There’s the age old battle between price and cost. Price is what you pay up front to buy anything. Cost is the overall, ongoing total expense calculated over the life cycle of what you bought. A $1,500 MacBook might actually cost less over a few years than a $500 Windows PC notebook. What about iPhones and Android phones?
Price v. Cost
The term Mac users have promoted for many years when comparing Apple’s once flagship computer is total cost of ownership. TCO. For example, a small car might have a price tag far less than a more expensive model, but through insurance costs, gasoline and service costs, and re-sale value, might actually cost more to use over years than the more expensive vehicle.
That’s the case with almost any device, and savvy shoppers generally know that time is money, so for those computer geeks who devote all sorts of time tweaking this and fixing that, while the rest of us just use our devices for the intended purpose, actually save money on more expensive devices. Like the iPhone.
Mark Hibben dug up some data that compared the TCO of Apple’s iPhone vs high-end Android smartphones.
- Apple’s iPhone offers lower cost of ownership than high-end competitors if resale value is factored in.
- Lower cost of ownership argues against a bear thesis that iPhone offers poor value compared to its competitors.
- Lower cost of ownership is critical to iPhone’s sustainable growth in emerging markets such as India.
Why would an expensive iPhone have a TCO lower than an expensive Samsung Galaxy S7 smartphone which may sell for far less? Usage can be factored in, but the primary reason is re-sale value. Used iPhones are worth far more than used Samsung devices, all of which carry the stigma of cheap, not un-similar to the problem with Windows PCs vs. Macs.
Here’s a perspective that you won’t find in such analysis.
Apple’s products, generally speaking, are aspirational brands that inhabit the premium end of the product spectrum, regardless of the industry segment. That positioning alone gives Apple higher margins and helps to explain why Apple owns the lion’s share of profits generated in any industry segment where it plays.
In other words, there is a growing segment of people who own Windows PCs that want Macs, but may not be able to afford a Mac now. Ditto for Android smartphone owners. A growing segment of the low end market wants to rise above the average and obtain a device which is easier to use, more of a status symbol, has more security and a wider range of high quality applications, and that is what drives customers from Android to iPhones, and not the other way around.
Also, Apple’s iOS, just like OS X on the Mac, is a huge product differentiator. Every device that runs Android is much like every PC that runs Windows. They’re all perceived as the same. That contrasts sharply to Apple’s not-so-secret but hard-to-compete-against ‘whole widget.’ Apple designs the hardware and the software so it all works better, remains more secure, and devices, even when used a few years, command higher prices than their Android or Windows counterparts.
That often makes total cost of ownership less for Apple products even though the produce– iPhone, iPad, Mac– has a higher initial price tag.