Charles Moore recently wrote a short piece, Macs
Still Cost Too Much, discussing how Macs are too expensive when
compared to PC machines.
While hardly one to drag an old argument out of the closet (Macs
have better components, Macs last longer, etc.) I will admit that
Charles does have a point. Dollar for dollar, Macs are more
expensive. The price gap has narrowed considerably over the last few
years, but Macs still remain at the higher end of the PC market.
The problem with this lies in the fact that Apple holds a much
smaller part of the market than Dell, Compaq, Gateway, and the rest
of the PC crew. They simply move fewer machines. Fewer machines means
less of a chance to earn discounts on bulk orders and less
opportunity to lean on a printer company for a sweet bundling deal.
This is not something that will go away anytime soon. Apple will
remain a niche player for the foreseeable future. Because it is a
niche player, it will never be able to match the prices of its PC
counterparts. Asking Apple to compete on price would lead the company
to financial ruin. I suspect that profit margins are already quite
thin. Getting into a price war would put a serious dent in future
profits.
Fighting the price war would be a damaging one to Apple and would
probably win few converts. Matching the price would still not solve
other perceived problems (at least in the mind of the na•ve
consumer) that Macs have. For example, a consumer might see that the
Mac has the same price as a Dell machine - but then realize that
there are fewer games for the Mac. All things being equal (including
price), which would the consumer take? Most likely the one with more
games.
Because Apple cannot fight an effective battle on price, it should
take a page from BMW's book. This point has been made many times
before. People are willing to spend more on a BMW because of the
cachet associated with the name. BMW's are for discerning drivers.
They take their driving seriously. The same kind of marketing could
easily be applied to Apple.
No one expects BMW to compete on price point. They would be wiped
out quickly. The market for BMW's is simply not big enough for them
to drop their prices into the same range as, say, a high-end
Chevrolet Cavalier. Sure, the Cavalier might have all the bells and
whistles that the BMW has (power windows and locks, sunroof, cruise
control, etc.), but there is no way it would be confused with a BMW.
Indeed, BMW would cheapen itself by trying to compete with a
Cavalier.
Apple could (and maybe should) sacrifice their original tenet (The
computer for the rest of us) and market their machines as computers
for discerning computer users. Above the common PC rabble they could
manufacture an image of exclusivity and quality. Then they could
easily command a premium for their machines.
Or they could flush the company down the tubes and compete on
price.
Stephen Van
Esch is the founder and president of
the
E-learning Foundry, an online training
resource for Mac users. Steve loves the Mac and is doubly bilingual,
since he's also fluent in Windows and French.
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