Yes, Folks, Apple Can Price Aggressively
Chance Furlong
Cuss and discuss.
Yes, Folks, Apple Can Price Aggressively
November 19th, 2010
Apple’s stock took a bit of a hit a few weeks back when they disclosed,
during their conference call with financial analysts, that profit
margins would be down this quarter. All this despite the fact that the
company was still tallying record sales and profits.
Of course, low profit margins for Apple are extraordinarily high for
most other tech companies, so it’s not as if you should be concerned
that their continued survival is at stake.
In fact, when the iPad first came out, industry analysts were surprised
that the opening price, starting at $499, was so much less than they
estimated. Certainly that raised expectations that netbooks, regarded by
some as a main competitor to Apple’s tablet, would suffer, and it
appears they have.
In an interview recorded for this weekend’s episode of The Tech Night
Owl LIVE, Stephen Baker, vice president for industry analysts for the
NPD Group, suggested that the iPad, though perceived not to be a costly
gadget, was actually priced higher than lots of popular tech gear,
suggesting that a starting price of $499 doesn’t quite take it into the
“mass market.” With soaring sales, he offered a prediction in response
to my question of whether iPad 2.0 would have a lower retail price: “I
think you will see in 2011 much cheaper iPads, yes.”
Baker didn’t contradict my suggestions of prices for the entry-level
model starting at $349 or $399. More to the point, whether or not Apple
makes the iPad any cheaper, it’s a sure thing you’ll see one or two
cameras as part of the package. It’s not because the alleged iPad
killers have beaten Apple to the punch with such features. Rather, it’s
a natural evolution of the product. Besides, it’s not as if sales have
suffered any.
When it comes to the iPod, when it first came out, at $399 for the debut
version in 2001, so-called expert analysts said it was too expensive.
There was no way people would buy a digital music from a company at that
price. Besides, and this is awfully familiar nowadays, what experience
did Apple have in building consumer electronics gear? They had
conveniently forgotten Apple’s earlier forays into that arena, such as
the QuickTake digital camera.
These days, sales of the iPod are declining slightly. Nonetheless, Apple
is safely ensconced in the number one spot, and also runs the number one
legal digital music resource on the planet. The cheapest iPod is $49 in
one of several colors. Nothing expensive about that.
The iPhone was pricy at its debut, largely because there was no carrier
subsidy. Today, you can get a 3GS remnant for $99 in the U.S., assuming
you sign the standard two-year service contract. The iPhone 4 is $199
and $299, depending on storage capacity, and all these prices are
identical to most competing gear with the Android or Microsoft mobile
operating systems. The exception is where carriers want to dump product
into the market place, and offer a two-for-one special. But even two
pieces of garbage isn’t exactly a replacement for one quality product,
but I’m half serious. I’m not really suggesting that phones from the
likes of HTC, Motorola, and other handset makers, are necessarily junk.
They certainly seem usable enough.
When it comes to Macs, the price versus value equation is cloudier. Some
suggest it’s hard for Apple to justify a $999 price for the MacBook when
mainstream PC box assemblers are offering supposedly full-featured
notebooks for as little as a third of that price. Of course, when you
actually look at the features, option them appropriately, the price
disparity is almost always sharply reduced.
A thin and light portable, such as the revised MacBook Air, actually
appears to be a bargain at the $999 entry point, especially compared to
competitors who traditionally offered somewhat similar models for quite
a bit more.
Moving up the price scale, among all-in-ones, the iMac remains extremely
competitive, particularly when you actually do the proper feature
comparisons. The Mac Pro historically tends to be ahead of Dell and HP
workstations, particularly when they all sport the same expensive Intel
Xeon hardware.
I am troubled, though, at the slowly rising prices of the Mac mini. The
original G4-based model debuted in 2005 at $499. Intel-equipped models
began at $599, and the current version, with a tinier, fancier
aluminum-clad case, is $699.
You’d think Apple might have found a way to upgrade hardware, offer a
slimmer case, and keep the mini at the original price. Yes, I understand
the server version, at $999, is a downright bargain. But those who crave
a cheap desktop computer may just find that the elegant mini is just a
little too rich for their blood.
In that case, I’m going to avoid the price and feature comparisons. At
the same time, there’s no reason whatever for Apple to drop the price or
even consider cheaper gear. They know how to butter their bread, and
they have no incentive whatever to change their ways.
relic
"Chance Furlong" <T-B...@megakatcity.com> wrote in message
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