The Apple Tax Revisited
November 26th, 2009All right, a new report from the NPD Group says that 48% of the retail dollars spent on personal computers in the U.S. now goes to Apple. However, that doesn’t add up to a 48%% market share by any means, because of the price of admission. But, folks, I still maintain there is no Apple Tax.
So how does Apple gain such a huge percentage of the money? Well, obviously, the average price of a Mac is way higher than the average price of a PC. Without going into the numbers specifically, the answer why is obvious: Apple won’t play in the cheap PC playground, because they don’t think it’s worth it.
You have to wonder just what Apple is thinking here and why it’s not going for the jugular in the alleged battle to the death with Microsoft, but the answers are crystal clear. Despite the fact that such industry giants as Dell and HP sell way more units than Apple, the latter makes higher profits and has loads of cash in the bank. So who can argue with that?
More to the point, with the great popularity of netbooks, it’s clear that millions of buyers are struggling to compute on the cheap. With products selling for less than $300, including a basic Windows OS license, it’s clear that the PC makers who sell such gear aren’t making a whole lot of money from each sale. They hope to make it up with volume, or perhaps entice you to customize your box and stock up on high profit extras, such as more memory, larger screens, extra software and other goodies.
Contrast this to Apple, which basically sells fully-outfitted Macs with very limited, carefully defined configurations. Yes, there is a “build-to-order” option that allows you to customize your new Mac with extra memory, a larger hard drive and a handful of other goodies, but your choices are limited. That is, other than the Mac Pro, where there are far more selections with which to cater to the needs of the content creators who are willing and able to afford expensive workstations.
But even the basic Mac mini, at $599, comes with a pretty decent bundle of software, including the latest iLife suite, plus components that may be optional on a low-end PC, such as gigabit Ethernet, 802.11n Wi-Fi and Bluetooth. A common scheme the PC makers pull to keep prices low is to scrimp on the Windows OS licensing. Although there is but one fully-featured version of the Snow Leopard client product, there are several variations of Windows 7. Most of the time, the cheap boxes come with a Home version, but you need to buy Ultimate to unlock all the features, and that’s usually $100 to $150 more.
Apple just won’t sell stripped machines, even though I can see a need, particularly in the enterprise where some of the usual frills, such as a Web cam on the note-books and iMac, and even Bluetooth and Wi-Fi, may not be needed for obvious reasons, such as office security. Forget the cost of the software, since it’s just a disk image that entails no extra expense for Apple when building the product.
But Apple’s main sales focus is on the consumer. Yes, that consumer may run a business, and it’s very common for people these days to want to bring their Macs into the office. There are countless stories of corporate executives taking their Macs and iPhones to the IT departments and demanding they support such gear. When the boss says do it, the IT person must say yes, even if they are wedded to the known trials and tribulations of Windows machines.
As I’ve said before, when you actually equip the PC with something comparable — or mostly comparable — to the Mac, you find the cost differences largely vanish. The Mac is sometimes a little more expensive, sometimes cheaper. PC makers are more inclined to tout instant discounts to grab a quick sale, and that’s where they might offer an added price advantage. But there’s no evidence that there’s such a thing as an Apple Tax. That was long ago and far away.
On the other hand, there is a Microsoft Tax, even though Windows fans usually can’t handle this uncomfortable truth. It comes in the form of the annual subscription fee paid for name-brand security software, and the higher level of maintenance the PC box usually requires.
Also consider the plight of the PC user with Windows XP installed. If they want to upgrade to Windows 7, which is actually a pretty decent operating system despite still being saddled with such land mines as the dreaded Registry, they are forced to do a clean install. By clean, I mean wiping the hard drive after backing up your stuff to an external drive. Microsoft’s migration utility is limited to your own documents, not applications, such it’s of little help in dealing with the real issues, which involve reinstalling all your apps and hoping all your settings will still work even if they are restored to the same location on your PC’s drive. Yes, that’s not a given.
If you can’t handle that clean install yourself, you are forced to pay someone to do it for you, or just buy a new PC. Either amounts to added expense — a Microsoft Tax. Is it even worth it? I don’t think so.
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There used to be another kind of Apple Tax (I’ve mentioned it before). It used to be that Macs shipped with such paltry RAM memory that you had to at least double the preinstalled amount before you could get halfway decent performance, which meant buying the new memory chips and, in the case of some models, paying a tech guy to install them. But nowadays all but the most low-end model ship with enough memory that, for most users, they work well right out of the box. In that sense, the cost of owning a Mac has gone down significantly.
@dfs, Also on most Macs it’s a trivial matter for the customer to replace RAM. It is irritating for the Mac mini, but possible of you’re careful with the putty knife used to open the case, and study the widely posted instructions closely before proceeding.
Peace,
Gene
Back in August I moved my MacBook Air from Leopard to Snow Leopard. Two-months-later I moved my ThinkPad from Vista Business to 7 Professional. Neither was any easier or more difficult than the other. Both my Leopard and Vista machines were backed up regularly, so I did what I always do, wipe the drive, install the OS clean and my applications clean. I wouldn’t think of doing it any other way on either platform.
As for Apple or MS tax, well, that varies. With hardware, you usually get what you pay for. Apple sells mostly premium gear and does so at an appropriately premium price. Some PC OEMs also sell premium gear and charge equally premium prices. You can get equivalent performance from a cheaper PC, but usually at a penalty in size, weight or build quality. My ThinkPad T400 is better than a MacBook Pro in some ways, worse in other, and was equally expensive.
For OS, again the argument of an Apple or MS tax is a valid argument for some, and total bunk for others. For the home user, there is little to no difference between Windows Home Premium and Ultimate. For business users, there is little difference between Professional and Ultimate. Bit Locker is really the only significant feature that is limited to Ultimate these days, and Home Premium only suffers if you need full domain membership capabilities. Enterprise computers need to join domains, but not many home machines do. So, if you are a home user it would be silly to spend the money on Windows Ultimate, and therefore it is entirely correct to compare the price of Home Premium with that of Snow Leopard. Likewise for enterprise use, Professional (which is more expensive) is often the only way to go. Its kind of like that WiFi on the mini. Its cost on a PC for home use should be counted if you want to use wifi, but in an enterprise where everything is wired, its presence on the Mac should likewise be ignored.
@Andrew, This is the age-old argument. What you need versus what you get. But a price comparison must include products similarly equipped as much as possible. Whether you can get what you need for a different price with different equipment and build quality, including the software bundle, is yours to decide.
Also remember that the cheap box with the poor build quality may have to be repaired or replaced more often. When it comes to the early need for a replacement, you may find that your savings just vanished.
Peace,
Gene
@Gene Steinberg,
No Gene, there is no MUST about having to feature-match gear regardless of need. There is a MUST only if we follow your methodology. If I don’t want an optical drive, I will not add its cost ($99) to that of the MacBook Air just because the competing Lenovo X301 has an optical drive. I don’t want it, and so I compare the prices of the machines when equiped the way I would buy them.
I bought an iMac last year for my receptionist, and it connects to the server via ethernet and uses the corded keyboard and mouse that it came with. I looked at a few PC models for that user as well, and selected the iMac. I did NOT, however, configure the PCs with wifi and bluetooth, as neither of those features were needed or even wanted. The iMac has both, and both are disabled. Ditto the webcam, another feature of the iMac that isn’t wanted or needed. I went with the iMac because the display was gorgeous and its all-in-one design works well on a crowded desk. PC all-in-ones would also work well on a crowded desk, but weren’t enough cheaper to forgo the iMac’s good looks and proven reliability track-record. OS wasn’t really an issue for this particular user as her main application is my Exchange calendar on either Outlook (Windows) or Entourage (Mac). Neither is significantly better or worse than the other for our uses.
We’ve had this talk before, and the fact remains that it is the BUYER and the buyer’s wanted or needed features that determine how closely a competing system will be equiped. A buyer who doesn’t want or need bluetooth and wifi would be absolutely stupid to add them to one machine just to compare prices to another, regardless of platform.
People whine about the alleged high cost of Macs, but it is said, in Enterprise, that the cost of the computer is less than 20% the cost of supporting the user operating it. Obviously, the cost of the computer itself is a “straw man” hostile IT people bring up to keep Macs out of their business; the cost of SUPPORTING a Mac is so much less than supporting a PC, it follows that untold billions could be saved, worldwide, if businesses upgraded to Macs.
I agree that Macs come more fully featured than Windows’ boxes straight from the factory, though the most expensive – the Mac Pro – doesn’t come with Airport/wi-fi curiously. Given the huge amount of money it costs (especially here in Europe) it seems somehow cheap for Apple to make you pay extra for wi-fi.
The problem as i see it is that since Apple has switched to Intel and more standard industry components, the quality control has gone down a bit. I remember the 2006 (I think) iMacs many of which developed fine vertical lines on the display and there was nothing to do but replace it. Happened to a friend and when I went to the Apple Discussion forums to check it was full of similar stories. Apple never admitted the defect. I hear of more logic board issues, faulty USB or FireWire ports, crimped display cables in laptops… At least to me, there seem to be more hardware problems than there used to be. I’ve been using Macs since 1996 and should probably upgrade my elderly desktop and laptop Macs (though they’re still running fine) but I hesitate. The new iMacs are very fast, but are they built to last? Don’t think I’d trust one as my main work machine.
@npcm, All generations of Macs had hardware deficiencies of one sort or another. Few generations were free of them. Consider some of those early PowerPC-based PowerBooks for example.
In any case, that’s what product warranties are all about, and even if you’re slightly out of warranty, Apple will usually do the right thing, even if you have to take it over to a supervisor for guidance.
Peace,
Gene
@Gene Steinberg,
Well, never had any problem with early iBooks (which I gave to friends in perfect working condition when I moved on) or my PowerBook G4 12″ – still in use after 6 years and happily running Leopard. For that matter, though I haven’t done it for some time, I bet my 7600 would still boot up fine. The Performa was a poor performer and horrible to get into. Had to take the whole dang thing apart to change out a hd for my sister some years ago. But generally, older Macs were sturdy beasts.
“In any case, that’s what product warranties are all about, and even if you’re slightly out of warranty, Apple will usually do the right thing, even if you have to take it over to a supervisor for guidance. ”
Not the case for my friend’s iMac which was 13 months old (no Apple Care, alas) when the vertical lines on the display started to proliferate. Out of warranty, and repair would have cost 700 Euros. Not worth it.
I don’t mean to sound like I don’t like Macs. I do, and wouldn’t use anything else. Just that I’m a bit more cautious about recent models having solid hw that lasts. I’m not one to change computers every couple of years – my computers have to have staying power. I suppose this runs counter to Apple’s (and mostly everyone’s) current consumer policy of planned obsolescence but some of us can’t afford to renew all our equipment every few years. I’m still running a 7 year old G4 MDD dual processor and apart from switching out the original “wind tunnel” power supply and fans for the free Apple exchange much quieter ones (and adding RAM and larger hds), it’s still going strong. Yeah, much slower than current Macs, I suppose but hey, it works.
@npcm, As to that iMac, if it was a power supply causing the display irregularities, it would probably have been covered by an extended repair program, because several are in place for that model line. But being one just month out of warranty, I suspect proper complaints to a tech support supervisor would have resolved this. I know that Apple can be bent in this way, as I’m acquainted with people who have dealt with similar situations and had success.
Peace,
Gene
@Gene Steinberg,
According to the authorized Mac repair shop it was taken to, it was the display that needed replacing, not the power supply. No Apple stores in France at the time (first one opened three weeks ago), only an online European Apple Store based in Ireland. And since Apple never acknowledged the faulty displays, there wasn’t a way to get it replaced under (expired) warranty.
Perhaps that might change now with actual people to see the problem and talk to face to face at the new Apple Store, but too late for that iMac.
Most XP machines in a home environment are likely in the same category
as the PPC Mac – they will not even run the latest OS. Which reminds
me, I noticed that the author very conveniently forgot to mention that
any Mac over 3 1/2 years old cannot even be upgraded! So, if you want
the latest Mac OS and you have an older machine then WHAP-BIG-TAX hits
you for yet another overpriced Apple POS.
Let’s see if the author’s is right on pricing too…for a top end
laptop machine to use in a home office environment.
17″ MacBook Pro
3.06GHz Intel Core 2 Duo
8GB 1066MHz DDR3 SDRAM – 2X4GB
500GB Serial ATA Drive @ 7200 rpm
SuperDrive 8x (DVD±R DL/DVD±RW/CD-RW)
MacBook Pro 17-inch Hi-Resolution Glossy Widescreen Display
Backlit Keyboard (English) / User’s Guide
Microsoft Office Mac 2008 – Business Edition
$3,799
17″ HP dv7t
Genuine Windows 7 Professional 64-bit
Intel(R) Core(TM)2 Duo Processor T9900 (3.06 GHz, 6 MB L2 Cache,
1066MHz FSB)
6GB DDR3 System Memory (2 Dimm)
500GB 7200RPM SATA Hard Drive with HP ProtectSmart Hard Drive
Protection
1GB ATI Mobility Radeon(TM) HD 4650
17.3″ diagonal HD+ High-Definition HP LED BrightView Infinity
Widescreen Display (1600 x 900)
LightScribe SuperMulti 8X DVD+/-RW with Double Layer Support
Webcam + Fingerprint Reader
Wireless-G Card with Bluetooth
HP Integrated HDTV Hybrid Tuner
HP Color Matching Keyboard
8 Cell Lithium Ion Battery
Integrated 56K Modem
System Recovery DVD with Genuine Windows 7 Professional 64-bit
Microsoft(R) Office Professional 2007
Norton Internet Security(TM) 2009 – 15 Month Subscription
Adobe(R) PhotoShop(R) Elements 8
Adobe(R) Premiere(R) Elements 8
Roxio BackOnTrack 3
MAGIX Music Maker 15
$2,553
Price difference $1,246, or 33%, in favor of the HP.
So, the Mac has more Ram, 6 gb is all HP will let you order.
Everything else on the HP is equal to or a higher spec than the Mac.
The HP has AV, hi-def display, a HD TV tuner, fingerprint reader for
security, and music and photo editing capability. Other than 2 gigs of
ram and the OS difference what is different about the Mac?
The guy who wrote the article obviously either has no clue or has not
even bothered to spec any machines.
@T. E. Elam, Excuse me but what country are you in? The 17-inch MacBook Pro is $2,499 in the U.S. with a standard 4GB memory configuration. If you want more than that, you can go to a third-party dealer and buy an 8GB memory upgrade kit for around $450, or 6GB, to match your HP, for roughly $300.
As to the rest of the package, I actually did a comparison of the HP against a standard MacBook Pro at their respective U.S.-based manufacturer sites, and added an Office Home package to the latter. The HP came in at a little over $350 less, but its display is a lower quality 1600×900 pixel LCD, whereas the MacBook Pro has a 1920×1200 display. That is surely worth part of the difference. There is no mention in the specs of a gigabit Ethernet option for the HP either. The specs sheet says it contains an “Integrated 10/100BASE-T Ethernet LAN.” Both are examples of HP cutting corners to keep the price low, rather than providing the highest level of quality possible.
Over the expected lifetime of the Mac and the HP, you can expect to pay far more for the latter when it comes to security software subscriptions and upkeep. The original purchase price, as mentioned in an earlier comment, is only part of the overall cost of either notebook.
Peace,
Gene
Is there a Porsche tax? Sure, there is. You know going in that you will pay more. A Porsche owner will tell you it is worth it, because of what you receive back. Many Chevy owners will never get why a Porsche owner will spend the extra money. That is fine. That is why we have completive marketplaces. That way each of us gets what we want.
The computer market is very strange; it’s as though we had many auto manufacturers, but they all used the same engine.
Then, over on one side, there are two groups which have their own engines; Apple and Linux. It is unreasonable to compare these two, except in their own terms. The wider market can always pretend to have a better deal, but they always slight some quality or features to hide the truth.
The one-size-fits-all crowd will simply not understand why we Mac users appreciate the Mac. The Mac is an acquired taste. Perhaps, more people would accept the Mac if they knew anything about it. Or if they knew what virtues it is which we value.
I wish Apple would properly price the Mac OS. If it charged $1000 to purchase it without EULA conditions, then the Hackintosh makers would desist. Those people who registered their OS on genuine Apple hardware, would get a $871 rebate. Then we could stop this debate about which hardware is better. We Mac users have reasons to dislike Windows. That alone is enough for us to pay more. Let us just leave it at that.
@Louis Wheeler, That is absurd. The Hackintosh community is relatively small and not really threatening. The major offender of that EULA license, Psystar, reportedly sold less than 1,000 units during its first year, and it’s clear that Apple will soon get its wish when it comes to getting an injunction to stop them. Apple has no incentive to loosen its EULA. It’s far too successful now catering to the higher end of the PC market.
Peace,
Gene
@Gene Steinberg,
Of course, the Hackintosh community is small, but its members deny Apple’s intellectual property rights just like Psystar. The difference was that Psystar was a direct commercial confrontation of Apple’s right. If Apple didn’t defend their rights, the courts could take them away.
The question is, “If the Hackers are just a nuisance, rather than a problem, why did Apple, recently, bother to block the Atom based processor chip?” Apple must have known that the hackers would be right back with a fix, so why throw down the gauntlet? Why stir up a fuss?
I suspect that Apple has another ace up its sleeve, but it’s too soon to say.
I’m going to start with a comparison of the new iMac to another computer using the Tech Night Owl method of modifying the second computer to, as closely as possible, match the features of the $2200 Core i7 iMac.
In order to eliminate variables such as software bundles, operating system and build quality, the computer I’m going to start with won’t be a generic PC, it’ll be the base model Mac Pro.
The iMac has better CPU performance than the stock configuration of the Mac Pro so we’ll need to upgrade the processor. Then we need another 1GB of RAM and a 1TB hard drive to match the iMac. Next we’ll need to add a Radeon 4870 to better match the iMac’s 4850. We also need an AirPort card because despite the fact that most pros don’t use wireless, it doesn’t match the iMac without one. Then we need to add an iSight camera, speakers and a 27″ IPS display. Since I’m unable to locate a 27″ IPS display I’ve used a refurbished 30″ Apple Cinema Display in the calculation. Total cost ~$4800.
What’s wrong with this comparison?
Both are Apple Macintosh computers. Both ship with the same OS and bundle of applications. Hardware has been matched as closely as possible. But one of them costs more than twice as much as the other.
How is that possible? I’ve followed the patented Gene Steinberg method of comparison to determine value.
It looks like a small number of customers are willing to pay a huge premium for PCI slots and empty drive bays, but Gene says you’re supposed to ignore individual customer needs and focus only on objective things like the cost of the hardware. PCI slots and empty drive bays are standard equipment in $400 PCs so their value is substantially less than the more than $2500 premium the Mac Pro commands.
So Gene, is there a Mac Pro tax?
@David, They aren’t comparable products in many respects. For example, the iMac’s Core i7 CPU is NOT a Xeon, which is a far costlier server-grade processor. Do I have to go on? People who require extensive expandability will choose a Mac Pro. Those for whom lots of power is sufficient, and are willing to accept the integrated display and lack of expandability beyond memory, will prefer the iMac. To be blunt, I probably fit into the latter camp, so you may expect some changes in my equipment lineup soon.
The comparisons I write about are all about similar products with similar configurations from the Mac and PC side. Similar products! Clearly you don’t understand that condition. You might as well compare a desktop and a notebook and then tell me why the former is cheaper and that’s absurd!
If you want to do a proper matchup, compare a Mac Pro with a similarly configured Dell Precision Workstation and see which one is cheaper. But be fair! Clearly you are playing word games here, and you can’t get away with that on this site. 🙂
Peace,
Gene
@Gene Steinberg, Andrew already pointed out how ridiculous it would be to factor in the cost of Wi-Fi when looking for a computer that will spend its entire life on a wired network.
Telling me to put a Bluetooth module into any PC I look at because it’s standard equipment in Macs is just as silly. I don’t even know if my Mac’s Bluetooth feature works because I disabled it shortly after I booted it for the first time.
Adding the cost of unnecessary and unwanted features doesn’t make a comparison more fair, it artificially skews it by putting a value on features that the buyer has already decided are worth nothing.
Your position is that its impossible to know what users might need or want so its essential to match up the machines the best you can. But in doing so you’ve taken the position that all users value all the features.
I think what Andrew and I are saying is that your position is not representative of the marketplace. Even within Apple’s own customer base I dare say most people would gladly trade away something Apple provides for something else if Apple offered such a choice.
So while I applaud your attempt to be fair, matching computers feature by feature is probably invalid in some way for every buyer.
@David, Someone said focus, so let’s do that:
1. This is a price comparison, not a purchase comparison.
2. It is much cheaper to manufacture the products with certain board-level features built in rather than added on later. That applies to particularly to Bluetooth and Wi-Fi, where chips are cheap now.
3. I agree that Apple should be considering “business” versions of its hardware without certain features, but probably the Web cam would represent the biggest cost savings. Apple, however, chooses to build a consumer product that happens to also work in an office environment, so they give you everything up front. If you find someone else’s product more suited to your needs, even if it’s a Windows PC, so be it. If Apple saw their market being hurt by loading up their products with certain capabilities, they’d change in a heartbeat.
Peace,
Gene
@David,
There’s a fair amount of truth in David’s comparison of the new 27-in. iMac and the Mac Pro. But in an important way he’s comparing apples with oranges. He’s comparing a newly-released model with one near the end of its life cycle. If you forced me to make a purchasing choice right now today, I’d buy the iMac and save a lot of money, by comparison the Pro is not very desireable. But, assuming I had the money to afford a Pro, I’d hold off the purchase a little while, since it is likely that pretty soon a new Pro will be released, probably using the 6-core Xeon Gulftown, and that will restore the traditional performance gap between the iMac and the Pro
@dfs, Performance is only one area to consider when you choose between these two. But I do think that Apple is going to move a lot of iMac quad-core iron and many of those sales will go to traditional Mac Pro purchasers. That will happen even after a faster Pro arrives and it may explain, in part, why the quad-core iMacs are still backordered as of the time of this writing. Other than possible production problems, it may well be that Apple seriously underestimated demand for the top-of-the-line models.
In any case, we need to return to the basics of the Apple versus Microsoft Tax argument. It’s not about which Mac is best for you, but whether similarly configured Macs and PCs are similarly priced. And they are! I’ve demonstrated that over and over again. I smell a subject change here, and it’s one that deserves a separate article.
Peace,
Gene
Gene, it will always be perceived that there is an Apple Tax because of the niches in which Apple engages.
Apple came out of its core markets of graphics, design and education in 1998. Those markets demanded specialized high quality parts which cost more. Then, Apple entered the upper end of the consumer market with the iBooks and the iMac. Apple has essentially cornered that upper end. It has very few competitors in Laptops and Desktops above $1000. This is no disadvantage; that is where the money is. Apple has high profit margins and making good profits in a down economy.
Recently, Apple has been making moves on the Small to Medium sized Business markets. These markets all have similar demands for quality, durability, build finish and ease of use. They are not disposable computers, like the low end computers are. Their buyers are likely to keep them for many years. Four years is usual for a Mac and sometimes longer. This wrings the maximum dollar out of the machine. It gives us a lower Total Cost of Ownership than a PC. It’s a case of “Pay now or pay later.” Or “The quality goes in before the name goes on.” Or “You get what you pay for.”
This is a symptom of the cultural differences between the Apple and Wintel market place. Wintel manufacturers are in a headlong rush toward the lowest possible computer price. You have to wonder how much longer they can take this trend until they produce complete rubbish. A bargain is only a bargain, if there aren’t any hidden flaws.
Sorry Gene. I like most of your articles, and while Apple are slowly getting closer to the HPs / Dells / Sonys / et al, I still fundamentally disagree with you on this one.
There is an Apple tax, especially outside the US. It’s a “premium product” tax, and it’s got some invisibles as well. Things like a lack of choice, crippled configs in lower end machines, upsell due to those crippled configs, the inability to vote with your wallet about hardware if you want mac os… Etc
Don’t get me wrong. I love my 15″ MBP. But they also still have still have a luxury tax. The hp on my desk at work has more port options (more USB, esata), a higher Rez screen (same 15″ size), and a desktop dock option. You push 1 button to undock and run.
On the downsides, the hp is bigger & heavier, far uglier, creaks it’s plastic like a ship in a storm, gets worse battery life,and runs windows 7 (I work for an it outsource / solutions provider, we did a 100% migration to win7 on day it was released using rtm code). Win7 is definitely better than Vista ( we refused to touch vista), and it’s got a few warts, but Mac Os X it ain’t.
So, anyway, I digress. My challenge for you is to go to some of the NZ online stores and do some comparisons there. Our pricing all includes 12.5% GST (govt sales tax). Our exchange rate to the US is presently 1NZD = 0.711 USD. I think the lowerend stuff is getter far closer than it used to be, but you typically get less features for the money. The higherend stuff is stratospheric pricing.
Rob.
@RobInNZ, Obviously my comparisons were made based on U.S. pricing. I would consider looking elsewhere, but leave it to others to do that, using the same criteria I posed at the beginning of the argument. Here, however, you sometimes find the PC alternative more expensive than the Mac. Elsewhere pricing may depend on a host of conditions, such as currency exchange and local trade issues that can skew the differences larger. But you don’t for a moment actually state what your 15-inch MacBook Pro costs, whether the HP is truly comparable in most respects (you list a few where it might be better) and the final purchase price.
Peace,
Gene
Apple tax? My 27-inch iMac i7 arrived last week. It’s the most incredible computer I’ve used, including Mac Pros.
@Neil Anderson, Tell us more. Is this the standard memory configuration or did you upgrade?
Peace,
Gene
T. E. Elam is full of, well, smelly stuff when he says you can’t upgrade a 3 1/2 year old Mac. I’ve got a white 2006 MacBook 2.0 gHz, and have kept it updated with every system update so far. I bought this machine while I owned a vintage 2002 G4 Mirror Drive Door (Dual 2 gHz) that I kept until 2008, when I sold it, equipped with Tiger. I had downgraded it to Tiger to sell it, but I had upgraded it to Leopard prior to that. Six years old, running 2 gigs of RAM, had all drive bays full, and it ran GREAT on Leopard! Even faster than Tiger.
You might want to do a little research first next time, before embarrassing yourself.
When we talk of market share we usually talk about units sold. This is because the more units sold, the farther down the experience curve you have gone. It is assumed that this will lead to higher cash flow generated from a mature product (cash cow) and therefore greater resources to invest in new products/businesses with growth capabilities. However, the manufacturers who sell into the low end PC market have managed to box themselves in to low profitability, whereas Apple has managed to have the market share in terms of cash flow. this is what really counts. They have also shown an amazing ability to develop new products and businesses with outstanding growth which in turn are generating even more cash. In these markets they have been able to develop the major market share both in turns of units and revenue (cash flow).
Only one player has a cash flow which exceeds Apple’s: Microsoft, who clearly has a huge position in OS and business software. MS, however, has proven to be inept in using this cash flow to generate new, viable profitable businesses. I believe that this is not likely to change because their culture won’t allow it, and culture is very difficult to change.
People who buy and use Apple products clearly do so because they perceive the value of these products justifies their purchase, and this value includes the equipment, its reliability, service longevity and utility. To talk about the bare cost of a computer without factoring in all of these and the suitability of the equipment for one’s intended use is silly. The so-called concept of an Apple tax is meaningless.
The tax begins the minute you bring a Mac home with the paltry 90 day tech support and one year warranty, even though you have paid a premium price for your Mac. Of course there is Applecare for an additional fee and a network of retail stores, but there is only one here in South Carolina. Several states don’t have an Apple store. Form over function kicks in next. Hard drives and batteries fail over time 100%, it is absurd that the user cannot easily replace an iPhone battery or an iMac hard drive. Then there are the accessories, I have been using Macs for 12 years and cannot keep up with how many times they have changed the way you connect your display, changed your keyboards ( with and without numeric keys ), how many Mac users did they abandon when the iPod dropped firewire support? I received a usb charger with my new iPhone but you don’t receive one with other iPod models. You receive a display port adaptor with the Mac Mini but you don’t receive one with a Macbook Pro, the much more expensive model. They gave us free e-mail for a couple of years, then they took that away. Hell you can’t even send a free iCard anymore. I can go on all night. My G4 mini-tower has served me well for nine years and I will be buying a new Mac within the next six months,( even though they choose not to offer a similar product anymore) but Apple really doesn’t act like a customer-centric corporation. They want you to buy new products every three years and throw your old stuff away just like everybody else.
@hiRandy, This is overdone. You can use the same USB-based peripherals, since Apple added USB years ago — then the industry followed suit. Apple devises some of its own connection strategies and some work and some become industry standards. When they become industry standards the rest of the companies catch up.
As to the iPhone battery: You can have it done for you by a number of dealers. Check http://www.iFixit.com and you’ll see ways to take apart every single Mac in recent memory to configure it your way.
Peace,
Gene
Apple tax? Yes, here in Europe. Consider: the basic Mac Pro with no extra features costs $2,499 in the US. The same model costs €2,299, which is $3,445.72 (today). Even considering our 19.6% sales tax, it doesn’t compute. Why should Apple charge so much more in Europe than in the US? And it isn’t only the low current dollar. Why doesn’t Apple charge the same equivalent price plus sales tax?
@npcm, Not an Apple tax. A matter of trade policies and exchange rates and other issues related to commerce involving products whose manufacturer is located in other countries. It’s not gouging on the part of Apple, though it would be nice if they were cheaper elsewhere.
Peace,
Gene
@npcm,
Everyone charges more in Europe. There is a very lively trade going on at the ThinkPad forums of European buyers buying new and near-new ThinkPads from the US because the European prices are outrageous.
@Andrew,
I can well believe it. In fact I’ve purchased all my Mac laptops in the US and had friends bring them over. Unfortunately that doesn’t work with a Mac Pro, though way back I did buy a desktop Mac – a 7600/120 – and purchased a funky anonymous black bag on Canal St. in NY just large enough to hold the ‘puter and carried it on the plane over my shoulder as hand luggage.
Nice rant, Randy. But you are using a nine year old Mac. Try that with a Dell. BTW, does it use floppy disks?
All kidding aside, everyone’s perception of the market is different. I note that Macs dominate the wish lists for lap top and desk top computers. The market clearly thinks they have value. Are they priced too high? Maybe, for some pocketbooks. Their dominance in the sales end is less striking on a unit basis, but oh, those revenues!
When Steve Jobs returned to Apple, the market was still growing fast but maturing. In a mature market, maintaining low costs and competing on price is often the only way to survive and grow. With its low and diminishing market share, such an approach would have doomed Apple. Instead they they chose to make the best and most reliable product and compete at the upper end. Basically they segmented the market. With very good execution they succeeded.
Twenty years ago, before the US automobile market self destructed, A lot of people yearned to buy a Cadillac but settled for a Chevy because they couldn’t afford one. I don’t recall hearing talk about a GM tax.
Apple is successful because people perceive they have better products which cost more and they can afford the higher price. Period.
@westech, When it comes to cars, you know that the Cadillac will, or should, provide a more luxurious vehicle. Apple competes primarily against the high-end offerings from Dell, HP and the rest of the pack, and in that regard pricing is fairly close across-the-board. So it’s more of a match between a BMW and the Lexus division of Toyota, the Infiniti division of Nissan or, yes, the Cadillac division of GM. In each case, one company with strictly a luxurious lineup is competing with companies that have products that cover a wider spectrum.
Peace,
Gene
@Gene Steinberg,
Yes, but twenty years ago the alternatives were Lincoln, BMW and Mercedes.
Today’s market appears to have four major segments (not counting servers and super computers)
Professional use, eg graphic editing;
High end desktops and lap tops;
Low end desktops and lap tops;
And net books.
Apple concentrates on the first two, and the market says, as it did (does?) with the Cadillac, give a more luxurious ride.
You don’t have to be all things to all people to succeed.
@westech, This is what some people fail to understand about Apple. It’s also far more efficient for a company to concentrate on a smaller number of market segments — and it causes fewer headaches too!
As I’ve always said, Apple is NOT your friend. They have chosen to play in sandboxes that keep them profitable, able to build more innovative products for customers. Doing everything for everybody — or trying — can wreak havoc on creativity.
Peace,
Gene
@Gene Steinberg,
Amen to that. Focus, focus, focus.
But no company is your friend. I admire the way Apple runs their business, which I summarize by saying that they make great products which people want and therefore they make money.
Just because I admire them doesn’t mean that they don’t make me mad at times.
Want to compare Apple to Microsoft?
@Gene Steinberg,
Thats true, but those Cadillacs, Audis (Volkswagen), Infinities and Lexuses (Lexii?) cost the same as the BMW, and compete fairly well.
I just bought a car in the near-luxury segment and my list included cars from BMW and Mercedes Benz (luxury only) as well as those from full-line companies (Audi, Lexus, Infiniti and Cadillac) and some top-line models from non-luxury names like Ford, Volkswagen and Subaru.
What all had in common was a price between $30K and $35K, compact or mid-sized body, quiet ride and sporty handling. My three favorites were as different in character as cars can possibly be, ranging from 4-door sports car (BMW 328i) to plush cruiser that still moves (Ford Taurus) and jack-of-all-trades (Mercedes-Benz C Class).
Computers are much the same. There isn’t one clear winner in each and every category, and some models are a better value than another. Of the cars I test drove, the as-equipped prices were only separated by about $4000, and the Ford was the most expensive of the lot. Apple is like BMW or Mercedes-Benz. Sometimes they are the most expensive (entry-level laptop), sometimes they are the cheapest (workstation), but usually they are priced very similarly to their competition when equipped the same (Gene’s method).
Where I continue to differ is that I truly believe that the equipment level must be based on the user’s desires. BMW and Mercedes-Benz both charge $1500 to move up from vinyl to leather interiors, while the other cars had leather standard at this price point. To a get a folding seatback in the Mercedes requires a $3000 option package, while most other cars had a folding rear seat as standard.
When it was time to sign the contract and drive the car home, I didn’t exclude the Mercedes because in price range it would come with the vinyl interior and non-folding seat, just as I didn’t automaticaly award the purchase to the Ford because it had so many toys that matching them would have put the others out of my price range. I decided what features I really wanted and what I didn’t care about, looked at models equipped to my needs and ignored the presence of unwanted features on the competition, unless I could get the same model without the unwanted toys.
I bought the Mercedes-Benz C300 even though it and the BMW were the most spartan of the pack. Had I followed your shopping method, I would have had to add expensive options to make a “fair” price comparison. I was buying a car, not leather seats. I wanted a very firm drivers’ seat, and could care less about a panorama roof or voice-controlled audio and nav systems. Those features were available on the C300, but adding them would have raised the price another $5000 or more than I had no desire to spend.
So too when buying a computer, if one model I am interested in has a feature that I don’t want I won’t add it to the other model. When I bought a Mac Mini, did I add an external lightscribe DVDRW because most competing PCs came with one? No, I could care less about lightscribe. When I bought an iMac did I buy the higher-end model withlarger hard drive, faster graphics and CPU? Nope, this was purchased for use by a receptionist, and power, performance and storage were completely unimportant. You compare based on your wants and needs, and anything unwanted should simply be ignored.
@Andrew,
Yes, the equipment level should be based on what the customer needs, or thinks he needs. I don’t disagree with you on that. With cars the macho in us sometimes takes over and we buy to impress others and to boost our egos. With computers this is less so, although I really would like to have a 27 inch iMac.
By and large, Apple does very well where they choose to compete. In most cases the difference in price where they do compete is not a major factor. Sometimes they may offer a feature before the competition. I believe that a big factor is the perception of the markets they serve that their quality, ease of use and service and support are better than the competition. I am sure this is not always justified, but back to the automobile analogy I remember GM dissing Toyota’s reputation for quality saying that they could only compete because they had cheap labor. Meanwhile, GM offered tail fins and chrome.
There is a strong tendency in American manufacturing to go for the short term profits. They often regard quality and service as expenses with no return. Once you get a reputation for poor quality and support it’s hard to shake it. Apple has generally taken a longer term view.
BTW, if you are buying a computer, say an HP, at a mass merchandizer the lower cost HP alternatives are there for you to compare. You can become your own competition.
Sleep well. I am off to bed.
@westech,
But is it really competition if a person buys HP model A because it is a closer match to his needs than HP model B? If he buys a Dell, or a Sony, or an Apple instead of an HP then it matters, but HP really doesn’t get too upset if more people buy model A than model B, so long as they both have similar margins, meaning aren’t downgrading to a no-profit netbook.
The words we use are often interesting. A tax is an addition which has no direct relationship to the value of an item.
The concepts implied in an Apple Tax is:
1. There is no difference between computers.
2. There is no difference between operating systems.
3. If Apple computers cost more, then it can only be because Apple forces an unfair bargain. Hence, Apple cheats its customers.
4. Therefore, Apple buyers are fools who do not understand the nature of computers.
This constitutes a profound bigotry, because it is based on values. Wintel and Mac customers value different things and thus, will pay accordingly.
A reply to this bigotry will be discounted. Apple’s hardware is chosen to satisfy the Mac users needs. It will have qualities which will never appear on a Wintel fans checklist. He will use this as an argument that the Mac User is being ripped off.
The Wintel fan often has no experience with the Mac OS, but he will say that there is no difference between it and Windows. Or he will assert that he is experience, but he finds no particular value in either. Thus, any preference to the Mac OS is derided as irrational, because no reason exists to pay more to get Mac OSX.
Apple confines its self to its niche markets in Graphics, Design, Education and the upper end of the consumer market. Only recently has it been making moves on the Small to Medium sized Business markets. Apple has traditionally had high profit margins and maintains high quarterly profits. It eschews government and big business as well as markets where these are low profit margins. This means that Apple does not care about market share. It will sell a fifth as many computers as HP, but have 2/3’s of HP’s profits.
This proves to the Wintel fan that Apple is ripping off its customers. He cannot see that the high profits are a reward for serving its customers well.
Lastly, The Wintel fan considers an Apple user a fool for valuing different criteria from him. He cannot see that Apple is being rewarded for solving the problems in the Wintel market. That is why Apple is growing at 30+% a year.
The point if that there is no reasoning with a Wintel fanatic, If you told him the benefits which you derive from being a Macintosh user, he would discount them. He would dismiss them as being unnecessary to computing.
Perhaps, they are unnecessary to him, but not to us. There is no accounting for taste. And no reason to argue with the deluded.
@Louis Wheeler,
There are a lot of fanatics on both sides of the platform divide. A few of us, however, are platform agnostic or at least equally efficient on either one. Many people switch platforms every day, and not the “switchers” who dump Windows for a Mac, but the people who use a Mac at home and a PC at work, or perhaps even move from to the other depending on the task. This can even be on the same computer these days, thanks to Boot Camp, Parallels and Fusion.
The point is, anyone who really uses both, a lot, is in a position to say which is better for his or her needs. Some use a Mac and only go into Windows for gaming. Others use a PC for some specialized business or scientific application and a Mac for video or graphics work. I would doubt if many of these users really care when seated at their Mac that some functions are done differently than in Windows, or that the Windows UI isn’t as polished and pretty as the Mac’s.
Right now I’m viewing a website and replying to a comment. Ihappen to be using my PC at the moment since I was just playing Fallout 3. Earlier this evening I was working on a motion to file in court tomorrow and took a break to visit and reply on this very same website, that time, using my Mac. The experience was different because of content on the website, but not altered in any way by using a Mac with Safari compared to a PC with Firefox.
In most mundane tasks, the OS really doesn’t make a difference unless if prevents you from doing something. Linux would make a huge difference to me, as it would prevent me from using working with legal pleadings written in MS Word. Those same documents are identical in the Mac and PC versions of Word, however, and it makes no difference whatsoever if I want to edit one on my Mac or on my PC. The words are the same when I print the document, and regardless of which OS I am using, the amount of work is the same.
Andrew, I agree with most of what you say. The problem with these debates is that Microsoft, and IBM before it, uses a form of propaganda called FUD — Fear, Uncertainty and Doubt — to delude people.
Anyone who would use the Apple Tax argument is beyond reasoning with.
Microsoft spreads lies; it tries to puff up itself while it ignores its flaws. Those flaws were decisions which conferred an immediate benefit. But, those decisions have long term problems attached which are increasingly evident.
Each OS has its niches. Wintel is chasing obsolescence by grasping after its market share. The one-size-fits-all mentality, as a Wintel fan would maintain, does not hold true.
Apple does not try to serve every market; it has been leaving Games and the Enterprise markets alone, but that will slowly change. Apple is steadily improving its hardware and software; it is chasing excellence. Investing in the future is often painful in the short term but confers a long term benefit. Apple has had very long term plans which are only now bearing fruit.
Snow Leopard sheds the compromises which Steve Jobs had to make to bring the, object oriented, NeXTstep Operating System to the Mac. Mac OSX 10.6 has fundamental changes which will take time to reveal. One of the most important change is that Snow lLeopard is sidelining the procedural Carbon API’s in 32 bit code while the rest of the Mac apps migrate to 64 bit. Rather large speed improvements are ahead, as well as a much better applications. The numbers of available applications will be shifting toward the Mac by the middle of next year — as will their speed and effectiveness. Apple developers will be utilizing these new foundations to capture much of the gaming market.
The Mac OS is an acquired taste. Most of us Mac users have a long experience with Microsoft Windows and prefer to pay more to avoid it.
Apple has, since 1997, been removing the deficiencies on its checklist. The last to fall is the price argument. This argument is flawed because it assumes that Mac users do not receive commensurate value for the higher price.
Apple has the highest customer satisfaction ratings in the computer market. This means that Apple creates products and maintains policies which cause people to be loyal. It solves problems up front and creates a trust in its users. It serves fewer people than Wintel, but serves them better. That is worth a few extra dollars.
@Louis Wheeler,
Louis,
Notice I never once said that Macs were more expensive than PCs, only that they were more expensive in some categories and less expensive in others. You can buy an entry level laptop or desktop cheaper from Dell or HP than you can from Apple and get similar performance. You can buy a high-end workstation cheaper from Apple than from Dell or HP and get similar performance. Usually the price difference is negligible when the hardware is truly equivalent, both in specification and build-quality.
Microsoft is also cutting away its legacy bottlenecks with Vista being the big architecture change, and the complaints against that OS are almost entirely based on the many problems that come with an architecture shift. Apple endured the same complaints to an even larger extent when it abandoned the classic Mac OS and moved to OS X. Microsoft has been here before as well, when it abandoned DOS-based Windows for NT-based Windows with Win2K in businesses and XP two-years-later for consumers.
Snow Leopard brings a lot of promises for the future, but this is now. Now, today, the two platforms are as equal as ever before. Back in the days of Windows 95 and System 7.5 things were pretty equal too, with Apple having the better UI and stability being pretty poor on both sides. Today, Apple has the better UI and stability is pretty good on both sides.
Clearly, it is the best time ever to be a Mac user, but its also the best time ever to be a Windows user. For those of us who use both, well, I guess its twice as good.
Andrew, Mac’s are more expensive than the average Wintel PC because Apple does not choose to sell products into the lower half of the consumer market.
The point about “The Apple Tax” is not about the expense, itself, but the assumption that Apple is not giving commensurate value for that higher price. That is, that we Mac users are fools for paying more for substandard products. Also, it proclaims that only hardware differences matter.
Usually, the way it is positioned in articles is to compare a Mac to a “White Box” computer or to the lower quality range of HP or Dell computers so long as the major components are the same. This leaves out many intangibles of quality, build finish, style, weight, etc. It leaves out the value of running Mac OS X, too.
Personally, I rarely buy the cheapest item of any product, because I’ve found that paying over 50% more tends to give values which are never in the cheapest goods. And that buying cheap goods is a false economy even when you are looking for a good price. It is called being, “Penny wise and pound foolish.”
I must disagree with you regarding Microsoft. The problem with Vista was that it was rushed to market; It wasn’t ready for prime time. Microsoft was embarrassed by the Longhorn fiasco — six bullion dollars and five years of effort flushed down the tubes.
Microsoft was forced to start over, so it took a clean copy of Windows Server 2003 to build Vista on. Server 2003 is an upgraded version of Windows NT, thus it carries on NT’s internal flaws. Windows NT’s major flaw is that its security was compromised to allow backward compatibility.
There was no architectural shift in Vista. Neither Vista nor Windows Seven are object oriented, multi user, Operating Systems in the way that NeXTstep and Mac OS X are. Windows is a stand alone disk system which is inherently unsuited for the internet.
http://www.rixstep.com/2/20090601,00.shtml
http://www.rixstep.com/2/20090726,00.shtml
There is no equality between the Win7 and Snow Leopard.
You are right that Windows 95 and System 7.5 were equally insecure, because they were stand alone disk systems. That was forgivable, because neither OS was exposed to the Internet.
Windows Seven gives the illusion of stability. If it were stable, it wouldn’t need Anti-virus software. It wouldn’t have fallen prey to the recent “Zero day” virus. Windows remains a catastrophe waiting to happen. It is unclear what Microsoft intends to do about this.
We won’t need to wait long for Snow Leopard to fulfill its promises. I am projecting that the shift to the 64 bit kernel will occur by default before July, That is because 75% of the Intel Mac user base will have upgraded to SL (it is about a third now). And 90% of the Applications will be in 64 bit code. There is little reason to upgrade to the 64 bit kernel before then. Much that is hidden will be reveled when that happens.
@Louis Wheeler,
7, Vista, XP, 2K, NT, are all stable. Stable and secure are different things. I have an old ThinkPad purchased around 1998 and upgraded (clean install) to Windows 2000 in 1999. That computer has never crashed, and never had a virus, and remains the model of stability today. It got a new hard drive about 5-years-ago to cure a noise issue, but is the same WIndows install from 1999 cloned over (Norton Ghost back then, Acronis TrueImage now). It is on the internet, behind a firewall, and has never had antivirus software installed on it. Because that machine (ThinkPad 600E) has the best keyboard I’ve ever had the pleasure to touch it remains my legal drafting machine. It has a Pentium II processor at 300MHz and runs Office 2003 Professional with the .docx compatibility update installed. A ten-year-old OS installation that has never crashed is what I call stable.
The architectural shift in Vista was the driver model that no longer runs at the kernel level, increasing (greatly) stability, not security. Using standard accounts and UAC was another architectural shift making it much harder for a machine to be compromised (security, not stability).
Is Windows 7 as secure as Snow Leopard? I don’t know. Both are flawed, though I tend to be more careful where I click on a Windows system than a Mac. My only malware infection in over 20 years of computing was actually on a Mac running System 7.5 called the “Autostart Worm”. I still don’t run antivirus of any kind on my Mac, though my modern ThinkPad (not always behind the firewall) has AVG Free, which as its name suggests, costs nothing. I don’t click EXE files, don’t unzip unsolicited attachments and don’t visit porn sites. As such, I consider both my PC and Mac to be quite safe.
I also agree with you on pricing. I have never purchased a cheap PC except for a pair of desktops for my first law office. Those cost $300 new back in 2006 and those machines still work fine, both are currently running Vista and I’ve had no issues with either. My current ThinkPad cost the same as a MacBook Pro, and is a very high-quality machine, as is my equally expensive and high-quality MacBook Air. I’ve had many high-quality computers, the vast majority from Apple and IBM/Lenovo. Build quality is about equal, though the current unibody machines are simply gorgeous.
Sorry, Andrew, What Microsoft did to Vista and Windows Seven was a series a palliatives — a bunch of bandaids. Its foundations are as insecure as Mac System 7.5 was. Microsoft has beefed up its external protection, but that is unlikely to last. Foundations cannot be made secure after the fact.
The Windows OS, to be secure, needs to be inside a virtual space or have new foundations built up from the bottom. Neither solution is likely to appeal to Microsoft.
The problem with the latter is that it would break all of Microsoft’s applications. It is unfortunate that Microsoft didn’t take advantage of the move to 64 bit processing to solve this security problem. That is short term thinking, because new foundations would be as painful to Microsoft as the move to Mac OSX was to Apple.
You are right about stability. The original Mac OS had cooperative multitasking. This depended on having well behaved applications and most of them were. Steve Wozniak said that the mere presence of Internet Explorer on a Mac made it unstable — whether IE was running or not. Microsoft has had a pattern of sabotaging its competition in deceptive ways which made that competitor look bad.
Mac OS X is very stable. I’ll go a week or two before I runs some diagnostic software which demands a reboot. I can’t remember the last time I crashed the system. Safari crashes every three weeks or so from a bad web page. Flash periodically hangs on a video, I force quit and will run diagnostics which cause me to reboot the system.
What flaw does Snow Leopard have? The vulnerabilities which Anti virus experts such as Mr Miller of Intego exposes at Consecwest are in its un-patched Open Source BSD foundations. Those vulnerabilities never go anywhere. Mac OS X has never has a virus, worm, adware or spyware in the wild. It has had two Trojan horses in the last three years. Otherwise, we only have spam and phishing attacks which could apply to any computer user.
The 64 bit kernel has increased security procedures, but I never heard of any serious mac problems.