Apple's Strategy Of Built-In Obsolescence

| About: Apple Inc. (AAPL)

Ross Miller made a good point about Apple’s (NASDAQ:AAPL) new flagship laptop, in his review for the Verge. Once you take into account that it has a solid-state drive, it’s actually not nearly as expensive as you might think.

Yes, $2,200 is a lot of money. But if you want a basic MacBook Pro with 8GB of RAM and a 256GB solid-state drive but without a Retina display, that’ll cost you $2,400. And if you upgrade both to a 512GB solid-state drive, the new computer is $2,800 — but the older, heavier, slower, clunkier computer, featuring a mere 1440×900 pixels of screen space, will set you back $3,100. Essentially, if you pay for the solid-state drive, you get the Retina display for less than nothing.

I’ve been a convert to solid-state drives since I got my first MacBook Air, and I custom-ordered the desktop machines both at home and at the office to have them as well. They’re wonderful things, and I’m never going to buy another computer with a hard drive. (I hate hard drives, they always fail on me at the worst possible moment.) Right now, computers with solid-state drives are still in the early-and-expensive stage of technological progress, but Apple’s on the right side of history here, and prices will surely come down.

That said, however, Richard Gaywood makes an equally good point about the new Apple machine: it’s much less accessible than anything which has ever carried the “Pro” name in the past. You can’t upgrade the RAM, because it’s soldered to the motherboard. You can’t upgrade the solid-state drive, because it’s an Apple proprietary drive, and no other drive will fit there. You can’t replace the battery. And so on. It even has proprietary pentalobe screws.

Writes Gaywood:

My last MacBook Pro saw a little over 2.5 years as my primary computer, and I would expect no less of any computer I was paying in excess of $2200 for. In that time, I upgraded the memory once, the hard drive three times, and replaced the battery once. None of these options would be available to me with a new MBPwRD. SSDs, batteries, and RAM can degrade or fail in time — is a $349 AppleCare purchase a hard requirement now? What if I want to keep my MacBook longer than the three years coverage AppleCare offers?

Of course AppleCare won’t just give you a new hard drive or new RAM or a new battery just because you feel like an upgrade — all those cost extra too, and cost much more if you buy them from Apple (which you have to, now) than if you just buy your own and do the fix yourself.

Which means that the Apple ecosystem has just closed in much further — while on every previous Pro machine consumers could fiddle around quite a lot, this one is a completely inaccessible box. It’s about as far as you can get from the Apple 1, which came as a kit. The control-freakery which started in the operating system and then moved into software is now very much built into the hardware as well.

As a result, Apple’s post-purchase revenue from every one of these new laptops that it sells will be significantly higher than what it’s seeing right now on the MacBook Pro line.

And have you wondered why the Mac Pro is little more than an afterthought, these days? It was originally released in 2006, and has had only evolutionary changes since then; the basic model has less RAM than the new laptop, comes with no display at all, weighs 40 pounds, and still contrives to cost $2,500. With Thunderbolt allowing power users to add as many screens and external hard drives to the new laptop as they like, Apple’s treatment of the easy-to-upgrade, easy-to-customize Mac Pro looks very much like deliberate neglect.

Apple Computer became Apple Inc back in 2007, and the overwhelming majority of its half-trillion-dollar market cap has absolutely nothing to do with revenues from selling laptops or desktops. The real money, it turns out, is in flows rather than stocks: the income stream from selling songs and apps, or from a cellphone contract, is much more valuable than a one-off computer purchase.

And it seems to me that with this latest model, Apple is trying to turn its computers into a flow product, too. It’s a beautiful shiny object — but it has much more built-in obsolescence than anything the Pro line has ever had in the past. And the more frequently Apple can persuade its customers to upgrade or replace their computers, the more its Mac operation will be worth. You might adore that Retina display now. But I suspect you’ll be replacing it sooner than you might think.