Fixing Mac Pricing

In the last couple of articles (part 1, part 2) on market-share, I established that there is an opportunity for Apple to increase its Mac market-share— particularly in the home market. But to compete seriously in that market, Apple is going to have to appeal to it. And price is the number one issue in that market.

Are Mac’s too expensive?
Is price a good reason not to buy a Mac? Well no, of course. Problem, is, unless you can appreciate why the Mac is good value, price is a very good reason not to buy a Mac. Now before you go blurting your coffee all over your keyboard, and unleashing your fiery fingers, consider a few furphies floating around the Zealosphere:

1) If you spec up a PC to match a Mac, there won’t be any price difference (Sorry, Joe Average doesn’t do that)
2) You can run Windows on Macs now (Oops! Forgot to mention it will cost you a few hundred dollars more)
3) Macs are higher quality than most PCs. (Joe average doesn’t know the difference, so doesn’t overly care)
4) Price is not important (Yes is it, because price is budget)
5) More users on Macs will somehow degrade OS X (This is just plain silly. What it does mean is the Zealosphere’s claims of OS X’s legendary user-friendliness will be shown as a little fallacious.)

The simple fact is, Apple is going to have a hard time selling Macs as long it keeps the price up.

It is amusing when those in the Zealosphere try to justify the Mac’s higher price by saying “Yes, but you have to compare apples to apples. Look what it comes with.” And then they set out to show that Macs have bluetooth, and wireless, and iLife, and no need for additional security software, and if it’s a MacBook you get high quality black instead of Brand X PC’s cheap and nasty black, etc etc. Before long they’ve had no trouble making the Brand X PC more expensive than the Mac.

But that’s not how the average the person—in that home PC market we’d like to see Apple making inroads into - shops.

Selling Stickers
Primarily, people buy on price. It’s called budget. It doesn’t matter what we buy, we always have a budget. Otherwise we’d all be driving luxury cars. How often does the salesman try to weasel out of us how much we’ve got to spend? Most times.

The majority of computers sold for personal use are sold to people who are generally ignorant of many aspects of their purchase. They’re the sort who surreptitiously look at sticker prices. The salesman will play off specs between models, but most of them are lost on the average shopper. He will buy based firstly on how much he’s got to spend, and then which seems the best value - based on his limited knowledge of what all the specs mean. This is why Macs struggle

Welcome to Wally’s world
Now, let’s not be Mr Computer Know-It-All, lets be plain old Wally What-the. Let’s put ourselves in his shoes.

Wally has just received his tax refund, a whopping AU$1000 - and he’s going to town! He’s buying the best computer he can for his money. The PC he’s got now is six years old and he’s thinking of giving it to his mother.

His mate, Mr KIA, says he should consider a Mac, that they are a genuine option - and he won’t have to spend extra on security software. Mr KIA tells him he can get a stock standard Mac mini Core Solo with AU$1 change. Plus, wait for it… the new Macs can even run Windows! Therefore Wally can take all his old software with him.

Wally’s rather excited, as Mr KIA has made it all sound so easy. Until he reads the paper. Dell has a PC for AU$899. When he reads the specifications they sound pretty good - 1GB RAM, 80GB hard drive, 17 inch LCD monitor and a 2.8Ghz CPU. These are specs he does have some feel for.

His mate, Mr KIA, points out the Mac mini includes Bluetooth and wireless networking. Wally can’t understand why he needs either of those. He then discovers the rest of the mini’s specs: 512MB RAM, 60GB hard drive, no monitor, no mouse, no keyboard, and a 1.5GHz CPU.

It doesn’t sound as good as the Dell.

“But the Mac comes with bluetooth, wireless networking, Front Row with remote, and iLife,” argues Mr KIA. “Plus you shouldn’t compare CPU speeds anymore.”

BYOKDM? Y?
Wally is going quite cold on the Mac now. Mr KIA has checked Wally’s old computer and the mouse is a serial mouse, the keyboard is PS/2 and the monitor is a 15 inch CRT. Mr KIA says for a few dollars he can get adapters or a few dollars more, a new mouse and keyboard. Wally had planned on giving the old computer to his mother to play Solitaire on, plus he really likes the new LCD monitors, so realizes he will need a new keyboard, display and mouse if he gets the Mac

“Why the heck doesn’t the Mac include a keyboard, display and mouse?” gasps Wally. The Mac is looking rather expensive now. And then Mr KIA just happens to mention that Wally will need to fork out AU$300 for Windows XP to get Windows compatibility on the Mac.

Now the Mac is looking decidedly seedy. To spec the Mac mini up to the Dell is going to cost Wally at least another AU$500, plus the AU$300 for XP.  That’s AU$800 more - almost the price of the Dell which has everything he wants.

Wally is floundering in specs, but he does understand RAM, hard drive and the extras the Mac needs. Decision time.

Budget was AU$1000. Wally buys the Dell and takes the McAfee anit-virus upgrade for AU$99, and with his remaining two dollars, buys a scratchie ticket, wins AU$100,000 and buys the luxury car he’s always wanted. And with his Dell, he surfs the net, sends some email, chats on Messenger, plans an overseas holiday, and doesn’t know how much better off he could have been if he’d stretched himself and bought a Mac. And, even though he can now afford it, since there’s no such thing as a luxury computer (despite what Apple would have you believe), Wally doesn’t dump the Dell and buy a Mac.

A computer is a computer is a computer. We Mac users know the advantages of Macs, but to the Wallys of the world, they aren’t worth paying extra. If Apple is going to increase its market-share, these are the people it has to sell to.

More Wally shopping
Lately we hear the MacBook is the best value Mac by comparison to PCs. Let’s do a Wally look.

MacBook - AU$1749: 13.3 inch screen, 1.83Ghz CPU, 512MB RAM, 60GB hard drive, DVD ROM plus Windows XP AU$300. Total AU$2049

Dell Laptop - AU$1699: 14.1 inch screen, 1GB RAM, 80GB hard drive, DVD burner.

Even without Windows XP, on face value, the Dell looks a better deal to Wally.

And whatever Mac Wally gets, we haven’t even told him he’s going to have to buy a new copy of MS-Office for the Mac at a few hundred dollars, otherwise he’ll have to reboot into Windows every time he wants to use Word.

Distorted logic?
If I’ve done this right, there should be torrent of people wanting to flame me saying these comparisons are skewed. But guess what? That’s exactly how it is for the Wally What-the’s of the world. This is their thought processes. They don’t think like you.

And what else? Even people who should know better - who live and breathe computers - still buy PCs because they represent better value.

Ouch that hurts doesn’t it?

I never switched to Macs because they were cheaper. Not a chance. I switched because I could finally afford to, my budget finally allowed it, and as a computer nerd of 20 years, knew Macs provide a more enjoyable and productive experience of computing. To me it was embarrassing saying I was a computer expert but owned a Windows computer. That’s like a car connoisseur owning a Kia.

Luxury!
When I started writing this week’s piece, I believed Apple would want to increase its market-share. But I think otherwise now - for the simple fact Apple is doing everything to demonstrate it considers itself a maker of premium computers. Apple created and maintains a market it is the only player in - luxury computers. This is an excuse for keeping prices inflated.

Further proof of Apple’s non-interest in increasing market-share is the half-hearted marketing outside the USA. Members of the Zealosphere love to bandy around Apple’s market-share at some four or five percent, but that’s US figure. The world figure of nearer two percent indicates Apple is not genuine about increasing market-share. Plus the absence of so much advertising, such as the “Get a Mac” ads - and so many others.

But if Apple wanted to, what could it do?

Sales and bundles
The Dells I used in my examples, were on special. When was the last time you saw Apple have a special deal on a Mac? Sometimes they throw in something for free, like an iPod, but Apple just don’t have enough specials. My local Kmart has specials every week. So do Dell. And so should Apple. Why? Because it’s advertising. Nothing keeps a retailer in the customer field of vision more than specials. Is it degrading? Only if you think there is a luxury computer market, and Apple belongs in it.

Apple could also have a better range of pre-built configurations. Eg For the student; the small business; the gamer; the videographer or musician; and so on. Package Macs based on who will use them. Take the thinking out of it. At the moment buying a Mac is like as if car dealers advertised cars based on their specs, with no mention of who they’d suit - eg off roader, commuter, family etc.

Certainly cheaper Macs doesn’t fix the additional Windows cost for those wishing to run it, but it will for some.

Back to Wally
I could give Wally a million good reasons to buy a Mac, but if it doesn’t fit in his budget, they’re all worth jack.

I’m not trying to discourage anyone from buying a Mac.  Macs are a great computer that I believe provide a better experience and make you more productive. (I was at my local library the other day and one of the staff was going around the PCs run Adaware on each of them. That’s the sort of productivity dents Windows makes.)

But no, what I’m really trying to do, is show that Macs are over priced and are holding Apple back from increasing it’s market-share (if it really wanted to…)

There is no luxury PC market; no premium PC market. It’s just an Apple illusion, as the black MacBook proves. If there was, people who buy luxury items would be buying Macs en masse. A computer is a computer.

What is out there, is a PC market crying out for a genuine alternative (not Linux, no popular commercial software support) that won’t break the budget.