Fri, 13 Jan 2006

Zero Tolerance Policy

Michael Kanellos is an editor at CNet. He had this to say in his recent article:
MK: One thing Apple Computer didn't address with the conversion to Intel processors is the price. Apple's products still carry a sizable premium, at least according to an early comparison with Gateway machines.
Let's ignore the fact that Apple has never been about "lowest price". What I take issue with is a) that Apple's products supposedly carry some sort of "premium", and b) that any comparison to Gateway machines is presumably some sort of fair comparison.

So just how much is this alleged premium?
MK: Historically, Apple has generally maintained a $300 price premium.
$300 huh? If he's right, scientifically speaking, one should be able to reproduce his results. Problem is, I had a hell of a time doing so. Here's the closest configuration I could find:

Company Apple Gateway
Model MacBook Pro M465-Eb
CPU CoreDuo 1.67Ghz, 667Mhz FSB 2MB Cache
Memory 1GB 667 DDR2 - 2x512 SO-DIMMs
Hard Drive 100GB Serial ATA @ 5400 rpm
Optical Drive SuperDrive
OS MacOS X Windows XP
Antivirus Software None (not necessary) Gateway Security Suite
Video ATI Mobility Radeon X1600 - 128MB ATI Mobility Radeon X1400 SE 128MB
Screen 15.4" TFT (1440 by 900) 15.4" TFT (1400 by 1050)
Battery Lithium-polymer battery Lithium-ion battery
Bluetooth Included +Module
WebCam Included +~$50
Shipping Free $49
Total Price $1,999 $1,913

The total difference, then, is $86. That's right, eighty six dollars.

Now let's see. The Mac is 9% lighter, 33% thinner, has a faster video card, better battery techology, doesn't use any cheap plastics and employs innovative new technologies. The configurations are simple and the site is thus simple to use. You can't say any of that for the Gateway.

So is Apple's customer base unwilling to pay that $86 "premium"? Should Apple cast off its bourgouise profits and shave off that $86 to tack on a few Gateway customers here and there? Is this what Steve Jobs should tell Apple's Board of Directors?

Let's face it. If Apple's strategy wasn't working for its customer base, you'd think it'd be reflected in its stock price. (Incidentally, AAPL is at a record high)

Michael, you're a technology writer for a company who, without the Internet high tech industry, would have no reason to exist. You would think that would justify splurging the $86 to buy quality where it counts. In fact, if you only use your computer for one hour each day for one year, the amortized cost of $86 for that period is twenty three cents a day. That's less than a postage stamp. You could find that much in between the cushions of most sofas in most living rooms in most industrialized countries in the world!

Now maybe you might counter that the difference isn't something you object to-- you're basically doing a service to your readers, perhaps. Well let's see who exactly your audience is, then, shall we? According to your own advertising marketing material, the average age of your readers is 37 years old, 88% college educated, with a median household income in excess of $80K, with 84% broadband access. To top it off, your audience is expected to spend, on average $3,500 on personal technology and consumer electronics in the next 12 months. And yet, you see fit to bemoan a price difference of $86 to this audience? Shame on you, Michael Kanellos.

If you (or any of your readers) can't afford that (or can't acknowledge that Apple's target market can), it's time for all of you to find a job in another industry or go read "", because the last thing you should be doing is spending any time writing (or reading) any articles that quabble over a $86 price "premium" for a purchase of nearly two thousand dollars.

Khan Klatt

Khan Klatt's photo