Finally Proof: Apple Products Aren't Overpriced

[testcss]

After trying to find the true cost of a PC (Windows computer) after removing the subsidization of stickers, bloatware, trials, etc. I stumbled across the Microsoft Online Store. I found 2 almost perfect examples of why Apple is indeed a better value.

First, a MBA equivalent PC found here.

Same everything basically except it has 1.33 Ghz i3 with Intel HD graphics. It costs almost 200 dollars more than the 11 in. MBA that has better graphics and Mac OS X. Keep in mind this PC is clear of bloatware, trial anti-spyware, etc. that subsidizes the cost of a PC.

Next, the best iMac equivalent I could find at MS Store, Here

Compared with base 27 in. iMac this computer has worse everything except 2 gb more ram and a blu-ray drive (I'm assuming a 540M 1gb is less powerful than an amd 6770m 1gb.) Once again this is a "premium" Microsoft computer sans subsidization.

What's your opinion? To note, don't flame me because you find a cheap plastic ultrathin, all-in-one etc. that is cheaper than a Mac because the computers I'm comparing have a similar design, quality, battery life, attention to detail etc. In fact the Samsung is a MBA carbon copy sans i3 and Intel HD. I think with the nearby release of Lion along with the new MBA's, Macbooks, Minis, etc. there is no longer a good reason to buy a pre-made PC (Building your own still is a great value though.).

 

[sumone]

To start I find even bringing this up to be incredibly ridiculous unless you're employed by Apple I don't see why you feel the need to justify their prices.

But....

"Apple's iPad line as a whole enjoys a margin of approximately 50%"
"High profit margins are standard for Apple, which earlier in the week boasted that its corporate margin for 2009's final quarter was 40.1%. Some products, in fact, have estimated margins even higher than Marshall's iPad numbers: The consensus for the iPhone 3GS is above 60%, for example."


"Apple accumulated $4.976 billion in revenue from the sale of 3.76 million Macs during their previous quarter, giving a Mac an average selling price of $1,323.40. Richman then multiplied that number by a 28% gross margin for Mac sales from Jefferies & Co to arrive at a profit of $370.55 per Mac sold. In comparison, HP’s PCs brought in $9.415 billion in revenue and returned a profit of $533 million last quarter. Hewlett Packard’s operating margin, which doesn’t include overhead costs, came in at 5.66%."
"With an average selling price of $650 and a profit margin of 8 percent, HP would be making approximately $52 on the sale of each PC, translating to “Apple makes more money from the sale of one Mac than HP does from selling seven PCs.”"


"The largely unnoticed 13-page report he issued last week on the iPhone's gross profit margins, which he estimates at nearly 60%. At that level they not only dwarf its competitors' but they could reshape Apple's business model as the iPhone's share of the company's overall revenue stream grows from 30% in fiscal 2009 to an estimated 45% to 50% in fiscal 2011."
http://fortunebrainstormtech.files.wordpress.com/2010/03/screen-shot-2010-03-02-at-6-20-30-am.png


You can debate all day whether or not Apple's products are "Overpriced" or not based on offerings and overall experience etc. But the fact remains that based on the amount of money Apple puts into producing their products they definitely could lower the prices if they didn't mind taking a hit in their profit margins. But despite whether you agree with their practices or not the way things are going Apple will probably sooner increase prices rather than decrease them because people will more than likely continue to buy their products despite the cost.

 

[andrewlgm]

What makes a mac superior is not so much the hardware, but the software. I bought a macbook last year, and it still runs smooth like the first day. In my opinion, Mac hardware is usually outdated when compared to PCs. They're still selling white macbooks and macbook airs with core 2 duos. 5 years after they first came out. In the PC world you can find core 2 duos for less than $500.

Of course these statements are nothing more than opinion. Macbooks are all built with great quality. From the white to the air to the pro. But I don't think it warrants the price. In my view, they're terribly overpriced. The white macbook should have gone down in price to $799 last year. But apple is still selling them for $999. Again, in my view, absurd.

Apple is a better value due to a macbook lasting longer than a PC when it comes to usability, stability and support. But not due to price. But any advanced windows user will tell you that if you know how to truly use a windows machine, or linux, a mac is far inferior due to its lack of customization, its high price, and apple's proprietary tech.

 

[testcss]

To Sumone:

I'm not trying to deny profit margins, but I trying to say Apple computers hold great value over their competitors. Profit margins are subjective, because the only products Apple sells are ones with typically high margin. A $199 netbook will have a low margin and a $3999 alienware computer has a high margin, but a lot more netbooks/low cost pcs are sold than that Alienware so statistically the PC profit margins are less. For consumer level products that are comparable to Apples' products, Apple products offer better value. Like I noted at the bottom of my post you can't compare a $199 plastic 10 in 2hr battery life computer to any mac computer. You must of missed that. I don't work for Apple and I even unbelievably own a 4 year old PC in addition to my mac. I do need find a need to justify their prices because I am tired of hearing people say Macs are more expensive. There is a reason why a Kindle with adds sells for $50 dollars less than an add-free version. It is subsidized. The same works for PCs where unneeded bloatware, free trial antivirus, multiple stickers, etc. subsidized a PC to make it seem very cheap. How many people would prefer to buy the add supported Kindle vs. a regular Kindle. A point of this post is to show companies can't compete with products similar to Apple. They either have to reduce build quality, subsidize, etc. to lower prices and seem attractive. I wanted to show Macs aren't overpriced or at least not to the extent people like you what others to believe. Your talk about iPads, iphones and such are ridiculous because I never mentioned an iPad/iPhone in my post. Maybe I should add words to your mouth. Even with the iPad/iPhone argument Apple still wins. How much does an iPhone cost with a similar 2 year contract? The same or even less than comparable phones like the Charge and the Thunderbolt. The iPad is still the best value on the market and there are countless reviews to match. It doesn't matter what Apple's margins are as long as they create products competitive with others. Maybe an ad-supported tablet will appear for $100 dollars with a dollar margin. Does that make it the best product/deal compared to a $499 iPad? I shouldn't have to even mention this but Apple will never compete with ultra-low margin computers but does that make them a bad deal. I am trying to say that Apple computers are cheaper/better deal than unsubsidized Windows PC equivalents and have Microsoft Store examples. Did you even look at the price and specs of the Samsung model?

 

[mschmalenbach]

Interesting...

Thanks to testcss for posting those details.

There is such a variety of different sources/combinations for hardware running Windows that it can be daunting to compare features/prices etc.

Sumone puts forward some interesting numbers from a business perspective, that I was familiar with, but makes an implicit and interesting point I think, which suggests that if (some) people knew the margins Apple makes on its products compared to the other manufacturers, they might be less inclined to buy Apple products.

I work in the semiconductor business and I work in sales, so I find this interesting.

Some people will never buy Apple - just as some people will never buy Ford or Mercedes cars. Some people will never buy Windows. These are, to use the vernacular, the 'fan boys' (& girls!) of their respective machines. And they'll do this no matter what. Everybody else will take a view based on a range of other criteria.

There aren't too many people who will avoid a particular product *just* because the manufacturer makes a huge profit margin from it. They'll stay away from it for other reasons. Example = the millions of readers of the News of the World newspaper (in the UK) who overnight decided that they wouldn't buy it again because of what it was accused of doing some years ago...

Apple is expected to post very strong results next week - it may have a smallish share of the PC market, but it has a huge share of the profits available in that market - that is one reason investors love Apple...

Enough people 'want' an Apple product - whether it's truly because Apple stuff "just works" or because it makes them feel "cool" - it's no different than Nike for example charging over $100 for some running shoes - they only cost a few $ to make... it's not just about money.

For me, I have Apple stuff. For me it was at first a simple business decision, based on money - total cost of ownership in terms of time not wasted due to driver issues, virus scanning, Windows security updates etc etc etc was significantly lower than the laptop I had at the time. I went from a $600 laptop to a $1000 MacBook and never looked back. Does this mean I'm anti-Windows? No! I want Windows to be good, to give Apple a run for its money and drive innovation - the user wins out in the end and I have had some great Windows kit - notably from Dell & Compaq.

So what ever your preference, to each their own...
... and enjoy!

 

[sumone]

andrewlgm - love the way you put that .

To OP:

You seemed to have missed the point I was trying to make. The only reason why I threw in those iPhone and iPad stats was to illustrate the type of profits Apple makes from it's products. And such profits are not exclusive to their iPhones and iPads.

As I already said which you must have missed. We can argue all day about whether they are overpriced or not. Some people will say that the functionality of the Mac justifies the cost while some say that if you knew how to properly use a Windows system you wouldn't experience nearly as many issues as some people do. That is all subjective so we cannot successfully debate that topic. However, what I am saying is that Apple prices their products in such a way that they gain sizable returns and it's not like their Macs have to be over $1000 USD. It's not like how Sony was losing on every PS3 sold because they spent way too much in production. Apple could certainly lower prices and still make out good and yet they choose not to because they know that people will still buy.

It is true that on average a Mac last longer than PC's and say for instance a Mac last for roughly fours years purchased at $1300 USD even if some one bought a $400 PC which broke down and needed to be replaced after 2 years with another $400 PC they would have still paid less than the $1300 Mac and you can even throw in Norton for the four years and it still comes out less. I don't know why you're complaining about bloatware because that can easily be removed it's not a big deal. I'm not saying this to "Hate on Apple" I love their products and I own several for which I paid their 'Higher than Competitors prices" for but I still believe that Apple could certainly lower prices.

 

[testcss]

Thanks, Sumone for trying to explain more clearly. I thought you were insinuating that Apple products are not worth buying because they have high profit margins. I should of entitled the thread a little better but I am just trying to show that products that are easily directly comparable to the experience of an Apple product are more expensive. The reason why profit margins are so low is because of the constant price wars between pc companies drive the price ridiculously low. If this results in innovation it is a good thing for consumers but when companies start going into other tactics such as lower quality build, subsidization processes as I mentioned before, etc. it spirals into a bad situation. I see what you mean that Apple could reduce prices and I myself believe the current macbook isn't a good value (hoping the refresh changes that). The whole point that I am showing is that a PC competing with similar specs and build quality can't compete with Apple and are overpriced. Therefore, if the computers are more expensive than what Apple has, it makes no sense for Apple to even consider reducing its prices even though it may have a high profit margin. $200 dollars more for the Samsung that is similar to the MBA pretty much highlights my point. Agree?

 

[sumone]

The whole point that I am showing is that a PC competing with similar specs and build quality can't compete with Apple and are overpriced. Therefore, if the computers are more expensive than what Apple has, it makes no sense for Apple to even consider reducing its prices even though it may have a high profit margin. $200 dollars more for the Samsung that is similar to the MBA pretty much highlights my point. Agree?

I see what you're saying but I feel like in some sense its like comparing Apples (no pun intended) and Oranges. Comparing spec for spec it would appear that the Samsung has more to offer like an SD Reader, the better CPU (which you already mentioned), mini HDMI port, USB 3.0 port among other things. It also comes with the Windows OS which some people may value over the Mac OS. Looking at it from this angle some may argue that the extra couple hundred dollars is justified but it just depends on what the person is looking for.

Again from a financial point of view I don't know how much total production was for samsung to make the series 9 based on some of the extra features it has and the fact that everything isn't done in house like with Apple i'm inclined to believe that Samsung probably paid more to make their ultra-portable and despite the higher price their return might actually turn out to be less than Apple's but I have no way of knowing for sure.

So despite being similar I don't really know if it affectively proves your point that Apple products are not overpriced.

 

[Sorcerer1984]

I agree with profit margins being high on mac products. To me many of the arguments on I stuff is really just a waste of time and thought...

Especially when you consider many (or most) of the apple products are now just assembled from outsourced parts. While apple seems stringent in accepting the highest quality of parts. In the end it comes down to the manufacturing company. As said prior in this thread apple makes some darn good software. However, when it comes right down to it, their OS is closed source software capable of running on only a handful of hardware configurations so of course it will have the ability to run nicer then an OS that must run decent on everything and anything, yes even an apple PC. If micro**** decided to only release drivers for a microsoft computer can you imagine? Yet apple gets away with this and will continue to!

I li