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The Computer for the Best of Us
.txt" -->
- 2001.04.18
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.
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