Apple's Premium Pricing

[ae86_16v]

What price Macintosh?

5/16/2006 4:19:01 PM, by Jeremy Reimer

Doing Mac versus PC price comparisons is an old, old, sport, and often the comparisons are done by one side or another with a particular axe to grind. Some people go directly for the cheapest, flimsiest PC ever built and compare it directly with the most expensive Macintosh just to say that Apple's computers are overpriced, whereas others go to ludicrous lengths to match the specs of one particular Apple model exactly to the point where only a single boutique model of PC fits the bill, in order to claim the reverse.

Because of this, I always approach price comparison stories with a wary eye. In the old PowerPC days, the different architecture at least offered some escape from price comparison madness. For example, when I bought my iBook five years ago, the low-power G3 offered a five-hour battery life that stood out from most PC laptops of the time, and the 12" form factor was hard to find except in very expensive "ultraportable" laptops from Sony and other high-end vendors. The main problem was figuring out exactly what PC hardware was equivalent in performance to PowerPC-based Mac kit. Often, it depended on what applications you ran.

These days, as Steve Jobs has said, "We're kind of done with Power" and new Macintosh hardware is pretty much identical to PC equipment. Apple has even gone so far as to enable booting Windows XP on their new Intelmacs (Wintelmacs?) which makes it hard at times to distinguish them from PCs. This hardware parity provides an opportunity for more sensible price comparisons, and a recent study by Piper Jaffray analyst Gene Munster has come up with a pretty good one.

Munster has found that while most people's conception of Macintoshes is that they command a 20 to 30 percent price margin over equivalent PCs, analysis of the new Intel-based Mac hardware shows that the actual price premium is much less: only 13 percent for desktops (well, iMacs, since the PowerMacs haven't transitioned yet) and 10 percent for laptops. This is a pretty reasonable margin, and certainly shows that Apple has come a long way from the company that once made more than 50 percent profit on both the Apple ][ and Macintosh lines.

However, the numbers don't tell the full story. While Apple may command a small price premium on the computers they do sell, they only sell a few models and they are all in relatively high price ranges. For example, instead of making the new MacBook a US$699 model with a Celeron, Apple chose to keep the high-end Core Duo processor and differentiate the US$1099 unit from the more expensive MacBook Pro by using integrated Intel graphics.

The majority of PC sales are for models that are cheaper than Apple's Mac prices. The average PC desktop with a display sold for US$744 last year, which is about the same as Apple's cheapest Mac, the US$599 mini, once you add a display, keyboard, and mouse. The average laptop sold for US$1070, slightly less than Apple's cheapest MacBook at US$1099.

Whether or not the prices Apple charges are worthwhile depends primarily on how much you value Apple's hardware designs, little additions such as the MagSafe power cord, or a licensed and legal version of OS X and the bundled iLife software. For Apple fans, of course, these additions are well worth the price premium.

http://arstechnica.com/news.ars/post/20060516-6848.html

[evoWalo]

Nice read but no matter how you explain it to people most will not buy a Mac cause it's out of their budget (over spec'd for their needs) or aren't looking for a modern OS (doesn't like change) even if it has BootCamp. Then again it is OK cause who wants to live in a neighborhood with everyone owning a Maserati or a Ferrari? It's getting sickening to see everyone walking down the mall with white earbuds.

I've seen the recommended spec of Vista and I expect prices of high end parts to drastically drop. People will need 1GB memory & 128MB video cards to run Vista properly.

I would wait until Vista & OS X 10.5.x comes out before buying a whole new system. Last thing I want is a computer that can barely run both. I hear good things about Merom.

[dutchmasterflex]

They have to charge "premium prices" or else they'd run out of money

If their laptops didnt melt down and their ipods stayed alive, I wouldnt mind paying their price.. but the quality and service just sucks for the amount of money you pay..

[dutchmasterflex]

Powerbooks were absolutely bullet proof? Thats why they were all burning up, literally.

Powerbooks have gotten so hot to the touch that it will actually warp the body of the laptop..

[evoWalo]

Well companies are supposed to maximize shareholder value and putting a hefty price tag is one way to do that. I dont fault BMW charging a premium for their "ultimate driving machine" neither do I whine about it. If Apple didnt they'd be breaking the law and could be sued. Also good industrial design does cost money and 30% of Apple's budget does go to R&D while Dell diverts a paltry 5% in comparison.

I have yet to see any Apple laptop literally meltdown. Heat issues arent isolated to Apple products. IBM, Dell, Toshiba, etc also suffer from quality issues from time to time but the difference is that Apple has such a small & famous product line that any press whether it be bad or good gets magnified.

Apple has time and time again received awards for being the best PC maker in terms of customer service. Maybe when you decide to be a customer you'd understand this.

Originally Posted by dutchmasterflex They have to charge "premium prices" or else they'd run out of money If their laptops didnt melt down and their ipods stayed alive, I wouldnt mind paying their price.. but the quality and service just sucks for the amount of money you pay..

Thermal issues concerning the Aluminum-based Powerbooks are isolated to the Revision A models. In succeeding Revisions the thermal issues are resolved.

I'd like to see photos of actual warped Powerbook bodies. If such exist I'm sure Apple promptly replaced em with no questions asked.

You dont get loyal customers by dishing out crap. Apple customers are willing to pay the 10% premium to avoid fuss.

Originally Posted by dutchmasterflex Powerbooks were absolutely bullet proof? Thats why they were all burning up, literally. Powerbooks have gotten so hot to the touch that it will actually warp the body of the laptop..

[RC45]

Remind us again exactly what you would do with these overpriced Apples that you can not do with a medium priced PC?

Oh - and don't forget to list the entire list of 7 applicaitons for sale for Apple computers.

And let's no hear the "video produciotn graphic artist" crap again - I am guessing very few people are in that mould... very few... which means the majority of Apple purchases have money they can piss away on "style"... what ever that is.

[dutchmasterflex]

RC, thanks for pointing out what I so obviously missed in my rebuttles..

And to top it off, all Apple computers now have the same hardware as PC

[SFDMALEX]

Apple is ghey.

[evoWalo]

For a 10% more you get the following

1. It just works
2. You can create amazing stuff using iLife
3. Award winning industrial design.
4. No viruses
5. All the bells & whistles of Windows Vista, now without excuses.
6. Maximizing the Intel Core processor
7. Best & easiet video conferencing bar non.
8. One click websites using iLife
9. Ability to make professional-level podcasts
10. The best consumer-level audio mixing app on the market to date
11. The best consumer-level NLE on the market to date
12. A fast, no fuss Plug & Play that actually works
13. A software bundle that's worth the 10% premium
14. You can also run Windows too at native speed so you can play your games too.
15. Win praises from journalists from the WSJ

The 10% premium of a Mac would've gone to buying antivirus software & a 3rd party firewall.

If you find the 10% premium to cause financial burdens that even people living in 3rd world nations can endure then maybe you should be worried about making money than to bash Macs.

Doesnt that piss you off that people can piss away money just like that? I think it a ripoff to buy a Windows license seeming it just has so many bugs and is afflicted with 114,000 known viruses. Then again Windows is all the Mac bashers know cause they dont know better.

I'd rather have far fewer quality apps than a whole warehouse full of crap.

Isn't it great that Apple is using Intel chips now? Now you can do apple to apple comparisons and whine about a 10% premium.

Mac users enjoy actually using their computers than putting up with the shortcomings of Windows.

BTW nice seeing you back again RC... JW became a bit boring without you crashing in.

Originally Posted by RC45 Remind us again exactly what you would do with these overpriced Apples that you can not do with a medium priced PC? Oh - and don't forget to list the entire list of 7 applicaitons for sale for Apple computers. And let's no hear the "video produciotn graphic artist" crap again - I am guessing very few people are in that mould... very few... which means the majority of Apple purchases have money they can piss away on "style"... what ever that is.

[evoWalo]

Almost forgot.

16. It never crashes, if ever.

So there are 16 reasons for such a huge 10% premium. Like 10% is so big. It takes 1/10th more to buy a Mac over... a Dell.

For 10% more you dont get the ever needed PS/2, VGA, Parallel, Serial, Modem ports. How barbaric that for 10% more you dont a floppy drive. For 10% more you dont get a PCMCIA slot cause everyone needs a PCMCIA slot.

For 10% more you get an option for glossy & non-glossy display.

Macs are said to be expensive because it uses the highest end & upper-mid ranged chips for Intel. Apple doesnt sell bargain basement Celerons or last year's Pentium M. Latest & cutting edge tech spec.

Isn't if funny that a lot pine over uber expensive cars and say they're worth it but cant stomach the thought of paying a 10% premium for a computer that actually works? Priorities guys, priorities.

[RC45]

^^ so what can you do with the mac you can't do with the PC again?

-oh and I came back just to bring joy to your iLife

[dutchmasterflex]

FYI, http://www.engadget.com/2006/05/19/w...s-on-your-lap/

Oh yeah, and wasn't the whole idea of buying a Mac was for its powerpc RISC processor? Now theyre pretty much PC's with a "pretty face"..

[nthfinity]

how about this great reason to buy a Mac...

You actually have to *buy* any software that doesn't com with it


*of course, I always buy all software, unless it is freeware

[evoWalo]

Yeah I saw that too on engadget. As I said on a few posts ago when Apple does something it gets full press whether it warrants it or not. Like would the press care if a Zen didnt have firewire cables? When the iPod came bundled with only USB cables the press gave a lot of print space. When was the last time the press talked about Dell's warning on hot laptops? My 5 year old Thinkpad has the same warning about not putting it on my lap inside its manual. What's the name of Apple's CEO? What's the name of HP's CEO? Who's Creative's CEO?

Check out the press about the latest Apple Store in Fifth Ave in NYC. Everyone's going gaga over the store.

Time was PPCs did better than x86 processors. But due to disinterest of Moto, IBM & Freescale the rate of progress on that platform waned to the point Intel chips became more competitive in terms of performance & power consumption. Intel was forced to catch up to AMD and it is coincidental it outdid the PowerPC.

PPCs can be found in all of the 6th gen video consoles: the PS3, XBox 360 & the Wiiiiiiiiiii. PPCs are also found in controllers for cars. Ford is one of the most notable car companies that uses a PPC inside it. In the realm of Personal Computers the PPC is on its last leg with the PowerMac G5 line. Once that's gone no more PowerPC on Personal Computer and good riddence. It doesnt perform as well as the current Intel Cores.

It's more like a PC with a better OS. Better OS is worth a 10% premium if it doesnt screw up.

[RC45]

Britney Spears gets more press than Tyra Banks... pretty much explains the Mac extra press vs PC