Price cuts on Macs? Why not?
Posted by Dennis Sellers 
Jul 25, 2008 at 9:52am
Sometimes Apple just can’t win. In the past it’s been knocked for having overpriced products. Now stock has dipped because some pundits think that Apple is planning price cuts to be more competitive in the current, tough economic climate. But what’s wrong with that?
CNN Money says that “Apple helped sour the sector, after delivering strong June quarter numbers, by offering a surprisingly weaker outlook for the current quarter.” The company cited costs related to a “mystery” product launch and more competitive pricing. On Apple’s earnings conference call, Chief Financial Officer Peter Oppenheimer told analysts that the company wouldn’t seek wide margins that would provide an “umbrella” for competitors to sneak in and steal business from Apple.
Fortune notes that analysts and investors interpreted the thinner margin forecast as signs that the company will be forced to cut prices in an “un-Apple-like effort to help juice sales.” The article continues on to say that: “Apple products carry somewhat of a must-have coolness factor allowing the company to command a premium price. It’s a bit of a bruise to Apple’s image to be seen competing on price.”
But why shouldn’t Apple compete on price? I’m pretty sure that you’re not going to see the company go after the bargain basement bin niche of computers. But with roughly a bazillion dollars in the bank, the company can (and should) cut prices on its Mac line. The company’s on a roll, so why not get the Macs into more hands? Price cuts can help do this.
As Silicon Alley Insider pointed out, Apple is probably going to “slash prices to accelerate the rate it’s stealing market share from rivals” and adds:
“This would have been unthinkable just a few years ago, but now it seems like a great time to make a real run against Windows-running rivals like Dell and HP. Microsoft’s Vista has a tiny fan club, PC manufacturers continue to churn out uninspiring machines, and as more software moves to the Web, companies (and individuals) have fewer reasons not to buy a Mac.”
Macs are selling at three times the industry average. Imagine what will happen if the prices get even more enticing?
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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.
RoDe Says:
The dropping of prices is inevitable. Its a constant. The price of a Mac will drop as material and component costs will drop.
I don’t mind prices dropping, again it’s sort of a natural occurrence. But what I do fear is a sharp dropping of price, with a sharp drop in overall quality.
And quality is what drew us all in and made us fall in love with the Mac. It’s the built quality of Mac hardware combined with the quality of Mac OS X that turned me around some five years ago.
I would hate to see Macs become cheaper, just for the sake of winning more souls. Only to see overall quality come crashing down.
Don’t forget, people switching from Windows to Mac do so because their fed up with cheap PC’s that fall apart after only a few years of service. A lot of switchers find it worth spending a bit more money, when they believe that their buying a product that is genuinely better.
Up until now this has been the case. And their and our believes have been justified. The Mac currently is the better platform in my opinion, it’s not perfect, but it’s miles ahead of the competition.
But now to get back on-topic. Is Apple to going to lower it’s prices and margins to win even more ground ?
I personally don’t think so. Apple is not going to lower it’s prices unnecessarily. As I said people are willing to lay down more cash if they get something that is genuinely better. Why lower prices if their is no need to do so.
I do however think that Apple is planning a product, which incorporates something that right now is so expansive that other manufactures avoid using it on a large scale, think SSD drives. Or maybe LED Cinema displays. This would also, besides the lowering of prices, affect the margins.
But that’s is just me guessing. I think I’m just gonna wait and see what Apple pulls from its magic hat, it’s bound to be something worth waiting for or not :)
Posted on July 26, 2008