Do Mac prices hurt sales?

[acedickson]

I'm looking to get some feedback about the prices of Apples computers, Power lines mostly. Do you think that one reason their marketshare is smal is because of the pricepoint? I recently made the switch and it's the smartest decision I have made. It's made my computing experience so much easier and more enjoyable. But, it did take me a year to decide to shell out the money for a 15" PB, all based on the price. It's now obvious to me that it's well worth it.

I beleive that more people would "switch" if they were a little more affordable. Thanks for taking the time to read!

 

[SiliconAddict]

The answer will come in about a week, well prob a few months after that, assuming the $499 iMac rumor is true. I'm pretty sure the answer is yes. I know more then a few people at work who would get a Mac if it wasn't for both the price and that they already have really nice monitors at home. One who just upgraded from a 17" to a 19" flat panel in prep for a new computer this spring. If all goes well the people who walk into the IT department can not longer say "yah but the price." I'm tempted to bring the iMac into the IT department where I work and simply hook it up to the Mouse/Keyboard/Monitor switch I have so I can demo it on the fly and just take it home with me at the end of the day. I know more then a few will get one at a $499 pricepoint.

 

[gekko513]

If Apple computers were cheaper then the market share would be larger. That's the way things work. However, if Apple computers were cheaper then they would either have to be lower quality or Apple would make less profit.

As for lower quality. Part of what keeps the Mac platform healthy is the arguable enhanced user experience that depends on the relatively high quality of hardware and software.

As for less profit. You can probably find the answer in some economic science textbook. The goal is to maximize profit. Max total profit is somewhere on the axis from selling lots of units with some profit to selling some units with lots of profit. The right price point would be at the point where a price cut would result in such a low increase in number of sales that it doesn't make up for the loss in profit per unit.

Sometimes it could make some sense to sell at a loss to gain marketshare if that marketshare can be exploited to make profit later. That was Microsoft's strategy on the xBox, but Apple is not in a position and can not afford the loss it would require to capture such a large marketshare from Dell, HP, Microsoft, Intel and others that they could milk that marketshare later on.

 

[mcmav37]

Max total profit is somewhere on the axis from selling lots of units with some profit to selling some units with lots of profit. The right price point would be at the point where a price cut would result in such a low increase in number of sales that it doesn't make up for the loss in profit per unit.

Sometimes it could make some sense to sell at a loss to gain marketshare if that marketshare can be exploited to make profit later. That was Microsoft's strategy on the xBox, but Apple is not in a position and can not afford the loss it would require to capture such a large marketshare from Dell, HP, Microsoft, Intel and others that they could milk that marketshare later on.

I think an important point here is that while Apple certainly makes a good portion of its profits off it's initial hardware sales, it does stand to make a good amount of profit off back-end sales. Imagine if Apple all of a sudden had twice as many people who would be considering buying an iSight once they see how cool iChat AV is, or getting an Airport card/AXE to join the wireless revolution. And that doesn't even mention the potential gold mine of people who will choose to upgrade to the latest iLife or OS X or even choose to step up to something like FCE. All of these software purchases are practically like 100% profit to Apple since they will have spent the R&D to create them no matter what their market share. Personally, while I know it will never happen, I think Apple could just survive on making profit from iPods and software and significantly reduce the profits it makes from hardware sales.

 

[Blue Velvet]

The majority of people are usually only vaguely-informed when making a computer purchase. How many times has a friend, colleague, or family member asked your advice or help when getting a new machine?

To my mind it's similar to buying a car: many people do the equivalent of kicking the tyres when buying a computer.

There are so many confusing factors for them that the price point becomes the reference point by which to measure purchases.

Apart from the technical specs, when you start adding in the slightly more abstract ideas like usability, resale value... and the most abstract yet real idea of 'quality' (Zen and the Art of Computer Maintenance, anybody?) then it becomes overwhelming for a lot of people although many won't want to admit it.

And also, never underestimate the resistance to change. i.e. switch... Saying that, many people are also on a limited budget and want to get the best they can afford -- it doesn't help when there are so many wilfully ignorant salespeople out there...

 

[kettle]

As for lower quality. Part of what keeps the Mac platform healthy is the arguable enhanced user experience that depends on the relatively high quality of hardware and software.

Yesh, the cult of Mac is really based on the overwhelming percentage of happy loyal customers. I'm not sure how high that percentage would be if Apple started producing machines that barely saw out the 12 month warranty. Bad user experience would dilute the value found in online user groups such as this one.

Apple must stay within the power band of customer satisfaction. This is what more than offsets the disadvantages of being on a minority computing platform.

I'm a happy user who still has "trouble" justifying an upgrade to my 5 year old G4. It's a genuinely lovely machine that I will be sorry to put into retirement. (maybe next year)

Great value for money.

 

[Chip NoVaMac]

Having made the move a year ago back to Mac, I can say it was the best move for the work I was doing. I was so happy we added an eMac to the house to be a backup for my PB.

The eMac was to have been used mostly by my other half. Though because of their use of Office for Windows at work; they could not find "happiness" with the layout of Office for Mac. I may be wrong, but I would think that it would be easy for MS to have a Windows compatible view for Office Mac. Yet they don't because it hurts their future sales of the Windows product IMO.

 

[iGav]

I beleive that more people would "switch" if they were a little more affordable. Thanks for taking the time to read!

What Apple have to be careful of is that they don't sell products that are so cheap that everyone could afford one, this waters down brand value and ultimately could negatively affect it's future. Think Burberry or French Connection UK.

Apple DO NOT need a massive market share to be successul, think B&O, NEFF and Aston Martin.

 

[zelmo]

What Apple have to be careful of is that they don't sell products that are so cheap that everyone could afford one, this waters down brand value and ultimately could negatively affect it's future. Think Burberry or French Connection UK.

Apple DO NOT need a massive market share to be successul, think B&O, NEFF and Aston Martin.

Quite agree. I don't want Apple to be so huge that they lose focus on what makes them special in the first place - quality. That having been said, I would love to see Apple reach a market share between 8 and 10%, as that would likely inspire more diverse software titles. It would also triple their market and possibly even squash the "Apple is dead" rumors. If the $499-599 headless Mac rumor comes true next week, Apple has taken a step towards achieving substantial market growth in the coming 18-24 months. Here's hoping.

 

[wdlove]

Quite agree. I don't want Apple to be so huge that they lose focus on what makes them special in the first place - quality. That having been said, I would love to see Apple reach a market share between 8 and 10%, as that would likely inspire more diverse software titles. It would also triple their market and possibly even squash the "Apple is dead" rumors. If the $499-599 headless Mac rumor comes true next week, Apple has taken a step towards achieving substantial market growth in the coming 18-24 months. Here's hoping.

IMHO if the $499 headless Mac is true, then it will also follow that it will have the expected Apple quality. Apple has represented quality. This will be a gateway CPU for people to see and feel the Apple experience. Then hopefully that will move up the product as the money and need rises.

 

[Chip NoVaMac]

What Apple have to be careful of is that they don't sell products that are so cheap that everyone could afford one, this waters down brand value and ultimately could negatively affect it's future. Think Burberry or French Connection UK.

Apple DO NOT need a massive market share to be successul, think B&O, NEFF and Aston Martin.

In the end the iPod changed that. The industry as a whole has entered into a new world. We may now be entering the point that the PC is more than just a "tool" but an appliance. At that point ease of look and style matter.

 

[mcmav37]

Apple DO NOT need a massive market share to be successul, think B&O, NEFF and Aston Martin.

Of course Apple does not NEED a massive market shart to be successful. Heck, one could argue they don't even need the Mac anymore now that they have the iPod to be successful. But, the Mac does need more market share to be fully respected. By that I mean that I am sick of still visiting websites that have video content that will not work on a Mac or, more importantly, finding software titles that are either months to years behind their Windows counterparts in release or never come out at all.

The comparison is often made betwen Apple and BMW (or Aston Martin). Sure, all very successful companies with very low market share, but successful nonetheless with happy customers. But how happy would those BMW owners be if a significant percentage of gas stations or car washes, etc. could not or would not service their car?

 

[varmit]

I would say no. The fact that Apple computers last longer and can still run the latest software well, meaning people don't have to come back every couple years to get a replacement, that hurts Apple's sales. People still have their iMacs, iBooks, Powermacs, and PowerBooks from the late 90s running the latest OS without problems.

 

[mms]

Maybe. Who knows?

But one thing that's absolutely certain is that Apple is a very profitable company as it is and I see absolutely no reason for change. A computer company does not have to be consumer-oriented to be successful. Apple has a history of quite a bit of success with higher-priced machines. Don't try to fix what ain't broke.

 

[el greenerino]

A small marketshare is fine as long as Apple doesn't become Leica. A small marketshare is further justified because Apple is the trend setter.

And another thought: Why worry marketshare now? Even if marketshare goes down there will still be more macs in households just not more percentage wise, which can be deceiving.

 

[yukon8170]

Do we really want people to switch?

Being a recent switcher myself, I understand the problems that windows causes. I would compare my switch to stepping out of the dark and into the light. However, think of what would happen if everyone started to switch. Apple would start making more of a profit than they are now - they are making a profit now. More people would buy them and demand that the prices become lower. This would trigger the use of cheaper parts used for macs, therefore creating cheaper computers (dell, anyone?) Within a few years (or months), we would start to see viruses and spyware popping up on apples. I know this sounds selfish, but I would rather the ignorant use their Dells and complain about the blue screen of death, than have to share my mac with another.

Just my two cents worth

 

[absolut_mac]

As for less profit. You can probably find the answer in some economic science textbook. The goal is to maximize profit. Max total profit is somewhere on the axis from selling lots of units with some profit to selling some units with lots of profit. The right price point would be at the point where a price cut would result in such a low increase in number of sales that it doesn't make up for the loss in profit per unit.

Dell seem to be doing okay by making a small profit, although I'm sure that their profit margins are considerably higher on their servers and *pro* line.

I'm sure that almost every company in business today is looking for that *economic science textbook*.

I'm obviously not a good candidate for understanding economics 101, because I don't have a clue how MS (read Bill Gates) could have gotten so huge and wealthy selling defective products that never worked as advertized.

 

[mcmav37]

More people would buy them and demand that the prices become lower. This would trigger the use of cheaper parts used for macs, therefore creating cheaper computers (dell, anyone?) Within a few years (or months), we would start to see viruses and spyware popping up on apples. I know this sounds selfish, but I would rather the ignorant use their Dells and complain about the blue screen of death, than have to share my mac with another.

Just my two cents worth

While I agree that we don't need everyone to switch to Mac, I think your logic is a little backwards. People who have bought a product don't turn around and demand lower prices. In fact, right now I think the demand is already there for cheaper Macs. On the other hand, if more people buy a Mac, Apple will not only be able to buy its components for less, but it could sell for less and with the higher volume maintain its profits (and quality).

Again, while we don't need a huge market share increase, if we stay at such a low level, we will continue to face problems with application availability. Games, especially, either come out months later that Windows counterparts, or not at all.

 

[yukon8170]

While I agree that we don't need everyone to switch to Mac, I think your logic is a little backwards. People who have bought a product don't turn around and demand lower prices. In fact, right now I think the demand is already there for cheaper Macs. On the other hand, if more people buy a Mac, Apple will not only be able to buy its components for less, but it could sell for less and with the higher volume maintain its profits (and quality).

Again, while we don't need a huge market share increase, if we stay at such a low level, we will continue to face problems with application availability. Games, especially, either come out months later that Windows counterparts, or not at all.

You do have a very good point. I dont play games that much on my mac. I like to use it for music and movies. I think that owning a mac makes a person look a lot smarter than owning a PC. I have become so much more productive by using this computer. I cant tell you how many times I woud have to restart my dell laptop before I got my powerbook. It was so frustrating! When you hear about all the problems that people have with their windows PC's, you can sit back and think to yourself "I am ahead of these dumb A**es because I own a mac."

 

[acedickson]

There are alot of valid points, BUT I disagree with the common argument that's been made. Lower pricing doesn't mean cheaper products. That would depend entirely upon Apple itself making that decision, whether or not to use cheaper parts. I don't believe they'd risk their faithful base in order to make more profit.

It seems to me that they could stand to lower the prices, increase the number of Mac owners, and at the least make the same profits they do now with their current approach. It's selfish of me but I'd like to own more Macs, but based on my income vs their current prices, it's a stretch for me to do. I'd love to get friends and family in a Mac too. Anything to make their lives easier and have them stop calling me with the Windoze problems all the time. ROFL

 

[Chip NoVaMac]

There are alot of valid points, BUT I disagree with the common argument that's been made. Lower pricing doesn't mean cheaper products. That would depend entirely upon Apple itself making that decision, whether or not to use cheaper parts. I don't believe they'd risk their faithful base in order to make more profit.

It seems to me that they could stand to lower the prices, increase the number of Mac owners, and at the least make the same profits they do now with their current approach. It's selfish of me but I'd like to own more Macs, but based on my income vs their current prices, it's a stretch for me to do. I'd love to get friends and family in a Mac too. Anything to make their lives easier and have them stop calling me with the Windoze problems all the time. ROFL

I agree, but at the price level the iMac mini is supposed to hit, Apple would not be hurt by having a system that needs replacing after 2 to 3 years. As opposed to many still running Macs that are 5 to 10 years old now.