How Apple Could Match Dell's Price
From Doug:
How Apple could match the Dell price:
- Make it a pre-sales platform for add-ons. Ship it brimming with
adware and hamstrung scaled down versions of software. Not a final
purchase, the very beginning of many purchases to come, in the guise of
demoware.
- No Research and Development.
- Maximize use of old hardware. Mainboard, system buses, key caps,
each and every component of the total system that does not figure into
sales specs, rescue from the salvage bin wherever possible.
- Push the time from sale to shipment out about 4-to-6 weeks for the
low dollar machines. Offer slightly upgraded versions of the same
machines for immediate delivery that sell for a few hundred dollars
more.
- Lower the sales margin. Because what are you actually offering that
justifies a 30% markup?
Top quality, latest technology, attention to detail, and a simple
hassle free sales experience, the value of exceeding customer
expectations. It all takes work, and work costs money. Ten percent
markup is plenty if the goal is to provide a commodity level user
experience.
The race to the bottom is easily won.
Hi Doug,
Thanks for the comment.
I don't disagree entirely, but If I were to buy a Dell
Inspiron 1525 for my personal use for US$499/Can$549 (you can get one
cheaper than that if you can live with a Celeron processor), I would be
running Linux on it, and there are vast quantities of Linux software
available for free.
Research and development? Dell's is maybe not up to
Apple's, but I think it's an overstatement to peg it at zero.
Old-school hardware doesn't bother me if it will do
the job - I still have two Pismos in production service.
Neither does waiting a few weeks to save hundreds of dollars. If you
can get a satisfactory machine for a good price, as a consumer, who
cares what the manufacturer's margin is?
Now, that Can$549 Inspiron 1525 has a Pentium CPU and
a 533 GHz frontside bus, but going to a Core 2 Duo with an 800 MHz FSB
will still take me up to only Can$700, which is $450 cheaper than Apple
Canada would ding me for a new 2.1 GHz white MacBook with a slower Core
2 Duo processor, the same speed FSB, a gig less standard RAM, a 2"
smaller display (albeit with the same resolution), and a half as large
hard drive. The Inspiron also comes with an internal modem, while Apple
Canada will extract another Can$59 for an external one (I have to have
a modem, being stuck with only dialup available where I live).
Speaking of nickling and diming, Dell will upgrade the
Inspiron's RAM to a maxed out 4 GB for Can$50, while Apple wants a
whopping Can$225 extra for the 4 GB spec. That would make the
price of the 2 GHz C2D Inspiron with modem (standard) and
4 GB memory (Can$849) Can$584 less than the 2.1 GHz MacBook with a
modem and 4 GB (Can$1,433).
As I said in the column, I don't dispute that there
would be compromises involved with opting for the Dell, but I'm
persuaded that they are not intolerable, and I think that aside from
not being able to legally use the Mac OS (a huge qualification, I
concede), that the value for money equation strongly favors the
Dell.
Charles
If you put Linux on a Dell and consider first cost the most
important cost, you have run right past any argument I can find against
using Dell.
Then my only argument would be against buying a new one. Rescue an
old one from the dumpster instead, help preserve the environment.
Nothing wrong with that at all. If everyone would do it, more computer
literate people and less electronics in the waste stream. A
win-win.
I have bought new Dells, new HPs on the high and low ends, new high
end IBM hardware, Acers, Gateways, etc. And most recently, factory refurbed Apple hardware.
I have run Linux and BSD on old hardware. I have built machines from
the ground up to try to save a few bucks.
My experience has been that you pretty much get what you pay for.
And the time versus money continuum holds just as true for IT
technology as for anything else. Spend time or money, whichever you
value the least. Likely you can learn much in the bargain.
The point I was attempting to make is that if Apple had to
start selling at a lower price, there are ways to do that. And the
obvious first place to look is at how it is being done by Dell, the
best at doing it.
Thus the list of my personal frustrations with the Dell experience.
And, tongue in cheek, how Apple could match that experience. Dell
offers a better experience than what I have outlined, they may even do
some R&D, but not at the low end of their offerings.
For real world users (not Linux or BSD), to achieve a Dell
experience that matches Apple offerings, you are quickly at, if not
above, Apple prices.
Without OS X, without resale value, without access to any
OS X applications.
After three years of flipping open my MacBook Pro to get right back
to work where I left off the night before, it is worth roughly half the
original refurb price of $1,500. I have lost about $250 a year, call it
$20 a month in resale value.
Every week, if not every day, I recapture that $20 in ease of use
and productivity. Estimating the increased productivity at a
conservative $20 per week, the first cost savings of a $500 Dell vs. a
$1,500 MacBook Pro evaporates the first year. My gut feeling is that I
recaptured the $1,000 in a couple of months, and it has all been gravy
since.
When learning about computers was my goal and pleasure, time spent
tweaking hardware and software was time well spent. Now that my goal is
getting something accomplished with computers, OS X on a MacBook
Pro provides the true value for me. No matter the IT challenge, it has
never left me short on capabilities. I don't see how anyone can claim
that for any other platform.
Maybe the Dell works fine for most users.
If it could be paired with a full sized keyboard to ease the task of
text input, an iPod touch would work fine for most users I know.
I don't think first cost comparisons are fair when comparing
something suitable for everyday, basic tasks to something that will
handle absolutely anything you can throw at it. There is a huge
difference in value. Admittedly, only for those who need the added
value. The 10 percent versus the 90 percent, according to the current
market.
Hi Doug,
Thanks for the follow-up thoughts. With me you're
preaching to the choir, I guess, because I'm still on Apple hardware
and likely to be for the foreseeable future - and for essentially the
reasons you've so eloquently elucidated, especially ease of use and
productivity and effortless pick-up-where-you-left-off contiguous
workflow continuity. I might actually enjoy tinkering with computers if
I had the time, but my dance card is enduringly over-subscribed, and
the just works, no hassle, right now dependability of the Mac is
priceless to me under present circumstances.
I paid about $1,500 for this Certified Refurbished 17"
PowerBook with a 1.5 GB RAM upgrade I'm using right now just shy of
three years ago. It's never missed a beat, and I guess still has a used
value of about $850, based on Wegener Media's current price listings.
That works out to just $216 a year, so it really doesn't owe me
anything, although I got a better than average deal on it at purchase
perhaps.
However, a lady of my acquaintance, totally un-tech
savvy, asked my advice on replacing her ancient PC laptop running
Windows 98 a couple of years ago. She is not one who would remotely
consider switching from her familiar way of doing anything, especially
computers, so I didn't even mention a Mac but suggested an Acer laptop
that was at the time on sale at The Source (Circuit City in Canada).
She bought one, and it died about 25 days later, fortunately just
within the over-the-counter replacement guarantee period. The second
one has been a solid performer for her, and she's been completely
satisfied with it for more than Can$1,000 less than a roughly
equivalently equipped Mac laptop would have cost her.
Charles
Switching from Mac to an Inspiron with Ubuntu
From Anonymous by Request in response to How Come Dell Can Sell
a New 15" Notebook for Half the Price of a Refurbished
MacBook?:
I bet you are getting a lot of mail on your article about the
Inspiron. Well, I'd like to share my experiences with you a little, if
you have a few minutes.
I am writing you this email on my new Dell 1525 running Ubuntu. I went through the same exercise
you did. I had to get rid of my iBook G3 a while back, because the
optical drive got fried and the entire computer was worth more as parts
than the replacement for the optical drive, so I was without a laptop
for a couple of years. This past month I just wanted to have a laptop
again, but any new laptops from Apple start at $1,500. I use the laptop
for email, viewing movies online (particularly Netflix, but also Hulu,
etc.), and since I write plays on the site, I use the machine for those
tasks.
Nothing that should task the computer too much, I think.
I bought this Inspiron with the exact configuration you mentioned,
with the intention of installing Ubuntu in it (I keep Vista for
watching videos on Netflix using IE, that's the fruit of DRM for
you).
I haven't had any problems with this computer since I bought it. I
use Google for email and keep my email in the browser. I have Open Office for documents, if I want
to work locally, otherwise, Google docs online will do just fine.
Ubuntu does have problems with Flash in Firefox, but that is in part because
the Flash plugin is closed, and because Firefox in Unix consumes an
ungodly amount of memory. Far more than it should. But those things
will improve.
You asked in your article:
Steve Jobs says you can't build a laptop computer for
under US$500 that isn't junk and that Apple doesn't do cheap. So the
Inspiron 1525 is definitely cheap, but is it junk? I'll venture that
there are some quality and design compromises by comparison with the
MacBook, but are these egregious enough to justify opting for a machine
that costs more than twice as much and isn't even brand new?
Is this machine crap, like uncle Steve says? No. That's just the
reality distortion field. It may not feel as fancy as a Mac, but we
love the bigger screen, just as shiny and glossy as a Mac's screen, and
inside are basically the same guts as a Mac. Are there design comprises
on this machine? I suppose there are, but I am not an aesthete enough
to notice them when I am using it. In fact, the trackpad has gestures
in it, for browsing with comfort. I didn't have that feature with the
iBook that I can remember.
Uncle Steve is giving you the reality distortion field full blast
with that one. The Dell is just fine. It just does not feel
state-of-the-art like the Mac does. The laptop is not junk. I felt
comfortable buying it, because I've been forced to use Dell laptops at
my jobs for the past 8 years or so - and the laptops have given me
almost no trouble at all.
So, in answer to your question from the article: Dell can sell this
machine for about 500 bucks and makes a profit because it probably
costs them between $300 to $400 to build the thing in the first place.
And I am willing to say that that is about the same cost for a MacBook.
But Uncle Steve's marketing makes the MacBook seem worth more than it
is. If I were you, on a writer's salary and all that, I would be fine
with the Dell and put my conscience to sleep in peace. I am a devoted
Mac guy (my nickname a long time age was indeed, the mac man). But I
feel more like a grown up now, choosing a computer for price and
features and putting into it the operating system of my choice without
restricting myself to Macs. And they do feel like a restriction.
I am happily using Ubuntu on this machine 80% of the time, and the
rest of the time I have to use the Vista side for DRM purposes. Ubuntu
is a great operating system, by the way. A breeze to install from
within Vista (you download Wubi, and it installs all of Ubuntu as an
application inside Vista . . . just like the alien in the
movies). Ubuntu recognized all the important elements of the system:
wireless, camera, etc. I use Google chat with the Vista side, since
Google has not made it available for Unix yet. If you are a writer,
Ubuntu on this Dell is ideal, because it reduces distractions
considerably.
A plus to doing this change with Ubuntu and Vista is precisely that:
a change. I don't know about you, but looking at the Mac OS X
desktop has gotten old for me. I can't change it or customize it for
variety. I can't even officially add applications under the Apple menu
like I used to with OS 9. I like OS X, it just hasn't been
exciting for me. And with Ubuntu there is no risk of viruses or
malware, for sure.
The other plus about using Ubuntu is that it does feel like OS 9 in
a way. Not perfect, but pretty good. It has features that make life
simpler, without being showy about it like Uncle Steve. I love Uncle
Steve, but I think the constant one-upmanship has gotten stale for me.
Ubuntu feels hackable enough to make it interesting, and you can
customize it with ease, both aesthetically and in terms of adding
features to it. I can put a dock on it, but there's no point to that.
Ubuntu has an applications menu that does not use real estate like a
doc, and it works just fine.
Just to give you an idea of the type of customizability I'm enjoying
with this system: Ubuntu comes with "panels", which are the equivalent
of docks, but also of the Apple menu bar. You can place applets in the
panels and move the panels around without fear and without hassle. The
original Ubuntu install has two panels, one at the top of the screen,
one at the bottom of the screen. The top one emulates the Mac menu bar,
with basically the same things on it as you'd find on a Mac at startup.
The bottom one emulates the dreaded Windows Task Bar . . . I
didn't like it, but I do like the fact that I can switch applications
easily with the applet, so I moved the applet with the functionality I
like (and the Trash icon) to the top menu bar and deleted the bottom
bar completely. Now I have all the functionality I need where I want it
and don't have to worry about the bottom part of my screen.
I had to learn all this, of course, but the help files were there
for the newbie.
My next Mac will likely be a Mac
mini, to replace my aging but reliable eMac G4. I will buy a non-Apple monitor
(for a reasonable price), and a keyboard and a mouse that won't feel
overpriced. I like to have choices, and real choices involve not buying
Apple products sometimes.
Well, anyway. Thanks for listening.
Anonymous
Hi A,
Thank you for the excellent commentary. This is just
the sort of discussion I was hoping to elicit with the article.
You have helped confirm my suspicions about both Dell
Inspirons and Ubuntu Linux, and I entirely agree with your
reasoning.
Personally, being as I make a substantial proportion
of my living writing about Apple and Mac computers, I guess I would be
a bit of a bounder to operate on PC hardware, and I need to be able to
test Mac OS software and peripherals, but if those dynamics were not in
play, I think I would be ordering an Inspiron 1525 and installing Linux
on it, as at least a trial run.
Charles
Dell on the Road Is Good Enough with a Mac at
Home
From Ruffin:
Yep, that's exactly why I bought a Vostro 1400 for nuttin' a little
over a year ago. Though I miss OS X, there's nothing on OS X
that doesn't have an inferior replacement on Windows, and perhaps Linux
if I ever get my idealism quotient back up. I feel like I got a larger
drive, faster processor, webcam, and ports galore for half price. When
I really want a Mac for iMovie, RapidWeaver, etc., it's waiting
on me at my desk at home.
This is part of the reason I'm frustrated with the delay in updating
the mini. I'd rather have a nice mobile computer and a new Mac
sitting at home for the price of a MacBook.
I don't know, it seems to come down to if it's worth about $20 a
month to have mobile OS X, as I tend to get a new laptop every two
years or so. I used to say it did. After a little over a year with the
Vostro, I'm not so sure.
Keep us updated!
Thanks for the comment, Ruffin.
It really does boil down to whether you can live
happily without the Mac OS, and if you have a Mac at home, you don't
have to go cold-turkey.
Charles
Apple Isn't Playing the Same Game as Dell
From Ken:
Charles,
You should be asking the reverse question:
How come Dell is forced to sell a new 15" notebook for half
the price of a refurbished MacBook?
or
How can Apple effectively sell a refurbished MacBook for twice the
price of a Dell 15" notebook?
The answer: Because everyone else (except Apple) is selling
equivalent laptops at about that same price, so Dell must match the
price or go even lower to get the sales. But everyone else (except
Apple) is playing the same game, so the price keeps going lower.
Since Apple is the only major player selling a uniquely desirable
product (a well-designed computer that runs Mac OS X), it is the
only major player that can sell computers at a healthy profit
margin.
Apple does not play by the same rules, and it's not even the same
game.
When your product is essentially just like everyone else's product,
you can't charge a premium unless there is an overall shortage of
supply. There is definitely no shortage of Windows PCs in the current
market.
Apple, on the other hand, can manage the level of supply for Macs to
meet the actual demand and maintain healthy profit margins. That's a
huge advantage. When the recession eventually blows over, Apple will be
standing tall and more powerful than ever before.
-Ken
Hi Ken,
Good point, but IMHO the huge advantage Apple has is
the Mac OS. The hardware is excellent, of course, and that helps, but
the Mac OS is the soul of the Mac experience. I have to say that I
would probably have switched to non-Apple hardware long since if I
could legally run OS X on it. OS X is the game.
Which is why I figure Apple will never willingly
license OS X. From their perspective it would be insane to do so,
as the brief and nearly fatal detour into the land of cloning in 1996/97 proved (I
bought a Umax SuperMac S900, and it
was/is - I still have it - one of the best Macs I've ever owned).
Charles
"Good point, but IMHO the huge advantage Apple has is
the Mac OS."
Actually, I think I said the same thing... :)
And, therefore, I agree completely with everything else you
said.
Well, almost. When Apple grows Mac OS X market share to about
25 to 30%, then Apple may start considering ways to effectively license
Mac OS X. "Never" is a long time.
Ken
Hi Ken,
I suppose you did. You said "a well-designed computer
that runs Mac OS X", so it depends on where you place the primary
emphasis in that clause. ;-) I think we're on the same
page.
Touché on the "never" - a dangerous word for
the prudent. Let's get to that 30 percent market share first and see
what happens.
Charles
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