We’ve heard the story before. Friends say, “Yeah, Macs are nice but they’re so expensive.”
How about the iPhone? “Looks really cool, but it’s waaay too expensive.” Really? How about the iPod? Expensive gadget? No. Do the math.
I heard it again yesterday from a guy in my office (all Windows PCs). “Macs are expensive.” How many times have we heard that?
I gave him a challenge. Check the Dell web site and find a comparable Dell for less than, say, an iMac or MacPro or MacBook Pro.
Half an hour later my co-worker came back with a sheepish grin, “Jack, I couldn’t find one that costs less than the Mac. What happened?”
While we were not paying much attention, Apple figured out how to generate products with high quality, high value, and low prices.
To be fair, you won’t find a Mac anywhere at $399. Cheapo PCs hit that price regularly, but that’s a PC you wouldn’t give to someone you don’t like, and it’s not comparable anyway.
Do some math. Apple supposedly has about 10-percent of the US notebook market share. I’m guessing that about half that market is cheap-assed PC notebooks that sell for less than $1,000.
Apple’s notebooks are exclusively in the $1,000 and above segment, which means the Mac maker has about 20-percent market share for notebooks.
Let’s do some more math. Find an MP3 player, flash-based or hard drive-based, that costs less than an iPod. There are some, but you have to look.
This is where value and quality enter the equation for Apple’s iPod business.
Why? How? Buy and iPod, plug it in, install iTunes and you’re good to go.
Try that with any other MP3 player. Our next door neighbor bought her daughter a Zune for Christmas. The daughter was mortified and upset. Her friends have iPods and they work.
It took our neighbor a week to get the Zune to finally work with their Dell. Just before the 14-day return policy ended, they took it back to get an iPod.
Isn’t math fun? Let’s head for current events and the iPhone. Everyone says it’s very cool but just too expensive at $500 and $600. Is it really?
Do the math. At $500 you get a cell phone, a WiFi browser and email, and a widescreen iPod. What’s that worth? Don’t even touch the “cool factor.”
A 4 gigabyte iPod nano is $200. What would a widescreen multi-touch iPod be worth? $250? OK. Fair enough.
What’s a brand new widescreen, multi-touch, ultra cool cell phone worth new on the market? How about $250? What did the RAZR cost when it first hit the streets? More, right?
See where this is going? We’re already up to $450 and haven’t touched the WiFi browser and email yet. Trust me, that kind of device would go for a minimum of $100 to $150 as a standalone.
The whole is greater than the sum of the parts with Apple’s iPhone, except for the price. It’s lower. Apple wouldn’t dare let AT&T Cingular subsidize the iPhone and reduce the price to $250. That’s too close in price to an iPod nano.
The iPhone is all those parts rolled into one device. Is there another device that does all three? No, no, and more no. For those that are close, at what price?
Apple has done something interesting in the past few years. They’ve become quality and value oriented to a high degree while maintaining low prices relative to competition.
Without much thinking, you can take the same math exercise to other Apple products. Airport Extreme. At $179 it’s a pricey WiFi router. Apple software and that USB port makes it a very low priced home server and backup device that’s actually easy to use.
How about AppleTV? Too much at $299, right? Then why is it selling sooooo well, sight unseen? Quality, value, price. I’ve read some instances of buyers who want to ditch their cable TV connection and just buy TV shows and movies they want from Apple’s iTunes Store.
That’s a bit extreme, but it may portend more of the future than we suspect today. Cherry pick the TV shows. No more crapola from Time Warner, Comcast and their crew of crooks.
Next time someone says, “The iPhone looks nice but it’s expensive…” just pause and do the math.