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Apple's Secret Weapon To Influence Industry Pricing
Hugh Pickens writes "Nick Wingfield writes in the NY Times that Apple's present pricing strategy is a big change from the 1990s, when consumers regarded Apple as a producer of overpriced tech baubles, unable to compete effectively with its Macintosh family of computers against the far cheaper Windows PCs. Now within the premium product categories where Apple is most at home, comparable devices often do no better than match or slightly undercut Apple's prices. 'They're not cheap, but I don't think they're viewed as high-priced anymore,' says Stewart Alsop. Winfield writes that Apple uses its growing manufacturing scale and logistics prowess to deliver Apple products at far more aggressive prices, which in turn gives it more power to influence pricing industrywide, and one of Apple's pricing secrets has been it's willingness to tap into its huge war chest — $82 billion in cash and marketable securities last quarter — to take big gambles by locking up supplies of parts for years."
This isn't exactly true for computers, but it sure is true for tablets. I can easily find better and more capable computers for lesser price than Macs, but it's an another issue with tablets. The current Android tablets either have bad hardware, bad design, are buggy or uninteresting and have less apps and games available. The good Android-tablets cost the same or even more than an iPad. At least with iPad I know to get consistent quality and a huge app store. And I don't mind paying a little for the apps and games, developers deserve support when they make good programs.
Hence, my current valuation for things is:
For desktop, Windows 7
For servers, CentOS Linux
For tablets, iPad
I didn't think tablets were that nice for a long time, but once I got mine I understand it now. It's really awesome when I'm laying down at the pool or hanging with my girlfriend in bed.
I've heard that the reason you see so few 9.5" "ipad size" tablet displays is that Apple bought up the entire stock. This is also why the iPad 2 had the same resolution as the ipad 1, and why the Android tablets are mostly stuck at 7". Can anyone confirm/deny this? Or explain that better. My knowledge of LCD manufacturing plants and capability is minimal, to say the least.
moox. for a new generation.
Windows 7? CentOS Linux?? I call bullshit on the "hanging with my girlfriend in bed" part. Never happened.
Samsung make most of the parts for Apple, they're hardly going to restrict supply to their own lines.
The whole tablet phenomenon is a fad. It was basically created via media hype, and the willingness of many of Apple's customers to buy just about anything with an Apple logo on it.
Despite millions upon millions being sold, very few people actually use tablets. Once the novelty wears off, it becomes obvious that they aren't practical at all. They take the worst of smart phones, without any of the benefits, and combine it with the worst of netbooks, without any of the benefits. Sure, the tablets look interesting, but after you buy one and try to use it you find that you're better off using your smart phone or your netbook. That's why despite so many being sold, it's extremely rare to see anyone actually using one.
The fact that there's basically no real demand for tablets is exactly why no other company besides Apple has been able to produce a successful competitor. There are many other tablets out there that are technically equivalent or superior to Apple's tablets, but nobody wants to use them, leading to situations like the one with HP where they liquidated their stock an unprofitable prices.
Contrast this to the uptake of useful devices like PCs, laptops, netbooks, PDAs and smart phones. People actually wanted to use these, so we quickly saw many viable devices from many vendors appear. Since the demand was authentic, these devices have had staying power. This just isn't the case with tablets. The tablet fad will likely be over by the summer of 2012, if not completely by early 2013.
as a non-native speaker, I find it painful to read "it's" instead of "its" in almost every /. post ...
"I love my job, but I hate talking to people like you" (Freddie Mercury)
People who view Apple's decisions as "big gambles" simply are not giving Apple the credit they deserve. Quite frankly, Apple hasn't gambled in quite a while - they are making very smart, very well thought out decisions and they are executing those decisions with skill and refinement. That isn't a gamble.
Regardless of what you think of Apple - love 'em or hate 'em - it's simply inaccurate to describe their moves as "big gambles". They are making bold business decisions.
Now, admittedly, that doesn't sound impressive but it actually is - too few companies are able to come up with a well thought out plan and to boldly follow it, sadly...
Apple isn't leveraging anything. They are competing and setting the price where appropriate for the market, and as high as they possibly can.
- In the mobile phone market where users switch brands as they please with disposable products that last maybe 1-2 years under contract they price quite aggressively. The iPhone really is a good deal. It also needs to be. With a large number of other smart phones on the market that also present excellent value the iPhone no longer has the unique benefits it did when it was first introduced. There is competition now.
- Tablets are still expensive. The iPad is not discounted aggressively, quite the opposite. They are making a fair bit of money on each device sold. Their competitors think that Apple has set the price for the device, but so far haven't come to the table with a competitor that is anywhere near as good, yet most are priced just as high. I eagerly await a day when another manufacturer releases an iPad competitor that's either similar to it with Android, or that is worse but priced accordingly. The new Galaxy tab may have been it but I won't know at this point.
Which only leaves laptops.
- Macbook Pro, 2.4GHz i5, 4GB RAM, 500GB HDD, Intel HD3000 graphics, 13" screen, $1399AU. ($200 more than the US even though our dollar is worth more).
- Dell Inspiron 15R, 2.4GHz i5, 4GB RAM, 640GB HDD, Nvidia Geforce GT252M, 15.6" screen $700AU
And I'm sorry but $240 for an upgrade of an additional 4GB of RAM? Sorry but those are prices I expected maybe 3 years ago.
Apple is still ludicrously overpriced in most of the products it sells.
Having fewer SKUs definitely helps, when one is talking leveraging prices over volumes, and not having a fragmented product line definitely pays its share. But it also helps Apple that most of the parts they use are not used by few other vendors, so that when they order something, the supply is theirs, and in a tight market, it cannot be easily allocated to anyone else. For starters, their CPUs have almost always - except for the x86 based Macs - been used solely by them. I dunno about the RAM, but they use(d) 8Mb of flash memory, unlike 2 or 4Mb that PC makers used, and I doubt that when Intel moved to the Firmware Hub model, Apple went w/ it (although that may be different right now w/ the Macs.) On tablets, the A4 or A5 is their own - they just need to book their capacity in the fabs, the flash is probably custom and not just off the shelf, and the other chipsets they use are more likely than not, ones that cater mainly to their architectural definitions.
As a result, it's not difficult for them to get allocation priority from several points in their supply chain, and given their pricing, it's probably not difficult to lock up fab and assembly capacity either. However, I think that locking up supplies for years is more likely a legal agreement than actually purchasing those parts. Generally, any company would be better off if it could use those resources to buy those parts when there is a surplus in the market, rather than when product is on allocation. But even w/ that, storage of such parts, and ensuring that they get moved, and don't just occupy warehouses, is important. Since Apple sells to end users, rather than to OEM purchasers (unlike say, Intel selling to Dell), it has a lot more flexibility in its sales than say, an Intel.
Incidentally, how well are Macs selling these days? Has Apple gained marketshare @ the expense of PCs?
What is a certainty is that Apple does volume buying at a scale nobody else can or is willing to match. It is a huge gamble for Apple. They got a lot of money but it is still a publicly traded company so if they screw up they can loose their value really quickly.
You said it yourself, the iPad2 is very conspicious in the its screen usage. Maybe they bought a little bit to many? Remember HP and the dump of its tablet? That wasn't just done to upset the market. Grinding up old stock is costly in itself. If say an iPad3 were to fail, how much obsolete stock would Apple have to get rid off?
All that has to happen is some chinese factory to open up and sell either better tech for the same price of the same tech for less and Apples strategy is shot.
Apple is also making a LOT of enemies. MS did the same once and those who thought that in business their is no room for hard feelings and rancor were ignoring moves by old MS rivals that didn't benefit the rivals as much as screw MS over.
And right now, with Apple fighting the other tablet makers that are also its suppliers Apple is feeding the hand it is scratching at the same time. Samsungs lawyers are paid by component purchases by Apple... how odd is that?
Apple is riding a wave of success but other companies have done it before them and crashed horribly. Will Apple have the same fate? Hard to say but seeing Apple giving up its old mainstays in the high end, they sure are playing a high risk game on a very narrow playing field. Samsung won't go bust if it can't make tablets and phones anymore, they got a lot of different products. Apple on the other hand would be dead in the water if something were to happen to their iLine of products. Unlikely... but then, did anyone really for see the fall of Amiga, Commodore? IBM PC's? Or indeed, Apple PC's? Once they were a major player and then dwindled. And it is unlikely Steve Jobs will return a 2nd time to save the company.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Yes having little variation in the range results in economies for the manufacturer, but the "one size fits all" approach combined with Apple's resistance to letting the people who buy their stuff do any changes to it means that very few people are perfectly served by the model range . The more choices you have in choosing a device and what you run on it the more like is the result you end up with something that severs your needs, rather that the needs the manufacturer feels you should have.
N.B. this user is far too lazy to write a witty and intelligent sig.
Look at the report to the President on Ensuring American Leadership in Advanced Manufacturing. (http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-advanced-manufacturing-june2011.pdf)
Laptops, semiconductor memory device, flat panel displays, and lithium-ion batteries are all technologies that America has lost the capability to manufacture. Apple could not manufacture their products in the US anymore.
This business of locking up the supply of parts ought to pique the interest of antitrust regulators (if any still exist.)
It actually strengthens your argument, "Apple could do more manufacturing in USA and still not have a huge impact on the cost of the product or bottom line". It probably will have more reliable protection of key technologies if made where trade secrets and manufacturing IP could be protected. But still it chooses to make it China.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
But people line up for days for these products when marginally incremental versions come out. Truly this is a sign of credit and access to money being way, way too easy.
Actually, it's my opinion that this is a sign of the late Steve Jobs being one helluva salesman.
This work is licensed under a Creative Commons Attribution 3.0 Unported License.
No doubt. Apple's hefty margin on products is the exact reflection of why they are over-priced. Why do they manufacture outside the US? For many reasons, but one is that they earn more for their shareholders. It doesn't matter what you or I think, media and spin will make Apple always a darling. Until its reign ends one day.
It scares me. One thing going through my head is if the microsoft secureboot lookout thing happens, rather than paying the microsoft tax to get a linux laptop, I fear I may one day have to pay the apple tax, which is a lot more and I've been saying apple are worse than microsoft since itunes.
I wrote my first program at the age of six, and I still can't work out how this website works.
Given Samsung sells their similar products at the same price in the USA as Apple, is everyone buying their products also an "Appletard"?
In fact, most high end smart phones cost the same from the major US carriers ($199 with 2 year contract). Is everyone that pays that price an "Appletard" as well?
And of course, only people who use Apple products line up for a new model when it comes out. No one does the same when Samsung releases a new Galaxy phone. Oh wait.
If I read your point further, you are saying that Apple should be forced to build their phones in the US. Then they would cost much more. Given the amount of uninformed complaining about their prices on phones and tablets that happens already, can you even imagine the endless crying we would see then?
Keep in mind the sending of jobs to China to build things is not confined to America. Other countries have the same issue (even some of the Japanese companies have to outsource to China to compete now). I am not a big fan of it either, but consumers have chosen to pay less for products in general and as such have driven the model. You can find some interesting articles on this if you google around, specifically about how Dell slowly turned over pieces of their operations overseas and how it has damaged then and also how Amazon had to go overseas to build the Kindle Fire at the price point they wanted.
I can get a laptop that can easily do whatever it's mac counterpart can plus it's at least half the price. If you are willing to make your own desktop you can get better performance at less than half the price.
Only recently have they started getting cheaper, but not by much. Those that are noticeably cheaper are also of noticeably worse quality.
I mean, they make like a billion dollars a month on iTunes... so it's not really accurate to focus on their computer business and act like they are somehow so much better than everyone else in they way they manufacture things. Sure Microsoft did an awful job with the Zune, so this makes Apple look like genuises... but Dell commands a far larger share of business workstation desktops and nobody on earth is out shopping for an Apple Server and every teenager in the world seems to own a playstation or an xbox. There are lots of categories where apple hasn't been successful/competitive AT ALL even though they have product to offer. Apple is at the crest of a wave but the iPod/iPhone/iPad is not going to be the must-have christmas item forever. Apple is a computer company that ended up designing and selling electronics as prestige fashion accessories because who on earth is going to buy their teenage daughter a walkman or make their wife walk town around texting on a blackberry anymore. Apple hit it out of the park with the iPad because everyone has been looking for a way for the last 30 years to sell more computers to women and women buy them.
if your life is such a big joke then why should I care?
What a crock.
I guess the New York Times is looking to boost its ad revenue going into the "important holiday shopping season". I understand how it works, you give Apple a free ad via this article and then Apple buys lots of ads in the next month, including the back page of the prestigious Sunday Magazine. It doesn't make it less nauseating though.
I understand why the New York Times would do it, what with the newspaper business being in hard times, but I don't understand why Slashdot would do it.
Here's a fun game: read the article and count the huge assumptions that are made, starting with this phrase, "within the premium product categories where Apple is most at home".
"Premium". I love that word. Is there any more over-used tag in 2011 consumer culture?
You are welcome on my lawn.
I routinely build high end PC's for about 1/2 the price of comparable Macs - and the machines I build have better components.
If I read your point further, you are saying that Apple should be forced to build their phones in the US.
I never said they should be forced to do anything. I said they probably could make them in the US. What gets me is that most consumers think they are "buying American" when they buy Apple, when in actual fact there is not much here in America apart from some offices in Cupertino and pimply teenagers at Apple stores. What I don't get is that Japan - with incredibly high labor costs and costs of living - manages to continue to be a manufacturer. As does Germany. Yet the US seems to be completely incapable of doing this. At one point buy the damned robots and upgrade your plants, you know?
Seven puppies were harmed during the making of this post.
The most important reason iP(a/o)ds are reasonably priced is because everyone is force to use the apple store where apple earns tons of money. Android device manufacturers don't earn (much) from the Android store. Which is probably related to an other article I just read, that Android devices break down more often then apple or blackberry devices. Android device manufacturers have to cut more corners to earn money.
The iSuppli teardown, with parts and manufacturing (but not software), put the cost at ~$330 for the 32 GB iPad. The store price is $600. I get there needs to be a profit, but 100%? That's hardly aggressive pricing (at least with regards to benefiting the consumer).
Here's a leaked excerpt from the next edition of Walt Mossberg's Wall Street Journal column, where he reports on a recent interview with Tim Cook, Apple's newly ascended CEO:
I asked Cook what he thought his biggest challenges were. "Clearly," he replied, "China is our next big challenge. After the U.S. it's our second-largest market. But we're doing well there. We have 6 Apple Stores in China now."
And after China? "Our biggest challenge in the U.S. is the Slashdot market," he said without hesitation. "We haven't executed successfully in that market. But it's a big market, vital to our success, and we're going to aggressively pursue it. I've asked Phil (Phil Schiller, Apples Senior VP of Worldwide Product Marketing) to sit down with John Frazier and figure out a way to get our products onto the ThinkGeek web site."
Cook can't explain why the Slashdot crowd won't buy Apple products. "I don't understand it. OS X is based on Unix. We've been big contributors to the open source movement. But they persist in calling our customers 'Appletards' and 'fanbois.'"
Cook is normally a low-key guy, but the more he thought about all the lost Slashdot sales the more agitated he got. "I want the Slashdot market. I will have it. Once I have the Slashdotters, the world will be mine! MINE I TELL YOU!"
At this point I had to terminate the interview.
China is complaining that it is not getting a fair share of the profits/prices. It claims more than 90% of the profits and 60% of the expenses happen outside China. Design jobs, liability insurance, warehousing, IP protection, software creation etc happen outside China. Only the brute manufacturing happens in India and China. (Surprised to learn Foxconn factory in my hometown in India is making the glass for all iPhones).
It actually strengthens your argument, "Apple could do more manufacturing in USA and still not have a huge impact on the cost of the product or bottom line". It probably will have more reliable protection of key technologies if made where trade secrets and manufacturing IP could be protected. But still it chooses to make it China.
They manufacture there because labor costs are much cheaper and they have none of the other costs associated with manufacturing in the US (payroll taxes, environmental laws, etc) that add to the costs. bringing that manufacturing here would add a lot to the costs - resulting in either a significant hit to the bottom line or much higher prices.
China is whining because they realize that they need to get more of the higher value work if they way to continue to grow their economy. At some point, someone else will be cheaper - either less developed parts of China or other 3rd world countries. They saw what Korea and Japan did as China took away manufacturing and they realize they must do the same.
Apple's playing it right - do the low profit work, that is easily transplanted as need, elsewhere where it's cheap and do the real money work at home.
I'm a consultant - I convert gibberish into cash-flow.
When you buy Apple you bring companies where bad employees are 'suicided' on town closer to home.
Don't worry they have all signed contracts prohibiting them from committing suicide so everything is ok now.
Seven puppies were harmed during the making of this post.
This whole posting has flamebait written all over it.
Why was this posted?
He might as well go on saying only Vi was included because of its excellent functionality over emacs or something else stupid to invoke a flame war. Cmd Taco would not allow that story to go through
http://saveie6.com/
MacPro prices are still outrageous. Then again, they are wonderful machines, although seriously in need of an update.
So Apple's secret weapon is to monopolize parts so its competitors can't afford them? Using its huge cash stack built on monopoly agreements with music and video publishers (in turn built on monopoly copyright rules) and monopoly telco lockins. It's monopoly money everywhere you look.
All of which "influences industry pricing" to keep everyone's products more expensive than they have to be, or would be if there were proper competition.
--
make install -not war
Everything at Apple is about making money. Is that so odd? What corporation doesn't. Only question is at what cost?
When the foot seeks the place of the head, the line is crossed. Know your place. Keep your place. Be a shoe.
You know at one time, a long time ago I told people I prefer it if Apple took over. At least Apple macs were superior products over Windows 3.1 MS junk. Like a dream Jobs came back and fast forward 16 years later I regret what I said.
Windows is somewhat usable now and much much improved and .NET is better over MFC and win32 horrors of yesteryears, but Apple is ruthless. Worse than Bill Gates. Actually MS is tamer now since Balmer is at helm as I think MS brutally botched standards like IE 6 as the result of Gates wanting poor quality to force developers to use the MS way so things wouldn't break. IE 6 is an example and SCO was the other. It was always the oddball as MS didn't want anyone porting Xenix apps to other versions of Unix and it showed even after SCO bought it from MS.
I am not worried over secureboot as I view it as the boy who cried wolf here on slashdot.
We heard this with Windows 7 and Vista that it will be a proprietary nightmare etc. It never happened, as I can still view websites on other operating systems, still watch youtube outside of Windows Vista/7 and all the other scary trolls were saying we would not be able to do due to DRM. Infact I can still boot Linux which I was told due to TCPA/Pallidone that I would not be able to do by 2011.
I am sure someone will crack it and find the keys for grub to use secureboot or there will be a bios option. After all until 2 years ago my bios had a setting for Vesa graphics and palette snooping for OS/2 compatibility. Talk about ancient! If BIOS makers are that finicky you can bet they will leave the option open.
After all many businesses will run XP after 2013 (shudder) and Windows 7 is likely to be the next XP as corporations learned this past recession that they can raise the stock price by being complacent and refusing to upgrade. Secureboot may even be off by default for the next couple of years as many will prefer Windows 7 similiar to XP after Vista took off. Even my tech inept parents ordered a Dell with XP on purpose.
http://saveie6.com/
"some offices in Cupertino and pimply teenagers at Apple stores", huh?
Apple employ ~60,000 people now, with very very few (if any) of those being in China...
It's not Apple's job to make your country a better place or more biased towards manufacture than design, that's your governments job. Unfortunately your government prefers to play with its dangerous toys, declare war left, right, and centre, try to make its rich richer at the expense of everyone else, ignore the healthcare requirements of its populace (seriously? No single-payer system in this day and age?), destroy human rights in the name of 'the war on terror', and generally have its two parties more involved with acting like dicks to each other than actually, you know, running the country.
When you can vote the government in and out of office, you get the government you deserve. I can only assume a majority of Americans are seriously screwed up. Or masochists. Or something!
Simon
Physicists get Hadrons!
What I don't get is that Japan - with incredibly high labor costs and costs of living - manages to continue to be a manufacturer. As does Germany. Yet the US seems to be completely incapable of doing this.
http://www.manufacturingnews.com/news/07/1017/art2.html
"A relative handful of countries -- led by the United States, Britain, Germany and Japan --have borne almost all of the losses. Between 1990 and 2005, Britain lost 43.5 percent of its manufacturing jobs (2.6 million); Germany lost 31 percent of its manufacturing jobs (3.6 million); the United States lost 24 percent (5.09 million); and Japan lost 22 percent of its manufacturing jobs (3.36 million)."
OK, that was an article from 2007, but have things really improved since then? I know a lot of Japanese companies, just like Apple does, offshores a lot of their manufacturing jobs. For example, I looked up where Sony's PS3 is manufactured and I found ASUS and Foxconn.
So was L. Ron Hubbard. In fact, I'd go so far as to classify these guys not as salesmen, but as "programmers".
Face it - Apple is a shining example of everything that is WRONG with modern American corporations. They COULD make their products in the US, but it would be slightly more expensive, so they outsourced manufacturing to Souzhou, China.
Learn your geeky history. Apple didn't but Steve Jobs did build all Next manufacturing to high tech facilities in the US. How many Next cubes did you buy? Oh yeah, they lost out because of price and because the US did not enforce its antitrust laws. After such an experience why would anyone do it again? Americans don't give a shit if it is US made and aren't willing to pay even a tiny bit more. There aren't any US made computers at all.
All the US gets to see is minimum wage retail mall jobs, while Apple gets extremely cheap manufacturing labor, relaxes environmental controls and of course tax breaks.
Apple is the poster child for making an effort with foreign manufacturing. They conduct regular audits of all suppliers, require suppliers to change practices, fire suppliers for violations and publish for all to see the audits and what is done in response to them. Apple is one of the few (possibly the only) computer company to push back against slave labor conditions in the third world. And yet you single them out as the example of what not to do. I can only assume this is because you don't actually pay attention and just want to attack Apple. Here's an idea, why not reward the best practices and only buy from Apple while telling other companies why. Maybe practices will start to change and someone will take a risk on US manufacturing again some day. You know what's wrong with US corporations? US consumers like you that drive those practices with ignorance and laziness.
Business schools in the US are starting to teach this concept you bring up again. It is an older concept and Japanese in style (forgot the author) who created Toyota noticed he could save money by having all the suppliers, warehouses, and factories all close together. Last you want the finished product close to the customer.
This is called Just In Time Inventory.
In corporations you have cost accountants who look only at fixed costs like labor and you have engineers who design things who favor the JIT inventory method. In India engineers are well respected as rich countries like the US outsources to you and creates demand. In the US accountants who save money are better respected. This is due to Wall Street favoring hiring accountants who can work magic to raise their stock prices over engineers who know how to build quality products.
The problem is you can't show on a spreadsheet how easily you can impact hte bottom line with JIT. You can easily show savings on labor costs. Guess which one is chosen by dumb corporations? The cost acountants win and the share price goes up as Wall Street can't see JIT impact on share price but can easily on simple labor fixed costs. The US is stupid!
If Apple were smart they would have one factor in India make Ipads near the glass in your hometown. Another in China, where the glass manufacturer is down the street. And another in the US .. gulp, Yes I said US. Infact I would make make 2 in the US. One for west coast consumers. The other for east coast.
Sure I would have higher labor costs and the economies of scale would add costs as well. However, I could save $$$$ using JIT invetory and would not have extra obsolete IPADs, Powerbooks, collecting dust in my warehouses. Infact I would use smaller warehouses. Oh and I would not have to pay for shipping. More saved costs. The IPADs in India go to Indian, Pakistani, African, and Russian consumers. The ones in China are sold just in Asia, The ones in the US go to Canada, Mexico, and the US only.
The share price might take a dip as cost accountants at Goldman Sachs would not like it on paper without understanding why, but it would save money or at least close to breaking even. Last, if a horrible earthquake or fire hit one plant in India I can have my Chinese plant make more sold over there while it is fixed. That is better risk management.
http://saveie6.com/
Apple is doing exactly what it should do. ComPanys are beholden to their shareholders and compelled to make the highest profit possible. With slim margins your assertion that it would be "not that much" doesn't hold water. If you want to blame someone see congress and the last 5 presidents who let china run rough shod over our economy and destroy us with a one sided trade war
So their 'secret weapon' is that they think ahead, price aggressively in shrewdly chosen market segments, and take carefully measured strategic risks with their resources?
Does it strike anyone as ironic that it's so unusual for a company to act the way a capitalist company is *supposed* to act that it's called a 'secret weapon'?
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
Don't worry, soon they will be exporting their higher value work overseas. Chinese EE university programmes produce a lot of well trained talent. Their overall engineering disciplines are on the rise, while in "the west" it's on a serious decline.
Apple is also doing it "right" by keeping most of their moneyz in their offshore operations and countries with low corporate income tax.
Apple fanbois actually claimed this even in the 1990s, hell even in the 1980s.. the conversation would go like this.
"Apples are overpriced"
"Oh, but when you consider something with *comparable features*, it's not"
"Yes it is, here's a machine with the same features and it's still under half the cost."
".....umm, it can't be comparable though."
"Oh yes, and in fact the processor's a little faster and it has more RAM."
"......"
The corrolary of this was to cherrypick from the few most expensive PCs on the market, but ignore the extras it had -- like maybe compare some Sony Vaio (Sonys are also overpriced.. and ignoring that it had say a TV in and out, more RAM, bigger hard drive, faster CPU, and a much faster video card) and ignoring the dozens of other models that equalled outspecced the Mac for less *from the same vendor*. Or (back in the day) compare the Mac desktop to something like a Compaq Netserver, ignoring the Netserver had a bunch of costly design features like redundant power supplies.
Same thing here -- if you consider some Apple thing to a "premium product", that means "premium pricing", when you can get a comparable music player or tablet for under half the cost (and obviously a good Ubuntu notebook -- don't bother with Windows -- is not $1,000-$2,000 like the Apples.)
I support Apple charging that much and being successful.
Keep in mind despite inequality in America, many are rich who benefit from outsourcing who are upper class and upper middle class. I myself could theoretically could afford one I would be broke if I did. Most people do not have them. What you see are rich people who built their careers before 2001 have them while the rest can't afford them without a credit card.
Apple is dumb like I mentioned in a post further down the tree that the labor costs are tiny compared to shipping overseas, inventory of obsolete products, suppliers all over the place that parts go up shipping to factory, and large warehouses due to the added inefficiencies of using an eggs in one basket approach to make the cost accountants who just look at Labor and taxes happy who want their bonus.
Having every part in the inventory, production, and supply part of the process close together in multiple plants closer to consumers would save more money and if all fortune 1000 companies did this the recession would be over and we would all jobs with wages going up year by year instead of down.
However, Apple has so much cash why would it care and do the risk at this point?
http://saveie6.com/
As much as I think Cain is nuts, I am opening up to the 999 tax rate.
Yes it would hurt poor people a lot which I do not like. However, doing so would immediately bring money and jobs to the US at a large scale and I think most economists and politicians have no idea how much it would save the US.
I believe taxes and not costs are the reasons. It is expensive to ship, have obsolete inventory, and slow production with many suppliers all over the globe, verses all down the street in the US. Seriously you could save a fortune and to hell with labor costs.
It is the 30% corporate tax is the reason. You need capital to do that as long as its here it is taxed.
http://saveie6.com/
US consumers like you that drive those practices with ignorance and laziness.
Except, I'm not a US consumer. But ok, continue to be proud of the fact that the US can't make anything at all anymore, thanks to the worship of profit and the bottom line above everything else. Then wonder why Germany can prop up all of Europe despite being a fraction of the size of the US. And completely ignore what this means for the American future when you are all busy selling hamburgers to each other and have to import everything else (including hamburger meat). In fact the only industry that is still relevant in the US is the defense industry, but when you look at 100 million dollar drones and trillion dollar 5th generation jets that are still not off the drawing board or the ones that have actually been manufactured can't actually fly because they have been grounded, you have to wonder exactly how deep the rot goes in the American business community. You print money to hand out to companies so they can hand it out to foreigners to build the real products you use, and hand it out to banks to create credit to give to Americans so that they can buy said foreign goods. Thus you have created a nation of paper-pushers and office workers who can't actually make anything, and you expect this model to last forever. And THEN you claim that the Taliban are the threat to your national security. To be honest you are your own worst enemies. But what should I care, I have enough gold to still be rich even after the US dollar collapses. I just can't wait to hear you guys say that you "never saw it coming". When you let someone else do stuff for you, that makes you depend on someone else.
Seven puppies were harmed during the making of this post.
"to take big gambles by locking up supplies of parts for years."
You can tell that they lock up supplies for years. It's visible in the years behind every other normal PC that Macs are.
Also known as 'once'.
Back when Tim Cook was COO, he actually streamlined Apple's supply chains quite a bit, to eliminate warehouses. Apple used to have obsolete products sitting in boxes somewhere, but no longer. It's why there's a wait time when you order a product from Apple, they have to make the thing first! So, I would not say warehouses are costing Apple dearly. I'm sure shipping is costly, but the labor is just so cheap over there.
Manufacturing workers here in the US expect huge salaries, huge benefits, and huge pensions. Unions and collective bargaining, while great things back in the days of child labor, dangerous factory conditions, and minuscule wages, have now crippled manufacturing here. The government has long since taken over the business of keeping workers safe and well-fed, and unions serve only to cater to the greed of the labor pool at the expensive of their own jobs.
Let's face it, if your job can be done by a robot, or a child in some third world country, you shouldn't expect to make loads and loads of money doing it, then be set up for life when you retire. It's unskilled labor, and it's worth exactly pennies an hour. That's why Chinese workers are eager to do the job for you for pennies an hour.
As lovely as the idea of good old American factories are, it's never going to happen unless American workers are willing to live a lower quality of life than they've become accustomed to. If it's any consolation, pretty soon China will be shipping a lot of their jobs overseas too, once their standards of living have increased as well. Apple is making a big push into selling their products in China now, which means it's probably not far off. If you can afford to buy an iPhone, you probably aren't working in an iPhone factory.
When we get cheap enough robots, we'll probably do as you say, build factories as close to customers or resources as possible, a mini automatic factory on every street corner where you can pick up anything, made the minute you swipe your credit card.
-mrxak
Onions Will Kill You
Apple's strategy with hardware reminds me a lot of Microsoft's mid-90s strategy with software. The biggest difference being the lack of anyone clamoring for an anti-trust investigation of Apple. I think it's a mistake on Apples part to try to gain a monopoly in this fashion; Apple's becoming an elephant instead of an innovator trying to maintain the top spot with litigation and control of parts rather than innovation. Maybe without Steve Jobs this is their safest bet, but it's certainly not a very inspiring (or 'cool') one and it's going to hurt their brand image. 2 years ago when their competition was woefully behind this article might have seemed daunting news for the rest of the industry.
I think if Apple wants to tie up all the hardware that can be used to make identical products to their own, that's awesome, because it's going to prevent exact knock-offs and force everyone else to continue to innovate. 2 years ago I bought an iPhone because it was by far the best smart phone on the market, but this year after watching the lackluster unveil of their latest version, I went out and bought a Motorola. The optics in the camera of my A2 might be a bit behind the new iPhone, but the rest of the hardware suits me a lot better and so does the software. Who cares if Apple has tied up all the 3.5" retina displays, I'm a man with man-hands, and I will never go back to that form factor. Apple's had some great designs, but they're not the singular pinnacle of ultimate design perfection.
I suspect that Apple's attempt to control the hardware markets is going to fail, just like their attempt to trademark "app store" and they'll soon be back to their tiny market share, only this time Google's Android will be the Windows 95. With no Steve Jobs to pick them back up... maybe the whole company is old-news.
You know, back when that was big news, somebody took two minutes and actually found out that suicide rates at Foxconn were actually lower than China as a whole. The reason is because those people have a job. As unfortunate as it is, having a job at Foxconn is pretty good compared to a lot of alternatives in that country.
-mrxak
Onions Will Kill You
Actually, the overuse of acronyms is more problematic. For example...
Let's say we were discussing a program written in Ada (the programming language) that somehow solves some compliance issue of the ADA (American Disability act). It's easy to see why the use of acronyms can be confusing. The solution is simple, the first time an unusual acronym is used, the users of slashdot should put the acronyms meaning in parenthesis immediately following.
Another irritation is the use of texting abbreviations. There is no message size limit so their use should be avoided. The use of texting abbreviations is slowly diminishing on this website and I think we should try to stamp out their use entirely.
Now that I am off my soapbox, you can return to what you were doing before,
Actually they are coming back.
Some jobs are shipping back to the US and these workers are glad to work for $7.50 an hour compared to $12.50 previously. Wages are lower now because the economy is still in the shit can. True GDP is up but that is because the rich take most of that in. For the middle class it is still recession. The jobs are coming back due to supply chain issues. It is misconception about labor and I believe it is more due to it is easier to show Wall Street a spreadsheet on costs than explaining supply chain tweeks.
But still, it takes weeks to assemble a mac, ship it over here and that adds costs. Like the grandfather said they ship the glass from India. Many manufactures that are still here are not leaving because they have JIT inventory and supply chain optimizations.
Also Chinese no longer work for pennies on the dollar. Infact many factories are hiring Vietnamese because the Chinese want $2.00 an hour or more. Why work for $.89 an hour when they can go to work down the street for $2.25? Costs are rising rapidly in Asia and the value of land is going up too which means the factory owners want more money too to cover that.
I am not advocating Apple leave China. I am just saying there is a reason Pepsi still makes their products here even though the majority of their money comes from overseas. They have a plant here and another in China, and another in India. It really is cheaper with the exception of the tax code. If Cain is president and we have a 9-9-9 system I bet you most of these jobs will all come back FAST! So fast it will hit the US by storm and people will be shocked.
http://saveie6.com/
If the Secureboot thing happens, it's virtually guaranteed that Macs will honor it or they won't be able to boot Windows 8. And they won't abandon Boot Camp, as it keeps people in the Apple fold. I suspect MS and Apple are buddies way more than people think.
Apple would be far better off without a bite taken out of it..
Are you guys just becoming aware of how the real world works or something? You're discovering what Walmart has been doing for 40 years? And Sears before them? And I'm sure thousands of other businesses that I don't remember or wasn't around for. How many times has this been discussed about iTunes alone? Are you guys really unaware that the same thing happens with hardware as well?
Slashdot used to be news for nerds, now it seems more like semi-nerd news for the masses.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
US consumers like you that drive those practices with ignorance and laziness.
Except, I'm not a US consumer. But ok, continue to be proud of the fact that the US can't make anything at all anymore, thanks to the worship of profit and the bottom line above everything else.
It goes well beyond a strawman argument when you attack an argument I did not only not make, but which contradicts exactly what I said. What I attacked about your argument was that Apple was the ideal example of what is wrong, instead of the reality that they are one of the "least bad" in a field of internationally awful players. Can you admit that your comment was a little off base in this regard? Then you go on to attack many other ideas that I never stated and which have no bearing on the current topic. You come off as an angry zealot looking for any excuse to rant about your favorite pet peeve. Do enjoy using those quality German made computers.
you are stretching it.
Apple priced their stuff and fixed it until the new model, pretty much same as they do now. When the new models came out it would be close to a comparable PC but a little bit more; not a lot more. Sometimes it was even cheaper but that was a rare case situation. Towards the middle to end of the product cycle (about 1 year) the comparison would make the mac more expensive as the comparable PCs which would have come down in price or had new models come out. The way Apple handled its product cycles vs the whole industry and them being out of sync didn't and still doesn't lend itself to a fully fair comparison.. These are computers and as you should know the prices change FAST.
Getting a comparable PC was also problem since the specs didn't match up many times - stuff like SCSI was more expensive to have. Less mass produced popular stuff didn't help. Also, there were quality issues-- a higher end mac would easily outlast comparable PCs at the office. The power supplies were just better while the PC ones were often cheap even on better systems. Also had fewer issues with SCSI drives than IDE ones overall. Plenty of studies back in the day rated the macs as lasting longer.
the Mhz thing was a problem a while back but for MOST the mac's lifetime the Mhz thing was a myth. Intel has a long history promoting Mhz for marketing and it wasn't meaningful. they'd cut corners to get a higher number than the others but it wouldn't perform better; especially for the extra money. The extreme point was Pentium 3 vs 4 where they even had lawsuits because the old chip was faster at 500mhz less speed! AMD had to sell in intel mhz units because it was so bad. Now intel is stuck and transitioned from their own mythology. we've been around 2gz for almost a decade.
SOMETIMES apple would charge way too much for the system; other times, they would be a fair price and known quality. Right now, I'd say their computers are overpriced. The 1st Intel tower was a great deal when I bought it; its not so great today but not too horrible. the iPhone iPod thing might be a little high but I don't think its much; the iPad right now has everybody easily beat.
if Apple would sell some lesser hardware at a lower price they could probably hurt the cheaper markets too. They tend to aim for the newest CPU etc. when a 1 year old chip would be way cheaper. They dominated with the iPod by selling weaker iPods against the cheaper players.
But still, it takes weeks to assemble a mac, ship it over here and that adds costs.
What in the holy fuck are you talking about? Apple has JIT inventory and supply chain optimizations, did you even read the article? Weeks to assemble and ship a Mac, my ass. The last CTO Mac I ordered took less than a week from me ordering it online to it being dropped off at my office, and that was a few years ago. They probably have it even tighter now. Hell, my new iPhone took 49 hours to go from the factory loading dock in China to my hands in the Philadelphia area. I actually sat down and figured it out with the tracking info, factoring in the time differences for the various depots.
I am just saying there is a reason Pepsi still makes their products here even though the majority of their money comes from overseas.
Uh, yeah, that would be because the chief ingredient in their products is water, you fucking retard. You don't burn up fuel shipping water around internationally, you build regional factories in places that are good central distribution points and have reliable water supplies (the latter being more of a concern outside the US).
Meanwhile the people who actually make the Apple toys are throwing themselves off the factory roof in despair.
And right now, with Apple fighting the other tablet makers that are also its suppliers Apple is feeding the hand it is scratching at the same time.
The only possible explanation for that statement is that it was posted by Iris.
Can you watch a DVD at full resolution over VGA on Windows 7??? NO Can you force Stereo Muxing? NO
But yeah you're right, its not locked down.....
Good-bye
Grats on skewing reality by anecdotal evidence
Now let's get back to reality.
Apple "all in one' vs Dell "all in one":
http://store.apple.com/us/browse/home/shop_mac/family/imac/select
http://www.dell.com/content/topics/segtopic.aspx/inspiron-one
23" Dell: i5 @ 2.5Ghz, 6Gb RAM, 1Tb HDD, Intel HD Graphics - 949.99$
21.5" Apple: i5 @ 2.5Ghz, 4Gb RAM, 500Gb HDD, AMD 6750M Graphics - 1199$
And so on for most configurations.
That's pretty much the only way to get away with this "oh, Apple products are not more expensive" myth, by playing "oh, but it's not identical". No it's not. And you can buy "all in one" dell for 599$, when Apple's start at 1199$.
"Learn your geeky history. Apple didn't but Steve Jobs did build all Next manufacturing to high tech facilities in the US."
You learn YOUR geeky history. Apple initially had all their manufacturing done in the US, and kept at least some manufacturing there, up until the early to mid 90s. They had factories in Fremont and Sacramento, CA, and another in Fountain, CO, to name three. You can easily tell the factory that built a given Mac from letters at the beginning of the serial number-- the only two that I still remember are "FC" for the Fremont factory, and "CK" for one they had in Cork, Ireland.
I actually just read the Jobs biography, and he apparently had a meeting with Obama during which Jobs took him to task over how difficult and expensive it is to open a new factory in the US, compared to nearly anywhere else in the world. I got the sense that Jobs would have happily done some production in the US again if it made business sense to do so.
~Philly
Cash and Short Term Investments were $25 Billion as of 9-24-2011 balance sheet.
http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii
... the pricing strategy of Apple has always been the same. Ever since I started following them back in 1985.
Stupid people just doesn't seem to 'get it'. And unenlightened journalists write stupid articles.
The principle is simple: with most IT products the price constantly drops, or upgrades are provided at the same costs. This is for all components as such. With Apple - even when they were doing their own manufacturing - they approach it 'differently':
At product launch the margin is minimal, because it's only then that the 'stupid journalists (tm)' are writing articles and making comparisations. It's very competitive then, and if you're interested in buying Apple products, you buy them best at that time. Because the price will stick at that price point. Basically almost forever. So it seems. For a year or more, it will remain at this price level, making by the end of that period, an enormous margin to Apple as the market prices of components have been falling constantly.
At the end of the period, there is typically a product upgrade, without cosmetic changes, which makes the product a little bit attractive again, but the best 'deal' where Apple makes the least margin is only there when there is a redesign of the product. As Apple knows that it's only then that the 'stupid journalists' will write comparison articles which will be around for the next year.
It's smart, yes. But it has nothing to do with stockpiling inventory - as Apple DOES NOT DO THAT. That was in fact Tim Cooks first big improvement at Apple, to move to an almost inventory-less company.
Apple makes computers from more expensive components because they are a product company and they don't compromise on design in order to hit the lower price points. Some people get this, and they buy macs and don't see the as overpriced. Other people think a fancy 27" monitor is superfluous and unnecessary. That's why you see them compare the price of a PC with a 24" el-cheapo monitor to an iMac with a much nicer 27" display.
Apple products are for people who are value conscious. Cost conscious penny-pinchers need not concern themselves with Apple products. They will always be able to find another "comparable" product that costs less and is good enough.