"Apple has the luxury of being, well, a luxury brand. Most consumers don't look at Apple and put the company on the same level as a Dell or HP. For consumers who want to save money on a computer or don't want to worry about learning Mac OS X, Apple isn't a consideration anyway. But for those people who have some money to spend, they want the most value for their money. And although some would disagree with their sentiment, I think many believe they get more value from a Mac than any other company's products. People who buy Macs aren't looking to save money; they're looking to buy a premium brand because of the perceived value of the product. Apple understands that; we understand that; why don't analysts? Sure, the market is moving towards cheaper alternatives and some people want smaller laptops, but hasn't anyone noticed that over the past few years, Apple's market share has grown considerably in the face of "cheaper" computers?"
Don is so right on this one. Why should Apple lower its prices and compete in the low-end market? So they can flood the market with sub-par machines that people aren't happy with? Don hits the nail on the head when he points out that people are willing to pay more for Apple because they perceive Apple as a luxury brand that's "worth" more. He even correctly notes in the very next paragraph that, despite the fact that we're in a recession, that has no effect on perceived value. It's amazing how many people have opinions on how Apple should run its business. You would think, from all the unsolicited advice, that things were falling apart or something.
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Current Apple Stuff: 24" iMac, iPhone 4, AppleTV (original), 4gb Shuffle, 64gb iPad 2.
He's probably right, but the key words are "PERCEIVED" and "luxury BRAND". I find it amazing (to their credit) that Apple has been able to maintain this perception despite gaffe after gaffe. My, what, $2500 17" MacBook Pro is nice, but not any better really than Bob's $1000 17" HP. I paid $1500 for the priviledge of running OS X (and in my case for developing Mac and iPhone apps). As for flooding the market with sub-par machines that people aren't happy with, have you read the reviews on the new MacBooks? The only difference is that people are so gaga that they are willing to pay a major premium for the sub-par machines, bend over, and beg for more.
Apple has a monopoly on "cool" right now. Because of this, they won't flood the market and become "common." They're too smart for that (Steve is, anyway). Still, I'd expect a significant drop in sales of all things "luxury" in the coming months. Apple will suffer, but will come out stronger for maintaining their "luxury" brand appeal.
Until sales start to fall, there is no reason for Apple to lower their prices. They are selling tons of computers at the current prices so there really is no incentive for Apple to lower the price of their products.
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2.4 20" aluminum iMac - August 2007
2.2 15" MacBook Pro - January 2008
8GB 1G iPhone - January 2008
Until sales start to fall, there is no reason for Apple to lower their prices. They are selling tons of computers at the current prices so there really is no incentive for Apple to lower the price of their products.
Not even counting the new unibody MacBooks, the black and white MacBooks were simply flying off the shelves up until they unveiled the new ones. As for the recession slowing things down, that hasn't really happened either and Apple is continuously talking about how well the sales are (and they are good; up over last year when the economy was arguably better).
Apple never got into the compete on price mentality, and in the end that's a smart thing because all that really becomes is a race to the bottom.
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Current Apple Stuff: 24" iMac, iPhone 4, AppleTV (original), 4gb Shuffle, 64gb iPad 2.
He's probably right, but the key words are "PERCEIVED" and "luxury BRAND". I find it amazing (to their credit) that Apple has been able to maintain this perception despite gaffe after gaffe. My, what, $2500 17" MacBook Pro is nice, but not any better really than Bob's $1000 17" HP.
I disagree. The Powerbook G4, the Macbook Pro, and the iMac I all use are the nicest computers I've ever had, and I notice all sorts of really nice touches (the contours of the case, the lack of excessive lights, silent operation, keyboard, solid feel, etc.). Now when I pick up Windows laptops, they feel like cheap pieces of plastic (with only very few exceptions).
Not that there's anything wrong with cheap pieces of plastic--but Apples definitely convey more of a luxury aesthetic.
I think Apple can sell their products at premium to only so many people. It's like growth vs. value decision. Their strategy has been successful and Apple has made profit (generally), but unless they want to be a perennial second (which is not necessarily a bad thing), I believe they have to seriously consider reaching to more user base by introducing lower cost products.
I think Apple can sell their products at premium to only so many people. It's like growth vs. value decision. Their strategy has been successful and Apple has made profit (generally), but unless they want to be a perennial second (which is not necessarily a bad thing), I believe they have to seriously consider reaching to more user base by introducing lower cost products.
Steve addressed in a PR segment after one of the recent iMac refreshes, and he basically all but said they weren't going after the cheap computer segment. Given Apple's decisions in this last decade, I'm pretty certain that they aren't gunning for first in the personal computer market.
It's like saying Mercedes should release a super-cheap car or Rolex a super-cheap watch. Why? I don't understand how people treat computers differently than other expensive lifestyle items. Don't get me wrong -- I would love to see more users in the Apple market -- but not at all costs. There are still plenty of people I'd never recommend Apples to -- it's simply not the right target platform for them.
Janak, its because when you buy a Rolex or a Mercedes it does everything you need it to do without further support. Computers are different. If there isn't enough marketshare for a company then there won't be enough support to make that platform viable.
Why should Apple lower its prices and compete in the low-end market? So they can flood the market with sub-par machines that people aren't happy with?
[...]
It's amazing how many people have opinions on how Apple should run its business.
The irony is killing me.
Anyway, who says the machine would be sub-par? Are all low-price PCs "sub-par"? (And what is "par" for a PC?)
Why couldn't people perceive Apple as the "easier PC" instead of the "easier but more expensive PC"?
When Apple reduced the prices of the original iPhone by $200 within the first few months, did the product suddenly become sub-par? Now that the iPhone is selling at prices comparable to (or lower than) many Windows Mobile smartphones, is it suddenly sub-par?
If you answered "no" to either question, why couldn't they do it with the Mac?
Apple Should Leave its Prices Alone
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