Is Apple playing the PC market right?

[mini.boss]

I know some people get personally offended to be catagorized with the PC world, but like it or not once they went Intel, offered boot camp and heavily marketed with their ad campaign then then they've got some new rules to consider. So my question is this, Is Apple playing the PC market right or are they hurting themselves by sticking to their own rules?

When Apple first hit Intel they shocked everyone with how competetive their prices were. But that was over a year ago and there hasn't been any changes in specs or price since then. Back in the PPC days then it was a mystery as to what the parts in your PowerBook cost so you just paid what they asked. But now that they use mostly PC parts then we know exactly what a MBP costs and its nothing close to $2500. And there's absolutely no reason that a 2ghzCoreDuo/512mb/80GB/Intel950 Macbook should cost $1500 when you can go to a ripoff place like best buy and get a Core2 with double the memory and double the harddrive for under $1000.

I understand Apple's flair for the dramatic but this old style of selling Macs is really going to backfire on them if they expect to expand into the PC market. I'm not saying they should release a new model every month, but don't treat us like suckers and drop the prices on systems to match the market. It really pushes people away to tell them to spend $1500 for old technology and then "surprise" us with a new system next week for the exact same cost.

 

[zero2dash]

I don't think that they're in any way trying to expand into (or take a chunk out of the userbase) of the generic "PC market". People who want to buy Macs will buy a Mac regardless of the price because they are dead set on a) the overall quality and reliability of the product, b) hate Windows/love OSX, c) are in the media designing field (whether print or video), or d) some/all of the above.

Generic PC buyers will never buy a Mac because of the sticker shock. Is anyone disputing this, or will anyone ever dispute this? Most tweener emailer/web surfer people would rather save the money and buy a Dell or (pick your choice) one of the many brand name PCs at discount stores like Walmart (eMachines, Compaq/HP).

Apple will grab some switchers with Boot Camp being an option now, that's for certain. But as for Apple being competitive and getting into a price war with anyone else? Don't hold your breath. Minis are cheap enough for the blue collar crowd if they want to take the plunge; otherwise, most people will stay far away from the remaining choices in the Mac hardware lineup. Which is a shame because despite what you believe - Macs are competitively priced in terms of parts cost. I spec'd out a Core 2 system (in parts) from NewEgg several times now, and every time I come out with a bottom line that is only a few hundred dollars less than that of a Mac Pro, which in the end is moot because you'll spend some of the extra money on an OEM copy of Windows (take your pic on what version).

You can argue "oh yeah well a Dell with a C2D is xxx dollars cheaper" which is true but let's try to compare the quality in the parts used in a Dell versus one you build yourself. Build yourself and spend more where you're using brand name award winning parts by award winning manufacturers, versus Dell using the cheapest crap they can find manufactured in a sweat shop tech HQ somewhere over in Asia by a generic no-name company that makes parts for practically every other PC company out there, including QC issues and exploding capacitors. If you seriously think that getting that cheaper computer is a wise decision in the longrun, then I won't try to sway your (misguided) opinion. But do me a favor before you click that "Buy" button on Dell.com...Google search "Dell exploding capacitors" for example and do a little reading and I think you'll decide to purchase your system elsewhere.

 

[mkrishnan]

I look down upon price-conscious consumers as trash, so I welcome any artificial actions Apple takes to keep them out of the family.

(That was a joke).

That being said, I think that Apple has consistently refused to follow the "double the ram double the hard drive" mentality -- that is, sacrificing elegance (but not necessarily cheap) peripheral features of Macs for best price/performance on one or two highly visible metrics like clock speed or disk size. I think that's the right move, and I don't think Apple needs to play that game.

And the final thing is... the usual. Show me the money. Can you provide any evidence that Apple's "flawed" strategy is causing them financial peril? Or even make the less demanding proof that the exact opposite -- that Apple is profiting tremendously doing exactly what they're doing -- is not true?

 

[Omegamanstyle]

the whole is not always the sum of the parts

While it may be true that part for part, a Mac (whichever model you want to spec out), may be more expensive than a PC or a build-it-yourself-frankenstein-assembly, perhaps the price tag is not just a summation of production costs. What is the big thing that Steve Jobs/Apple been touting for the last few years? That it's all about the software.

Apple isn't interested in selling a box with a hard drive and processor, etc. They're selling OSX. That's what makes a Mac different (dare I say superior?) to a Windows machine.

So if still want to price out the tit-for-tat of a Windows PC and a comparable Mac, make sure you add the price of Anti-virus software, and the version of Windows you will be licensing. For my money, it's worth the extra cash to have a friendlier, more intuitive, more resilient and stable OS than to cut a corner because I can save money eating a cheeseburger instead of filet mignon.

 

[mini.boss]

And the final thing is... the usual. Show me the money. Can you provide any evidence that Apple's "flawed" strategy is causing them financial peril? Or even make the less demanding proof that the exact opposite -- that Apple is profiting tremendously doing exactly what they're doing -- is not true?

I think this is really a non-mac fanatics biggest curiousity about the apple fans. We are CONSUMERS so why is the most important thing Apple's profitability? I love my macs but I also love my money so I'm not in the mentality that I should be donating work hours to ensure Apple remains profitable. I really think that the smartest thing Apple would do is open up a paypal account and ask for donations. They'd make a killing.

BTW, I never said they had a "flawed" strategy. I'm just pointing out that to PC users then they're not staying competetive by charging the same prices for a product throughout its entire lifecycle. Judging from the responses so far I now realize I am way off base. Apple can charge whatever they want because there's always a big enough portion of their userbase who will pay it. Who needs new customers.

 

[Applespider]

I think this is really a non-mac fanatics biggest curiousity about the apple fans. We are CONSUMERS so why is the most important thing Apple's profitability?

Possibly because for many years, there were worries about whether Apple would survive...

I do agree for what it's worth. Apple products tend to be much better value at the start of their product cycle compared to equivalent PCs but not towards the end of it. I'm astounded that the MBPs haven't been updated yet nor had a price drop. I wouldn't buy one at the moment. <hugs Powerbook and keeps fingers crossed>

 

[Dont Hurt Me]

As far as market share goes there is no way Apple is playing this right. The model lineup uses the old ppc model of competing with themself meaning the buyer has to choose between say Mini vs PowerMac or Mini and throw away my monitor for a iMac or iMac all in one vs Powermac. This goes on in the laptops. This isnt how you sell to the customer. You sell to the customer by allowing the options needed by the customer but instead they play the gpu game. Oh you want a decent Gpu? you must spend $2500 for a powermac. My first Powermac was $1600.. Apple is chasing away people with all these games. Its nuts and it will keep them at 5% marketshare. sure the OS is better but the world didnt care and bought windblows. Apple needs to get with it because its about the consumer not Apple. Consumer is King and that is economics 101 and Apple doesnt get it. It sure is sweet to go to any PC maker and configure the machine for me vs Apples way of having to buy crap I dont want,dont need and cant afford. Vista is coming and we all know it will be a OSX clone. Apple needs to change its ways and not having a consumer tower is pretty stupid.

 

[zero2dash]

Vista is coming and we all know it will be a OSX clone.

I think you're giving Vista about 1000000x more credit than it deserves.
It'll be a clone, sure. A weak-willed, half@$$ed delivering clone.

What I've seen of Vista is underwhelming...a lot. Granted I'm basing that opinion on betas and RC1 (but I'm downloading RC2 now in the meantime). But so far - Vista is still Windows at its core and it still suffers the majority of the same problems that have plagued every other iteration of Windows to this point. Just because they threw in User Account Protection and some other things doesn't mean those won't be exploited soon enough.

Apple needs to change its ways and not having a consumer tower is pretty stupid.

I do agree that Apple would be wise to come up with a "headless iMac" like many people are shouting for, but they probably won't. As for their sales tactics and the like, I'll just say once again - Apple fans will buy Apple computers, especially considering that (in most cases) they have to. Design industry people (for the most part) create and use files on the Mac platform and most of their customers and contacts do the same; that's why Apple will always be around. They may only be 5% or whatever of the market share, but they're still there.

Classic case of supply and demand. /shrug

 

[Thanatoast]

Here's the thing I've been thinking about lately:

Why do I care what hardware is in my computer? I know, sacrilege, but seriously.

I just bought a 2.0 C2D 17" iMac stock config. Since I know about computers I can tell my friends that is has a gig of RAM, a 160 gig HD and an x1600 video card with 128 megs.

Does this mean anything though? I spend more time talking about how I can fit my entire music and movie collection on it and have it organized and easy to access. Or that I can play WoW at full res with all the sparklies turned on. And that I can do it in windowed mode while video chatting with people. And that everything is where I expect it to be, and that I never have to argue with my computer to get it to do what I want.

My computer looks sexy, moves fast, and blows people away with it's capabilities, not it's hardware specs. I don't really care what's *in* it, it's what it *does* for me that counts. That's why I pay a premium, and that's why other looking for quality do as well.

 

[generik]

What I really hope is Apple will eventually copy other manufacturers and have a more streamlined "BTO" system.

Like for instance everyone else allows you to choose the exact processor/ram/hard drive and for some Thinkpads even GPU options on your laptop!

Apple could certainly take a leaf from this book, and it will do away from this agonising "When is C2D MBP coming" waits.

The MBP was pretty good value when it was first released, but over the past 6 months that value per buck has gone to mush. Why should we, as mac users, have to conform to Apple's release cycles? They should be giving us what we want, as in what we want exactly. If I want a MBP that has a slower CPU than a Mac Mini, so be it, Apple will still charge the MBP premium on it etc, but at the end of the day if that's my choice it is entirely my prerogative.

As it is because Apple puts their lines at what are traditionally the "premium" prices for that product, once their machines cease being cutting edge it is immediately not worth it. Poof, the value is gone. That's the real reason why people are holding back, it is not for 64 bits and future proof and all that crap. People can't justify paying top dollar for less than top parts. Do away with this and people will buy as they need, rather than constantly waiting to buy the best and newest.

 

[Porco]

I hope Apple doesn't play the PC market game too much, I don't think it will. Obviously it has to be in the same realm of reality (unless Steve and his RDF is around, natch ) but Apple aren't about being just another PC manufacturer. The brand of Apple is, to me, about quality, innovation, style, and being a bit different. And I don't mind paying a little extra for that sometimes - if it is 'extra'. In the end, I think Apple chooses to market itself as a premium product - knowing it won't be ubiquitous, but that's OK because it is being true to itself and the users who genuinely enjoy owning their products (more so than the average windows PC user I would guess).

I love that the OS actually feels like an extension of the hardware and vice-versa. I love that using a Mac is a conscious decision for actual reasons and not one made by default (i.e. buying a windows machine because 'it's what everyone else uses'). I love that Apple isn't just about making as cheap a computer at a certain technical specification as possible. If they wanted to be that, I'm sure they could, but I think the company has an actual philosophy of how it wants computing to be, and I think that's great.

Really, I guess what I'm getting it is that Apple is playing the Mac market right, and letting any [non-conflicting] bonuses they can pick up available in the PC market help them do that. To approach the PC market as the priority would be to abandon the very things that make them special.

 

[Dont Hurt Me]

They just need better hardware choices, Mac OSX is what makes Apple. Apple is a software company they just dont want to market it without hardware attached.

 

[YS2003]

I actually like Apple to be the under-dog in the PC market (as it is now). PC markets are mostly going toward the lowest common denominator (generally speaking, as Apple also got into low end markets with Mini).
Many people are not accustomed to new technology. I made a "half"-transition in 2001 with my first Ti PB with OS X (the first one). I recall I called up Applecare asking her if I need to do partition the drive because Ti came with both OS X and OS 9.
I think Steve Jobs and his good team at Apple management understand you cannot satisfy everybody. I think Apple is targeting particular markets as it is playing well with the current iPod craze (I think the majority of iPod are sold to younger generations, who are more flexible in OS-orientation).
At my work place (which is a large multi-national company with its USA operations of more than 1600 people), I think I am only one of the few Mac users. When I take my Mac to the regional or national meeting, I am the only one with Mac (I also admit I have been the only with the Tablet PC in the meeting).

 

[mkrishnan]

I think this is really a non-mac fanatics biggest curiousity about the apple fans. We are CONSUMERS so why is the most important thing Apple's profitability? I love my macs but I also love my money so I'm not in the mentality that I should be donating work hours to ensure Apple remains profitable. I really think that the smartest thing Apple would do is open up a paypal account and ask for donations. They'd make a killing.

That's because it's *not* a fan opinion. It's a business opinion. Apple is a company traded on the bourses. It's obligation is indeed to make a good ROI. And they are. Which seems to be good evidence on the surface that their current strategy makes sense.

 

[ilikeninjas90]

apples ipod does plenty enough for them

 

[milozauckerman]

It's obligation is indeed to make a good ROI. And they are. Which seems to be good evidence on the surface that their current strategy makes sense.

But their thriving business is driven on the back of the iPod - what happens when they don't have a new iPod every six-months to a year (or people simply tire of buying the hot new thing)? What happens if the iTV is a flop (which it very well might be if streaming video is, itself, a failure)? You saw Apple stock prices flounder a bit when the intro of new iPods stretched by a couple of months - imagine if they'd missed the holiday season with these products?

Take away the iPod and Apple is back in the dark days of the mid-to-late '90s - and maybe not even that, as their price-to-value ratio (on the consumer end, in comparison to the PC world) is worse now than it was when the iMac debuted.

And while I think it's bizarre and inconceivable that Apple hasn't come to market with C2D portables, ultimately it won't effect their bottom line because investors are quite happy with Jobs & Co. so long as the consumer-electronics line is doing well. That's where the money is. If Apple sells half as many Macbook Pros as they potentially could, that's more than offset by, say, new shuffle sales.

 

[generik]

But their thriving business is driven on the back of the iPod - what happens when they don't have a new iPod every six-months to a year (or people simply tire of buying the hot new thing)? What happens if the iTV is a flop (which it very well might be if streaming video is, itself, a failure)? You saw Apple stock prices flounder a bit when the intro of new iPods stretched by a couple of months - imagine if they'd missed the holiday season with these products?

Take away the iPod and Apple is back in the dark days of the mid-to-late '90s - and maybe not even that, as their price-to-value ratio (on the consumer end, in comparison to the PC world) is worse now than it was when the iMac debuted.

And while I think it's bizarre and inconceivable that Apple hasn't come to market with C2D portables, ultimately it won't effect their bottom line because investors are quite happy with Jobs & Co. so long as the consumer-electronics line is doing well. That's where the money is. If Apple sells half as many Macbook Pros as they potentially could, that's more than offset by, say, new shuffle sales.

Well, Apple should be more proactive in other market segments then, especially considering Microsoft has just joined in the fray. You may argue it is ugly and crap, but remember pocket pc when it first started? Where is Palm today?

Today I have to say the Zunes is looking mighty good compared to the iPod, it's interface is pretty snazzy as well... which is what Apple is all about - all snazz (quality is perceived and just as fictional as Made in China and Co). Microsoft is making greater inroads into the mp3 player market than they did into the PDA market.

 

[matticus008]

Take away the iPod and Apple is back in the dark days of the mid-to-late '90s - and maybe not even that, as their price-to-value ratio (on the consumer end, in comparison to the PC world) is worse now than it was when the iMac debuted.

Based on what? You have indicated no methodology to determine value. If you're talking about retail price v. component price, I think you'll find that you're mistaken (PPC cost-to-retail price was far more disparate a year or two ago than the same ratio with Intel, even today). If you're talking about a qualitative judgment of "value" including user experience, you'll find that you can't prove your opinion one way or the other.

The truth is that Apple has always kept a high margin on its hardware, but it's one that has been balanced by a more-than-competitive software bundle as well as substantial long-term value. The depreciation rate of Macs alone results in the "price premium" being repaid 1-3 years out. Value is no longer a sum of the parts costs--if it is for you, then naturally you'd consider Apple a raw deal. But if the bottom line is the only salient factor in your decision, you were foolish to consider Apple in the first place.

And while I think it's bizarre and inconceivable that Apple hasn't come to market with C2D portables, ultimately it won't effect their bottom line because investors are quite happy with Jobs & Co. so long as the consumer-electronics line is doing well. That's where the money is. If Apple sells half as many Macbook Pros as they potentially could, that's more than offset by, say, new shuffle sales.

Again an assertion not supported by facts. The Macintosh unit is a full half of Apple's revenue. That means that even if the iPod vanished overnight, Apple would still be in a more profitable and higher-revenue position than it's ever been, considering its market cap has tripled in the past five years. They're not in a position to ignore one or the other, and it's absurd to claim that the Mac line is floundering when it is, in fact, flourishing.

 

[generik]

Based on what? You have indicated no methodology to determine value. If you're talking about retail price v. component price, I think you'll find that you're mistaken (PPC cost-to-retail price was far more disparate a year or two ago than the same ratio with Intel, even today). If you're talking about a qualitative judgment of "value" including user experience, you'll find that you can't prove your opinion one way or the other.

That is foolish thinking. Have you ever seen a luxury car with... plush leather seats, soundproof carbin, blah blah blah, the works, but at the end of it when you sit before the driver's seat and floor the accelerator, it barely keeps up with the cheap Yugo?

That is like a parent is saying his retarded child is talented in spite of his lack of school grades because of other intangible factors. Sorry pal, doesn't work that way. Everything in this world is measured and quantified. Apple is not keeping up.

By the way Apple is not even a luxury brand, peeling wrist rests, discoloring plastics... overheating and whining. If I buy a Thinkpad I know what I am getting, the boys designing that even described the pains they took to make the logic board electrically silent to prevent disturbance to wireless. What have Apple done? Overheating... whining... oh please. Well designed my ass.

 

[matticus008]

That is foolish thinking. Have you ever seen a luxury car with... plush leather seats, soundproof carbin, blah blah blah, the works, but at the end of it when you sit before the driver's seat and floor the accelerator, it barely keeps up with the cheap Yugo?

Yep, sure have. Most midlevel brands are this way, along with the lower-end models of the premium manufacturers. But as you mention, Apple is not a luxury brand. It's upscale, but not luxury.

That is like a parent is saying his retarded child is talented in spite of his lack of school grades because of other intangible factors. Sorry pal, doesn't work that way. Everything in this world is measured and quantified. Apple is not keeping up.

Keeping up in what way? Sales? Performance? Quality? Customer satisfaction? Innovation? Aesthetics? Software bundles? Support? Price? Engineering? These are all factors that could be associated with "value," and do not constitute an exhaustive list, at that. Even within that list, any given company need not be competitive in all areas to be successful.

 

[ascender]

For starters, quite a few people I know are surprised that you can boot Windows on a Mac. Straight away that tells me that Apple could do more with their advertising. I'd have thought it would be a small price to pay for the number of sales you might get as there are lots of PC users who would love to switch given a bit more education about OS X and the chance to use XP if they needed to.

But with the Intel chips, Macs will get more coverage in PC magazines anyway, so maybe Apple are counting on that and word of mouth to help.

I don't know what sales figures are like, but more people certainly seem to be using Macs than say 5 years ago. That's just my own experience, but the problem with the sales figures we see in magazines are that there are so many PCs sold every year that its difficult to see real gains being made by Apple as the figures will include businesses as well as personal purchases.

 

[2ndPath]

For starters, quite a few people I know are surprised that you can boot Windows on a Mac. Straight away that tells me that Apple could do more with their advertising. I'd have thought it would be a small price to pay for the number of sales you might get as there are lots of PC users who would love to switch given a bit more education about OS X and the chance to use XP if they needed to.

I think Apple still considers the windows drivers, boot camp, as a beta. It might be marketed, when it is considered to be a final version.

 

[gavd]

Really, I guess what I'm getting it is that Apple is playing the Mac market right, and letting any [non-conflicting] bonuses they can pick up available in the PC market help them do that. To approach the PC market as the priority would be to abandon the very things that make them special.

Excellent post. Agree with everything you're saying.

 

[DaveP]

I'm in agreement with Don't Hurt Me. I only have a old iBook because the desktop choices don't fit for me. I'm no marketing guy, but I won't spend 2 grand on a computer that is more than I need just so I get PCI slots and the ability to upgrade the hardrive. So I'm starting to use my Windows box more and more.

Secondly, the posts stating that you are paying for OSX and not just the hardware are completly correct. Certainly with the laptops the Mac hardware itself is a total ripoff. The Windows world is probably about 30+% cheaper for similar hardware (I'll be work the rest of the day and won't be able to back this up with links, etc, but my Dad finally made a PC laptop purchase after a couple months of shopping and calling me and letting me know prices so I'm relatively aware). So a third of the cost is OSX.

 

[emotion]

Secondly, the posts stating that you are paying for OSX and not just the hardware are completly correct. Certainly with the laptops the Mac hardware itself is a total ripoff. The Windows world is probably about 30+% cheaper for similar hardware (I'll be work the rest of the day and won't be able to back this up with links, etc, but my Dad finally made a PC laptop purchase after a couple months of shopping and calling me and letting me know prices so I'm relatively aware). So a third of the cost is OSX.

Or that the percentage of the final cost that goes to Apple is greater than that which goes to MS for their OS on the cheap PC.