Linked by Thom Holwerda on Mon 19th Oct 2009 21:43 UTC
Apple It's getting a little bit predictable, but Apple has reported yet another stellar set of quarterly financial results. The company has sold more Macs and iPhones than the same quarter last year, but sales of the iPod were down compared to the same quarter last year. Profits and gross-margins were also up.
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RE[3]: Comment by Tony Swash
by Tony Swash on Tue 20th Oct 2009 09:08 UTC in reply to "RE[2]: Comment by Tony Swash"
Tony Swash
Member since:
2009-08-22

The trick is, to do cult marketing, and use that to sell people something different from and usually more expensive than they really need for the job, in order to raise margins.


This cuts to the heart of the important question. The question is not "is Apple kit more expensive than equivalent PC kit". The questions are why does Apple kit, consisting of stuff at the higher price range, sell so unbelievably well at the hight of a recession when so many people are so cash strapped?. Why have Apple products across the board been selling above market trend for so long?

One answer I have seen on many occasions, and your comment is an example of it, is that it is essentially all just a marketing trick. That Apple somehow hypnotises enough people into buying stuff they don't really want or need and that there are plenty of superior non-Apple alternatives that if only people weren't hypnotised by the marketing they would be buying instead. My answer to that is that its rubbish.

I think the answer is not marketing (although very clever marketing is a part of the equation) but rather the total experience that people get from using Apple kit. Its to do with the way that Apple kit looks and feels, its to do with the way in which Apple kit is designed and works, its to do with the integration of hardware and software, its to do with the pleasure of the Apple Store retail experience, its to do with all the added value and cleverness of the bundled iLife suit and of the App store. etc etc

The fact of the matter is that lots of techy and non-techy consumers purr with pleasure when exposed to the experience of using Apple kit. It makes them feel good, and clever and creative and safe in a way that Windows/Rim/Nokia/ stuff just doesn't.

I have lost count of the times that friends (most of whom are not Mac users) have come up to me to gush about their iPhone and how wonderful it is. I lent my neighbour (who is totally inexperienced and fearful of computers) my spare MacBook Pro when her newly purchased and cheap netbook running Visa started to malfunction. She now stops me in the street to gush at me about how much fun she is having using the mac, how she editing photos and movies using the ILife suit, how she feels so good. She looks and is empowered by her use of Apple kit. And its that experience which has powered Apples sensational success in the last decade.

Reply Parent Score: 3

Thom_Holwerda Member since:
2005-06-29

This cuts to the heart of the important question. The question is not "is Apple kit more expensive than equivalent PC kit". The questions are why does Apple kit, consisting of stuff at the higher price range, sell so unbelievably well at the hight of a recession when so many people are so cash strapped?


But that's the very question! We don't know if this is the optimal price/profit ratio for Apple. For all we know they could drop 200 USD off the iMac and MacBook Pro 13", and for all we know they might sell 50% more Macs that way - decreasing margins, yes, but massively increasing profits.

That's kind of the point here. The price/profit ratio for companies like Acer and HP isn't optimal because even though they all sell 6-8 times as many machines as Apple, they do not profit as much from them. Apple's price/profit ratio could also not be optimal - it could be that by lowering the price, they could actually increase profits because the loss in margins could be more than made up for because of increased unit sales.

In other words, Apple could actually be underperforming if you take into account that this might simply not be the optimal price/profit ratio.

Edited 2009-10-20 11:47 UTC

Reply Parent Score: 0

RE[5]: Comment by Tony Swash
by puenktchen on Tue 20th Oct 2009 12:32 in reply to "RE[4]: Comment by Tony Swash"
puenktchen Member since:
2007-07-27

We don't know if this is the optimal price/profit ratio for Apple. For all we know they could drop 200 USD off the iMac and MacBook Pro 13", and for all we know they might sell 50% more Macs that way - decreasing margins, yes, but massively increasing profits.


well, let's do the math: let's say they sell their cheaper imacs and macbooks at an average price of $1000. their margin is 35% = $350 per unit. if they cut the price to $800, their profit per unit drops to $150 USD. if they sell 50% more macs, they now make $225 were they used to make $350 profit. in order to earn more money after cutting the price by 20%, they'd have to sell 134% more macs. that's not very likely, because even at that pricepoint there are still many cheaper alternatives on the market.

as much as it hurts my wallet, relativly high prices seems to be the right thing to do from apples perspective.

Edited 2009-10-20 12:34 UTC

Reply Parent Score: 3

RE[4]: Comment by Tony Swash
by alcibiades on Tue 20th Oct 2009 12:10 in reply to "RE[3]: Comment by Tony Swash"
alcibiades Member since:
2005-10-12

.....One answer I have seen on many occasions, and your comment is an example of it, is that it is essentially all just a marketing trick. That Apple somehow hypnotises enough people into buying stuff they don't really want or need and that there are plenty of superior non-Apple alternatives that if only people weren't hypnotised by the marketing they would be buying instead. My answer to that is that its rubbish....


I don't think that either. I think what people are buying is OSX, and what they are being sold as the price of it, is hardware which is no more integrated than anyone elses, and which is mostly not very well fitted to the users real needs, being mostly rather eccentrically configured systems with too little cooling, too little disk, poor graphics, not a lot of memory, but humongous processors. This is why Hackintoshes are perceived as a threat. They offer just as integrated hardware but in more rational and cost effective configurations. This marketing stance is tied into what I call 'cult marketing', as we are about to see.

..the total experience that people get from using Apple kit. Its to do with the way that Apple kit looks and feels, its to do with the way in which Apple kit is designed and works, its to do with the integration of hardware and software, its to do with the pleasure of the Apple Store retail experience, its to do with all the added value and cleverness of the bundled iLife suit and of the App store. etc etc

The fact of the matter is that lots of techy and non-techy consumers purr with pleasure when exposed to the experience of using Apple kit. It makes them feel good, and clever and creative and safe in a way that Windows/Rim/Nokia/ stuff just doesn't.


Yes, the psychological boost which cult membership gives is enormous. But that is what it is. Scientologists feel the same way. The passage is a good illustration of it. It is feelings directed to a particular company and a set of consumer products it makes which would be more appropriate directed to quite other objects, human or spiritual. I am not trying to be unpleasant about it, though this will probably not be very nice to read. But that is what it looks like from outside.

I used to be on the inside too, and I left. So I know what I'm talking about. It looks very different depending where you are standing. And once you are out, you'll never go back.

Well, to add something. You will still walk down the street feeling good. But it will be because its a nice day, you feel in tune with God, you are in love, you are going sailing, its Christmas, you got a bonus, your child has just hugged you. But it won't be because of the consumer products you own.

Edited 2009-10-20 12:17 UTC

Reply Parent Score: 2