Putting Mac Selling Prices in Context

I've got to chuckle, being on vacation this week. There's nothing relaxing about the religious Mac versus Windows war raging in Apple Watch comments. The comments are fun reading, and I want to thank each commenter. This post is in response to some of you who opined about the topic.

But first, I've got a response to everyone: Nitpicking aside about value and spec versus spec and price versus price comparisons, Mac average selling prices are much higher than Windows PCs. Twice as much for notebooks, or about $750, and $1,000 more for desktops. NPD's data is reliable. That said, my previous post made no value judgment that higher ASPs were somehow bad. Apple has chosen to mainly compete in the "premium," or above $1,000, PC market.

Mac ASPs have been higher for some time. I chose to resurface the topic now for three reasons:

1. Mac desktop ASPs increased from 2006, while Windows desktop selling prices stayed low after years of free-falling.
2. There is a gulf right now among Windows PCs and Macs for memory and storage. One could argue—and rightly—that Windows Vista needs more memory than Mac OS X Leopard. But differences could create comparative perception problems for Apple.
3. Apple has said its margins would drop nearly 5 percent in fiscal 2009 from fiscal 2008 third quarter. That suggests either Apple will lower prices, bulk up systems or both.

GOT A TIP OR RUMOR?

Here are my specific responses to some of you, based on your comments:

Jeff: "I think it's a bit of intellectual dishonesty, Joe, to keep your argument of comparing Apples & PCs (oranges) alive and intact by stating that one shouldn't compare apples & oranges. You can't have both. Are your ASPs based on an average of all models offered, or by an average based on gross sales of each model? You state that the mini's sales are negligible, but why not factor the sales price into computing an ASP for Apple machines?"

Joe's Response to Jeff: I'll have to double check with NPD, but average of prices for systems sold. As for Mac mini, the comparison is unfavorable to Apple; I cut Apple slack by ignoring mini. The Dell Studio sells for $100 less than the entry-level Mac mini and comes with similar processor, memory and graphics, but twice the storage capacity and an HDMI port. The $699 model comes with a 19-inch wide-screen monitor for $100 less than the $799 Mac mini.

MonkeyT: "Anyone who argues 'average' sale prices in their reasoning rather than actually comparing machines with matching specs is a clueless prat. It's like arguing that the average sale at one new car dealership is outrageously more expensive than the average sale price of all other wheeled vehicles combined (a figure which includes sales of bicycles, tricycles and wheelbarrows)."

Joe's Response to MonkeyT: Those car dealers are surely looking at their competitors' average selling prices. NPD tracks ASPs for a reason. They are important metrics for measuring value. They are somewhat inexact, because other factors, such as market perception or supply and demand, affect ASPs.

Biorn Porry: "Pathetic. Ignorant. Arrogant. How can a writer get it SO WRONG. If Joe Wilcox wants to play on a level playing field why doesn't he select two appropriate players. Dell's XPS One is the correct one to make such comparisons with - and it starts at $1299. For comparison shoppers that's $100 MORE than Apple's iMac. Do the math (and your homework), Joe and you'll find Apple Macs often cost less than 'comparable' PCs...Joe Wilcox comes across as a hack more at home scribbling fantasy fiction when he pontificates unctuously about market share gains."

Joe's Response to Bjorn: Of course, I did my homework. I've made those kind of feature-to-feature comparisons in previous writings. I refer you to the three reasons (stated above) for writing about ASPs and the undeniable difference between them. The comparisons I made relate to the reasons for writing about ASPs and Apple's falling behind on easily upgradable features. How hard is it to add more memory and hard drive capacity, so as to pass savings on to customers and to alleviate any perceptions that somehow a Windows PC might offer much more for less?

Mitch: "Your comparison at the low end fails to point out that the iMac also has some other features not listed for the Inspiron 518: The iMac has bluetooth, 802.11 g, a double layer DVD burner and a Web cam. It also has lower energy consumption and OS X instead of Vista."

Joe's Response to Mitch: Those differences are clearly stated in the features I listed, except for power consumption (and it's stated for neither computer). Please take another look.

Ben: "The thing is, some people appear to be taking this as a discussion of what Apple offers, when the truth is that they offer a great range of products. The weighted average means not that Apple does not offer value, but rather that Apple customers are willing to pay more to get higher-value systems."

Joe's Response to Ben: You're absolutely right, and I stated this in No. 2 of the six points made in my previous post.

Savage: "'... Wilcox writes, 'If Apple is going to continue its market share gains, or simply maintain that 8.5 percent U.S. share, prices must go down and configurations bulk up. The math is simply undeniable.'" No, Joe. What's undeniable is that Macintosh, at current pricing, is already taking market share from Windows. Therefore, your argument is illogical."

Joe's Response to Savage: As stated in my previous post, Apple has sold Macs in the absence of Windows Vista marketing. Microsoft is launching a massive Vista advertising campaign. Microsoft's messaging will emphasize the importance of choice and value, in part compared with Macs.

John: "OK, put aside Apple products for the moment. I just found this at Nextag: HP Compaq RM252UA 17.0" Notebook, 2.2 GHz Centrino, 2.0 GB RAM, 120 GB Hard Drive, 17" Display, Windows Vista. Price: $2,799.00 at Amazon.com; $2,629.99 at MacMall.com. So if the $700 laptops are so great why would anyone ever buy an HP laptop for this much? ?????"

Joe's Response to John: That's a good question, John. The answer has something to do with specs missing in your comment. The RM252UA, or HP Compaq 8710p, probably isn't a bigger seller, but it's unique. Some of that big extra cost comes from the two operating system licenses (Vista business with Windows XP downgrade) and the Blu-ray Disc DVD+/-RW SuperMulti DL drive, which is a Blu-ray disc burner. Not many PC manufacturers ship optical drives capable of burning 50GB discs, including Apple.

Glenn Chadderton: "There is a major flaw in the comparison of desktop PCs and Macs. A $700 PC does not come with a 20-24 inch TFT monitor and is in no way an 'apples to apples' comparison of what Apple is providing."

Joe's Response to Glenn: The computer in my example came with a 19-inch monitor. Many Windows PCs do in fact come with big monitors.

Hariharan Vijay: "You casually mention yet forget to include in the argument that this laptop's on SALE?...Oh, and was it intentional or did you just happen to forget that this HP is a 2 Ghz dual core, while the Macbook sports a 2.4? The difference in performance is MUCH more significant than the 20% up in processor speed."

Joe's Response to Hariharan: The notebook was clearly stated to be on sale (twice). There's nothing casual in that. It's back-to-school buying season. Sales are the norm right now. In fairness to Apple, students get a free iPod Touch (after rebate) with their new Mac. Apple chooses to give away something rather than cut prices. As for the 2GHz and 2.4GHz comparison, you're joking, right? The feature comparison was there for a reason—comparison. The MacBook has more processing power, but the HP more graphics memory, twice the system memory and twice the hard drive capacity. Please, take the faster processor, Hariharan. Some other folks would want more everything else.

Kevin: "I just wish Apple was honest with their pricing policy. Their computer hardware 'should' be sold for approx. the same price as PCs. After all they use exactly the same components under the hood these days but for some tweaking—we're not comparing a Ferrari to a Ford here—and their OS makes up the difference in selling price."

Joe's Response to Kevin: I could and should do another post just on software. Mac's real value comes from Apple software. Two artists might use the same canvas. One paints a masterpiece and the other a dud. Apple's software is the masterpiece.

Robert: "The NPD Graph is misleading. NPD uses creative math. You see, Apple makes two types of desktop computers. The Mac Pro is a desktop, the iMac is a desktop—with a build-in screen. Here's what they did: They have counted the iMac as a normal, generic tower desktop. (without screen). They counted the Windows pc if it was the same as the iMac. The low end iMac is very competitively priced, and it looks gorgeous. It's not even really low end, because OS X scales great."

Joe's Response to Robert: There's nothing "creative" about NPD's math. Most Windows PCs ship with monitors. If there's anything amiss it's that the average selling prices of Macs may be understated because Mac Pro doesn't ship with a monitor. So the comparison skews in favor of Macs, because the monitor cost isn't reflected in the data.

Jack: "For many of us, the only thing we really need is a browser and, maybe, a media player. So why pay the extra money?"

Joe's Response to Jack: You shouldn't. Spend $199 and buy an iPhone.

[Please send your tips or rumors to watchtips at live.com].

Posted by Joe Wilcox on August 8, 2008 1:00 AM