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Your Apple Products Are Getting More Expensive. Here's How They Get Away With It. (washingtonpost.com)
An anonymous reader shares a report: Apple has never made cheap stuff. But this fall many of its prices increased 20 percent or more. The MacBook Air went from $1,000 to $1,200. A Mac Mini leaped from $500 to $800. It felt as though the value proposition that has made Apple products no-brainers might unravel. For some perspective, we charted out the past few years of prices on a few iconic Apple products. Then we compared them with other brands and some proprietary data about Americans' phone purchase habits from mobile analytics firm BayStreet Research.
What we learned: Being loyal to Apple is getting expensive. Many Apple product prices are rising faster than inflation -- faster, even, than the price of prescription drugs or going to college. Yet when Apple offers cheaper options for its most important product, the iPhone, Americans tend to take the more expensive choice. So while Apple isn't charging all customers more, it's definitely extracting more money from frequent upgraders.
[...] Apple says prices go up because it introduces new technologies such as Face ID and invests in making products that last a long time. Yet it has clearly been feeling price discomfort from some quarters. This week, amid reports of lagging sales that took its stock far out of the trillion-dollar club, it dedicated its home page to a used-car sales technique that's uncharacteristic for an aspirational luxury brand. It offered a "limited-time" deal to trade in an old iPhone and get a new iPhone XR for $450, a $300 discount.
What we learned: Being loyal to Apple is getting expensive. Many Apple product prices are rising faster than inflation -- faster, even, than the price of prescription drugs or going to college. Yet when Apple offers cheaper options for its most important product, the iPhone, Americans tend to take the more expensive choice. So while Apple isn't charging all customers more, it's definitely extracting more money from frequent upgraders.
[...] Apple says prices go up because it introduces new technologies such as Face ID and invests in making products that last a long time. Yet it has clearly been feeling price discomfort from some quarters. This week, amid reports of lagging sales that took its stock far out of the trillion-dollar club, it dedicated its home page to a used-car sales technique that's uncharacteristic for an aspirational luxury brand. It offered a "limited-time" deal to trade in an old iPhone and get a new iPhone XR for $450, a $300 discount.
That's probably for a few reasons. First, it costs more than 2.5x more than you are suggesting to build it. Then you also don't understand what it costs to develop the software that runs on it or maintain that software for the (relative to the rest of the industry) excessively long lifespan of Apple devices (the iPhone 6 released in 2014 still runs the latest version of iOS) or the marketing and distribution of those products or the customer support.
So while Apple has the healthiest margins in the industry, no one sells a $140 phone for $1,000.
Apple says prices go up because it introduces new technologies such as Face ID
And Face ID wouldn't be necessary if they hadn't removed the fingerprint reader, so in other words they're imposing the cost of solving problems to its customers that Apple itself caused.
You are a terrible historian.
Gateway was never a quality product, it was a low cost one. Gateway designed absolutely nothing. They were eliminated when high quality manufacturers collapsed the price umbrella that eliminated parasites like them.
Dell had a mix of in-house products (Optiplex) and co-developed ones (Dimension). In fact, Gateway's boxes, effectively rebranded Dimensions, had a lot of Dell engineering in them. Dell was the leader in collapsing the profit model and causing Gateway's extinction. By then, Dell wasn't "gaining ground", it was a tier 1 supplier. Dell, though, was never a brand where you paid a premium for quality, it only appeared so when compared to the lowest cost boxes. Dell offered high quality PCs at lower cost than other tier 1 suppliers.
Dell never cared in the slightest about eMachines. Dell cared about Gateway who was essentially selling Dell machines at lower cost. We know how that turned out.
The cause of quality issues in the industry is not as you describe. Intel moved to monopolize every aspect of the PC (including the mindshare aspect with the "Intel Inside" campaign). PC manufacturers could not fight this and it led to a loss of differentiation on quality. When the core PC is always the same, it's a commodity. Reversion to the mean was inevitable and it was caused by Intel, not by anything you describe.
Apple, throughout the bulk of their resurgence, sold Intel PCs with Intel chipsets and Intel quality. Apple merely restricted compatibility deliberately. Curious that a move like that would lead to an image of superior quality, eh?
Apple does not have to lower quality to "make their products cheaper". In the end of a long-winded and largely incorrect exposition, you make quite an ignorant claim. In fact, the whole point of this article is Apple's remarkably high margins.