“Had Apple succumb to calls from industry watchers to release a new MacBook at or below the $800 price point, it would have amounted to ‘a value-destroying event of epic proportions,’ according to a newly published analysis,” Prince McLean reports for AppleInsider.
MacDailyNews Note: There were no “calls from industry watchers.” There was a single, unsubstantiated rumor that, as usual, reverberated around in the media echo chamber until it was disproved.
McLean continues, “In a report released Wednesday, Needham & Co’s Conor Irvine and Charles Wolf, one of the more colorful analysts covering Apple today, commended Apple for avoiding the ‘folly in pricing for market share,’ and instead sticking to its roots as a value-driven organization that produces world class, differentiated products a cut above the rest of the industry.”
“The Needham report added, ‘The observers arguing for Mac price cuts point out that during a recession, users who might otherwise buy a Mac, may opt for an entry level Windows notebook instead. However, this argues against price cuts even more strongly because it implies that the price elasticity of demand between Macs and Windows PCs is lower and the value destruction is greater than we assumed in our analysis,’ pointing to its projection for sales at both $800 and $900 low end targets,” McLean reports.
“Needham’s analysts point out that Apple’s unique circumstances of having products that are clearly differentiated from generic Windows PCs gives the company the opportunity to sell to markets Dell and HP can’t compete in, and that misguided efforts to become a generic PC vendor, something many pundits have long insisted Apple do, would only erode the company’s profits as well as its image and allure,” McLean reports.
McLean reports, “‘In short,’ the Needham analysts reported, ‘Apple has demonstrated that there are a significant percentage of Windows users who recognize the value of a Mac and are willing to pay more for comparable configurations of Macs and Windows PCs. This argues that Apple should focus its resources on making the Mac even more unique as it did with the recent introduction of the MacBook, which features an all-in-one design and a versatile, multi-function track pad that no Windows competitor will be able to emulate for the foreseeable future.’”
Much more in the full article here.
In other words, Macintosh is the aspirational brand in the personal computer market and Apple is smart to keep it that way.
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