the value is that great.
My guess is that before long Apple will 'switch' their campaign. There's always going to be competition, and we all know that it's hard to position the iMac right (I mean without having a 2.8 GHz processor and without setting it at 799$).
I think Apple's _other_ ads are far better. Print ads right now (I don't know if you get the same in the rest of the world, but in Switzerland) show the iPod taking up all of the page. Only a title is on top of it, translated to English: "Wishlist."
Another one, quite similar in message, shows a Canon digital camera on the left page with the words "If you get this for christmas..." and an iMac on the right with "You'll want to get this.".
Apple has products that have the perfect styling for ads with product photos. They look elegant and have a similar attraction to people like a nice car or watch.
I personally wonder what impact the Switch campaign has made. I don't doubt it has made one, I just think that Apple should focus more on the stylish products again (in the ads).
The Gateway will, in my opinion, take away other PC makers' sales rather than iMac sales.
I really don't think that Apple should even consider Gateway a problem. I would guess that in about a year (unless Dell's anticompetitive practices are brought into check) Gateway is going to be a memory.
I work on all types of systems, and Gateway is a running joke in the industry. They make the single lowest quality PC on the market. And even the markets in which they are being sold is shrinking everyday. First they pulled out of the Asian-Pacific market, then the European. They are closing stores in the US left and right. They moved their corporate offices from San Diego to Poway to cut costs, and they have laid off three quarters of their work force in the last two years.
A pretty box is not going to induce amnesia in the general computing public. Any one who has owned a Gateway, known someone who has owned a Gateway, or ever worked with a Gateway knows not to buy a Gateway.
Apple may have things to worry about, but anyone who works with PCs knows it is not Gateway. And unless Gateway does something quick (like bettering the quality of the systems they put out), I would think they are not long for this world... much like every Gateway system I have ever seen.