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Daring Fireball: Apple's Pricing Advantage

146 points by motvbi 16y ago

_delirium 16y ago
I've noticed this even with normal laptops at the smaller end. If you're looking for a 15" laptop, you can find a lot cheaper PCs than the $1,799 MacBook Pro. But if you're looking for a 13" laptop with roughly equivalent processing power and weight, it's hard to find a PC laptop much cheaper than the $1,099 MacBook or $1,199 MacBook Pro. Some are considerably more, because while Apple prices the 13" at the bottom of their range, a lot of PC manufacturers price the "ultraportables" as a premium item.
- cheald 16y ago
  Having just recently priced laptops, I didn't have this experience. A 13" MBP is $1200 for the bare-bones options (4GB RAM, Core 2 Duo, 250GB 5400 RPM SATA). It weighs about 4.5 lbs. They want an additional $400 for an extra 4GB of RAM (wtf?) A Dell Inspiron 14" with the same specs clocks in at $665 at 4.9 lbs (which is still under the 5lb "ultraportable" mark). A Lenovo U350 with similar specs clocks in at $700 and 3.5 lbs. The Apple tax is very definitely still in play.
  - icegreentea 16y ago
    But if you move up to Dells and Lenovo's "premiere" laptops (Latitudes and Thinkpads), then the price difference narrows considerably. Bare bottom T410 (14") is ~1200 (granted, its currently on sale for like 700-800 dollars... Lenovo has a lot of sales actually). I think it's fair to say that MBPs compete with all of the other brands "one step up" or business lines. MBP build quality alone lets it fight in that category.
    - cheald 16y ago
      At some point, you're paying a few hundred extra for the aluminum body and glowy Apple logo - it's not just about "premium" versus "consumer" tiers of hardware. A Latitude 5400 (again, same hardware loadout) prices on Dell's website right now at $849.00. A ThinkPad Edge 13", again, similar loadout, prices at $694.00. Apple makes fantastic hardware, no doubt, but it's very difficult to consider them to be competitively priced. For the price I'd pay for a MBP, I can get a machine a generation ahead in terms of raw horsepower. I just got an HP Envy 17 (I wanted a portable workstation, rather than a ultralight) and it's a hell of a lot of hardware (Core i7, 8GB RAM, 750GB 7200 RPM HDD) for roughly half the price of an equivalent MBP.
      - tibbon 16y ago
        I think the body is actually a pretty big deal. Who else is making unibodies like that?
        krakensden 16y ago
        Dell was selling one for a little bit: http://www.dell.com/us/p/adamo-laptops http://www.dell.com/us/p/adamo-laptops
        jonah 16y ago
        Apple really does have the materials/build quality thing down. I don't know anyone who makes a physically better laptop or phone...
        nikster 16y ago
        Let me tell you a story about my 17" unibody MacBook Pro. It's nearly 2 years old now. I used this thing constantly, I use it about 12 hours a day, every day, and carry it around in my backpack every single day. Most weekends, too, even. Thanks to the glass screen, the screen as as good as it was on day one - and it's the best I've ever had in terms of brightness and clarity. When the screen gets dirty, I scrub it furiously with a napkin. Glass - it doesn't scratch! The alu body is as tight as on day 1. You'd have to look very closely to see any scratches at all - it basically looks brand new. The battery lasted until 2 days ago, providing around 6 hours real life usage (on a 17" laptop!). Now it's down to 60% capacity at 500 charge cycles - and guess what, Apple is replacing it free under AppleCare warranty. Nothing shakes. Nothing rattles. The unibody is just as solid as it was new. As is the keyboard and the track pad. It's blazingly fast too thanks to an SSD I put in the optical drive spot (though that was a little harder than it should have been). At the end of the day, this is just fantastic quality and it ends up being not only better but also cheaper than any crap quality laptop simply because I can use it for 2 years. Maybe even longer, who knows?
        steve19 16y ago
        I just put in an SSD and moved the hard drive into the optical bay. Probably the best upgrade I ever did to a laptop :) I suggest moving your SSD into the original hard drive spot and moving the hard drive into the optical bay. Apparently the optical bay is slower.
  - barrkel 16y ago
    FWIW, I'd put the ultraportable mark somewhere closer to 3lb; certainly no more than 1.5kg. My Toshiba Portege (12") is closer to 1.1kg (2.4lb).
  - _delirium 16y ago
    I'm not able to find any of those with: 1. a comparable battery life; or 2. a comparable video card, though, which is what the higher-end ultraportables I was looking at for comparison have. For me, the battery is the main sticking point; I could compromise on the GPU.
  - cdavid 16y ago
    If you consider that CPU, ram and hard drive is the only thing that matters in a laptop, then yes, apple is definitely overpriced. But mac unibody, battery indicator, magnetic connector, pluggable power unit (to change the type of connector for different countries), etc... have a cost, and I would gladly pay a few more bucks for it. Last, I got two PC laptops: both were broken beyond repair after 3 years, whereas my unibody mac book look almost new after 1.5 year, and my first, plastic macbook works perfectly (3 years old). The only PC laptop that were not crap in my experience were lenovo, but surprise, those were expensive as well.
    - nikster 16y ago
      "The only PC laptop that were not crap in my experience were lenovo, but surprise, those were expensive as well" It's a mystery! At least it seems a mystery to many people here. Correlation between price and quality - who'd have thought!
  - jmreid 16y ago
    You're not taking into account Mac OS X and iLife (among other things), which are major pluses. Especially when you're responsible for other's tech support.
  - cletus 16y ago
    And this, ladies and gentlemen, just proves Gruber's argument that many people buy PCs based on bullet point specs having never seen the enclosure. With MacBook Pros you get: - a backlit keyboard with ambient light sensor; - a high quality display; - significantly better battery life than any Windows lapt I've ever seen (due in part to software admittedly); - the best trackpad I've seen on any laptop ever (seriously... Why do Windows laptop trackpads STILL suck??); - better graphics than much of the laptops Macbooks are compared to; - a pleasing industrial design. 3 years ago I would've agreed. Now? The "Apple Tax" is small to nonexistent. Upgrades are often expensive. That's still true but ever big PC manufacturer does this. Dell is probably the worst offender, offering a really crappy spec for a low headline price and then offering, say, a CPU anyone can buy for $300 outright as a $400 upgrade from a $100 CPU. And that's with Dell's buying power. And yes I know it isn't quite that simple: Dell may have a quota of CPUs they neex to move, etc but the assertion that they charge through the nose for upgrades is (IMHO) irrefutable.
    - siglesias 16y ago
      Don't forget iLife.
      - Yaggo 16y ago
        Anybody have an idea what would cost an equivalent software for Windows? (Offering similar usability, high quality templates/samples/tutorials etc. Actually it wouldn't surprise me if no such a thing exists for Windows.)
        Tyrannosaurs 16y ago
        I don't think you have to do that, it's far too subjective and there are free equivalents for a lot of stuff (Picassa for iPhoto for instance). The easiest thing would be to knock the retail price of iLife off ($49) as that's where Apple seem to value it.
        Yaggo 16y ago
- rythie 16y ago
  There are many best seller laptops on Amazon in the $500-600 range, so I'd have to disagree. If you want a midrange or high end laptop then Apple's don't look bad, most people don't though - but then they don't care about the OS either.
zdw 16y ago
tl;dr version: Apple has the volume advantage because it buys a huge amount of flash memory, displays, etc. that it can make products at price points other vendors can't compete with without cutting corners.
- napierzaza 16y ago
  Thank you, it's never worthwhile reading long-form Gruber.
- pchristensen 16y ago
  Also iPod/iOS compete as devices (a la consumer electronics) as opposed to competing as specs (a la PCs), which makes build quality and design much more important.
- deleted 16y ago
  [deleted]
- jseliger 16y ago
  This is not accurate and ignores the bottom paragraphs, which are about how companies compete on design and quality in phones whereas they don't do so in PCs, which are more frequently judged based on specs. You can see this when Gruber transitions: "But there’s another major factor at play, which I believe is more important than volume pricing." The above comment is an example of why you frequently shouldn't trust the "tl;dr version:" those versions are frequently wrong, or they sheer away a sufficient amount of detail as to become wrong.
trotsky 16y ago
I see daring fireball has never heard of archos. http://www.engadget.com/2010/08/31/archos-unleashes-five-five-new-android-froyo-tablets-we-go-h/ http://www.engadget.com/2010/08/31/archos-unleashes-five-fiv...
- ary 16y ago
  It's difficult to know exactly which point in the article you take issue with. I didn't see anything that indicated Gruber is unaware of the Archos.
  - rimantas 16y ago
    My take is that gp talks about equivalent to iPod touch, but I cannot really see how Archos are in this category. The smaller ones have resistive touchscreens with lousy resolution, the bigger ones are different form factor, pricier and no Android market :(
  - trotsky 16y ago
    various quotes: Now, even putting quality aside, competitors can’t match Apple’s prices. no one else can afford to match the iPad’s price with a comparably sized touchscreen display iPods, iPhones, iPads. Across all of them, Apple’s prices are either comparable, or lower, than their competition.
    - ary 16y ago
      Now, even putting quality aside, competitors can’t match Apple’s prices. The only Archos device that is shipping and comparable to an Apple product (the iPad) is this: http://www.engadget.com/2010/11/02/archos-70-internet-tablet-now-shipping-for-279-with-8gb-storag/ http://www.engadget.com/2010/11/02/archos-70-internet-tablet... This is not something that can be easily compared to the iPad. Yes it is cheaper, but the two devices aren't the same. The three biggest (and easily measured) differences are the screen size, screen resolution, and storage. I can't find a price for the Achos 10.1, but please feel free to link it if you have it. no one else can afford to match the iPad’s price with a comparably sized touchscreen display See above and below. iPods, iPhones, iPads. Across all of them, Apple’s prices are either comparable, or lower, than their competition. The other Archos devices available for sale are indeed cheaper, but also fail to have comparable specs to the Apple devices.
heiti 16y ago
It's a bit disappointing when "the world" and "USA" are used interchangeably. The US market is fairly small. Things are quite different in other places.
- maxawaytoolong 16y ago
  The USA is the world's largest consumer goods market, surpassing the next one, Japan, by a factor of 5. http://en.wikipedia.org/wiki/List_of_largest_consumer_markets http://en.wikipedia.org/wiki/List_of_largest_consumer_market...
  - ugh 16y ago
    That’s interesting but is it also a good reason to use “USA” and “the world” interchangeably? Germany, the UK, France, Italy, Spain, the Netherlands, Poland, Belgium, Greece, Sweden, Austria, Denmark, Portugal, Finland, Ireland and Romania combined – all EU member nations – are about equal to the US. They have a larger combined population (about 460 million v. about 310 million) but the USA certainly don’t beat them by a factor of 5 even taking population into account, more like a factor of 1.5. Oh, and 10 divided by 2.8 is 3.6, not 5.
    - maxawaytoolong 16y ago
      The article doesn't actually use "the USA" and "the world" interchangeably. It just says that Apple is the #1 buyer of flash memory in the world. I regret making my initial comment because in the context of the article, the comment I was responding to makes little sense.
      - heiti 16y ago
        Sorry for the ambiguity on my part. I meant that the claims made about iPhones price are based on USA. In many other markets the price differences of iPhone and HTC Desire are quite significant(where i am, it's $940 vs $620). Not to mention that you can get a $210 android phone. Money is not that important for lots of people but looking at the world its very important. Also iPod's market share is dwarfed by music-phones. It might be true for US and many other rich countries that people don't use that feature and use their iPod instead but in a significant part of the world people cannot afford to cash out $250 for iPod nano just to get a better user experience from their music player. Yes you can get a iPod shuffle for $65 but thats not an upgrade anymore. Same goes for MacBooks. The equal quality products might have a fairly small price difference, but many people cannot afford to cash out $1400 for a laptop. Especially if there is an alternative available for $500. They are not comparable based on specs and quality etc, but they are comparable in that you can browse facebook, look at pictures and IM on both of them. Anyway, i agree with Apple making great quality products and that they are nowadays more affordable than ever. I just don't agree with making conclusion about the world based on one quite rich country and belittling other manufacturers who build affordable products for the ones who cannot afford those premium prices.
nowarninglabel 16y ago
The 2nd paragraph: "Now, even putting quality aside, competitors can’t match Apple’s prices." Does not jive with the prices mentioned later: Apple Ipad - $599/$699 for the 16/32 GB models Samsung Galaxy S - $594 HTC A8181 Desire - $527 I don't know what the author's definition of "match" is, but seems to me Android tablet makers have matched prices quite well. *Edit: fixed my formatting
- alanthonyc 16y ago
  7" screens vs. 10" screens?
  - arron61 16y ago
    7" vs 10" screens but failedl to mention that the Galaxy Tab also has dual cameras, a GPS chip, a cellular chip, and etc - things not seen on the ipad. I think the Tab could have been priced lower but Samsung wanted to see if they could technically compete with the ipad at the same price point first. And if things don't go well, reduce the prices later. Why shoot yourself in the foot to begin with? And additionally when Android lifts the hardware requirement to obtain the Android Market, you will definitely see much cheaper tablets such as Archos and even the Galaxy WiFi Tab.
    - ojbyrne 16y ago
      The (admittedly more expensive) 3G ipad has both a cellular and a GPS chip. $629/$729 for 16/32 gigs.
      - schultzor 16y ago
        I'd bet that some of the 3G iPad's $130 premium is also a concession to ATT for the contract-less data plan options.
        ropiku 16y ago
        Possible but in the UK there's a £100 premium and it's available on all carriers
kemiller 16y ago
Another factor here is that mobile devices are all a tier or two down from personal computers in terms of the raw number of dollars. Seems like a 15% premium is something people will consider paying if it only amounts to $30, but might not if it's $300. This was especially true in the early days of the PC revolution. The Mac 128K sold for $2495 at the time, which is more than $5000 in today's dollars[1]. I can't find any good stats on what a typical PC cost at the time, but let's say it was half that. That's a HUGE difference; a mortgage payment (or more than one!) and not something many individuals or businesses are going to pay, even for substantially better quality. Other factors: * No amount of speed was enough. People bought computers to, well, compute things, and there were real limits users experienced because of slow processors. This is no longer true for most uses. Faster speeds are nice to have, but it's no longer true that 20% faster number crunching is a huge win for many people. * With such expensive kit, businesses were understandably reluctant to commit to any platform that didn't let them multiple-source parts and perform repairs. Backups were expensive or non-existent. By contrast, a defective mobile device is simply exchanged or written off. * In 1984, worldwide PC shipments totaled 6.3M units. Commodity parts were the only way to achieve any kind of economy of scale, not to mention the benefits of competition. 20 years later, it was 177M. [2] At that level, even a minority player can get the same economy of scale that the entire PC industry enjoyed a decade earlier. Anyway. Nobody knows how this will all shake out. But the spectacular success of the modular PC market doesn't mean it's the inevitable outcome. [1] http://bit.ly/9P293K http://bit.ly/9P293K [2] http://bit.ly/a9XLJF http://bit.ly/a9XLJF
- protomyth 16y ago
  Cost isn't everything, even in 1984. The PC wasn't the price leader of the era, check the market share and price of a C64.
  - kemiller 16y ago
    No, but it was arguably price-performance leader, which the Mac, in raw terms, decidedly was not. I guess the other piece at the beginning was the IBM brand, but that wasn't enough to make it take off like a rocket.
sdz 16y ago
I think a related part of Apple's pricing advantage comes from the fact that they are good at taking technologies developed for the iPhone and using it in other places instead of reinventing the wheel for every product. The iPod touch, Apple TV, and iPad are all variously stripped, screenless, and scaled versions of the iPhone. They share the same processor and underlying OS. This allows Apple to not just sell a lot of stuff, but to sell a lot of the exact same stuff. So not only are their marginal costs lower from buying in bulk, their fixed costs of research and development are lower, too. Could an iPad's cost $499 or an Apple TV $99 if they didn't sell the iPhone? Probably not, and definitely not if they wanted to keep the kind of margins they command right now.
- mediaman 16y ago
  This reminds me of a quote from Bill Gates, early on in his career, in which he says that Microsoft's business model is "creating variable revenue streams from fixed engineering costs." Although that's true of many software companies, Apple is proving to be very adept at creating revenue streams across multiple, very different product categories from the same engineering investment.
marze 16y ago
Lucky for Apple's competitors they have Android, otherwise they'd really be up a creek. With the hardware volume purchasing advantage combined with the many-year head start they have on the OS, it will be surprising to me if any competitor obtains a 10% market share in the iPad or iPod Touch markets.
- rchowe 16y ago
  I'd argue that if the competitors didn't have Android, the tablets would just run on x86 processors. And run either windows or linux. I believe that the presence of ARM early in this market is actually good on the OS side, because it doesn't lead to shoehorning windows onto a tablet. x86 tablets aren't going to succeed both because of the pressure to run desktop OSes, but also because x86 processor companies only seem to be able to produce and market market clock speed and not what really matters in this case (low power consumption and heat output).
  - schultzor 16y ago
    With the failure of Linux netbooks, I don't think it'd do any better on tablets, ARM or x86.
    - rchowe 16y ago
      I never said it was going to do any better.
    - ZeroGravitas 16y ago
      Which Linux? Android is already doing okay, Meego and WebOS are relatively untested but have big corps behind them and Ubuntu should fill a similar niche to the one where people run Windows tablets because they need some specific bit of Windows software.
- martythemaniak 16y ago
  At this point, you should probably remember that Android came out 2 years ago and managed to overtake the iPhone in that short time frame. I highly doubt Apple will have even a plularity (let alone a majority) of the tablet market in 2 years.
fragmede 16y ago
iPad aside, the tablet form factor has been tried and failed before. The original 7" EEE, which retailed for $400 bore a whole new 'netbook' segment. That was a multi-million dollar gamble which ultimately paid off. Give the previous failures of tablets, that no one is stepping up to the plate to try again at that price, even given Apple's success (hey, they're Apple) isn't surprising.
tibbon 16y ago
This puts a hole in the "Apple is more expensive" claim (which I've believed to be false for years)
mattmaroon 16y ago
First of all, I priced this at work out of curiosity when buying some Mac Pros and some Macbook Pros. You can get a PC with the same hardware specs as a Mac Pro for about half the cost. You can also get a PC with the same specs for about the same cost if you get one of the gamer brands, but just a Dell or HP Quad core machine is far cheaper than a Mac Pro, assuming all things that can be compared on an apples to apples basis are the same. In notebooks the price disparity is not quite as large, but it's still large. You'll get about the same notebook for $800 that you'd get for $1,200 from Apple. Also, stuff like RAM upgrades and SSDs cost far more for the same thing. Again though, you could find comparable Windows units for about the same prices, or at least close, if you went with higher end notebook brands. Second, in phones the price disparity is still large because of Apple's deal with AT&T. They're getting not only the $600 unsubsidized prices, but some extra fee as well taken from the contract. You might argue that AT&T is paying that, not you, but your bill may be higher as a result, or you may be on AT&T rather than Verizon since VZW wouldn't agree to that, etc. Even in tablets, competitors definitely can match the iPad's prices. The Nook is $250. I of more tablets costed below the iPad than above.
- jules 16y ago
  Dell is still way more expensive than buying the parts and assembling yourself, about 2x more expensive where I live.
- frou_dh 16y ago
  Mac Pros have Xeon CPUs and ECC RAM. Were you comparing with similar "workstation" grade PCs? (Whether the average Mac Pro user gets any real benefit from these parts is another question)
  - yardie 16y ago
    Consider that now is the time when manufacturers are putting memory test utilities into firmware and that intersects with systems coming with 4-8-12GB of memory that take can take multiple hours to fully test. I would say its worth it. If the Mac detects a bad DIMM it locks it out and informs you which one. You don't have to have do the RAM shuffle to find out which one is the bad DIMM. Your computer also doesn't crash because of it (it shouldn't but I've seen instances where even ECC couldn't recover).
guelo 16y ago
While it is true that Android phones haven't been able to undercut iPhones by much, the argument doesn't hold up for tablets and iPods because these markets haven't really been entered by the Android manufacturers yet. The Samsung Galaxy tablet is at the forefront but the real wave of Android tablets is months away waiting for the release of Gingerbread. Expect a lot of announcements around CES time. As for the iPod market, Android has a lot of catching up to do with it's media software so that will probably be a bit further out.
- swombat 16y ago
  Great, so they'll have an iPad competitor out round about the time that the second version of the iPad comes out and blows the current iPad out of the water, then? Colour me unimpressed.
- schultzor 16y ago
  Weren't multiple Android tablets announced/demoed at last year's CES, or am I mistaken? Maybe all the OEMs just rushed demo samples out without figuring out how they were actually going to produce them...
- metageek 16y ago
  Archos has had Android PMPs for about a year now.
b3b0p 16y ago
When I purchased my Apple machines I also took into account the cost of the tools I would be using the operating system. Macbook Pro + Xcode + Mac OS X vs Lenovo or Dell upper end model + Visual Studio + Windows 7 Visual Studio adds a considerable amount to the final cost, but I'm also willing to put down a fair amount more for having Mac OS X.
- awa 16y ago
  So you are comparing Visual studio to Xcode and saying you went with Xcode cause it runs on Mac OS?
- recoiledsnake 16y ago
  Visual Studio and SQL Server have free Express editions.
- ChRoss 16y ago
  Can you also add the cost for becoming Apple Developer then?
  - mbreese 16y ago
    Umm... $0.00? It costs nothing to become an Apple Developer. It costs $100 to be an iPhone developer, or $100 for their Mac developer program. Both of which give you previews of OS updates and the ability to sell your software in their stores. Otherwise, you don't have to pay anything.
jrockway 16y ago
First, Apple is the world’s leading volume buyer of a precious, expensive component: flash storage. They get better prices and priority availability from suppliers. Do they get better prices than Samsung? Because Samsung is who designs and makes the flash memory. (Also, Wikipedia seems to say that Sony buys more than Apple.)
- wtallis 16y ago
  If Apple has a long-standing contract for deliveries of flash, Samsung probably can't easily say that they'd prefer to keep the flash memory for use in their own gadgets. Considering that at times Apple has placed orders for more than half of Samsung's annual output, such a contract is likely to exist.
  - jrockway 16y ago
    That was back when flash was new and exotic, right? Every music player on the market is flash-based now, and so are many computers. Samsung's Wikipedia page says that Apple accounts for about 2% of their sales.
    - napierzaza 16y ago
      Ugh ____ has 95% of the music player market. Fill in the blank.
      - thomasz 16y ago
        In revenue or in units shipped?
      - dagw 16y ago
        I'll answer "No one". Most numbers I can find place Apple in first place with around 75%.
        thomasz 16y ago
        Are those international numbers? I'm just wondering, because if I would buy the cheapest nano, I'd have to pay 159€, which would be ~ 219$. That's not really competitive. The cheapest Air costs ~1,377, a 15'' Macbook Pro ~2,410.
cletus 16y ago
I've had this argument far too many times. Specifically regarding the iPad vie put several theories forward regarding the 7" vs 10" tablets: 1. Apple has tied up the world supply of 10" capacitative touch screens. That's not far-fetched; 2. Price: as per Gruber's argument; 3. Fear: no one wants to directly compete with the iPad so they're seeking some form of differentiation. Nikon did this with DSLRs and Canon. It wasn't necessarily fear but Nikon DSLRs weren't positioned directly against Canon equivalents: they were in between; or 4. Volume: to Apple's credit they bet big on a market with very little evidence. To the victor the spoils. The rest are much more sheepish hoping something sticks before going all in. This is much like the "shotgun marketing" vie mentioned previously. I'm reminded of a scene from "How I Met Your Mother" several years ago. Barney made a video resume. His argument was that Corporate America wants someone who looks like a bold risk-taker but does risk anything because taking risks gets you fired. There's a lot of true in that and the response to the iPad can be construed as a collective aversion to risk by all the people involved. Once more all this highlights the importance and strategic advantage of having a committed product guy at the helm of a tech company.
- netcan 16y ago
  All these might be true, but still be on-the-margin effects. In the PC world (and I think the old audio player world), any new Apple product was met a competitor with the similar specs (often better) at close to half the price (taking into account sales and such). Like the post concludes, if it was possible to make an android tablet (even a 7" one) that was a direct alternative to the ipad at $350 someone would be
  - ZeroGravitas 16y ago
    Archos 10 inch tablet: $300. http://www.archos.com/products/ta/archos_101it/specs.html?country=us&lang=en http://www.archos.com/products/ta/archos_101it/specs.html?co... I'm not saying it's the best tablet ever, though on a spec checklist it might actually win (camera, HDMI out, USB host, multimedia formats etc.). I'm more interested in the fact that the vast majority of Gruber-style pronouncements about how special Apple is require you to not have any knowledge of what's actually happening outside the Apple bubble. It's also worth noting that the Samsung Galaxy Tab price has been on a constant downward trajectory. Last I saw the Carphone Warehouse in the UK was selling it for £489 for 32GB (compared with $599 for iPad 32GB) a £110 difference rather than the $30 dollar one Gruber quotes. Comparing list prices favours Apple since they, somewhat unusually, rarely if ever sell below that price.
jedbrown 16y ago
The T-mobile Vibrant (aka Galaxy S) is $499 off-contract from T-mobile, with 16 GiB of internal storage. You can call them and unlock it for free immediately. This is slightly different from the quoted $600 with 8 GiB internal. /pedantry
teyc 16y ago
Apple priced iPad very aggressively. No question about this. This is a brand new product category and Apple wanted to own it, and priced it that competitors find hard to compete. In fact, Jobs had warned about this, saying margins with iPad will be lower (i.e. no Apple tax). It was on the strength of this comment that I bought an iPad, something I would not normally do. In contrast, all the Windows tablet systems are still priced in the 3k mark.
gcb 16y ago
apple tax is no more in price of the device, as those are cheap for apple now. Apple tax today is control! While mobiles are moving farther from the locked-in model (i get my phones unlocked for some 5 yrs, and before that, used to unlock them) apple is moving computers to it. An apple store on the desktop, with DRMed software, is a full circle to mainframe in computer history. Heck! the iphone, with subsided price along with mandatory monthly bills and approved catalog of software and only one choice of network is already as close the main frame as you can get! It would be interesting to compare the at&t iphone contract with a 70's IBM mainframe lease one. anybody has one around? :)
elai 16y ago
Gruber, they're not competing on price.
ck2 16y ago
Yup, Apple's factories have the suicide rate to prove all that goes into their products.
jamesk2 16y ago
The Android vs. iOS marketshare race is one in which iOS is hobbled because of iOS's exclusivity. When the iPhone 4 hits Verizon next year, $199 Android phones will take a massive hit in demand and they will quickly be dropped in price to spur demand. Apple has dropped it's prices to compete before. It'll be really interesting if Apple drops the price of the iPhone below the top of the line Android phones.
buro9 16y ago
I believe that the price advantage comes not insignificantly from the market side of reselling software, apps, music and video and taking a not insignificant slice of the sale of those items. If you remove the market from the equation Apple's bottom line isn't as impressive, in fact the rise of Apple in recent years is coupled to the rise of their market place. So strong is their domination over music distribution that I'm starting to think that when an investigation starts against Apple that the target should be to split Apple into two companies; one for hardware (and OS) and one for the markets. Only then will Apple operate on a level playing field with regards to other hardware manufacturers, as it is the advantage of the market that enables them to subsidise the price of hardware, and as they have grown dominant in hardware (especially in music players) they should be treated as a monopoly of that market and competition encouraged (by just levelling that playing field slightly). I realise that these views aren't in line with the opinion of the vast majority of people I speak to, especially online and in circles who use Apple gear. But this is long term speculation stuff, the "What-if"... years ago I speculated how dominant itunes could be and it mostly has come to pass and is still increasing (25% of all US music, 69% of digital music as of mid-2009).
- rimantas 16y ago
  Only then will Apple operate on a level playing field with regards to other hardware manufacturers, as it is the advantage of the market that enables them to subsidise the price of hardware I must be reading it wrong but it sounds a bit like „let's make it worse for Apple, because others cannot quite catch-up“. iPod'a are not the cheapest players, are they?
- wtallis 16y ago
  You seem to be operating under some misconceptions about antitrust law in the US. Being a near-monopoly is not illegal. Abusing your monopoly to force your way into a new market is, but simply using profits from one product line to fund R&D on a new product doesn't count. Even if Apple has achieved a near-monopoly over digital music or sales or portable music, it's not at all clear that they have had the opportunity to abuse that monopoly. There have been cases (Psystar, etc.) that have tried to get the bundling of Mac OS X and Apple computers ruled as illegal tying, and they have failed. For the foreseeable future, there will not be grounds for a federal antitrust case against Apple. You should try to conceive of Apple as the poster child for a successful business strategy: vertical integration. A large part of the success of Apple's expansion beyond computers is due to the fact that they can and have ensured that the products work well together, and that most of the products they have introduced have been natural complements of their existing products. You also seem to be somewhat ignorant of the timeline of Apple's rise over the past decade. The iPod was on the market and gaining traction for a year and a half before the iTunes Music Store opened. At the time the iTunes Store opened, DRM was mandated by pretty much all the content owners. If this contributed to Apple getting a monopoly on digital music sales, the blame should fall on the music studios for not insisting that the online stores they deal with use a single interoperable DRM system, and not on Apple, who had no incentive to promoting interoperability with other music stores and players. The profits of the iPod+iTunes Store combo provided most of the funding for the Intel switch and the development of the iPhone. Like the iPod, the iPhone was on the market and gaining traction for about a year and a half before the App Store opened. It's hard to argue that Apple's computers have been helped much by the iPod and iPhone other than by generally strengthening the Apple brand. Each step of the way to their current position, Apple has done it by introducing products that can be at least moderately successful on their own, without the hardware/software tying you are complaining about. None of those individual steps has been anywhere as close to monopoly abuse as, say, Microsoft's entry in to the video game console market, which faced no significant legal challenges. Nor has Apple clearly erected any artificial barriers to entry for competitors. Their agreements with content producers are not exclusive, and now that DRM is not applied to music sales, there's no significant barrier to using music purchased through iTunes on other music players. To the extent that Apple has created any barriers to competition, it has only been by raising the standards for usability and quality.
fs111 16y ago
Does he even read the things he links to? The amazon page of the HTC desire says 499$, that is not "just under 600$". Why do people link to this fan-boy all the time?
eftpotrm 16y ago
Apple cheap - hmm, not sure I buy that. Why does an iPhone cost more than an iPod Touch, a standard 2G phone and a 3G USB dongle? That's all the hardware is. Why does an iPad with a 10 inch screen cost twice as much as a netbook with a 10 inch screen and a keyboard? Apple may have found some good niches to milk for cash with some attractively designed products, but cheap they most definitely ain't.
- metageek 16y ago
  >Why does an iPhone cost more than an iPod Touch, a standard 2G phone and a 3G USB dongle? That's all the hardware is. Currently, that's not true. The iPhone 4 has a much better camera than the current iPod Touch. Not sure if there are any other differences.
  - eftpotrm 16y ago
    OK, sorry, a generation out of date :-) Still, a 5mp lens/CCD/flash package, even allowing for miniaturisation, isn't more than a few tens of pounds at absolute maximum. There's still a hefty markup IMHO.
- metageek 16y ago
  >Why does an iPhone cost more than an iPod Touch, a standard 2G phone and a 3G USB dongle? I suspect the real reason is that Apple keeps the iPod Touch cheap to sell to people who can't get an iPhone for some reason (they're too young, they can't afford the data plan, their employer insists on BlackBerries). When they have a chance to buy a smartphone of their own, it'll probably be an iPhone, so they won't have to learn a new UI, or walk away from the apps they've bought.

146 points by motvbi 16y ago

I've noticed this even with normal laptops at the smaller end. If you're looking for a 15" laptop, you can find a lot cheaper PCs than the $1,799 MacBook Pro. But if you're looking for a 13" laptop with roughly equivalent processing power and weight, it's hard to find a PC laptop much cheaper than the $1,099 MacBook or $1,199 MacBook Pro. Some are considerably more, because while Apple prices the 13" at the bottom of their range, a lot of PC manufacturers price the "ultraportables" as a premium item.

cheald 16y ago
Having just recently priced laptops, I didn't have this experience. A 13" MBP is $1200 for the bare-bones options (4GB RAM, Core 2 Duo, 250GB 5400 RPM SATA). It weighs about 4.5 lbs. They want an additional $400 for an extra 4GB of RAM (wtf?) A Dell Inspiron 14" with the same specs clocks in at $665 at 4.9 lbs (which is still under the 5lb "ultraportable" mark). A Lenovo U350 with similar specs clocks in at $700 and 3.5 lbs. The Apple tax is very definitely still in play.
- icegreentea 16y ago
  But if you move up to Dells and Lenovo's "premiere" laptops (Latitudes and Thinkpads), then the price difference narrows considerably. Bare bottom T410 (14") is ~1200 (granted, its currently on sale for like 700-800 dollars... Lenovo has a lot of sales actually). I think it's fair to say that MBPs compete with all of the other brands "one step up" or business lines. MBP build quality alone lets it fight in that category.
  - cheald 16y ago
    At some point, you're paying a few hundred extra for the aluminum body and glowy Apple logo - it's not just about "premium" versus "consumer" tiers of hardware. A Latitude 5400 (again, same hardware loadout) prices on Dell's website right now at $849.00. A ThinkPad Edge 13", again, similar loadout, prices at $694.00. Apple makes fantastic hardware, no doubt, but it's very difficult to consider them to be competitively priced. For the price I'd pay for a MBP, I can get a machine a generation ahead in terms of raw horsepower. I just got an HP Envy 17 (I wanted a portable workstation, rather than a ultralight) and it's a hell of a lot of hardware (Core i7, 8GB RAM, 750GB 7200 RPM HDD) for roughly half the price of an equivalent MBP.
    - tibbon 16y ago
      I think the body is actually a pretty big deal. Who else is making unibodies like that?
      - krakensden 16y ago
        Dell was selling one for a little bit: http://www.dell.com/us/p/adamo-laptops http://www.dell.com/us/p/adamo-laptops
      - jonah 16y ago
        Apple really does have the materials/build quality thing down. I don't know anyone who makes a physically better laptop or phone...
      - nikster 16y ago
        Let me tell you a story about my 17" unibody MacBook Pro. It's nearly 2 years old now. I used this thing constantly, I use it about 12 hours a day, every day, and carry it around in my backpack every single day. Most weekends, too, even. Thanks to the glass screen, the screen as as good as it was on day one - and it's the best I've ever had in terms of brightness and clarity. When the screen gets dirty, I scrub it furiously with a napkin. Glass - it doesn't scratch! The alu body is as tight as on day 1. You'd have to look very closely to see any scratches at all - it basically looks brand new. The battery lasted until 2 days ago, providing around 6 hours real life usage (on a 17" laptop!). Now it's down to 60% capacity at 500 charge cycles - and guess what, Apple is replacing it free under AppleCare warranty. Nothing shakes. Nothing rattles. The unibody is just as solid as it was new. As is the keyboard and the track pad. It's blazingly fast too thanks to an SSD I put in the optical drive spot (though that was a little harder than it should have been). At the end of the day, this is just fantastic quality and it ends up being not only better but also cheaper than any crap quality laptop simply because I can use it for 2 years. Maybe even longer, who knows?
        steve19 16y ago
        I just put in an SSD and moved the hard drive into the optical bay. Probably the best upgrade I ever did to a laptop :) I suggest moving your SSD into the original hard drive spot and moving the hard drive into the optical bay. Apparently the optical bay is slower.
- barrkel 16y ago
  FWIW, I'd put the ultraportable mark somewhere closer to 3lb; certainly no more than 1.5kg. My Toshiba Portege (12") is closer to 1.1kg (2.4lb).
- _delirium 16y ago
  I'm not able to find any of those with: 1. a comparable battery life; or 2. a comparable video card, though, which is what the higher-end ultraportables I was looking at for comparison have. For me, the battery is the main sticking point; I could compromise on the GPU.
- cdavid 16y ago
  If you consider that CPU, ram and hard drive is the only thing that matters in a laptop, then yes, apple is definitely overpriced. But mac unibody, battery indicator, magnetic connector, pluggable power unit (to change the type of connector for different countries), etc... have a cost, and I would gladly pay a few more bucks for it. Last, I got two PC laptops: both were broken beyond repair after 3 years, whereas my unibody mac book look almost new after 1.5 year, and my first, plastic macbook works perfectly (3 years old). The only PC laptop that were not crap in my experience were lenovo, but surprise, those were expensive as well.
  - nikster 16y ago
    "The only PC laptop that were not crap in my experience were lenovo, but surprise, those were expensive as well" It's a mystery! At least it seems a mystery to many people here. Correlation between price and quality - who'd have thought!
- jmreid 16y ago
  You're not taking into account Mac OS X and iLife (among other things), which are major pluses. Especially when you're responsible for other's tech support.
- cletus 16y ago
  And this, ladies and gentlemen, just proves Gruber's argument that many people buy PCs based on bullet point specs having never seen the enclosure. With MacBook Pros you get: - a backlit keyboard with ambient light sensor; - a high quality display; - significantly better battery life than any Windows lapt I've ever seen (due in part to software admittedly); - the best trackpad I've seen on any laptop ever (seriously... Why do Windows laptop trackpads STILL suck??); - better graphics than much of the laptops Macbooks are compared to; - a pleasing industrial design. 3 years ago I would've agreed. Now? The "Apple Tax" is small to nonexistent. Upgrades are often expensive. That's still true but ever big PC manufacturer does this. Dell is probably the worst offender, offering a really crappy spec for a low headline price and then offering, say, a CPU anyone can buy for $300 outright as a $400 upgrade from a $100 CPU. And that's with Dell's buying power. And yes I know it isn't quite that simple: Dell may have a quota of CPUs they neex to move, etc but the assertion that they charge through the nose for upgrades is (IMHO) irrefutable.
  - siglesias 16y ago
    Don't forget iLife.
    - Yaggo 16y ago
      Anybody have an idea what would cost an equivalent software for Windows? (Offering similar usability, high quality templates/samples/tutorials etc. Actually it wouldn't surprise me if no such a thing exists for Windows.)
      - Tyrannosaurs 16y ago
        I don't think you have to do that, it's far too subjective and there are free equivalents for a lot of stuff (Picassa for iPhoto for instance). The easiest thing would be to knock the retail price of iLife off ($49) as that's where Apple seem to value it.
        Yaggo 16y ago
rythie 16y ago
There are many best seller laptops on Amazon in the $500-600 range, so I'd have to disagree. If you want a midrange or high end laptop then Apple's don't look bad, most people don't though - but then they don't care about the OS either.

zdw 16y ago

tl;dr version: Apple has the volume advantage because it buys a huge amount of flash memory, displays, etc. that it can make products at price points other vendors can't compete with without cutting corners.

napierzaza 16y ago
Thank you, it's never worthwhile reading long-form Gruber.
pchristensen 16y ago
Also iPod/iOS compete as devices (a la consumer electronics) as opposed to competing as specs (a la PCs), which makes build quality and design much more important.
deleted 16y ago
[deleted]
jseliger 16y ago
This is not accurate and ignores the bottom paragraphs, which are about how companies compete on design and quality in phones whereas they don't do so in PCs, which are more frequently judged based on specs. You can see this when Gruber transitions: "But there’s another major factor at play, which I believe is more important than volume pricing." The above comment is an example of why you frequently shouldn't trust the "tl;dr version:" those versions are frequently wrong, or they sheer away a sufficient amount of detail as to become wrong.

trotsky 16y ago

I see daring fireball has never heard of archos. http://www.engadget.com/2010/08/31/archos-unleashes-five-five-new-android-froyo-tablets-we-go-h/ http://www.engadget.com/2010/08/31/archos-unleashes-five-fiv...

ary 16y ago
It's difficult to know exactly which point in the article you take issue with. I didn't see anything that indicated Gruber is unaware of the Archos.
- rimantas 16y ago
  My take is that gp talks about equivalent to iPod touch, but I cannot really see how Archos are in this category. The smaller ones have resistive touchscreens with lousy resolution, the bigger ones are different form factor, pricier and no Android market :(
- trotsky 16y ago
  various quotes: Now, even putting quality aside, competitors can’t match Apple’s prices. no one else can afford to match the iPad’s price with a comparably sized touchscreen display iPods, iPhones, iPads. Across all of them, Apple’s prices are either comparable, or lower, than their competition.
  - ary 16y ago
    Now, even putting quality aside, competitors can’t match Apple’s prices. The only Archos device that is shipping and comparable to an Apple product (the iPad) is this: http://www.engadget.com/2010/11/02/archos-70-internet-tablet-now-shipping-for-279-with-8gb-storag/ http://www.engadget.com/2010/11/02/archos-70-internet-tablet... This is not something that can be easily compared to the iPad. Yes it is cheaper, but the two devices aren't the same. The three biggest (and easily measured) differences are the screen size, screen resolution, and storage. I can't find a price for the Achos 10.1, but please feel free to link it if you have it. no one else can afford to match the iPad’s price with a comparably sized touchscreen display See above and below. iPods, iPhones, iPads. Across all of them, Apple’s prices are either comparable, or lower, than their competition. The other Archos devices available for sale are indeed cheaper, but also fail to have comparable specs to the Apple devices.

heiti 16y ago

It's a bit disappointing when "the world" and "USA" are used interchangeably. The US market is fairly small. Things are quite different in other places.

maxawaytoolong 16y ago
The USA is the world's largest consumer goods market, surpassing the next one, Japan, by a factor of 5. http://en.wikipedia.org/wiki/List_of_largest_consumer_markets http://en.wikipedia.org/wiki/List_of_largest_consumer_market...
- ugh 16y ago
  That’s interesting but is it also a good reason to use “USA” and “the world” interchangeably? Germany, the UK, France, Italy, Spain, the Netherlands, Poland, Belgium, Greece, Sweden, Austria, Denmark, Portugal, Finland, Ireland and Romania combined – all EU member nations – are about equal to the US. They have a larger combined population (about 460 million v. about 310 million) but the USA certainly don’t beat them by a factor of 5 even taking population into account, more like a factor of 1.5. Oh, and 10 divided by 2.8 is 3.6, not 5.
  - maxawaytoolong 16y ago
    The article doesn't actually use "the USA" and "the world" interchangeably. It just says that Apple is the #1 buyer of flash memory in the world. I regret making my initial comment because in the context of the article, the comment I was responding to makes little sense.
    - heiti 16y ago
      Sorry for the ambiguity on my part. I meant that the claims made about iPhones price are based on USA. In many other markets the price differences of iPhone and HTC Desire are quite significant(where i am, it's $940 vs $620). Not to mention that you can get a $210 android phone. Money is not that important for lots of people but looking at the world its very important. Also iPod's market share is dwarfed by music-phones. It might be true for US and many other rich countries that people don't use that feature and use their iPod instead but in a significant part of the world people cannot afford to cash out $250 for iPod nano just to get a better user experience from their music player. Yes you can get a iPod shuffle for $65 but thats not an upgrade anymore. Same goes for MacBooks. The equal quality products might have a fairly small price difference, but many people cannot afford to cash out $1400 for a laptop. Especially if there is an alternative available for $500. They are not comparable based on specs and quality etc, but they are comparable in that you can browse facebook, look at pictures and IM on both of them. Anyway, i agree with Apple making great quality products and that they are nowadays more affordable than ever. I just don't agree with making conclusion about the world based on one quite rich country and belittling other manufacturers who build affordable products for the ones who cannot afford those premium prices.

nowarninglabel 16y ago

The 2nd paragraph: "Now, even putting quality aside, competitors can’t match Apple’s prices." Does not jive with the prices mentioned later: Apple Ipad - $599/$699 for the 16/32 GB models Samsung Galaxy S - $594 HTC A8181 Desire - $527 I don't know what the author's definition of "match" is, but seems to me Android tablet makers have matched prices quite well. *Edit: fixed my formatting

alanthonyc 16y ago
7" screens vs. 10" screens?
- arron61 16y ago
  7" vs 10" screens but failedl to mention that the Galaxy Tab also has dual cameras, a GPS chip, a cellular chip, and etc - things not seen on the ipad. I think the Tab could have been priced lower but Samsung wanted to see if they could technically compete with the ipad at the same price point first. And if things don't go well, reduce the prices later. Why shoot yourself in the foot to begin with? And additionally when Android lifts the hardware requirement to obtain the Android Market, you will definitely see much cheaper tablets such as Archos and even the Galaxy WiFi Tab.
  - ojbyrne 16y ago
    The (admittedly more expensive) 3G ipad has both a cellular and a GPS chip. $629/$729 for 16/32 gigs.
    - schultzor 16y ago
      I'd bet that some of the 3G iPad's $130 premium is also a concession to ATT for the contract-less data plan options.
      - ropiku 16y ago
        Possible but in the UK there's a £100 premium and it's available on all carriers

kemiller 16y ago

Another factor here is that mobile devices are all a tier or two down from personal computers in terms of the raw number of dollars. Seems like a 15% premium is something people will consider paying if it only amounts to $30, but might not if it's $300. This was especially true in the early days of the PC revolution. The Mac 128K sold for $2495 at the time, which is more than $5000 in today's dollars[1]. I can't find any good stats on what a typical PC cost at the time, but let's say it was half that. That's a HUGE difference; a mortgage payment (or more than one!) and not something many individuals or businesses are going to pay, even for substantially better quality. Other factors: * No amount of speed was enough. People bought computers to, well, compute things, and there were real limits users experienced because of slow processors. This is no longer true for most uses. Faster speeds are nice to have, but it's no longer true that 20% faster number crunching is a huge win for many people. * With such expensive kit, businesses were understandably reluctant to commit to any platform that didn't let them multiple-source parts and perform repairs. Backups were expensive or non-existent. By contrast, a defective mobile device is simply exchanged or written off. * In 1984, worldwide PC shipments totaled 6.3M units. Commodity parts were the only way to achieve any kind of economy of scale, not to mention the benefits of competition. 20 years later, it was 177M. [2] At that level, even a minority player can get the same economy of scale that the entire PC industry enjoyed a decade earlier. Anyway. Nobody knows how this will all shake out. But the spectacular success of the modular PC market doesn't mean it's the inevitable outcome. [1] http://bit.ly/9P293K http://bit.ly/9P293K [2] http://bit.ly/a9XLJF http://bit.ly/a9XLJF

protomyth 16y ago
Cost isn't everything, even in 1984. The PC wasn't the price leader of the era, check the market share and price of a C64.
- kemiller 16y ago
  No, but it was arguably price-performance leader, which the Mac, in raw terms, decidedly was not. I guess the other piece at the beginning was the IBM brand, but that wasn't enough to make it take off like a rocket.

sdz 16y ago

I think a related part of Apple's pricing advantage comes from the fact that they are good at taking technologies developed for the iPhone and using it in other places instead of reinventing the wheel for every product. The iPod touch, Apple TV, and iPad are all variously stripped, screenless, and scaled versions of the iPhone. They share the same processor and underlying OS. This allows Apple to not just sell a lot of stuff, but to sell a lot of the exact same stuff. So not only are their marginal costs lower from buying in bulk, their fixed costs of research and development are lower, too. Could an iPad's cost $499 or an Apple TV $99 if they didn't sell the iPhone? Probably not, and definitely not if they wanted to keep the kind of margins they command right now.

mediaman 16y ago
This reminds me of a quote from Bill Gates, early on in his career, in which he says that Microsoft's business model is "creating variable revenue streams from fixed engineering costs." Although that's true of many software companies, Apple is proving to be very adept at creating revenue streams across multiple, very different product categories from the same engineering investment.

marze 16y ago

Lucky for Apple's competitors they have Android, otherwise they'd really be up a creek. With the hardware volume purchasing advantage combined with the many-year head start they have on the OS, it will be surprising to me if any competitor obtains a 10% market share in the iPad or iPod Touch markets.

rchowe 16y ago
I'd argue that if the competitors didn't have Android, the tablets would just run on x86 processors. And run either windows or linux. I believe that the presence of ARM early in this market is actually good on the OS side, because it doesn't lead to shoehorning windows onto a tablet. x86 tablets aren't going to succeed both because of the pressure to run desktop OSes, but also because x86 processor companies only seem to be able to produce and market market clock speed and not what really matters in this case (low power consumption and heat output).
- schultzor 16y ago
  With the failure of Linux netbooks, I don't think it'd do any better on tablets, ARM or x86.
  - rchowe 16y ago
    I never said it was going to do any better.
  - ZeroGravitas 16y ago
    Which Linux? Android is already doing okay, Meego and WebOS are relatively untested but have big corps behind them and Ubuntu should fill a similar niche to the one where people run Windows tablets because they need some specific bit of Windows software.
martythemaniak 16y ago
At this point, you should probably remember that Android came out 2 years ago and managed to overtake the iPhone in that short time frame. I highly doubt Apple will have even a plularity (let alone a majority) of the tablet market in 2 years.

fragmede 16y ago

iPad aside, the tablet form factor has been tried and failed before. The original 7" EEE, which retailed for $400 bore a whole new 'netbook' segment. That was a multi-million dollar gamble which ultimately paid off. Give the previous failures of tablets, that no one is stepping up to the plate to try again at that price, even given Apple's success (hey, they're Apple) isn't surprising.

tibbon 16y ago

This puts a hole in the "Apple is more expensive" claim (which I've believed to be false for years)

mattmaroon 16y ago

First of all, I priced this at work out of curiosity when buying some Mac Pros and some Macbook Pros. You can get a PC with the same hardware specs as a Mac Pro for about half the cost. You can also get a PC with the same specs for about the same cost if you get one of the gamer brands, but just a Dell or HP Quad core machine is far cheaper than a Mac Pro, assuming all things that can be compared on an apples to apples basis are the same. In notebooks the price disparity is not quite as large, but it's still large. You'll get about the same notebook for $800 that you'd get for $1,200 from Apple. Also, stuff like RAM upgrades and SSDs cost far more for the same thing. Again though, you could find comparable Windows units for about the same prices, or at least close, if you went with higher end notebook brands. Second, in phones the price disparity is still large because of Apple's deal with AT&T. They're getting not only the $600 unsubsidized prices, but some extra fee as well taken from the contract. You might argue that AT&T is paying that, not you, but your bill may be higher as a result, or you may be on AT&T rather than Verizon since VZW wouldn't agree to that, etc. Even in tablets, competitors definitely can match the iPad's prices. The Nook is $250. I of more tablets costed below the iPad than above.

jules 16y ago
Dell is still way more expensive than buying the parts and assembling yourself, about 2x more expensive where I live.
frou_dh 16y ago
Mac Pros have Xeon CPUs and ECC RAM. Were you comparing with similar "workstation" grade PCs? (Whether the average Mac Pro user gets any real benefit from these parts is another question)
- yardie 16y ago
  Consider that now is the time when manufacturers are putting memory test utilities into firmware and that intersects with systems coming with 4-8-12GB of memory that take can take multiple hours to fully test. I would say its worth it. If the Mac detects a bad DIMM it locks it out and informs you which one. You don't have to have do the RAM shuffle to find out which one is the bad DIMM. Your computer also doesn't crash because of it (it shouldn't but I've seen instances where even ECC couldn't recover).

guelo 16y ago

While it is true that Android phones haven't been able to undercut iPhones by much, the argument doesn't hold up for tablets and iPods because these markets haven't really been entered by the Android manufacturers yet. The Samsung Galaxy tablet is at the forefront but the real wave of Android tablets is months away waiting for the release of Gingerbread. Expect a lot of announcements around CES time. As for the iPod market, Android has a lot of catching up to do with it's media software so that will probably be a bit further out.

swombat 16y ago
Great, so they'll have an iPad competitor out round about the time that the second version of the iPad comes out and blows the current iPad out of the water, then? Colour me unimpressed.
schultzor 16y ago
Weren't multiple Android tablets announced/demoed at last year's CES, or am I mistaken? Maybe all the OEMs just rushed demo samples out without figuring out how they were actually going to produce them...
metageek 16y ago
Archos has had Android PMPs for about a year now.

b3b0p 16y ago

When I purchased my Apple machines I also took into account the cost of the tools I would be using the operating system. Macbook Pro + Xcode + Mac OS X vs Lenovo or Dell upper end model + Visual Studio + Windows 7 Visual Studio adds a considerable amount to the final cost, but I'm also willing to put down a fair amount more for having Mac OS X.

awa 16y ago
So you are comparing Visual studio to Xcode and saying you went with Xcode cause it runs on Mac OS?
recoiledsnake 16y ago
Visual Studio and SQL Server have free Express editions.
ChRoss 16y ago
Can you also add the cost for becoming Apple Developer then?
- mbreese 16y ago
  Umm... $0.00? It costs nothing to become an Apple Developer. It costs $100 to be an iPhone developer, or $100 for their Mac developer program. Both of which give you previews of OS updates and the ability to sell your software in their stores. Otherwise, you don't have to pay anything.

jrockway 16y ago

First, Apple is the world’s leading volume buyer of a precious, expensive component: flash storage. They get better prices and priority availability from suppliers. Do they get better prices than Samsung? Because Samsung is who designs and makes the flash memory. (Also, Wikipedia seems to say that Sony buys more than Apple.)

wtallis 16y ago
If Apple has a long-standing contract for deliveries of flash, Samsung probably can't easily say that they'd prefer to keep the flash memory for use in their own gadgets. Considering that at times Apple has placed orders for more than half of Samsung's annual output, such a contract is likely to exist.
- jrockway 16y ago
  That was back when flash was new and exotic, right? Every music player on the market is flash-based now, and so are many computers. Samsung's Wikipedia page says that Apple accounts for about 2% of their sales.
  - napierzaza 16y ago
    Ugh ____ has 95% of the music player market. Fill in the blank.
    - thomasz 16y ago
      In revenue or in units shipped?
    - dagw 16y ago
      I'll answer "No one". Most numbers I can find place Apple in first place with around 75%.
      - thomasz 16y ago
        Are those international numbers? I'm just wondering, because if I would buy the cheapest nano, I'd have to pay 159€, which would be ~ 219$. That's not really competitive. The cheapest Air costs ~1,377, a 15'' Macbook Pro ~2,410.

cletus 16y ago

I've had this argument far too many times. Specifically regarding the iPad vie put several theories forward regarding the 7" vs 10" tablets: 1. Apple has tied up the world supply of 10" capacitative touch screens. That's not far-fetched; 2. Price: as per Gruber's argument; 3. Fear: no one wants to directly compete with the iPad so they're seeking some form of differentiation. Nikon did this with DSLRs and Canon. It wasn't necessarily fear but Nikon DSLRs weren't positioned directly against Canon equivalents: they were in between; or 4. Volume: to Apple's credit they bet big on a market with very little evidence. To the victor the spoils. The rest are much more sheepish hoping something sticks before going all in. This is much like the "shotgun marketing" vie mentioned previously. I'm reminded of a scene from "How I Met Your Mother" several years ago. Barney made a video resume. His argument was that Corporate America wants someone who looks like a bold risk-taker but does risk anything because taking risks gets you fired. There's a lot of true in that and the response to the iPad can be construed as a collective aversion to risk by all the people involved. Once more all this highlights the importance and strategic advantage of having a committed product guy at the helm of a tech company.

netcan 16y ago
All these might be true, but still be on-the-margin effects. In the PC world (and I think the old audio player world), any new Apple product was met a competitor with the similar specs (often better) at close to half the price (taking into account sales and such). Like the post concludes, if it was possible to make an android tablet (even a 7" one) that was a direct alternative to the ipad at $350 someone would be
- ZeroGravitas 16y ago
  Archos 10 inch tablet: $300. http://www.archos.com/products/ta/archos_101it/specs.html?country=us&lang=en http://www.archos.com/products/ta/archos_101it/specs.html?co... I'm not saying it's the best tablet ever, though on a spec checklist it might actually win (camera, HDMI out, USB host, multimedia formats etc.). I'm more interested in the fact that the vast majority of Gruber-style pronouncements about how special Apple is require you to not have any knowledge of what's actually happening outside the Apple bubble. It's also worth noting that the Samsung Galaxy Tab price has been on a constant downward trajectory. Last I saw the Carphone Warehouse in the UK was selling it for £489 for 32GB (compared with $599 for iPad 32GB) a £110 difference rather than the $30 dollar one Gruber quotes. Comparing list prices favours Apple since they, somewhat unusually, rarely if ever sell below that price.

jedbrown 16y ago

The T-mobile Vibrant (aka Galaxy S) is $499 off-contract from T-mobile, with 16 GiB of internal storage. You can call them and unlock it for free immediately. This is slightly different from the quoted $600 with 8 GiB internal. /pedantry

teyc 16y ago

Apple priced iPad very aggressively. No question about this. This is a brand new product category and Apple wanted to own it, and priced it that competitors find hard to compete. In fact, Jobs had warned about this, saying margins with iPad will be lower (i.e. no Apple tax). It was on the strength of this comment that I bought an iPad, something I would not normally do. In contrast, all the Windows tablet systems are still priced in the 3k mark.

gcb 16y ago

apple tax is no more in price of the device, as those are cheap for apple now. Apple tax today is control! While mobiles are moving farther from the locked-in model (i get my phones unlocked for some 5 yrs, and before that, used to unlock them) apple is moving computers to it. An apple store on the desktop, with DRMed software, is a full circle to mainframe in computer history. Heck! the iphone, with subsided price along with mandatory monthly bills and approved catalog of software and only one choice of network is already as close the main frame as you can get! It would be interesting to compare the at&t iphone contract with a 70's IBM mainframe lease one. anybody has one around? :)

elai 16y ago

Gruber, they're not competing on price.

ck2 16y ago

Yup, Apple's factories have the suicide rate to prove all that goes into their products.

jamesk2 16y ago

The Android vs. iOS marketshare race is one in which iOS is hobbled because of iOS's exclusivity. When the iPhone 4 hits Verizon next year, $199 Android phones will take a massive hit in demand and they will quickly be dropped in price to spur demand. Apple has dropped it's prices to compete before. It'll be really interesting if Apple drops the price of the iPhone below the top of the line Android phones.

buro9 16y ago

I believe that the price advantage comes not insignificantly from the market side of reselling software, apps, music and video and taking a not insignificant slice of the sale of those items. If you remove the market from the equation Apple's bottom line isn't as impressive, in fact the rise of Apple in recent years is coupled to the rise of their market place. So strong is their domination over music distribution that I'm starting to think that when an investigation starts against Apple that the target should be to split Apple into two companies; one for hardware (and OS) and one for the markets. Only then will Apple operate on a level playing field with regards to other hardware manufacturers, as it is the advantage of the market that enables them to subsidise the price of hardware, and as they have grown dominant in hardware (especially in music players) they should be treated as a monopoly of that market and competition encouraged (by just levelling that playing field slightly). I realise that these views aren't in line with the opinion of the vast majority of people I speak to, especially online and in circles who use Apple gear. But this is long term speculation stuff, the "What-if"... years ago I speculated how dominant itunes could be and it mostly has come to pass and is still increasing (25% of all US music, 69% of digital music as of mid-2009).

rimantas 16y ago
Only then will Apple operate on a level playing field with regards to other hardware manufacturers, as it is the advantage of the market that enables them to subsidise the price of hardware I must be reading it wrong but it sounds a bit like „let's make it worse for Apple, because others cannot quite catch-up“. iPod'a are not the cheapest players, are they?
wtallis 16y ago
You seem to be operating under some misconceptions about antitrust law in the US. Being a near-monopoly is not illegal. Abusing your monopoly to force your way into a new market is, but simply using profits from one product line to fund R&D on a new product doesn't count. Even if Apple has achieved a near-monopoly over digital music or sales or portable music, it's not at all clear that they have had the opportunity to abuse that monopoly. There have been cases (Psystar, etc.) that have tried to get the bundling of Mac OS X and Apple computers ruled as illegal tying, and they have failed. For the foreseeable future, there will not be grounds for a federal antitrust case against Apple. You should try to conceive of Apple as the poster child for a successful business strategy: vertical integration. A large part of the success of Apple's expansion beyond computers is due to the fact that they can and have ensured that the products work well together, and that most of the products they have introduced have been natural complements of their existing products. You also seem to be somewhat ignorant of the timeline of Apple's rise over the past decade. The iPod was on the market and gaining traction for a year and a half before the iTunes Music Store opened. At the time the iTunes Store opened, DRM was mandated by pretty much all the content owners. If this contributed to Apple getting a monopoly on digital music sales, the blame should fall on the music studios for not insisting that the online stores they deal with use a single interoperable DRM system, and not on Apple, who had no incentive to promoting interoperability with other music stores and players. The profits of the iPod+iTunes Store combo provided most of the funding for the Intel switch and the development of the iPhone. Like the iPod, the iPhone was on the market and gaining traction for about a year and a half before the App Store opened. It's hard to argue that Apple's computers have been helped much by the iPod and iPhone other than by generally strengthening the Apple brand. Each step of the way to their current position, Apple has done it by introducing products that can be at least moderately successful on their own, without the hardware/software tying you are complaining about. None of those individual steps has been anywhere as close to monopoly abuse as, say, Microsoft's entry in to the video game console market, which faced no significant legal challenges. Nor has Apple clearly erected any artificial barriers to entry for competitors. Their agreements with content producers are not exclusive, and now that DRM is not applied to music sales, there's no significant barrier to using music purchased through iTunes on other music players. To the extent that Apple has created any barriers to competition, it has only been by raising the standards for usability and quality.

fs111 16y ago

Does he even read the things he links to? The amazon page of the HTC desire says 499$, that is not "just under 600$". Why do people link to this fan-boy all the time?

eftpotrm 16y ago

Apple cheap - hmm, not sure I buy that. Why does an iPhone cost more than an iPod Touch, a standard 2G phone and a 3G USB dongle? That's all the hardware is. Why does an iPad with a 10 inch screen cost twice as much as a netbook with a 10 inch screen and a keyboard? Apple may have found some good niches to milk for cash with some attractively designed products, but cheap they most definitely ain't.

metageek 16y ago
>Why does an iPhone cost more than an iPod Touch, a standard 2G phone and a 3G USB dongle? That's all the hardware is. Currently, that's not true. The iPhone 4 has a much better camera than the current iPod Touch. Not sure if there are any other differences.
- eftpotrm 16y ago
  OK, sorry, a generation out of date :-) Still, a 5mp lens/CCD/flash package, even allowing for miniaturisation, isn't more than a few tens of pounds at absolute maximum. There's still a hefty markup IMHO.
metageek 16y ago
>Why does an iPhone cost more than an iPod Touch, a standard 2G phone and a 3G USB dongle? I suspect the real reason is that Apple keeps the iPod Touch cheap to sell to people who can't get an iPhone for some reason (they're too young, they can't afford the data plan, their employer insists on BlackBerries). When they have a chance to buy a smartphone of their own, it'll probably be an iPhone, so they won't have to learn a new UI, or walk away from the apps they've bought.