“The timing is perfect for Apple to cut Mac prices and dramatically to increase its market share. If Apple made that seemingly radical decision, the MacIntosh could easily move out of single digits of market share,” John Dodge writes for SmartPlanet.
MacDailyNews Take: That’s a strange Website name. Can a giant orbiting rock really be “smart?” Certainly, the majority of humans crawling all over it aren’t, based on their OS “choice,” to say nothing of the IQ bell curve among many other things.
Dodge continues, “Mac operating system share has steadily risen in 2009, topping out in October at 5.27 per cent to Microsoft Windows’ seemingly insurmountable 92.52 percent, according to market research firm Net Applications.”
MacDailyNews Take: Net Applications doesn’t measure market share, Mr. Dodge. It measures OS information reported by users browsers as they access NetApps’ network of some 40,000 sites worldwide. Market share is nothing but the number of units sold by a vendor divided by the total number of units sold regardless of whether they made money (Apple Macs) or not (“netbooks”). Dell has triple the market share of Apple, generates roughly 33% greater revenue, but makes just 1/3rd the profit. Tell us why Apple has to dramatically cut Mac prices and increase market share again?
Dodge continues, “There’s a problem and it’s one Apple can fix. Macs are too expensive.”
MacDailyNews Take: Says who? Only someone who doesn’t understand the differences between margins, profits, and market share.
Dodge continues, “There I was last Friday in the Apple store cooing over an elegant 15-inch MacBook Pro. But at $1,700, I could not pull the trigger.”
MacDailyNews Take: John, nobody cares if you’re too poor to afford a 15-inch MacBook Pro. Get the 13-inch model, or the MacBook, and/or a real job and stop your tedious whining.
Dodge continues, “Everything else was right except the price. I’m ready to switch from 20 plus years as a Windows user who has written about the technology longer than that and switch to a Mac… The Mac is the more intelligent choice… So as a buyer, I’m stuck in a PC notebook processor netherworld and being too cheap to shell out megabucks for a Mac, the clear winner on all levels but price. Pricecuts on the Mac would make it a much more appealing mainstream contender. Android, anyone?”
MacDailyNews Take: To illustrate the morbid stupidity: There I was last Friday in the BMW dealership cooing over an elegant BMW M5. But at $85,500, I could not pull the trigger. Everything else was right except the price. I’m ready to switch from 20 plus years as a Ford sufferer who has written about automobile technology longer than that and switch to a BMW… The BMW is the more intelligent choice… So as a buyer, I’m stuck in a Ford and being too cheap to shell out megabucks for a BMW, the clear winner on all levels but price. Pricecuts on the BMW would make it a much more appealing mainstream contender. Chevy, anyone?
Last quarter, Apple sold a record number of Macs. Apple currently owns 91% share of the $1,000+ computer market. If anything, Apple should consider raising Mac prices as selling record numbers of premium-prices products during “the worst economy since The Great Depression” probably indicates that Apple’s Mac prices are too low. Even without price increases, perhaps because articles written by illogical people don’t command much of a price, John can’t afford a Mac, so in order to appease him, Apple should cut their margins down to beleaguered Dell’s levels, so they can work markedly harder for significantly less revenue and soon start laying off people, closing plants, retail outlets and call centers, skimping on build-quality, and installing a bad copy of Mac OS X from a bloated, rudderless company headed by a clown who once got a very fortuitous dorm assignment.
Pure genius, John. SmartPlanet, indeed.
What may well be the stupidest article of the month, at least, already (not counting anything emitted by Rob Enderle) – give John the clicks, so maybe the poor bastard can eventually afford a reburb Mac, at least – can be found here.
Ya and I’d like BMW’s to cost the same as KIAs, WAAAA!
Spec ’em out, boys! A Mac will be within a few hundred dollars either above OR BELOW your comparable PeeCee.
I agree, it would be great to see Apple compete on the lower end as well.
He does have a bit of a point, certainly in countries other than North Murrica. In Oz, for example, Macs are way, W-A-Y more expensive than PCs. So much so that I don’t bother to recommend Macs to anyone – I just quietly enjoy my Macbook.
Macdaily news are really idiots. Forget the fact they litter their page with stupid ads that pop up every time you move your mouse.
Macs are EXPENSIVE, no doubt about it. I’m a loyal Mac user from day one and really hate windows, BUT we need 2 new laptops. My old ibook G3 just can’t cut it. With the current economic environment I just can’t pay 2k for laptops for me and the wife, so I’m now looking at PC laptops, as much as it pains me. Before people say get a better job or you’re too cheap, I’m retired and my pension is more then many people salaries, BUT dropping 2K plus on laptops doesn’t fit the budget in the face of the oncoming financial Tsunami. I am now force to look at the less expensive PC and will have to suffer using a PC..
Once you lower the prices (which are not too high to begin with) you will never be able to raise them back up. It is a one way, permanent decision.
Oh, rubbish! Apple’s current margins are somewhere in the 34% range. If they dropped prices 25% those margins would be close to those of HP, a few points above the margins that Dell generates. They’d have to sell 4x as many Macs to generate the kind of profit and cash flow they have now.
Now you understand why Dodge is not running Apple and Jobs and his crew are.
More snarky comments from MDN that add little to the article they supposedly comment on. OK, they add a little.
Yes, Apple can afford to lower the purchase price of several models by quite a bit. How do I know that? Their cash hoard keeps growing. They can continue to accumulate cash – at a slower rate – if they cut the price of many of their models by 10%-12.5% – NOT the 25% in the headline. Not ALL their models, but many of them.
Would this price them where John would feel comfortable buying them? Maybe. More likely, though, not. John is not looking at the value of the purchase, precisely, so much as the COST. And that can be scary! MDN claims: “Apple currently owns 91% share of the $1,000+ computer market.” … and who am I to doubt them! But, that means the entire $1,000+ market is less than 10% of the TOTAL market. Cutting the price of an iMac, or a MacPro, or even a MacBook Pro, by 10% will not break that $1,000 price-point in many – any? – places. The result would likely be that niche would grow with the addition of more Mac sales – but Mac’s share would grow only a little faster.
And Apple’s money pile will grow much less quickly.
And AAPL’s stockholders would complain.
More.
“Why should Apple cut Mac prices 25 percent?”
They shouldn’t!
Didn’t Steve say something about not playing in certain segments of the market??
Not Gonna Happen as long as His Steveness (Jobs, not the Chairthrower) is in charge.
First of all, I totally agree with the comment about this site being littered with “stupid popup ads,” really stupid when they advertise Microsoft Bing. Now that’s not only stupid, but prostitution. Also, not everyone can get a “real job,” but we can “stop whining,” and yes- in the long run, and in terms of user experience- Macs are worth the price, and I believe, more bang for your buck than any PC.
I think everyone is missing the point. If Apple management, its Board, and stockholders in general, are satisfied with the product and the financial returns being generated, and most importantly the current sales, then I say screw all the ankle biters crying for a price cut. Buy a damn Dell/HP if you can’t afford the Apple tariff.
JoeSmoe:
You may want to consider refurbs. I know they aren’t $500, but very often, white MacBooks appear for $800 and even less. You get full standard warranty, at the end of which you can pick up another two years of AppleCare (if you’re worried about the reliability).
If $500 was all I could afford for a laptop, I would probably seek out a well-kept used MB (C2D). You could get 2.2GHz model with 1GB of RAM and 120G HD for that money, and it can comfortably run SnowLeopard, so you’ll be set for the next 3-4 years (at least). Most certainly, it would perform better than a new $500 Acer or Dell of today.
Windows people should stay in windows world, if they don’t understand what a price/value product means, why are they giving opinions?
Look at this caption contest of the “answer bar’ from microsoft.
http://www.9to5mac.com/answer-bar-despair#comment-53145
Stupidity or linkbait? I’ll choose the former. What a dope.
I have to learn to type faster. WAY faster! Or make a quick comment, post it, then type in the rest of it. There were NO posts when I started my previous entry!
If Raymond is correct, if Apple is making around 34% profit on a typical sale, then my estimate was low. 15% to 20% might be reasonable. There would still be few entries dropping below $1,000 and none dropping into the $500/system* category quite a few PC users are most comfortable with. (with new monitor, speakers, printer, etc.) Even so, Cubert is quite correct on “value”.
Did the author look at what a comparable Dell or other PC laptop with similar specs would cost compared to the MacBook Pro?
No, of course not. He just simply passed a judgement based upon a dollar price. There are plenty of $3000+ PC laptops out there.
Apple SHOULD NOT drop their prices 25%. I think they have done a bit to bring them closer to the low end, along with the rest of the PC industry…. but they should not join the “race to the bottom” that the PC manufacturers have all engaged in, to the point where they don’t really make profits on hardware sales any more, and have commoditized their own products.
Apple has maintained their margins, I’d argue, by keeping their design in-house and only relying on the ODMs in Taiwan and China for manufacturing. The PC OEMs have ceded almost everything to the same handful of ODMs their competitors all use… none of that that leads to creativity, better design, higher margins or better choice for the consumer. Just lower prices, at the sacrifice of everything else.
@ Cubert
Exactly. Every time I compare a Dell or HP with the same specs as a Mac, the Mac either is less expensive or about the same. I can’t understand why even some Mac users can’t seem to grasp this. And, once total cost of ownership is considered, it’s not even close!
Here you have another good one about microsoft stores, they didn’t upgraded to Windows 7, what are they afraid of?
Well, the real question is: do we CARE that Apple is making TONS of money, or do we want everyone to be able to afford a Mac? In fact, they’re not mutually exclusive. Theoretically, if Apple cut their prices by 25% then, yes, they would have to sell 4 times as many just to make the same profit BUT they would have SIGNIFICANTLY more market share. And this just might cascade- if everyone thought the price barrier was broken and Macs were as affordable as PCs. Then it might one day be Apple with the 90% market share and they would still be raking in the profits.
I agree with Dodge- Apple’s mission should be to make a reasonable profit but also to put OS X on the desks and laps and pockets of EVERYONE on the planet. They are sitting on upwards of $31 BILLION dollars – it’s not like they’re scraping by. You would think they could be a little more competitive in price to gain that market share…
As an Apple shareholder, I would be happy to see the stock price dip for a bit if it meant huge gains in market share in the long term – there is a greater good here (we’ll still make plenty on Apple stock once the tide really turns)….
Your economic observations might be right, MDN, but I don’t like you dissing Earth. It’s the best goddamn planet you know.
“BUT dropping 2K plus on laptops doesn’t fit the budget in the face of the oncoming financial Tsunami. I am now force to look at the less expensive PC and will have to suffer using a PC..”
So how do you think your PC’s and PC using companies will do in the coming financial Tsunami?
You will need maximized productivity and reliability.
Think about it.
I’m calling BS. You aren’t retired. In fact, I would guess that you are under 30. Your misspelling of Joe Schmoe, various grammatical errors, and the general “feel” of your post make me think you are 18 to 25 years old, were “educated” in the U.S., and don’t actually own or use a Mac. Nice try, though.
The question is not the cost but rather is the price difference between PC and Mac justified by the experience. BMW vs Ford?
The PC isn’t even in the same showroom.