Apple should cut Mac prices—but not necessarily for the most argued reason
Posted by Dennis Sellers 
Aug 8, 2008 at 7:38am
On Thursday we ran a report regarding a Joe Wilcox article at eWeek’s Apple Watch that said data from the NPD research group shows that Macs are much more expensive on average than Windows systems. Macsimum readers had plenty of comments (see the give-and-take under the article), but I (of course) wanted to offer my two cents. Plus I want to mention the fact that this could be a wake-up call for Apple.
First, though, I want to offer some thoughts from my fellow Macsimum editors. J. Scott Anderson had this to say:
“My first thought is that articles like this are nothing new. That said, I do like that these kinds of articles come out. I think that it helps to Apple honest in their pricing—well it used to. the unprecedented success at Apple is, in my opinion, causing even more arrogance than Apple normally has—and that is when they were ‘beleaguered.’ I’m hoping that a lot of articles like this and some exposure on the security front deflate them just a bit. They have a great opportunity here. But they, like anyone, can easily blow it.
“One more point. I noticed something interesting with the comparison. The author compared a mid-range tower box to the iMac. It would seem to me that the computer to compare the iMac to would be the XPS One. And it would seem that the Dell all-in-one costs more than the Dell tower … imagine that! I guess that maybe engineering might cost you a bit more. And the new Studio Hybrid, cost about the same as a Mac mini.”
Don Foy had this to add: “You have to take into account the software included (not the crapware that comes on a PeeCee), and what kind of service you get for that money. Apple is consistently the best in service surveys.
“Nobody complains that a BMW costs more than a Chevrolet (well, I’m sure someone does, but not reasonable people). Now, if you equip that Chevrolet, when possible, with the equivalent options to the BMW, then you might end up in the same ballpark, or maybe paying even more.
“Same with Macs and PCs. Compare Apples to Apples (pun intended).
“MacBook 13.3 listing at $1300: 2.4 GHz Core 2 Duo, 2GB RAM, 160GB HD, Dual Layer SuperDrive.
“To get that at Dell, you’re paying $900 (on sale right now). But you get no productivity software installed. No entertainment software installed. Last time I checked, I got all that included with my Mac. Is it still more expensive? Yes, probably a little. Do you get more for the additional cash? Absolutely.
“And you don’t get Vista with a Mac.”
So what do I think? Well, whether Apple can continue to do well with higher prices (though they’re really only slightly higher)is sorta beside the point. The company will continue to sell LOTS of Macs. But with price cuts, it could sell even more computers, gain more market share and take advantage of the major dissatisfaction with Vista.
In other words, I think Macs are well worth what you pay for ‘em, when you consider return-on-investment, lack of technical problems and viruses, longevity and the fantastic bundled software. So Apple shouldn’t cut prices because they’re too high (they’re not), but instead they should cut prices to gain market share.
I don’t necessarily think the company should enter the bargain bin niche of computer offerings. After all, being a leader doesn’t allow a cut of corner cutting. But reduci\g margins and making Macs as affordable as possible to as many people as possible will have long-term benefits that will outweigh any short-term cuts in profits.
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Chris Says:
There are already too many DOS heads getting Macs, calling them MACs, asking about (useless) antivirus software for their Macs, talking about Wallpaper instead of Desktop images, trying to ‘map a drive’ instead of mounting one, and polluting the Mac ecosystem with a host of other Windows centric garbage.
Apple needs to RAISE prices to keep the riff-raff away.
Posted on August 08, 2008
joe Says:
I look at the NPD sales data and reach a different conclusion. The price difference that they see is a reflection of basic retail economics.
Buy all indicators Apple is selling a lot of computers. More and more every year. Doesn’t the consumer determine if Apple computers are over priced (or any other products for that matter) by purchasing fewer of them. Based on Apple’s sales figures consumers are saying that Apply computers are not over priced.
Why are WinTel computers so cheap? Its because consumers are purchasing fewer PCs. What does a PC manufacturer do when sales are down. Reduce the selling price.
Posted on August 08, 2008
elpolloloco19 Says:
Though I agree that a cheaper mac could help gain market share, I don’t think lowering prices are what Apple should do. The laptops have a good range in price, letting the buyer choose from casual user to production user. Though the desktop has a high end in the Mac Pros, it seems the iMac itself offers the range that the laptops offer. What Apple should do is develop the Mac Mini more. This is a cheaper low end computer that can be used with any monitor (as opposed to an internal one). Maybe they could make a base price at 499 and give it more of a range like the other desktops. I think that could be a way to ease in newer uses (especially financially), as well as sell more to users that already have one but would like a second or extra one.
Posted on August 08, 2008
Louis Wheeler Says:
I have to wonder about the competence of the writers of these articles. Do they know enough about the Apple Macintosh to say anything meaningful? They invariably come from the PC side and have a chip on their shoulders. They have a checklist and a price sheet. They think that this is enough to explain away the differences. And to the novice computer buyer, it might well be. It depends on your standards of excellence.
The checklist is never complete, of course, because the PC’s which the authors choose are always stripped, bargain basement, loss leader, e-waste computers which never seem to last longer than a year.
I’ve seen price comparisons which go the other way; that is, where an expert on both sides of the computer market starts with one of these price comparisons and determines what it would cost to upgrade the PC to the point where it is usable, let alone comparable to what comes as standard equipment on a Mac. That comparison is always to the PC’s disadvantage.
You see, the aftermarket components necessary to bring a PC up in Quality are quite expensive, since so few people on the PC side seem to value quality, durability and high mean times before failure. What does quality matter, if you don’t intend to keep a computer longer than a year? The Mac is a bargain if it costs twice as much, but lasts three to four times as long.
Then, there are the quality differences in the Software on a Mac and PC. These are value judgements. The authors of these articles pretend that there are no quality differences between the Mac OS and Windows. They seem totally ignorant. Their needs and standards of excellence may be so impoverished that they see nothing measurable between the OS’s. But, the Mac buyers do. They would rather pay more for a Mac to avoid using Vista.
So, should Apple lower the price of its computers?
First, does it need to? The Macs are selling quite well at the current prices. Macintosh sales have been increasing annually at above 30% growth. Lowering the price would sell more machines, but Apple has enough problems supplying the buyers it has.
Second, does Apple want to lower the quality standards necessary to beat the PC’s on price? Not likely.
Third, does Apple want to change its marketing plan to compete in the stripped, bargain basement, loss leader, e-waste computer market? This is unlikely, because the profit margins in these markets are razor thin.
Fourth, does Apple want to give up its reputation for high quality, elegant, stylish computers? No.
Starbucks is closing many of its stores, now. Its management got greedy and neglected the price of becoming commonplace and ordinary, rather than exclusive. It lost its cachet and perception of prestige.
Apple seems quite happy in letting people think that they cost more. This is fine, so long as Apple delivers more to the discriminating buyer.
Fifth, If Apple were to market in the stripped, bargain basement, loss leader, e-waste computer market, then it would have to sell ugly machines. The authors seem to place a low value on esthetics. Apple cannot afford to, because it is going for the upper end of the consumer market. That is where the high profit margins are.
Not everything in life can be reduced to mere price. The real question is if Apple’s customers get value for what they pay. Does Apple deliver convenience, ease of use, quality, elegance and style to make up for any perceived price differences? An increasing number of customers say yes. So long as they say yes, the Apple has little reason to change anything. Nor to make changes very often.
But, Apple will periodically upgrade the quality and usability of its computers, rather than compete on price. This is necessary to adjust for lower component costs. We are close to such a readjustment now. That is why the price comparisons temporarily seem out of line.
Posted on August 08, 2008
Hulk Says:
People tend to forget or simply don’t know about the higher quality parts Apple builds into their product. They use Hitachi or Seagate drives and low-latency RAM whereas others use cheap WD or Maxtor drives and cheap high latency RAM. There are still better parts, but you might find them only in gaming PCs which sell for much more than an Apple.
Posted on August 08, 2008
rjwill246 Says:
Great comments above. PC users, with no Mac experience cannot get their arms around build quality, design and function.
In addition, Apple market value will plummet as shareholders recoil in horror at sliding margins.
No thanks… keep the “high” prices.
Posted on August 08, 2008
James Says:
Great comments above? You’re all just a bunch of Apple fanboys who probably haven’t touched a PC in years. I know you all think the “bundled” software is great, but really, what is there that you couldn’t download for free on a PC? Oh, right, it’s “higher quality.” Whatever you need to tell yourselves to keep feeling elite.
When it comes down to it, PCs are better value than Apples are in terms of price for functionality. As somebody who has used both extensively, I am aware that there are crappy PC manufacturers out there, but you can still get PCs of decent build for less than an Apple, and get just as long use out of it as you would an apple. You just have to know how to take care of it. Sure, you may not “need” to reformat an Apple computer over it’s lifetime, but it sure helps to do it once in a while anyway.
All you’re paying for with a Mac is the style and the different operating system. You may not have noticed this, but Apple does not use parts that are unavailable to other computer manufacturers. And no, it’s not just expensive gaming PCs that have decent parts. You just have to take the time to do the research and not buy bargain-basement deals.
Posted on August 08, 2008
re: james Says:
No thanks mate--- there is nothing there to write home about. It is well established by experts- that would not be you are me-- who have repeatedly shown that macs are good value. Hard to convince the impoverished PC fanboys of that I know. When experts fail on this, we amateurs have no hope--- and I realize there is no need to confuse you with facts as your mind is made up!
Posted on August 08, 2008
elpolloloco19 re:james Says:
I agree that it is possible get PC equivalents at relatively cheaper prices (pre-made or self-made) but you get what you pay for. There are poeple who buy macs cause they want OS X and/or they don’t like Windows. There are people who buy PC’s cause they want Windows and/or don’t want OS X. That’s fine, and I agree that you should do your research if there is no preference. However, I do think that if you are neither a pro or con of either operating system, then the ability to run both (on a Mac) should be considered when looking at price difference.
I can’t get away from Windows entirely since some apps that I use (both work and pleasure) are Windows only. However, I personally prefer some Apple Pro apps to the Windows equivalent, so a PC isn’t for me. In my case, a Mac works fine.
Posted on August 08, 2008
jsk Says:
I think Apple is missing a great opportunity here.
With Apple’s rise of mind-share, good press (on balance), and slowing rising market share; now is the time to aggressively grab market share. Here’s what I would do. Put that HUGE stock pile of case to some good use. Lower the price on all Macs to “look” more competitive (but still make a profit) except for the iMac. On the iMac, lower the price to below cost. Then go after M$’s customers. Since M$ makes it incredibly difficult to move a Windows license, buy every switcher who buys an iMac a copy of Windows if they bring in their registration card (or whatever you use to prove you own a legitimate copy of Windows) at the time of purchase.
The customer will get a great computer at a great price (very few people really need a gaming rig) and no risk of losing their Windows investment. Apple will get a much larger market share (and resulting snowball effect that causes, more software in more markets, more shelf space in more stores = more customers = even mo’ money). Apple’s $20 something billion cash stockpile will do something other than collect dust.
It IS possible to do more than just the iPhone!
Posted on August 08, 2008
ldrhawke Says:
I wonder why past even PC users would publish headlines like below and lie ?....:>)
It’s more than OSX, although that’s enough, it’s quality hardware too. Sure you can buy PC’s that are built with quality hardware, but you pay more too. What most people compare MACs to are the cheap and dirty PCs when they try to make a price point. I have probably owned 20 MACs and have never had a component failure or a virus on one of them. I don’t know of many PC owners able to say that.
I listen to the time wasted with start up and virus issues from PC users and I cringe. I don’t see any companies advertising on TV and the internet service for $20 or $30 bucks a month to keep MACs running.
“Fortune Small Business: The best PC for Microsoft Office is Apple Mac
Friday, August 08, 2008 - 11:15 AM EDT
“How’s this for the ultimate digital-age, small-business irony: Want the best possible environment for Microsoft Office? Try running it on a Mac,” Jonathan Blum reports for Fortune.”
Posted on August 08, 2008
Barry Says:
Apple uses cheap components just like everyone else. My iMac has a WD drive in it; my MacBook Pro has a Fujitsu. The RAM in both is whatever no-name they can get from Korea. I can replace those with higher-quality parts when the time comes. Where Apple excels is in industrial design and mechanical engineering. I will gladly pay more for a silent computer.
Posted on August 08, 2008
Steven Says:
Not only do you get high quality hardware with a Mac you also get a very high quality OS and productivity programs. OS X is what sells the Mac it is not only that it’s not windows. People have got fed up with MS broken promises on security and stability and want to try something new.
People are also realising that if they must run windows then they can have the best of both worlds on one machine.
Posted on August 08, 2008
oszkar Says:
who cares about the OS? give me a browser (firefox) and let’s go to the cloud.
linux +firefox + cloud computing= future
macs are good looking
the OS(X) will not make a difference in a few years
Posted on August 08, 2008
J. Scott Anderson Says:
Oszkar:
You sound like the thin-client guys of the past 20 years. BTW…20 years later they still are not right. The cloud has been around since computers went multi-user–try decades ago. However, it has not taken over because, while there are advantages to the cloud, there are also huge disadvantages. And, boy, if the browser is the pinnacle of interface, then I’m quitting computers now.
Posted on August 08, 2008
Thomas Says:
I think that most of the people commenting are missing the point in some cases.
Apple charges what the market will bear. If you have something that is desirable, well then you can charge more for it due to the demand or in some cases as the iphone, pent-up demand.
I have a photography studio and 15 years ago was lessen the weekend scheduling to spend more time with my wife and kids. I did not want to close my studio but decided to raise my prices 20 percent.
Guess what...I got more customers than I had previously in the past 6 months. With the higher margins I couldn’t refuse. My thoughts were still to spend more time with my family on weekends so I raised my priced by 50 percent more than the already increased 20 percent.
More and more calls kept coming in. I was not the cheapest photographer in town to start out with. But, my clients were becoming more upscale and the orders larger.
I wasn’t doing anything different.
Now...I decided to try my hand once again. I now offer only so many weekends a year for photography and I have since doubled my fees. I’m now booked in advanced 7 months.
I use the same lab, same cameras, computers (Macs) and my output and costs are the same. The only difference is perception and what the market will bear.
So, Apple (me) and the PC (other photographers who may have the equal talent/quality) can be affected by perceived value versus actual.
I know package my products to match apples quality and now can charge appropriately for it. My competitors (and friends) are still offering the same ole same ole.
final analysis/example - If you had the choice between two cars and everything was equal except one thing and that is the exterior appearance of the car. One looked like a Pinto and the other a Ferrari.
What would you choose? Remember---except for the appearance, they are exactly the same.
Posted on August 08, 2008
alex Says:
I’m going to have to agree with James in his comments above. I COMPLETELY agree that while Macs are beautiful machines, look nicer, and have a different OS, PC’s will always be a better buy. Why? Heres why. 1) For someone like myself, someone who is computer literate,(99.9% of users aren’t) you can EASILY not only maintain, but keep a pc running for equal or longer than a mac in terms of performance and usability. I know this because I’ve had my pc for at least 5 years and it’s just as fast as it always was because I know a little about computers and know how to maintain and clean it every once in a while. Most importantly, I am not a dumb ass like most consumers and browse the internet with unsafe browsers and navigate to virus stricken websites. I also know how to protect my data and be safe unlike most people. While macs are great machines, you can easily do just about anything with a pc that you can do with a mac. 2) Is this idiot writer saying that macs are cheaper because they come with software? LOL! When you buy a mac, it comes with just enough to run a machine, just like a pc does. You pay extra for ANY extra software such as aperture 2 ($200), final cut ($200), iwork08 ($80), logic express ($200), mobile me (at least $70/yr), protection plan ($250). Thats $1000 right there!! ADDITIONAL! So, please don’t play that argument that macs come with software, cuz they don’t. Their just like pcs, where you need to buy office, virus protection, etc. Not different in any way, nor are they any cheaper. Plus, what they DO come with is only ilife, photobooth and front row, which honestly are not the free software people want. While it may seem that I have a pc biast, I don’t. I’m just correcting you fools who talk with your head in your ass. However, I do agree macs are more fun, just as or damm close to as compatible as pc’s are these days, have great software (if you optimize it), and are more secure for the general population, who unfortunately, has no idea how to maintain and keep their pcs clean. I do also believe macs are out of the box much less susceptible to viruses and spyware (which they claim), therefore more consumer friendly, hence it automatically protects many from the plagues of windows, which makes customers think it’s a better made product, which I think is a misconception because its their fault, not the pc really. BUT, like I’ve been saying, for someone whos computer literate, this makes no difference. I love macs and think their awesome machines, but the value argument doesn’t really stand up in my opinion, and if it does, barely so…
While I may sound confusing by now and certainly repetitive, one big thing I think contributes to the misconception of this argument is that mac’s just come out of the box with a protective layer from alot of pc’s problems, which is good for amateurs and makes them think it’s just because its a better product. I don’t think this is necessarily so, actually I think it’s wrong. Whats really the case is a mac is like a straight jacket for consumers, preventing them from fucking up like they usually do on pcs. BUT, if they were to escape from that straight jacket by getting a virus or fucking up their computer somehow (macs protective shield), they would feel just as angry and frustrated with mac as they did previously with a pc and macs superiority would diminish. Thats my personal opinion from years of experience.
Posted on August 09, 2008
Peh Kong Wee Says:
Go on fighting. But a lot of hard PC user don’t like to see growth in Apple, that it. I have both.I am permanent slave to computer.
Posted on August 09, 2008
alex Says:
actually im not fighting as much as it may seem so. I <3 Apple! I just wanted to see if anyone actually agreed with me
Posted on August 09, 2008
J. Scott Anderson Says:
Alex:
Let’s see if I understand you correctly. According to you, the typical PC (there are exceptions to every rule) does not look as good as a Mac. The PC isn’t as secure as the Mac. The PC requires a “computer literate” person to “easily” maintain a PC. 99.9% of user are not computer literate. Yet, you maintain that the PC is the better deal. Hmmm…
Also, you list a bunch of professional level software (with the exception of iWork and MobileMe is not software it is a service akin to Windows Live) and claim the Mac doesn’t come with good software. Well…contrary to your opinion, iLife is the reason many people buy Macs. What you call fun my mother, for example, calls necessary. She uses iLife extensibly for a variety of things important to her. Documenting local and family history may not be important to you, but it is to her. No, she does not have iWork and does not need it. TextEdit reads and writes the simple Microsoft Word documents that she creates and edits with her peers just fine. But, even if she did have to upgrade, the $80 she would spend is much lower than the price she would have to pay for Microsoft Office.
Yes, one day, the Mac is probably going to get a virus. However, I’ve been waiting around eight or so years for that to happen. By most IT people’s reckoning, that is a massive amount of time in the computer industry where things change so fast. So, while most (read as the vast majority) Windows users have been fighting or being destroyed by malicious software, Mac users have been blissfully getting work done and not wasting time and money getting their appliance back up and running.
So…hmmm…computer that works for more of the time with fewer problems (both internally and externally generated) versus computer that doesn’t. Which one is a better deal again?
Posted on August 09, 2008
Mr. Reeee Says:
I’ve heard that Microsoft charges the DOSBoxStuffers™ like Dell and HP about $50 per computer to load Windows. You can BET that it costs Apple more than that per loaded copy of Mac OS X.
I wonder how Apple manages to keep prices where they are given the incredible amount of time, effort and MONEY it must take to develop and support Mac OS X. Not to mention their internet and retail sales operations.
At this point Apple is essentially developing and maintaining 3 operation systems: Mac OS X, iPhone/touch (yes, it is based on Mac OS X, but certainly very different in many ways) and iPod. Eventually we’ll see the iPod OS go away as iPhone/touch takes over. Maybe even this year?
It’s been proven that Macs really are about the same cost as a generic Windows box WHEN THEY ARE CONFIGURED APPROXIMATELY THE SAME. The article being discussed didn’t even TRY to do that. I’m sure it generated plenty of hits for the site.
Posted on August 09, 2008
Drop It Already Says:
This whole Mac vs. Pee Sea is SO goddam tiresome.
All Mac users have had to use Windows boxes in some capacity. Mac users DO have experience with “the dark side”, so we do have taste of both sides. Luckily for some, not too much. I’d wager that the majority of Windows users simply do not have much, if any, experience using Macs and cannot make that claim and certainly lack a point of reference from both sides.
NO, the MacPlus you used in public school does not count.
Until WinDOS users get a reasonable amount of time using a Mac running Mac OS X, please STFU until you know what the hell you’re talking about.
Thank You.
Posted on August 09, 2008
bo Says:
i think apple should develop a more affordable mac specifically for sale in developing nations . apple should be trying to increase their presence in china , india , brasil , et al . it’s akin to the emphasis they place on the education market : that’s where the growth will come from
Posted on August 09, 2008
Deocliciano Okssipin Says:
ˆ
|
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bo is right!
If Apple lower the profit margin It could cut the price.
Posted on August 09, 2008
Brontes Muse Says:
Remember the ibook you mentioned is actually on sale too, for back to school customers. They save 10% and get an ipod. That’s $130 cash, and $250ish in a cool usable product.
1300 ibook
- 130 Student discount
- 250 ipod
--------------
$920 total
Not that far off from the $900 Dell.
Posted on August 10, 2008
Vaius Says:
The only truly overpriced Mac i’ve found is a fully configured super-computer-esque Mac Pro, for about 21,600$ (about 16,200 $ with the Apple Employee Discount)
The specs are as follows:
Two 3.2 Ghz Quad-Core Processors (6.4 Ghz Eight Core total)
Four 8 Gb Memory Cards (32 Gb Memory total)
One Mac Pro RAID Card (for enhanced data protection and storage)
Four 1 Tb 7200 rpm Serial ATA 3gb/s (4 Tb 28,800 rpm 12gb/s total)
One NVIDIA Quadro FX 5600 1.5 Gb Graphics Card
One x16 Optical SuperDrives (for viewing and burning discs, of course)
One Apple Cinema Display (30” Screen)
Apple Mighty Mouse (4 buttons, and a 360° Scrolling Sphere)
Aluminum Apple Keyboard (For typing… obviously)
Posted on August 24, 2008
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Dennis Sellers
Dennis has been a newspaper editor/reporter (seven years) and teacher (seven years). He has over 4,000 magazine, newspaper and online articles to his credit. He has also covered the Mac and tech industries for over a decade for such online publications as MacCentral, MacMinute and now MacsimumNews.
ldrhawke Says:
What is not stated is the PC’s are cheap because they are cheaply made and they look cheap. I’d rather pay more for an Apple computer knowing the high reliability record that comes with it. A Chevy Nova and a Porsche both have four wheels and will get you from point A to point B, but’s that’s about all they have in common.
Posted on August 08, 2008