“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.]