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Wed, Dec 23, 2009 - 10:53 AM EST  —  AAPL: 201.33 (+0.97, +0.48%)  |  NASDAQ: 2258.48 (+5.81, +0.26%)

Why should Apple cut Mac prices 25 percent?
Tuesday, November 03, 2009 - 02:20 PM EST

"The timing is perfect for Apple to cut Mac prices and dramatically to increase its market share. If Apple made that seemingly radical decision, the MacIntosh could easily move out of single digits of market share," John Dodge writes for SmartPlanet.

MacDailyNews Take: That's a strange Website name. Can a giant orbiting rock really be "smart?" Certainly, the majority of humans crawling all over it aren't, based on their OS "choice," to say nothing of the IQ bell curve among many other things.

Dodge continues, "Mac operating system share has steadily risen in 2009, topping out in October at 5.27 per cent to Microsoft Windows’ seemingly insurmountable 92.52 percent, according to market research firm Net Applications."

MacDailyNews Take: Net Applications doesn't measure market share, Mr. Dodge. It measures OS information reported by users browsers as they access NetApps' network of some 40,000 sites worldwide. Market share is nothing but the number of units sold by a vendor divided by the total number of units sold regardless of whether they made money (Apple Macs) or not ("netbooks"). Dell has triple the market share of Apple, generates roughly 33% greater revenue, but makes just 1/3rd the profit. Tell us why Apple has to dramatically cut Mac prices and increase market share again?

Dodge continues, "There’s a problem and it’s one Apple can fix. Macs are too expensive."

MacDailyNews Take: Says who? Only someone who doesn't understand the differences between margins, profits, and market share.

Dodge continues, "There I was last Friday in the Apple store cooing over an elegant 15-inch MacBook Pro. But at $1,700, I could not pull the trigger."

MacDailyNews Take: John, nobody cares if you're too poor to afford a 15-inch MacBook Pro. Get the 13-inch model, or the MacBook, and/or a real job and stop your tedious whining.

Dodge continues, "Everything else was right except the price. I’m ready to switch from 20 plus years as a Windows user who has written about the technology longer than that and switch to a Mac... The Mac is the more intelligent choice... So as a buyer, I’m stuck in a PC notebook processor netherworld and being too cheap to shell out megabucks for a Mac, the clear winner on all levels but price. Pricecuts on the Mac would make it a much more appealing mainstream contender. Android, anyone?"

MacDailyNews Take: To illustrate the morbid stupidity: There I was last Friday in the BMW dealership cooing over an elegant BMW M5. But at $85,500, I could not pull the trigger. Everything else was right except the price. I’m ready to switch from 20 plus years as a Ford sufferer who has written about automobile technology longer than that and switch to a BMW... The BMW is the more intelligent choice... So as a buyer, I’m stuck in a Ford and being too cheap to shell out megabucks for a BMW, the clear winner on all levels but price. Pricecuts on the BMW would make it a much more appealing mainstream contender. Chevy, anyone?

Last quarter, Apple sold a record number of Macs. Apple currently owns 91% share of the $1,000+ computer market. If anything, Apple should consider raising Mac prices as selling record numbers of premium-prices products during "the worst economy since The Great Depression" probably indicates that Apple's Mac prices are too low. Even without price increases, perhaps because articles written by illogical people don't command much of a price, John can't afford a Mac, so in order to appease him, Apple should cut their margins down to beleaguered Dell's levels, so they can work markedly harder for significantly less revenue and soon start laying off people, closing plants, retail outlets and call centers, skimping on build-quality, and installing a bad copy of Mac OS X from a bloated, rudderless company headed by a clown who once got a very fortuitous dorm assignment.

Pure genius, John. SmartPlanet, indeed.

What may well be the stupidest article of the month, at least, already (not counting anything emitted by Rob Enderle) - give John the clicks, so maybe the poor bastard can eventually afford a reburb Mac, at least - can be found here.

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Nov 03, 09 - 02:24 pm Comment from: bobo

Ya and I'd like BMW's to cost the same as KIAs, WAAAA!

Nov 03, 09 - 02:28 pm Comment from: Cubert

Spec 'em out, boys! A Mac will be within a few hundred dollars either above OR BELOW your comparable PeeCee.

Nov 03, 09 - 02:31 pm Comment from: G Spank

I agree, it would be great to see Apple compete on the lower end as well.

Nov 03, 09 - 02:32 pm Comment from: Des Gusting

He does have a bit of a point, certainly in countries other than North Murrica. In Oz, for example, Macs are way, W-A-Y more expensive than PCs. So much so that I don't bother to recommend Macs to anyone - I just quietly enjoy my Macbook.

Nov 03, 09 - 02:33 pm Comment from: JoeSmoe

Macdaily news are really idiots. Forget the fact they litter their page with stupid ads that pop up every time you move your mouse.

Macs are EXPENSIVE, no doubt about it. I'm a loyal Mac user from day one and really hate windows, BUT we need 2 new laptops. My old ibook G3 just can't cut it. With the current economic environment I just can't pay 2k for laptops for me and the wife, so I'm now looking at PC laptops, as much as it pains me. Before people say get a better job or you're too cheap, I'm retired and my pension is more then many people salaries, BUT dropping 2K plus on laptops doesn't fit the budget in the face of the oncoming financial Tsunami. I am now force to look at the less expensive PC and will have to suffer using a PC..

Nov 03, 09 - 02:33 pm Comment from: deepdish

Once you lower the prices (which are not too high to begin with) you will never be able to raise them back up. It is a one way, permanent decision.

Nov 03, 09 - 02:36 pm Comment from: Raymond in DC

Oh, rubbish! Apple's current margins are somewhere in the 34% range. If they dropped prices 25% those margins would be close to those of HP, a few points above the margins that Dell generates. They'd have to sell 4x as many Macs to generate the kind of profit and cash flow they have now.

Now you understand why Dodge is not running Apple and Jobs and his crew are.

Nov 03, 09 - 02:37 pm Comment from: DLMeyer

More snarky comments from MDN that add little to the article they supposedly comment on. OK, they add a little.
Yes, Apple can afford to lower the purchase price of several models by quite a bit. How do I know that? Their cash hoard keeps growing. They can continue to accumulate cash - at a slower rate - if they cut the price of many of their models by 10%-12.5% - NOT the 25% in the headline. Not ALL their models, but many of them.
Would this price them where John would feel comfortable buying them? Maybe. More likely, though, not. John is not looking at the value of the purchase, precisely, so much as the COST. And that can be scary! MDN claims: "Apple currently owns 91% share of the $1,000+ computer market." ... and who am I to doubt them! But, that means the entire $1,000+ market is less than 10% of the TOTAL market. Cutting the price of an iMac, or a MacPro, or even a MacBook Pro, by 10% will not break that $1,000 price-point in many - any? - places. The result would likely be that niche would grow with the addition of more Mac sales - but Mac's share would grow only a little faster.
And Apple's money pile will grow much less quickly.
And AAPL's stockholders would complain.
More.

Nov 03, 09 - 02:38 pm Comment from: ron

"Why should Apple cut Mac prices 25 percent?"

They shouldn't!

Nov 03, 09 - 02:41 pm Comment from: Kevin

Didn't Steve say something about not playing in certain segments of the market??

Not Gonna Happen as long as His Steveness (Jobs, not the Chairthrower) is in charge.

Nov 03, 09 - 02:41 pm Comment from: auramac

First of all, I totally agree with the comment about this site being littered with "stupid popup ads," really stupid when they advertise Microsoft Bing. Now that's not only stupid, but prostitution. Also, not everyone can get a "real job," but we can "stop whining," and yes- in the long run, and in terms of user experience- Macs are worth the price, and I believe, more bang for your buck than any PC.

Nov 03, 09 - 02:43 pm Comment from: jaundiced

I think everyone is missing the point. If Apple management, its Board, and stockholders in general, are satisfied with the product and the financial returns being generated, and most importantly the current sales, then I say screw all the ankle biters crying for a price cut. Buy a damn Dell/HP if you can't afford the Apple tariff.

Nov 03, 09 - 02:43 pm Comment from: Predrag

JoeSmoe:

You may want to consider refurbs. I know they aren't $500, but very often, white MacBooks appear for $800 and even less. You get full standard warranty, at the end of which you can pick up another two years of AppleCare (if you're worried about the reliability).

If $500 was all I could afford for a laptop, I would probably seek out a well-kept used MB (C2D). You could get 2.2GHz model with 1GB of RAM and 120G HD for that money, and it can comfortably run SnowLeopard, so you'll be set for the next 3-4 years (at least). Most certainly, it would perform better than a new $500 Acer or Dell of today.

Nov 03, 09 - 02:44 pm Comment from: Troy

Windows people should stay in windows world, if they don't understand what a price/value product means, why are they giving opinions?

Look at this caption contest of the "answer bar' from microsoft.
http://www.9to5mac.com/answer-bar-despair#comment-53145

Nov 03, 09 - 02:45 pm Comment from: Flackman

Stupidity or linkbait? I'll choose the former. What a dope.

Nov 03, 09 - 02:46 pm Comment from: DLMeyer

I have to learn to type faster. WAY faster! Or make a quick comment, post it, then type in the rest of it. There were NO posts when I started my previous entry!
If Raymond is correct, if Apple is making around 34% profit on a typical sale, then my estimate was low. 15% to 20% might be reasonable. There would still be few entries dropping below $1,000 and none dropping into the $500/system* category quite a few PC users are most comfortable with. (with new monitor, speakers, printer, etc.) Even so, Cubert is quite correct on "value".

Nov 03, 09 - 02:47 pm Comment from: Cubert

Did the author look at what a comparable Dell or other PC laptop with similar specs would cost compared to the MacBook Pro?

No, of course not. He just simply passed a judgement based upon a dollar price. There are plenty of $3000+ PC laptops out there.

Nov 03, 09 - 02:51 pm Comment from: Mark in Portland

Apple SHOULD NOT drop their prices 25%. I think they have done a bit to bring them closer to the low end, along with the rest of the PC industry.... but they should not join the "race to the bottom" that the PC manufacturers have all engaged in, to the point where they don't really make profits on hardware sales any more, and have commoditized their own products.

Apple has maintained their margins, I'd argue, by keeping their design in-house and only relying on the ODMs in Taiwan and China for manufacturing. The PC OEMs have ceded almost everything to the same handful of ODMs their competitors all use... none of that that leads to creativity, better design, higher margins or better choice for the consumer. Just lower prices, at the sacrifice of everything else.

Nov 03, 09 - 02:51 pm Comment from: MacBart

@ Cubert

Exactly. Every time I compare a Dell or HP with the same specs as a Mac, the Mac either is less expensive or about the same. I can't understand why even some Mac users can't seem to grasp this. And, once total cost of ownership is considered, it's not even close!

Nov 03, 09 - 02:53 pm Comment from: Troy

Here you have another good one about microsoft stores, they didn't upgraded to Windows 7, what are they afraid of?
http://www.youtube.com/watch?v=TmjUq8usoKQ

Nov 03, 09 - 02:53 pm Comment from: MacMan

Well, the real question is: do we CARE that Apple is making TONS of money, or do we want everyone to be able to afford a Mac? In fact, they're not mutually exclusive. Theoretically, if Apple cut their prices by 25% then, yes, they would have to sell 4 times as many just to make the same profit BUT they would have SIGNIFICANTLY more market share. And this just might cascade- if everyone thought the price barrier was broken and Macs were as affordable as PCs. Then it might one day be Apple with the 90% market share and they would still be raking in the profits.

I agree with Dodge- Apple's mission should be to make a reasonable profit but also to put OS X on the desks and laps and pockets of EVERYONE on the planet. They are sitting on upwards of $31 BILLION dollars - it's not like they're scraping by. You would think they could be a little more competitive in price to gain that market share...

As an Apple shareholder, I would be happy to see the stock price dip for a bit if it meant huge gains in market share in the long term - there is a greater good here (we'll still make plenty on Apple stock once the tide really turns)....

Nov 03, 09 - 02:54 pm Comment from: UltraVisitor

Your economic observations might be right, MDN, but I don't like you dissing Earth. It's the best goddamn planet you know.

Nov 03, 09 - 02:56 pm Comment from: kenh

"BUT dropping 2K plus on laptops doesn't fit the budget in the face of the oncoming financial Tsunami. I am now force to look at the less expensive PC and will have to suffer using a PC.."

So how do you think your PC's and PC using companies will do in the coming financial Tsunami?

You will need maximized productivity and reliability.

Think about it.

Nov 03, 09 - 02:57 pm Comment from: @JoeSmoe

I'm calling BS. You aren't retired. In fact, I would guess that you are under 30. Your misspelling of Joe Schmoe, various grammatical errors, and the general "feel" of your post make me think you are 18 to 25 years old, were "educated" in the U.S., and don't actually own or use a Mac. Nice try, though.

Nov 03, 09 - 02:57 pm Comment from: Doc4i

The question is not the cost but rather is the price difference between PC and Mac justified by the experience. BMW vs Ford?
The PC isn't even in the same showroom.

Nov 03, 09 - 02:57 pm Comment from: chaz

@JoeSmoe
Predrag makes some good points, my take is you must think you are going to kick the bucket within the 6-8 years a Mac will be good for (vs 2-4 years of a Pee Cee), and that you dislike your hiers so much you will leave them crappy Pee Cee's that are also ready to kick the bucket. Thats the only logic I can derive from your willingness to choose PC's based on pure price. cool hmm

Nov 03, 09 - 03:00 pm Comment from: MacMan

And another point: why should one have to buy a Pro machine just to get the 15" monitor? Maybe not everyone needs the extra speed & RAM and FireWire and and and...

Look, I think the people responsible for Windoze should be taken to the World Court and prosecuted for crimes against humanity, but that doesn't mean Apple can't make a 15" MacBook (no Pro) for those that don't need the extra power but just want a wider screen...

Just a thought...

Nov 03, 09 - 03:03 pm Comment from: MacAdvocate

The time is right for retardo-blog writers to cut their word count by 100%.

Seriously.

Nov 03, 09 - 03:04 pm Comment from: Davecc

Hey, I have a new MacPro and a BMW X3. Life is good.

Nov 03, 09 - 03:05 pm Comment from: iPhoner

Previous upgrade path:

- Go to Dell, HP, Gateway, Compaq, Sony, Alienware websites and build system. Go with cheapest system that provided max build.

Current upgrade path:

- apple.com
Save up and buy the best system known to man.

Nov 03, 09 - 03:05 pm Comment from: Jubei

What may well be the stupidest article of the month, at least, (not counting anything emitted by Rob Enderle) - give John the clicks, so maybe the poor bastard can eventually afford a reburb Mac, at least"

LOL. Well give him a few more articles and he'll soon be up to Robs Supreme Idiot Levels.

Nov 03, 09 - 03:08 pm Comment from: Handsome Smitty

MDN: "MacDailyNews Take: John, nobody cares if you're too poor to afford a 15-inch MacBook Pro. Get the 13-inch model, or the MacBook, and/or a real job and stop your tedious whining."

Jeez, did Olberman guess-write this piece. Harsh. Lay off the lemons, maybe your asshole will unpucker itself.

Nov 03, 09 - 03:09 pm Comment from: Jubei

@JoeSmoe

I guess your clueless to the meaning of the word "saving". Yeah get a jar put in 10 bucks a week if that's all you can afford. Sell your old crap when your ready. Then you can afford a Mac. There you go. How hard was that.

Nov 03, 09 - 03:11 pm Comment from: Handsome Smitty

MacMan: "Apple's mission should be to make a reasonable profit but also to put OS X on the desks and laps and pockets of EVERYONE on the planet. They are sitting on upwards of $31 BILLION dollars - it's not like they're scraping by. You would think they could be a little more competitive in price to gain that market share..."

Naw, not Job's style. That would be so...so...common. He's a typical elitist liberal billionaire, doesn't want to associate with the peons.

Nov 03, 09 - 03:13 pm Comment from: Handsome Smitty

Davecc
"Hey, I have a new MacPro and a BMW X3. Life is good."

Laugh it up, fuzzball.

Nov 03, 09 - 03:14 pm Comment from: Predrag

I love how there are all these ads for Microsoft's stuff on MDN. The fun part of it is that they keep spending money on advertising here (i.e. MDN keeps making money off of MS), while it is obvious to ANYONE that not a single person on this web site will actually respond to any MS ads.

If MDN has to make a living selling ads, I say, let them sell ad space to MS! There's nothing like the satisfaction that comes with the knowledge of MS throwing money down the drain!

Nov 03, 09 - 03:26 pm Comment from: chaz

@Predrag
I don"t know about you, but thats the luxury of having 90+% of the market that M$ keeps sticking us in the eye with. I also would like to see Apple be a little more price competitive. In the PeeCee world it's the hardware guys getting squeezed, M$ just picks up license fees from every bare bones crappy net book that gets sold.

Nov 03, 09 - 03:27 pm Comment from: ^(*)%$^&#!

MacMan - They are sitting on upwards of $31 BILLION dollars - it's not like they're scraping by.

There's always someone who wants to spend your money when they don't have it themselves.

It's their money, leave off it!

Nov 03, 09 - 03:30 pm Comment from: Lorax

Does this guy use dial-up to save money, too?

Nov 03, 09 - 03:32 pm Comment from: alex

I think the prices are fine, and there's definitely no need to lower them, but raise them? Whoa, MDN, let's not get carried away!

Magic Word: Working, as in if John was, he'd be able to afford a Mac.

Nov 03, 09 - 03:34 pm Comment from: Another IT Guy...

Apple chopping margins makes zero sense in light of their users' willingness to pay current prices. It's just a bad business decision.

Secondly, why do Macolytes compare their systems to one of the highest required-maintenance car families out there?

Nov 03, 09 - 03:38 pm Comment from: ElderNorm

@MacBart,
"@ Cubert

Exactly. Every time I compare a Dell or HP with the same specs as a Mac, the Mac either is less expensive or about the same. ...!"

RIGHT ON. Absolutely Right on. PERIOD and to those that want Apple to drop prices..... WHY. They already match PC prices. ......

Apple makes money the old fashion way, they earn it. The spend Billions to buy memory at great rates ahead of need so their costs are lower when they use it. They keep turn over fast so there is not a lot of inventory sitting on the shelf. If you want a crappy pc for internet surfing, get a net book, virus ware etc and have fun. Save money. But there are plenty of used Mac systems out there for a good price. (Bought a used G4 tower for $200)

@JoeShmoe. "Macs are EXPENSIVE, no doubt about it. I'm a loyal Mac user from day one and really hate windows, BUT we need 2 new laptops. My old ibook G3 just can't cut it"

Sorry fellow (PC troll??) See above. get two pc laptops that match a Mac and you are spending the same or more.

Why do you need a more powerful computer??? BUSINESS??? then its a tax write-off. Just to surf the internet faster..?? My iBook works just fine and runs Tiger too.

Sorry to all the complainers but I would like a new MacBook too. but mine runs just fine and will be with me for 3-5 years more. And by then, I might just sell my old iBook G3 for $300. Let me know if your still looking. LOL

Just a thought.
en

Nov 03, 09 - 03:45 pm Comment from: WetFX

I keep wondering exactly what specks the PC people are comparing. What about everyday use items. Apple's trackpad is the most advanced on the market, PC's have nothing close. The keyboard is centered with good space between the keys, and the pros are backlit. Most cheep laptops try and trick people into thinking they are getting a great deal because it includes a number pad; however they are now typing uncomfortably off center, when they could have had better speakers instead. When you go past the RAM, processor, and hard drive, there is no comparison.

Nov 03, 09 - 03:46 pm Comment from: x

What a clueless asshat. Buddy, carry your ass, Apple does not want your business because you cheapskate that does not want to pay for value.... you want it for free.

Go by a fscking netbook running Windows and go back to sleep, dumbass.

Nov 03, 09 - 03:47 pm Comment from: kevt

Dodge thinks he has it bad! He should be thankful he doesn't live in the UK, where the base 999$ MacBook retails for £799 = 1300$.

Apple should be cutting the costs in some places in the world. Their greed is seriously pricing themselves out of sales in the UK.

Nov 03, 09 - 03:59 pm Comment from: ElderNorm

Release the flaming arrows.!!!!! grin

en

Nov 03, 09 - 04:01 pm Comment from: @JoeSmoe

"BUT dropping 2K plus on laptops doesn't fit the budget in the face of the oncoming financial Tsunami. "

You may have hit the nail on the head with this part of your entry.

No matter what the Obama administration says, I shudder at what the financial prospects are right now. Then, combined with some socialist thinking from our administration, I'm VERY concerned.

Other than that, Macs are worth every penny Apple charges. Windows unit are so expensive on maintenance, there's no comparison.

Nov 03, 09 - 04:10 pm Comment from: the other steve jobs

Of what value is having additional market share?

It hasn't helped Microsoft or Dell or Nokia in any measureable way.

Nov 03, 09 - 04:13 pm Comment from: January 24, 1984

The most expensive suit I ever bought was the cheap one I never wear.

Nov 03, 09 - 04:13 pm Comment from: Lilochris

Macs are expensive. Honestly, sometime I'm annoyed by the MacDailyNews Take. Sorry but not everybody is rich as yourself to afford All Apple's Best and Latest tech.

I came to the mac in 2005 starting with the $499 Mac Mini. And months later, I needed a notebook. The AppleStore Sold me a Brand new 12 Inch iBook G4 1.2Ghz including AppleCare for $699 with EDU Discount. Because it was the Previous model line. They sold it to me in that price because Apple Just introduced the 2005 1.33GHZ/1.42Ghz iBook G4 Line. That was the best deal of my life which I wouldn't of found anywhere. If it were for a thoughtful Store Employee who remembered that leftover iBook, I probably would've bought a crappy Win/Tel Laptop.

My Ol' Faithful iBook G4 1.2Ghz has been creaky for the past year. It just can't handle HQ video files online, and I'm getting tired of the spinning beach ball. The battery now last for about 1 Hour average, the enclosure has hairline cracks everywhere, and the Charging cord is breaking apart exposing the wires. I wrapped that with a mound of Electrical tape. I need a new Laptop.

I don't have $1000 to spend now. I'm a student and even after the EDU discount, it still will cost over $1000 for a base MacBook. If apple were to price that MacBook at between the $699-$799 range, maybe I would've upgraded a bit sooner.

Honestly the White macbook should be Priced over $150 more expensive than where it should be.

Apple Should also now include iWork. ilife is a much more valuable App and Apple Includes that. But Why not complete it with iWork Apple??? With all those Apps combined, you'll blow the competition away.

Oh and that $899 display?? Just How many people buy these???Apple Prices it this way because it may have some USB ports, speakers, and an iSight Camera? That display should be around $599 If apple want to move these. And Why offer a smaller 21.5 display like from the iMac so Apple can price it at $299.

@ElderNorm
R you kidding around or do you actually believe you may get $300 3-5 years from now for your iBook G3. If my Late 04 iBook G4 were in perfect shape, I don't even think I would get $300 for it even today.

Nov 03, 09 - 04:14 pm Comment from: Spark

Hey! Ford is the only American auto company turning a profit. Use GM for your analogy.

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