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How does Apple consistently sell at such a high price!?

E

elmateo487

macrumors 6502a
Original poster
Jun 12, 2008
873
530
Can someone PLEASE explain this logic to me.

How can a company sell a brand new laptop, for 370 bucks!? With an 8 gig solid state drive, 9 inch screen, full sized keyboard, 512 mb of ram, and a card reader. Plus assembly, case and so on.

http://www.slashgear.com/acer-aspire-one-launched-379-for-atom-powered-eee-901-rival-0311865.php

AND we pay close to that or more for our iPods or iPhones!?

That bull!! If someone could show me the cost of individual parts of an ipod i would be satisfied. But i apologize, that is just ridiculous.

Either apple really does buy "Premium" parts. (from my experience that is NOT true. Besides their screens.)

Or they are getting bad deals. (Highly unlikely)

Or we are getting robbed.

Is it because a laptop is bigger? And the parts are THAT much cheaper to find now?
 
i think it's quality and consumer loyalty. we know that, in general, apple makes good products.

you can't compare a netbook to apple laptops. a cursory glance at specs already reveals differences. also, os x is a consistently selling point.
 
it is more or less like hiring a senior consultant vs a junior consultant...
the hourly price of both is remarkably diferent.

Apple is more expensive because their design is superior and they have to charge for it (also the OS, the build, marketing, etc).
 
Apple caters to a niche market. It's like the same reason why Mercedes doesn't sell a $15,000 car, they're not targeting that particular demographic, therefore they don't need a $378 machine in order to remain competitive.
 
Because we are all dumb enough to pay for it.

I think thats a simple answer.
 
elmateo487 said:
How can a company sell a brand new laptop, for 370 bucks!? With an 8 gig solid state drive, 9 inch screen, full sized keyboard, 512 mb of ram, and a card reader. Plus assembly, case and so on.

<snip>

AND we pay close to that or more for our iPods or iPhones!?
Click to expand...
Simple, they are different products so you can't compare directly.

Ntombi said:
Because they can.

They sell, we buy.
Click to expand...
Guilty. :)
 
Pandaboots said:
because it runs windows
Click to expand...

Actually Linux OS with Windows XP as an option. Plus, only a 1.6GHz processor and 512MB RAM and a microscopic 8.9" display. The SSD is only 8GB, no gigabit Ethernet, and the WiFi is only b/g... no n, and only 3 hours battery life! No wonder it's so cheap! It's too small to be useful and ridiculously underpowered. I'd rather have a Mac Mini! At least it would come with Mac OS X!
 
I can buy a ton of manure for $50, but an itty-bitty 10-carat diamond costs $5 million! Yet both are made primarily from carbon. What a rip-off!
 
So the answer is that Apple rips us off and everyone is fine with that?

I see around these forums all the time. There is NO WAY IN HELL that "So and so product" will ever sell for 200 dollars. When they very well could be sold for that much, just it would be outrageous to what Apple normally does.

P.s. i would not call an iPod classic anything NEAR a mercedes.
 
Because if we want OS X, we have no other option than to pay what Apple charges, we can't go elsewhere as there's no competition. It's like when your on a plane, they charge you way over the normal price for drinks, because they no you can't go and buy from anywhere else, as your 30,000ft in the air.
 
elmateo487 said:
P.s. i would not call an iPod classic anything NEAR a mercedes.
Click to expand...

I like mine a lot-- big capacity, great battery life, rock solid and durable-- if its not a Mercedes I'd say it's a least a Volvo. Solid quality & reliable, not flashy.

Another problem with your comparison is price: I paid $250 for 80 gigs-- compare that to when I paid $499 for a 3G 30 Gig 4 years ago, with no color screen or click wheel. That's a pretty good price drop; one you'd not see with a Mercedes or a Volvo.

I'd say its nowhere near a Chevy Zune.
 
That has to do with parts though. The price of parts. Hard drive space is something tangible, something someone can count on their fingers. Which is why Apple does EXACTLY what they just did in your case.

Oh 80 gigs? Cheaper? What a bargain! And everyone still pays the high price.

Trust me. I love my iPod. I wouldn't go another direction. But Apple eventually will bring their prices down. They will need too if they are not continuously innovative.

yorkshire said:
Because if we want OS X, we have no other option than to pay what Apple charges, we can't go elsewhere as there's no competition. It's like when your on a plane, they charge you way over the normal price for drinks, because they no you can't go and buy from anywhere else, as your 30,000ft in the air.
Click to expand...

The ipod classic doesn't run os x. Neither do ANY of the small devices. I am comparing the price margin of this laptop, and these handhelds. Where is the high cost in apple handhelds?

Man. Its like 15 Zombies and a couple sensible people walked into this thread!

ntombi said:
Because they can.
Click to expand...


They sell, we buy.

nanofrog said:
Exactly. ;)

You choose what you buy. No one's holding a gun to your head. :p
Click to expand...

Its like HELLO people! Are you thinking!? Is that actually logic!?
 
GSMiller said:
Apple caters to a niche market. It's like the same reason why Mercedes doesn't sell a $15,000 car, they're not targeting that particular demographic, therefore they don't need a $378 machine in order to remain competitive.
Click to expand...

I wouldn't call >70% market share for the iPod and multi-million iPhone sales "niche". Apple has set the de facto standard for both music players and smartphones with their product lines.

However, responding to the OP, I wouldn't call the iPod/iPhone pricing "ripoff" either. Sure, we can purchase more raw computing power (such as the aforementioned Acer Aspire netbook) for less. But certain questions must be asked about any "competing" product...
  • Is it as portable as an iPod/iPhone?
  • Is it as nicely designed?
  • Is it as elegant and intuitive to use?
  • Is it as effective to do what you, the purchaser, intend it to do, right out of the box?
 
To actually address the question at hand, Apple iPods are quite competitively priced. The equivalent 80 GB Zune is $249, just like the 80 GB iPod. You're not actually paying any more for the equivalent iPod. Sure, you can get a completely different product -- a flash-based computer, for around the same price, but you wouldn't take your computer for a jog, would you? What you're paying for is miniaturization. It costs more to get the same functionality in a smaller package.
 
just like i said

"Is it because a laptop is bigger? And the parts are THAT much cheaper to find now?"

I'd like to see, if anyone knows, the cut Apple makes from each ipod. What it costs them to make it.

The socratic method, by the way, is the best way to get anyone to think these days. Including myself.
 
elmateo487 said:
just like i said

"Is it because a laptop is bigger? And the parts are THAT much cheaper to find now?"

I'd like to see, if anyone knows, the cut Apple makes from each ipod. What it costs them to make it.

The socratic method, by the way, is the best way to get anyone to think these days. Including myself.
Click to expand...

There are lots of breakdowns like this online. Here's one example:

http://www.appleinsider.com/article...d_nano_sports_fattest_profit_margins_yet.html

But the article is misleading. Their actual profit margin is not simply the retail price minus the component cost. There are other costs associated with these products -- research and development, marketing, shipping, project management, retooling factories, packaging, and so on. I believe Apple's overall profit margin is more like 30 percent. But you can easily find that online as well.
 
I think the answer is what everyone else has already said. It really doesnt matter what the components cost. Its more about the value it creates for YOU. If you dont get $250 (or what ever value, depending on the ipod you buy) of value from the ipod, dont buy it. I personally, (and prob most that buy them) get that much out of the ipod. Keeping what used to be stacks and stacks of CDs in my pocket, and easily moving it all with me from my home stereo, to car, to computer, to friends house when having a party, is pretty cool.

I dont think this makes anyone here a "zombie." Have you ever worn Nikes? Or any other name brand shoe? What do you think the PBOM on that was? Most of that cost was prob marketing. And there was probably a healthy margin in there as well.

Point is, with capitalism, a company is free to set any price it wants, and typically it is the balance of what the market will bear. I dont feel like I am being ripped off - its a consumer product, that no one NEEDS. To the victor go the spoils as they say... apple took a risk in sinking millions of dollars to develop these things, now they are rewarded with the profit. I dont know why so many people get bent out of shape about this? If they ever ask a truly unreasonable amount of money for an ipod, people will stop buying.

Okay, I'm done rambling....

edit - and wordmunger above is also absolutely correct... you cant just look at the PBOM... there are other costs that far exceed the actual hardware... Nike, referenced above, is a perfect example. About $5 of plastic, leather, nylon, and rubber, and $50 in marketing lol.
 
Apple buys quality parts. Apple provides excellent service. And Apple makes a profit from the products it sells. Building a full computer into the tiny case of an iPhone or iPod Touch isn't cheap. All that added together, I think the prices are about Ok. And obviously nobody forces you to buy an iPhone or iPod Touch. Pick things you like, then choose what is best value for money for you.

wordmunger said:
Their actual profit margin is not simply the retail price minus the component cost. There are other costs associated with these products -- research and development, marketing, shipping, project management, retooling factories, packaging, and so on. I believe Apple's overall profit margin is more like 30 percent. But you can easily find that online as well.
Click to expand...

Thirty percent is "gross margin". If you take a product off the shelf, then you decide whether to put it back on the shelf or to go and pay for it, the difference between these two is the gross margin. Gross margin excludes the cost that Apple has whether you buy that one product or not, like development, running the stores, etc.
 
Two words: Perceived Value

You also can't compare a cheap laptop and an iPod. You're comparing two entirely different product lines and markets.
 
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