Stop the Noiz

Debunking the Apple Tax

Frank Fox - 2008.10.31 - Tip Jar

"The Apple Tax" was a brief MIcrosoft campaign to paint Apple as too expensive. Since then, the discussion has made the rounds on various sites discussing the merits of this idea. Many are trying to show that for a comparable computer, the Mac isn't all that much more expensive.

What an original idea that is.

However, all this discussion is missing is the simple question: "So what if they are?"

What if Macs really do cost more? What are you going to do about it?

Bloggers tried with all their reports of an $800 laptop to predict that Apple would cut prices. Apple showed them what they thought of that idea. Apple's lowest cost notebook starts at $999. That is $199 away from what people claimed Apple should do.

Arrogance?

Is it arrogance or hubris for Apple to think that it can continue to sell high dollar computers?

Seeing Apple's Q4-08 report, it looks like Apple is fully capable of selling in this price range; neither arrogance or hubris is running the show. The facts are out there: Price alone is not the enemy of sales.

What mojo does Apple have that Dell and HP wish they had?

Apple is compared to other premium brands like BMW all the time, but I saw one that makes more sense. Apple is more like Toyota: Toyota isn't a luxury brand. Toyota cars are selling in large numbers and have a slightly higher price.

How does Toyota do it? It works on improving the value of their cars.

Value

Value is the perception of benefits relative to the price paid. The perception of value will drop if you don't maintain the quality of all the little details.

When I opened my Mac Pro to install RAM, I saw that it is just as refined on the inside as outside. That didn't increase the processor speed. It doesn't help protect against computer viruses. At most the clean design may help with airflow, but that attention to detail tells me that someone took more time designing my computer than a Dell workstation.

Unibody MacBookThe value of the new MacBook and MacBook Pro is not the amount of hard drive space or processor speed or installed RAM, it is the total attention to construction. I supervise a tooling shop with CNC machining. I know what is involved in machining the new cases for the MacBooks.

First off, that type of machining is accurate to within 0.001" or better. Why a laptop case would need that kind of precision is beyond me, but every bolt hole holding that case together will match perfectly every time.

Second, milling is much, much slower than injection molding. A molded plastic part is complete in under a minute, often much less. The same is true of stamped sheet metal parts. Milling everything out of one block of aluminum will take minutes to hours for completion. That case is probably one of the most expensive things included with the new MacBook - yet Apple made that kind of leap in quality with almost no change in price.

Take it from me: Be impressed.

Milling Aluminum Isn't Cheap

Are we going to see $400 laptops from Asus or Dell using the same unibody construction? Hell no! The case alone may cost $100-200 (that is a guesstimate on price), and there are still a lot more parts to add to the computer to finish it off. No one would pay a premium for a Dell made that way unless Dell sneaks it into a $3,000 gaming laptop.

I think Apple has answered the question about the Apple Tax with the latest MacBooks. The answer is that no one else is offering the quality of computer construction that Apple offers in the same price range.

When you walk into your favorite coffee shop with one of these under your arm, you won't have people snickering about how much more you paid. Instead, they will be craning their necks to get a look at how darn good it is.

You can value that any way you want in making your next computer purchase, but just like Toyota, the quality of the car is at least as important as the sticker price. LEM

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