“Glancing at Apple’s latest quarterly numbers, it’s hard to argue that its business strategy – premium prices for premium products equals high profit margins – isn’t working. Armed with $25 billion in cash, Steve Jobs’ view of the immediate future, echoed by a number of analysts, seems equally persuasive. ‘We may get buffeted around by the waves a little bit but we’ll be fine,” Andrew S. Ross writes for The San Francisco Chronicle.
Ross writes, “Not, however, if analyst Trip Chowdhry of Global Equities Research in Half Moon Bay is right. ‘Apple is selling Cadillacs to people who can no longer afford them,’ he said.”
MacDailyNews Take: It’s packaged in a nice, concise sound-bite, but upon any inspection at all, Mr. Chowderhead’s theory falls apart quicker than a Compaq laptop. The average Mac user is smarter and richer than the average Windows PC user. Mac users (and premium buyers in general) are among the last affected by an economic slowdown, if they’re affected at all. The real problem upfront is for the Dells and HPs of the world who have customers who are obviously extremely sensitive to initial sticker price. HP, Dell et al. compete basically only on price. So, how low will they have to go — no margins, or even negative margins — just to maintain their market share numbers?
Apple doesn’t have that problem. Mac users understand that TCO is what’s important, not initial sticker price. Mac users are also able to compare similarly-spec’ed computers and can therefore see that Apple competes very well with Windows PC box assemblers’ prices. Unlike most Windows PC sufferers, most Mac users have used both Macs and Windows PCs (at work and/or school) and have therefore made an informed choice.
Ross continues, “That would include me. I had been gearing up eagerly to buy one of Apple’s new, sub-$1,000 MacBooks the world had been told to expect. As we know, that price point didn’t transpire. The low-end model costs $1,299, and that was too rich for my blood. So I hooked up an older super-lightweight Dell Latitude to my monitor, and now I’m a Windows guy.”
MacDailyNews Take: B.S. No real Mac user we know would blithely dump their Mac to become a “Windows guy” over a measly $299. It simply doesn’t happen as Ross — who obviously can’t tell a rumor echoing around the Web from reality — describes. Mac users casually subjecting themselves to years of frustration and suffering in a bag of hurt just to save a few bucks upfront? Ross’ story just doesn’t ring true. It’s the OS and the software, stupid. Real Mac users understand that implicitly. “You can take my Mac when you pry my cold, dead fingers off the mouse!” isn’t an empty saying, it’s a truism.
Ross continues, “How many people out there are like me is the multimillion-dollar question as Christmas approaches. Will the “premium Apple experience” matter compared with $400 rivals that, in this age of cloud computing and so forth, aren’t so very different?”
Full article here.
MacDailyNews Take: Ross is so obviously not a Mac user, it’s painful to slog through his pretending. Anyone who really uses a Mac understands that $400 pieces of junk saddled with Windows Whatever are very different indeed. And, oh, by the way, Apple offers a $999 MacBook (even less for education customers).
John Markoff reported for The New York Times yesterday, “Steven P. Jobs appeared as a surprise ‘special guest’ on Apple’s earnings call Tuesday afternoon. Mr. Jobs noted in particular the loyalty of Apple customers and suggested that while they might delay purchases, it was unlikely they would leave the computer maker for competitors.”
Markoff reported, “A recurring question among Apple watchers for decades has been, ‘When is Apple going to introduce a low-cost computer?’ Mr. Jobs answered that decades-old complaint by stating, ‘We don’t know how to build a sub-$500 computer that is not a piece of junk.’ He argued instead that the company’s mission was to add more value for customers at current price points.” Full article here.
MacDailyNews Take: It certainly seems to be working for Apple, as large numbers of personal computer buyings are finally starting to “get it.” According to Gartner, Apple’s Mac sales grew 30 times that of the PC market as a whole in third quarter 2008 without Apple stooping to dangle cheapo junk a la HP, Dell, and the rest of the low- or no-margin, bait-and-switch PC box assemblers.
[Thanks to MacDailyNews Reader “Gman” for the heads up.]
‘We don’t know how to build a sub-$500 computer that is not a piece of junk.’
Good thing the Mac mini is no longer sub-$500!
disappointed…I was just waiting for the Rob Enderle from the Enderle Group was quoted as saying..
mmmh…didn’t get there…ah, there’s more than Robbie
Will the economy affect Apple? Perhaps. But that is no reason to put out junk. And the comparison to a Cadillac is really goofy. Overpriced and pimped out crap that will be worth a fraction of their cost in a few years is not what Macs are.
All you can do is laugh at these uninformed Analysts who pretend that they understand Mac and their intrinsic value.
Ross should use some of the $15,000 he received from M$ for this hit piece and buy a MBP.
Currently, a Cadillac(Mac) is a good long term investment that you can count on for a longer term, rather than buying a new Dell every two years along with all the hassles.
Can we vote out stupid analysts as well as stupid politicians? Ignoramasocialists!
@mike H
Exactly right!
Nothing about what he’s writing here makes any sense at all. MDN nailed it right on the head.
Comparing a Mac to a Cadillac is an insult. I thought Apple wasn’t going to ship junk, but this comparison makes it seem otherwise.
>Jobs … argued instead that the company’s mission was to add more value for customers at current price points.
Yeah, by REMOVING firewire…?
Cadillacs are crappy, overpriced and ugly.
Try BMW.
If you can’t afford new, buy a used Mac. They’re not POS WinDOS Boxes. Macs are actually built to last.
I know people who are still using 8 and 10 year old iMacs. SURE, they’d like new Macs, but their iMacs are still working.
“Mr. Chowderhead’s theory falls apart quicker than a Compaq laptop.”
Ha! Good one, MDN!
My cursor is a curser, cursir.
Some truth in what the author is saying I reckon. Maybe Apple really dont want to grow too large too soon. By pricing the lower earners and lower disposable income groups out out of the market Apple can remain as the Rolex or Porsche of their sector. High ticket prices, wonderful products, all leading to generous profit margins.
On the other hand MDN is right to point out that Apple products are superior – all Mac enthusiasts know that of course. But when times are hard like right now, a £349 laptop in Asda looks a lot more appealing to parents than anything Apple offers, especially when the parents have two teenagers wanting laptops for Christmas and the parents know next to nothing about computers.
@TGAFM
>[lbah blah] mortgage lenders who have brought this country to the economic state that it is in right now.
Did it ever occur to you that house prices are way way WAY too high?
There have always been people who coudn’t afford to buy ANY computer!
Now some people must make some choices and determine their priorities again.
What do you need the most? A good computer or a monster gasolin drinking car?
A good computer or to go out every evening or week to spend your money in bars, theatre, dancing or other sort of sports events?
People must get ready to consume LESS and go back to more essential things.
Stop wanting always more and more. Good quality is far better then quantity and at the end, it still costs less.
@BS.
correct. that way we get rid of all unwanted mac users and send them away. because, hell, we are all tired of hearing them bitch about FW, and 3G etc. we just want them to leave.
once they leave, the quality of the mac world increases ten fold.
ps. what are you still doing here. you belong in the MS forums, go there with windows explorer.
The UK is expeiencing a significant drive towards netbooks. If the youngsters get hooked it will be some effort to make a regain.
Therefore like ipod nano and shuffle you have to have a pricepoint that suits the younger market – that may be pocket money or present but a student looking at a $500 netbook – wireless and mobile carrier connected versus a $1,300 Macbook is faced with a very significant price differenntial.
The underlying point is therefore valid.
@ Mr. Reeee
The Cadillac CTS is good. Attractive, drives great, finally an interior that measures up to Mercedes and Audi (BMW’s interiors are the worst of the lot).
Steve Jobs also stated that the iPhone and the iPod touch are in that sub $500 market already.
The iPhone and the iPod touch are both OS X multi-touch hand held computers. One even makes phone calls.
Even Windows Users are laughing at the $400.00 Netbooks. And the main reason is it will never, ever be able to run anything but the most basic version of Windows XP. All the ones I’ve heard about are cheaply made, contain all kinds of BFRs, mercury and PVC plastics. All the cheap Windows $400.00 Netbooks will be long dead and in a landfill after the craze as long ended and many, many years before the first of the new Macbooks and Macbook Pros are recycled.
If you want to carry around a plastic box full of toxic chemicals, that you’ll need to replace every 8 to 16 months then buy your self a Cheap PC. You want a computer that will last a long time and then at the end of it’s long useful and life can be recycled and used again buy a Mac.
Remember the saying, “you get what you pay for”, applies to Electronics as much as it applies to cattle.
In crisis BMW sales increase!
Ninety-five % of people on this site are probably no worse off than they were five years ago. It’s the ‘doom & gloomers’ in the lib media who are dragging down the economy more than need be; like this maroon Ross. You’re going to be dead a long time, so spend some of your savings on a new Mac. I am doing just that this week. Cheer up; there’s always someone worse off than you are. Are you healthy? Great! Live a little.
“Yeah, by REMOVING firewire…?”
Oh, please. Yes, he removed FireWire from the MacBooks. Deal with it already!
So he removed FireWire…added LED screen, added more RAM, added larger HDD, added MUCH better graphics, “added” a stronger case, added glossy screen. Ok, that last one can be a plus or minus depending on who you ask. Plus, you get to do your part to save the environment!
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Did i forget anything else?
BTW
Netbooks are a passing fad, just like Disco… they will be around for about as long too.