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.

Comments

$1000 phones

[110010001000]

I never thought anyone would buy a $1000 phone that was built for $140. That is probably why I am not in sales.

Re:$1000 phones

[jon3k]

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.

Re:$1000 phones

[jellomizer]

The $140 isn't the true cost of the product either. There is a lot of money in the Administrative costs of such a device. The R&D probably factoring in hundreds of rejected designed and ideas that cost a lot money before it was rejected, staff from the executives down to the maintenance workers, who needs to get paid no matter how many units are sold.
Now Apple is one of the biggest companies in the world, they are making a good amount of profit off each unit sold, but the cost to build one unit, isn't the true cost.

Now that being said, there is danger in the Race to the bottom sales tactic. Where you sell your product less then your competitor, then your competitor cuts their prices to be below you and then you return back again. At first you may assume that this is good for the consumer, however it isn't long in this race to the bottom sacrifices are made to where the product gets crappier and crappier every price cut, because the company will still try to keep its margins, and will not sell at a loss.

If you look at historic Desktop PC makers back in the late 1990's
1995ish, Gateway 2000 was gaining a lot of ground, one of its biggest points was its product quality. Sure you will pay more for it but it is worth it. Then in a few years it tried to compete with lower cost competitors such as Compaq which then caused the quality to drop rapidly as your $2k PC is now $900 but the drives will fail, and 3rd party components would undoubtedly crash Windows rapidly because the drivers were never quite right.
1997ish, Dell begin to gain a lot of ground, one of its biggest points was its product quality. Sure you will pay more for it but it is worth it. Then in a few years it was trying to compete with eMachenes which then caused the quality to drop rapidly as your $2k PC is now $900 but the drives will fail, 3rd party components would crash win....

Apple isn't the perfect company and their products are not perfect. However they have mostly maintained a high quality in their products (with their share of duds) often the big scandals like the iPhones 4 antenna problem and the iPhones 6+ bending problems, are actually small problems, however people got angry because of the standard that Apple normally has. But if Apple would try to make their products cheaper it will only open the door for their competition to sell better quality products and take Apples spot.

Re:$1000 phones

[dfghjk]

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.

It's pretty simple

[Brett Buck]

Apple can sell these for more money because everything else is treated like a knockoff. They are the dominant player, everyone knows that, and no one checks specs since they are all close enough to each other that it doesn't matter.

      I know we can expect a raft of posts to follow that explain the important technical and religious differences, but the vast, vast majority of the people buying these just don't care about that stuff, they want to have what is socially considered the best.

Re:It's pretty simple

[Oswald McWeany]

Most are treated as knock-offs because they actually are - witness the notch nonsense, which wasn't even Apple's idea to start with. And then how every manufacturer suddenly came out with a laptop that like a MacBook Air - some of them are still embarrassingly obvious MacBook Pro clones.

If I ran a competing company and could poach any one employee from Apple- it would be their head of marketing.

What you say is true, other companies do copy Apple. (sure Apple copies the competition too- but there is more Apple mimicry than the other way around).

It's not that Apple is the only company with good ideas, and it's not that all the features copied from Apple are good ideas- some of them are terrible, but other companies copy them nonetheless. Somehow much of society has the idea that Apple is the end product that others should strive to be (even if in somecases the competition has a better product).

I'm not sure how they did it, but their head of marketing must be a genius.

It’s True

[jittles]

What they’re talking about is 100% true. I have tons of Apple devices. Multiple Mac Minis, iPads, iPhones, etc. And I found that the plastic parts of my MacBook Pro (2011) are failing and the hinge for the laptop lid will soon fail entirely. So I started shopping for a replacement. What I found is that the MacBook Air is insanely expensive for the performance you get. And if I buy a MacBook Pro? Also insanely expensive. They solder in all the RAM and NVMe drives. The real kicker for me? Paying $500 for an NVMe SATA drive that I cannot upgrade when I can buy a 1TB NVMe PCIe drive that has WAY better throughput when dealing with smaller files. In fact, the throughput difference is so huge that switching from SATA to PCIe drops a compile time on one of my projects by 70%, So what did I end up doing? I ordered a Lenovo laptop that supports NVMe PCIe, has removeable RAM, AND weighs half a pound less than the MacBook Pro. Oh did I mention that it also has a better processor and almost the exact same battery life? And I am paying $1000 less out the door, including buying my own NVMe PCIe drive to upgrade it with. I will never buy another Apple computer again. The only reason I own an iPhone is due to Apple making its money off of hardware sales and Google making its money off of spying.

Here's how they get away with it: lack of competit

[metamatic]

I was a happy Android user for 7+ years. But to reliably get OS updates and upgrades, and not have to put up with a botched Android UI and bloatware, that meant buying a Nexus phone and tablet. Which I did, every 2 years or so.

But then Google decided to give up on Android tablets entirely, and give up on mid-price phones. They jacked up their prices, and a Pixel 3 now starts at $799. Well, guess what, that's the same price as an iPhone XR. And Google's last Android tablet offering before they gave up was actually more expensive than an iPad. So I switched.

With computers, nobody else is even offering a good Unix-based computer. Linux isn't competitive -- I use it for work, but sound and video are still a dumpster fire and don't count on hibernation working as well as a Mac either. If I didn't need to edit 4K video and work on music, I'd probably buy a ChromeBook, and sales of ChromeBooks seem to suggest that indeed there's an underserved market there.

Basically, nobody is putting in the time and money to clean up Linux (or BSD) and offer systems where sound and video editing, hibernation, and all the other basic functionality of a Mac is right there and just works. If you want that, you either have to put up with Windows and its myriad deficiencies, or you have to buy a Mac.

I'm a little surprised that nobody's deliberately setting out to build laptops that have exactly the same hardware as a Mac and are perfectly suited to hackintosh use. Give me a laptop with a proper keyboard and hardware that all worked properly with macOS and I'd be very tempted.

Re:Purchase price is the least important part

[ranton]

Apple understands that the purchase price of a device is in fact pretty much the least important things about it.

It isn't different than any other luxury device like an expensive home, car, clothing, etc. Once someone reaches a level of income where their time has significant value, the cost of luxury items is not nearly as relevant. The difference between a $1000 phone and $200 phone purchases every other year is $1 per day. It is the difference between a small fry and a large fry at McDonalds. If you have enough income where you aren't struggling to pay the mortgage, pay for car repairs, and feed yourself, how trivial is the difference between a small fry and large fry when eating fast food?

If someone is having trouble balancing their budget, buying an expensive phone every other year probably won't even make the top 20 things to fix in their spending habits.

Huh?

[lengel]

"It felt as though the value proposition that has made Apple products no-brainers might unravel."

In what universe of delusion has Apple ever been a value proposition???????

Apple charges more to solve problems they create

[JoeyRox]

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.

It's actually not at all simple

[SuperKendall]

no one checks specs

Anyone intelligent does not check specs on mobile devices these days, because it's not raw hardware or software alone that matters - it is the combination of the two.

That is why iOS devices can get away with less RAM. Technically it's "lower spec" than some Android devices, but it ends up working better because iOS simply needs much less RAM to function well.

Same for battery, if you "check the specs" on an android device you might find a bigger battery where the entire phone has much worse real-life battery life than a similar iOS device.

Even highly technical people like myself stopped "checking the spec" some time ago for this very reason - my remain cognizant of what the specs are, but keep them in perspective within the entire function of the device.

"Checking specs" makes more sense with desktop and laptop hardware because there all of the OS choices have been heavily optimized over a long time (though even then the administration overhead matters a lot to me which is why I still will not run Windows).

You know you can....not buy their products, right?

[Uberbah]

Summary not just written and powered by smarmy Hatorade, its a honey pot for the same. You know Zombie Steve isn't holding a gun to your heads, right? You are perfectly free to buy an Android phone - even if it comes with a notch and costs just as much as an iPhone XR.

Re:Zombies.

[garcia]

I'm an Apple user but you're making sweeping generalizations of which I've honestly only heard from non-Apple users. The only people who care that someone has an Apple product seems to be those who use Android.

I used to use any number of different products across any number of platforms (OS/2, Debian, Windows, etc, etc, etc) but to say I want to use it because of the logo is objectively ridiculous.

I use it because I've used one for years and don't see any reason to change. I haven't had to pay anything (except standard mobile contract fees) for any of these phones and my laptops are solidly killing it years later.

Do your thing, by all means; but stop spouting off ridiculous theories of which have little basis in reality.

Re:Overpriced junk

[ljw1004]

Apple makes good but not great products. They sell based on their reputation which they haven't deserved in years.

I think they have a reputation for protecting your privacy better than the alternatives, which they have and continue to deserve.

Re:Overpriced junk

[Moof123]

The contrast is the shit-show that is Android. It is a wild west scene of outdated OS versions, sporadic and unreliable security updates, non-removable bloatware, apparently rampant Chinese spyware, etc. Even otherwise good brands turn around and do this crap on their entry level and mid-range phones with just a few notable exceptions.

I have an Android phone, and I am amazed at the rampant pitfalls one has to navigate to pick a good phone at a low price. The safe ways to avoid this seem to be to get a flagship phone from the likes of Samsung or Google, or to get an Apple phone. I did not begrudge my rather non-technically minded wife when her iPhone 5s wore out and she wanted an 8. I've had to do ZERO to help her out. $800 was very cheap for marital bliss, and the phone will likely keep her going for a good 3+ years.

The peanut gallery will tell you to just root your android phone and load Lineage OS, or similar. For 99% of the buying public that is useless advice.

Re:Zombies.

[amicusNYCL]

The only people who care that someone has an Apple product seems to be those who use Android.

People who drive around with Apple stickers on the back of their car would seem to offer a counterpoint to that argument. I've seen cars with 3 or 4 Apple stickers on the back in a neat row, apparently they want to make their car as attractive a target as possible for a smash-n-grab.

I use it because I've used one for years and don't see any reason to change.

There are better products for the same price or less, which is a reason to change. There ARE reasons to change, but once you get deeply enough into the Apple ecosystem then it becomes a burden to move to a different platform. Which goes back to the headline about how Apple gets away with making their products more expensive.