Greg's Bite: Apple's hardware prices matter
TweetFollow Us on Twitter

Greg's Bite: Apple's hardware prices matter

By Greg Mills

I was idly wandered through the brand new Sam's Club here in Kansas City, Kansas, Friday afternoon. The store is just around the corner from my home. A neighbor, living just a few doors down the street, is the proud manager of the giant new store.

I was there at the grand opening a couple of weeks ago and actually ate the first "tomane torpedo" sold at the food court. Where else can you get a large Nathan's hot dog and giant soft drink for $1.50? 

As I was sampling the free bites of food they give away, I stumbled into the electronics department. The products on sale were all the Apple tablets, iPhones and iPods, as well as the brands X, Y and Z semi-equivalents. Features and prices varied wildly. 

The electronics guy reads my Greg's Bite articles. He commented as soon as he saw me, that as far as he was concerned, I had hit the nail right on the head in my recent article regarding Microsoft's constant marketing gaffs.  I like it when even the die-hard PCs out there have to agree with my sarcastic, and somewhat critical, view of Microsoft and the "great tongue" himself, Steve Ballmer.  

I have found that while many Apple faithful really like the company and care about Apple, a lot of PC users actually deeply distain Microsoft but stick with that platform for reasons imagined or real only in a past lifetime. The day when you simply couldn't get by with just a Mac due to certain PC-specific software titles or features has pretty much been over for a while now. Ever since you could run (shudder, gag, wince) Windows on modern Macs, that argument has been slowly fading away.  Another myth that is also dying out is that Apple products are super expensive. While still a bit higher priced than PCs, the Apple "premium" has largely been eliminated.

My son Isaak hates it when I tease him that running Windows on his MacBook Pro is like keeping pigs in the back seat of a brand new BMW. He is much more "cross platform" than I am. Partitioning your hard drive and running two operating systems seems to lead to headaches he constantly deals with that I can do without.  

I was discussing with the Sam's Electronics guy the cracked keyboard issue that might cause a complete recall of all Surface tablet cover/keyboards sold so far.  It seems, according to Steve Ballmer, that users are "holding them the wrong way" and curling them under, in such a way that the plastic hinge that connects the tablet to the keyboard breaks and exposes wires. This issue really makes the Surface computer keypad unusable in salt water.

The public relations department at Microsoft released a statement on the cracked keyboard issue: "Microsoft makes every effort to ensure our customers receive a high quality product. We are in active contact with our Customer Support operations and are aware of a small number of instances of material separation,"  

A "small number" of keyboard defects was not quantified by Microsoft's pubic relations spin department. Since the Surface has only been on the market two weeks, one wonders how long until all such keyboards break. Ironically, another issue has been that the Microsoft logo printed on the Surface computer is rubbing off. Some enterprising person will no doubt be selling Apple logos to slap on over the smudged Microsoft logos. That ought to enhance Surface tablet resale values dramatically, but might be an illegal deception amounting to criminal fraud. There are stupid people out there.  

Did you hear about the woman who bought a mirror with one of those Apple logo decals stuck to it as an iPad from a huckster selling implied "stolen goods" for cheap? Before she figured out she had been hoodwinked, the salesman and her $200 were long gone.  I had a guy try to sell me concrete blocks sealed up in cardboard boxes as high quality stereo speakers. He refused to open the boxes to allow me to see the speaker before I paid him since they were "factory sealed" ... yeah, right. A deal that is too good to be true normally is.   

Sounds like Microsoft is facing "recall city" just in time for Christmas.  Fortunately, with actual worldwide sales of the Surface Computer and Keyboard accessory to date, according to my best estimate, at less than a thousand, it shouldn't hit Microsoft's bottom line too hard. (I am not counting internal sales to Microsoft staff, samples to tech writers or Surface tablets that have been returned by angry consumers)  This explains the divergence of my estimate and Microsoft's recently published sales numbers.

As we were discussing Microsoft latest gaffs a lady walked up and picked up a demo iPad 3. My electronics friend gave her his attention, and I stepped back to allow him to talk with her. She noted out loud the price for the Apple tablet and put it back like it cost money to even touch it.  After she was out of ear shot, we discussed the prices Apple had put on its current offerings.  

Keep in mind that when Steve Jobs launched the iPad, the air in the room was sucked out as the $500 base price was hundreds of dollars lower than industry expected. Everyone inhaled at once. Since Amazon launched its cheapo loss leader tablets, Apple iPads only seem expensive to those who really don't understand the difference. As I pointed out to my daughter's teacher, if you buy an iPad the Kindle app is free. You buy a Kindle and that is all you have.

Price comparison alone is sort of like comparing a baloney sandwich on Wonder Bread with a steak sandwich on a freshly toasted croissant by price alone. Both sandwiches are theoretically eatable, but the steak sandwich costs more. Quality counts. people. I suppose if you have never had a steak sandwich, baloney sandwiches are better than going hungry, but just barely.

Comparing the Apple tablets with Amazon tablets strictly on what they cost consumers out of pocket is really deceptive for fundamental reasons. Apple makes its money on hardware sales and some money down line on apps and accessories.  Amazon just breaks even or loses a bit on each cheap tablet they sell.  The difference between Apple and Amazon is in the marking plan after the consumer plunks down their tablet money.  

Amazon figures the closely linked loss leader tablets they sell will pay off in the long run through sales at Amazon.com. Apple actually has it both ways. The margins for an iPad run around 40%, and Apple still sells apps and accessories down line. The new iPad mini has a slightly lower net margin than previous iPads, but even at the lower price point, Apple makes money on each tablet they sell. I recently bought my iPhone 5 with my iPad through the Apple on-line store app. 

It has been speculated that once the tablet market becomes saturated with iPads of both sizes Apple will cut prices to continue to keep pressure on the competition.  As I have noted previously, since Apple knows they will be stretched to keep up with demand at higher price points, why cut prices to the bone until supply catches up with the runaway demand? Apple makes money by being smart about its prices.  Cook isn't going to leave money on the table.

Apple products tend to be the gold standard for electronics. Microsoft launched its Surface tablet at exactly the same entry point as Apple's iPad. This tends to set expectations at an equal level and likely sets up consumers to be very disappointed and angry. When you realize the steak sandwich you bought from Microsoft tastes a lot like baloney, product returns and crappy product reviews are sure to hurt their market share. That is already happening.  

Dire predictions that the glory days at Apple are over are really off base. As long as the tradition of quality and elegance continues at Apple, continued growth is assured. While some people shop based purely on price, the rest of us would rather buy the BMW than the crappy Ugo car. Quality costs something. Personally, I am willing to pay a few buck more and have a better experience over the lifetime of my electronic devices. (I have an iPad mini coming Monday).

I will be posting an article next week on the HTC/Apple patent cross licensing deal and the ramifications for Android. I am also watching to see if Cook offers Ron Johnson his old job back since the "new JCPenny" is about to fire him before he bankrupts them.  

That is Greg's Bite.

 

Community Search:
MacTech Search:

Software Updates via MacUpdate

Airmail 2.1 - Powerful, minimal email cl...
Airmail 2 is a new mail client designed for OS X 10.10 Yosemite with fast performance and intuitive interaction. Support for iCloud, MS Exchange, Gmail, Google Apps, IMAP, POP3, Yahoo!, AOL, Outlook.... Read more
Logitech Control Center 3.9.2 - Keyboard...
Logitech Control Center (LCC) is designed to support OS X and allows you to take full advantage of your Logitech keyboard, mouse, or trackball. With the LCC you can: Browse the Internet using... Read more
Adobe Acrobat Pro 15.007.20033 - Powerfu...
Acrobat Pro DC is available only as a part of Adobe Creative Cloud, and can only be installed and/or updated through Adobe's Creative Cloud app. Adobe Acrobat Pro DC with Adobe Document Cloud... Read more
CleanMyMac 3.0.1 - Delete files that was...
CleanMyMac makes space for the things you love. Sporting a range of ingenious new features, CleanMyMac lets you safely and intelligently scan and clean your entire system, delete large, unused files... Read more
Evernote 6.0.10 - Create searchable note...
Evernote allows you to easily capture information in any environment using whatever device or platform you find most convenient, and makes this information accessible and searchable at anytime, from... Read more
CleanApp 5.0.1 - Application deinstaller...
CleanApp is an application deinstaller and archiver.... Your hard drive gets fuller day by day, but do you know why? CleanApp 5 provides you with insights how to reclaim disk space. There are... Read more
Quicken 2015 2.5.0 - Complete personal f...
Quicken 2015 helps you manage all your personal finances in one place, so you can see where you're spending and where you can save. Quicken automatically categorizes your financial transactions,... Read more
Tonality Pro 1.1.4 - Professional-grade...
Tonality Pro gives you the power to create stunning and dramatic black & white images. This is a complete monochrome image editor with more than 150 one-click style presets, totally unique... Read more
Adobe Photoshop CC 2014 15.2.2 - Profess...
Photoshop CC 2015 is available as part of Adobe Creative Cloud for as little as $19.99/month (or $9.99/month if you're a previous Photoshop customer). Photoshop CS6 is still available for purchase (... Read more
BBEdit 11.1 - Powerful text and HTML edi...
BBEdit is the leading professional HTML and text editor for the Mac. Specifically crafted in response to the needs of Web authors and software developers, this award-winning product provides a... Read more

Play Endless Golf in Flick Golf Free...
Full Fat has released a new update for Flick Golf! Free. The ‘Eliminator’ update brings a whole new way to play with its endless round. [Read more] | Read more »
The Enchanted Cave 2 (Games)
The Enchanted Cave 2 2.1 Device: iOS Universal Category: Games Price: $2.99, Version: 2.1 (iTunes) Description: Delve into a strange cave with a seemingly endless supply of treasure, strategically choosing your battles to gather as... | Read more »
Crystal Siege is on Sale With a New Univ...
Crystal Siege,  FDG Entertainment's RPG  Tower Defense game, has gone universal in its latest update. [Read more] | Read more »
Platforming Action RPG Swordigo is Curre...
Touch Foo's 2D action-platformer, Swordigo, is free for a limited time on the App Store. Now you can run, jump, and slash your way through adventure for absolutely nothing. [Read more] | Read more »
Watch This Homerun Slides into Home on t...
Eyes Wide Games has launched their one-touch baseball game, Watch This Homerun, for the Apple Watch. [Read more] | Read more »
Disney Celebrates May 4th With Galaxy Si...
For Star Wars Day, May 4, join Disney Interactive and Lucasfilm as they celebrate with a whole lot of in=-app sales for their Star Wars apps. [Read more] | Read more »
Oh My Pixel! We Go Hands-on With The Kni...
I recently had a chance to play around with the upcoming Knights of Pen & Paper 2 from Paradox Interactive. I was a huge fan of the first game, so I had a lot of expectations going into it - and I wasn't disappointed. The game has gotten some... | Read more »
Throw Out Your Stylus and Sketch With Pe...
Penpoint Drawing, by Damin Liu,  is a new creative drawing app that uses your finger as your stylus. [Read more] | Read more »
Oceanhouse has Released Just So Thankful...
Oceanhouse Media, makers of digital book apps, are celebrating Mother's Day with a giveaway and a new app. [Read more] | Read more »
Get Dressed, the Virtual Wardrobe App fo...
Dressed, by  Kabuki Vision, is one of the first fashion apps for the Apple Watch. It pairs your watch with your iPhone to let you browse garments from your closet and mix and match them to create the perfect outfit. To add new pieces you just use... | Read more »

Price Scanner via MacPrices.net

12-inch 1.1GHz Silver MacBook in stock today
B&H Photo has the new 12″ 1.1GHz Silver MacBook in stock today for $1299 including free shipping plus NY sales tax only. Act now if you’re interested, since we don’t expect B&H to have this... Read more
iPad Air 2s on sale for up to $50 off, NY tax...
B&H Photo has iPad Air 2s on sale for up to $64 off MSRP including free shipping plus NY sales tax only: - 16GB iPad Air 2 WiFi: $469 $30 off - 64GB iPad Air 2 WiFi: $549.99 $50 off - 128GB iPad... Read more
Check Apple prices on any device with the iTr...
MacPrices is proud to offer readers a free iOS app (iPhones, iPads, & iPod touch) and Android app (Google Play and Amazon App Store) called iTracx, which allows you to glance at today’s lowest... Read more
Sale! New 13-inch 256GB MacBook Air for $1099...
B&H Photo has the new 2015 13″ 1.6GHz/256GB MacBook Air on sale for $1099.99 including free shipping plus NY tax only. Their price is $100 off MSRP. Read more
Japan Post Group, IBM and Apple Deliver iPads...
Japan Post Group, IBM and Apple executives meeting in in New York City yesterday announced a first-of-its-kind initiative aimed at improving the quality of life for millions of Japanese senior... Read more
Worldwide Tablet Market Contracts For Second...
Worldwide tablet shipments recorded a second consecutive quarter of year-over-year decline in the first calendar quarter of 2015 (1Q15), according to preliminary data from the International Data... Read more
Apple restocks refurbished Mac minis for up t...
The Apple Store has restocked Apple Certified Refurbished 2014 Mac minis, with models available starting at $419. Apple’s one-year warranty is included with each mini, and shipping is free: - 1.4GHz... Read more
13-inch 2.5GHz MacBook Pro available for $999...
Adorama has the 13-inch 2.5GHz MacBook Pro on sale for $999 including free shipping plus NY & NJ sales tax only. Their price is $100 off MSRP. Read more
New 13-inch Retina MacBook Pros available for...
Save up to $80 on the purchase of a new 2015 13″ Retina MacBook Pro at the following resellers. Shipping is free with each model: 2.7GHz/128GB MSRP $1299 2.7GHz/256GB... Read more
13-inch 128GB MacBook Air on sale for $50 off...
Save $50 on the purchase of a new 2015 13″ 1.6GHz/128GB MacBook Air at the following resellers. Shipping is free: $949.99 $949.99 $949.99 $949.99 $949.99 B&H Photo charges NY sales tax only.... Read more

Jobs Board

Senior Identity Architect - *Apple* Pay - A...
Changing the world is all in a day039s work at Apple . If you love innovation, here039s your chance to make a career of it. You039ll work hard. But the job comes with Read more
Hardware Systems Integration Engineer - *App...
Changing the world is all in a day039s work at Apple . If you love innovation, here039s your chance to make a career of it. You039ll work hard. But the job comes with Read more
Senior Identity Architect - *Apple* Pay - A...
Changing the world is all in a day039s work at Apple . If you love innovation, here039s your chance to make a career of it. You039ll work hard. But the job comes with Read more
Hardware Systems Integration Engineer - *App...
Changing the world is all in a day039s work at Apple . If you love innovation, here039s your chance to make a career of it. You039ll work hard. But the job comes with Read more
Senior Identity Architect - *Apple* Pay - A...
Changing the world is all in a day039s work at Apple . If you love innovation, here039s your chance to make a career of it. You039ll work hard. But the job comes with Read more
All contents are Copyright 1984-2011 by Xplain Corporation. All rights reserved. Theme designed by Icreon.