Mac Pricing: Value Is in the Eye of the Buyer

Lauren would have felt so uncool at yesterday’s Worldwide Developer’s Conference keynote speech. You remember Lauren, right? She was the gal in the Microsoft commercial who actually wanted to buy a Mac but had to walk out of Apple store when she discovered there was no 17-inch laptop there for under $1,000.

Sure, the 17-inch Macs are a better bargain this week than they were last week - a more powerful machine that’s $300 cheaper. But no, Lauren, it’s still not under $1,000. The 17-inch is down to $2,499.

You see, when it comes to Macs and PCs, pricing is a relative thing. At the developer’s conference yesterday, I’d swear that I heard gasps of delight among the cheers as Marketing VP Phil Schiller announced the price for the 13-inch Macbook Pro (note the “Pro” in the name) could be yours for $1,199. (Did you hear the gasps?)

Mac owners have had a taste of something better in computing and understand that there’s a premium price that must be paid to get that something better - and they’re willing to pay. Sure, you could probably pick up two Windows machines (17-inch machines, at that) for the same $1,199 - but there’s an old saying about getting what you pay for (cough cough… Windows.)

Here we are in an historic economic slump and companies across a number of sectors are trying to find that magic number that will bring customers back without compromising too much of the bottom line. Today’s pricing announcement is Apple’s way of saying that it’s no different.

Of course, some of you might think that Macs are still over-priced, but these are bargain prices for the technology that Apple (AAPL) is putting into these machines - 7 hour batteries, all of that RAM and the performance graphics card. Yes, $1,199 is a bargain.

And I’m not the only one who thinks so. My colleague Andrew Nusca, in a blog post yesterday, said, “…it’s cheaper than ever to buy a Mac” and even one his readers chimed in by saying, “…those prices are sweet. And VERY competitive.”

Comments

[Itsonlymoney:]

People measure quality in their own unique way. mac users are willing to pay more for what they perceive as a quality computing experience. Considering that many of us spend hours at a computer each day, how much more does it really cost us to use a mac rather than a pc? I say relatively little.

Jun 09 11:48 AM

[buddhabill:]

I switched to Macs a few years back and will NEVER buy a PC again...the ease of use, clean form factor and true plug and play just plain works for me. I'm too busy to take on the part-time job of unloading all the crap that comes on a new PC, loading the right anti-virus stuff, getting the drivers to work, etc.

Jun 09 11:57 AM

[Hedged In:]

Thought experiment: Imagine that PC vendors (eg. Dell and HP) could offer their hardware with Apple's OS for some premium over the price of the same machines with Windows.

Now ask yourself these questions:

1. How much more would you be prepared to pay for OS X versus Windows?
2. How much would you care that the machine isn't Apple's hardware?

My personal preference: I'd jump at that, as I'd like the option of much cheaper hardware (yes, Macs are too expensive), and I'd prefer plastic to the metal casing of MacBooks. And I'd be prepared to pay a significant premium for OS X over Windows (I'm a diehard Mac user).

Conclusion: Apple is forcing people like me to pay more than I want to by bundling its OS with its hardware. So yes, it's laptops are too expensive.

Jun 09 12:11 PM

[Jasper M:]

As a lifetime Mac user, I believe a good portion of the relative advantages Mac enjoys is not so much Mac advantages (Apple has made a LOT of mistakes lately), but DISadvantages of the MicroSloth PC.
For example, many extoll the wonders of a true "plug and play" system - but shouldn't that be the norm? Seriously, shouldn't it? People have gotten in the habit of thinking of Macs as high end performers, but I would argue that they are merely Normal performers.

It is only comparison to a single, wretched competitor, whose market share is based on, well, market share, that makes Macs seem to shine. I suspect it would not take much for a third party to show just how average Macs have become.

Jun 09 12:22 PM

[jack dee:]

This is an investment site, not a dating service, is you want to get a date with steve I suggest you call apple.
And while you are doing that we could discuss apple as an investment , and not as a love fest.

I can recall disagreeing with many over SCSS the fans loved the product and figured that was enough reason to pour in cash. Sadly most were very badly burned.

Jun 09 12:37 PM

[Channon:]

Only one data point, but the hardware upgrades (specifically firewire and battery) on the 13" are enough to put me in the "buyers" column.

Am I still paying a premium? What is my time worth? At the office, I'm still running XP because of Vista, and that's very dated technology that costs quite a bit of productivity. Updates, virus scans, firewall maintenance all eat up precious time.

Right now I'm typing this post on my 12" PowerBook G4 that is 4 years old this month. 4 years is about twice the life of a typical PC laptop, WITHOUT having to live through the upgrade hassle. I'll gladly pay $1500 again (incidentally, that's what I paid 4 years ago for my 1.5Ghz G4, plus $100 to get to 1.25Ghz RAM) for another painless 4 years of computing; this time on a 2.5Ghz Core 2 Duo & 4 Ghz RAM onto which I'll install my copy of XP and ditch the office PC thanks to Outlook support... My only regret is that AAPL doesn't make something smaller than the 13".

Jun 09 12:41 PM

[SiliconVall...:]

Jasper M, you are absolutely right! Cannot say it any better!

Jun 09 12:43 PM

[jack dee:]

Sorry but without a complete lock on hardware, apple would be vastly worst than MS. The whole point of apple products is the complete package. It simply would not make any sense for tarnish the brand, without full control of hardware, apple would face all the same issues MSFT does.

On Jun 09 12:11 PM Hedged In wrote:

> Thought experiment: Imagine that PC vendors (eg. Dell and HP) could
> offer their hardware with Apple's OS for some premium over the price
> of the same machines with Windows.
>
> Now ask yourself these questions:
>
> 1. How much more would you be prepared to pay for OS X versus Windows?
>
> 2. How much would you care that the machine isn't Apple's hardware?
>
>
> My personal preference: I'd jump at that, as I'd like the option
> of much cheaper hardware (yes, Macs are too expensive), and I'd prefer
> plastic to the metal casing of MacBooks. And I'd be prepared to pay
> a significant premium for OS X over Windows (I'm a diehard Mac user).
>
>
> Conclusion: Apple is forcing people like me to pay more than I want
> to by bundling its OS with its hardware. So yes, it's laptops are
> too expensive.

Jun 09 12:43 PM

[Channon:]

Hedged In:
Have you ever used the aluminum laptops? They are far superior to plastic. The case and size is the only reason I'm using a 4-year-old laptop. That is, the lack of availability of a metal-case small-format laptop until recently. And, likely the only reason my laptop has survived for 4 years. I think you are in very small company if you prefer a plastic case to AAPL's new unibody aluminum case. Premium pricing, surely an arguable position (until you go try to build a comparable Dell), but plastic over metal???

Jun 09 12:46 PM

[Roger Knights:]

Computer prices have declined so much that even Apple's more expensive machines would have been seen as bargains in the past. $2000 or so for what a Mac offers is a very low price.

The Apple tax amounts to $1 a day over the lifetime of the unit. It's worth it to me, to avoid the headaches. The Mac just works. (Windows just labors.)

==========
"I suspect it would not take much for a third party to show just how average Macs have become."

OS/2? Linux? They've failed to appeal. Android? Only on a netbook.

Jun 09 12:47 PM

[Anthony B:]

I think Mac's share of college students will climb drastically, as it's not $1,119. It's $1,099 with the education discount. Add on top of that the free iPod touch after mail-in rebate, which you can sell to a friend for $200. The price gets to $899! (this is what I plan on doing)

- In addition my macbook that I bought 3 years ago still has resell value, I'm selling it to my sister for $350. Leaving my upgrade price at $549...

Jun 09 01:01 PM

[Gamechanger:]

I guess I buying a Mac for 3 times as much as a PC costs - if I were doing something with my computer that warranted it. However, like 90% of users, I use my computer mostly for emails, web browsing, and the occasional Word or Excel document.

I would love to here from a Macanatic how a Mac makes any of these things easier. For whatever it's worth, I'm submitting this via my 6 year old Dell laptop (which despite all the clever Apple commercials has never given me a whiff of trouble)...

My prediction? Macs never gain more than 10% market share, which is pretty much where other ultra-premium products such as Porshe, Hermes, and Four Seasons reside. Why? 90% of the users don't need the extra computing power any more than they need to plonk down big bucks to buy a Ferrari to commute to work.

Now the iPhone on the other hand...at $99 might be the best tech bargain in the world!

Jun 09 01:16 PM

[Switcher:]

I've been working with PCs for years as a developer and finally got an iMac 2 years ago. The software is more reliable but Windows XP is fairly reliable as well compared to the older versions.

Apple hardware is superior. One thing about the iMacs is that they are super quiet. My 24 iMac is almost silent and my HP laptop is many times louder. When I turn off the laptop in my den it is silent.

A minor thing perhaps but if you google "silent PC" you will find how difficult it is to get a quiet PC. Some have had to resort to building their own (mostly for multi media usage but for some who run their PCs in their bedrooms, a silent PC may be an issue too).

That is just one example of better hardware. Ever check out the power cable on the Mac laptops. Magnetic connection to the laptop - not a major thing again but these little touches add up.


On Jun 09 12:11 PM Hedged In wrote:

> Thought experiment: Imagine that PC vendors (eg. Dell and HP) could
> offer their hardware with Apple's OS for some premium over the price
> of the same machines with Windows.
>
> Now ask yourself these questions:
>
> 1. How much more would you be prepared to pay for OS X versus Windows?
>
> 2. How much would you care that the machine isn't Apple's hardware?
>
>
> My personal preference: I'd jump at that, as I'd like the option
> of much cheaper hardware (yes, Macs are too expensive), and I'd prefer
> plastic to the metal casing of MacBooks. And I'd be prepared to pay
> a significant premium for OS X over Windows (I'm a diehard Mac user).
>
>
> Conclusion: Apple is forcing people like me to pay more than I want
> to by bundling its OS with its hardware. So yes, it's laptops are
> too expensive.

Jun 09 01:22 PM

[jmmx:]

Nobody seems to notice that the lauren commercial is incredibly manipulative. They pick the 17" screen precisely because they know that Apple does not offer a 17" MacBook, that size comes only in the MB Pro.

Then there is the self-contradiction: If Lauren is such a light-weight user that she is happy with the low powered HP she got, then why does she want the big screen and extra weight to lug around? It seems to me that she really would have been happy with a MacBook that probably still runs circles around the HP in performance, and would be much lighter (not to mention easier to use and more trouble-free).

Maybe she would still have felt that the MB was still more expensive, and wanted a cheaper computer, but she would not have been limited to Apple's Pro model. Remember, Pro really does stand for professional.

Jun 09 01:34 PM

[jmmx:]

@ PM

I disagree.

1- If you find a Dell on the internet, and you upgrade it so that it is equivalent in hardware to a Mac (CPU, GPU, etc), then you will find that there is not much price difference. Sometimes the Mac actually comes out cheaper.

2- If you are willing to settle for a cheaper machine, then you are liable to wind up with something that is less dependable. One of the reasons that macs work as well as they do is precisely because they control the HW. They do not need to be compatible with inferior parts or construction.


On Jun 09 12:11 PM Hedged In wrote:

> Thought experiment: Imagine that PC vendors (eg. Dell and HP) could
> offer their hardware with Apple's OS for some premium over the price
> of the same machines with Windows.
>
> Now ask yourself these questions:
>
> 1. How much more would you be prepared to pay for OS X versus Windows?
>
> 2. How much would you care that the machine isn't Apple's hardware?
>
>
> My personal preference: I'd jump at that, as I'd like the option
> of much cheaper hardware (yes, Macs are too expensive), and I'd prefer
> plastic to the metal casing of MacBooks. And I'd be prepared to pay
> a significant premium for OS X over Windows (I'm a diehard Mac user).
>
> Conclusion: Apple is forcing people like me to pay more than I want
> to by bundling its OS with its hardware. So yes, it's laptops are
> too expensive.

Jun 09 01:42 PM

[levin70:]

Funny all the PC bashing. What's apples marketshare? How many fortune 1000 companies have an installed mac base? What's that, none? What was the last game developed for the MAC? I certainly don't know, but I'm pretty sure that there hasn't been a game built for the mac in quite a long time.

Not everyone is an idiotic fool that needs everything spoon fed to them. There are actually a lot of us geeks out there, that enjoy nothing more than putting together great PC builds. Can't do that with Apple. And by the way, when you actually know something about PC's and OS's, you can build your own system that is as fast, if not faster than anything Apple will build for you for at a minimum of 60% less than what they will charge you. And considering how much Apple charges, that is a lot of money.

Regards

Jun 09 02:39 PM

[Hedged In:]

Yup, I'm writing this on a MacBook Pro. Don't like the metal case.

On Jun 09 12:46 PM Channon wrote:

> Hedged In:
> Have you ever used the aluminum laptops? They are far superior to
> plastic. The case and size is the only reason I'm using a 4-year-old
> laptop. That is, the lack of availability of a metal-case small-format
> laptop until recently. And, likely the only reason my laptop has
> survived for 4 years. I think you are in very small company if you
> prefer a plastic case to AAPL's new unibody aluminum case. Premium
> pricing, surely an arguable position (until you go try to build a
> comparable Dell), but plastic over metal???

Jun 09 02:57 PM

[naidle:]

Just picked up my first Mac ever. I'm sick of problems with Microsoft but I fully understand going the cheaper route. It's all in what you can afford.

Jun 10 01:12 AM

[Eye Forget:]

You have to look beyond the hardware. Apple sells a package of well built, technically decent machines, superb service, unmatched integration, superb design and a great OS. What that's worth to people is their decision. Judging by their sales and profits history, they appear to know what they're doing.

The lower prices are as much a competitive response as it is a reflection of costs. Apple was, and probably still is, the lowest cost manufacturer of pc's. Their operations area gets little press but it is an envy of manufacturers.

Jun 10 08:14 AM

[TCK:]

I am a dedicated Mac user. When I was looking for a computer, Grandma said get anyone you want. So I got the the pink one. It was twice as good as the PC because it cost twice as much.

Also, my computer has something it called RAM. I don't think that PC's have this. Even if they do, they likely stole the idea from Macs.

Now when I go to Whole Foods to eat my bean sprout salad and can proudly show the web page that I made of my pet Gerbil.

Yours Sincerely,

Typical Mac owner

Jun 10 08:45 AM