Apple famously sells its hardware at a premium. It could afford to sell its products for much less money, with teardowns consistently revealing there is little justification for the prices in terms of the cost of manufacturing Macs and iDevices. But the company chooses not to do so.
The reasons for this are many and varied, and differ depending on who is expressing their opinion. The fact is Apple could cut its prices, but whether it should do or not was the subject of last week’s We Ask You discussion.
The Apple Tax = A Taxing Question
We asked you, Should Apple Cut Its Prices? A fair number of you answered the question, giving opinions ranging from, “Yes, definitely,” to, “No, of course not,” with a, “Who bloody cares??” included for good measure.
The majority of people suggested Apple should indeed cut their prices, despite the perception that higher prices equal better products. Sure, you generally pay for what you get, but Apple seems intent on adding an extra layer of expense even on top of that.
There are already signs of Apple subtly adjusting its pricing strategy. The iPad was a lot cheaper than many experts predicted. The iPhone 5c was a (failed) experiment at releasing a slightly cheaper smartphone. And the price of the latest MacBook Air has been cut by $100. But these are small changes taking years to enact.
Apple is cash-rich and has no need to panic in terms of cutting prices. However, its worldwide market share isn’t all that impressive, boasting around 15 percent of the smartphone market and just 8 percent of the computer market. To increase this market share Apple needs to add new people to its existing userbase, and price cuts are an obvious way of doing so.
The question then is, does Apple want to increase its market share? If it sees itself as the Ferrari or Rolex of consumer tech then probably not, and certainly not if it means cutting its prices to compete with what Cupertino sees as inferior competition.
To conclude: Apple could its prices quite easily, Apple should cut its prices if it wants to grow, but Apple won’t cut its prices all the while it sees itself as a premium brand appealing only to those with money to burn.
Comment Of The Week
We received a lot of great comments, including those from Imaduddin Sawal, Peter F, and jamieg. Comment Of The Week goes to Robert O, who won with this comment:
I think that a large part of Apple’s “cult” appeal is in its “elegant” status, and therefore they can’t cut prices (too much) without affecting its brand.
This might come as a shock to some of you younger techies, but Apple has always been an expensive brand, and as an “old guy,” I’ve always resented them for it. Back in the 1980?s, there were 8-bit computer platforms that easily outperformed the Apple II (namely the Commodore 64 and Atari 8-bits) on most levels, but Apple continued to successfully charge triple the price of competing platforms, largely on “brand.” This “Apple tax” continued into the 16-bit era, to namecheck the Commodore Amiga and even (arguably) MS-DOS platforms.
However, I do have to (in retrospect) concede that Apple has been a positive force in the tech industry, pushing the personal computer, windows/mouse interface, MP3 players, and smartphones into the public arena. Without the Apple II, what would the 8-bit computer world have looked like? Without the Macintosh/Lisa, what would the 16-bit era (and beyond) have looked like? Without the iPhone, what would the “smartphone” era have looked like? Or the “tablet” era?
Perhaps by purchasing an Apple product, you’re actually investing in the next step in technological evolution. Thank you, Apple fans, for when the competitors’ products start mirroring your advancements, the general “poor” public can enjoy your innovations at much lower prices!
So should Apple lower its prices? No! Let the competitors lower theirs! Then the masses can afford it!
We chose this comment because it offers a balanced view on the question of Apple’s pricing strategy. Although the premium pricing caused this guy frustration for many years, he can now see how Apple’s investment in R&D has helped push technology to the next level. At which point we all benefit, Apple fans or not.
We Ask You is a weekly column in which you have your say about a particular subject. We ask you a question each week, with the results compiled and compressed into a follow-up article the following week. This column is nothing without your input, all of which is valued.
Image Credit: Angelo DeSantis via Flickr