Daring Fireball: Apple's Pricing Advantage

http://daringfireball.net/2010/11/apples_pricing_advantage

by motvbi • 16 years ago

146 173 16 years ago

_delirium2• 16 years ago

I've noticed this even with normal laptops at the smaller end. If you're looking for a 15" laptop, you can find a lot cheaper PCs than the $1,799 MacBook Pro. But if you're looking for a 13" laptop with roughly equivalent processing power and weight, it's hard to find a PC laptop much cheaper than the $1,099 MacBook or $1,199 MacBook Pro. Some are considerably more, because while Apple prices the 13" at the bottom of their range, a lot of PC manufacturers price the "ultraportables" as a premium item.

cheald5• 16 years ago

Having just recently priced laptops, I didn't have this experience. A 13" MBP is $1200 for the bare-bones options (4GB RAM, Core 2 Duo, 250GB 5400 RPM SATA). It weighs about 4.5 lbs. They want an additional $400 for an extra 4GB of RAM (wtf?)

A Dell Inspiron 14" with the same specs clocks in at $665 at 4.9 lbs (which is still under the 5lb "ultraportable" mark). A Lenovo U350 with similar specs clocks in at $700 and 3.5 lbs.

The Apple tax is very definitely still in play.

icegreentea• 16 years ago

But if you move up to Dells and Lenovo's "premiere" laptops (Latitudes and Thinkpads), then the price difference narrows considerably. Bare bottom T410 (14") is ~1200 (granted, its currently on sale for like 700-800 dollars... Lenovo has a lot of sales actually).

I think it's fair to say that MBPs compete with all of the other brands "one step up" or business lines. MBP build quality alone lets it fight in that category.

barrkel• 16 years ago

FWIW, I'd put the ultraportable mark somewhere closer to 3lb; certainly no more than 1.5kg. My Toshiba Portege (12") is closer to 1.1kg (2.4lb).

_delirium2• 16 years ago

I'm not able to find any of those with: 1. a comparable battery life; or 2. a comparable video card, though, which is what the higher-end ultraportables I was looking at for comparison have. For me, the battery is the main sticking point; I could compromise on the GPU.

cdavid• 16 years ago

If you consider that CPU, ram and hard drive is the only thing that matters in a laptop, then yes, apple is definitely overpriced. But mac unibody, battery indicator, magnetic connector, pluggable power unit (to change the type of connector for different countries), etc... have a cost, and I would gladly pay a few more bucks for it.

Last, I got two PC laptops: both were broken beyond repair after 3 years, whereas my unibody mac book look almost new after 1.5 year, and my first, plastic macbook works perfectly (3 years old). The only PC laptop that were not crap in my experience were lenovo, but surprise, those were expensive as well.

jmreid• 16 years ago

You're not taking into account Mac OS X and iLife (among other things), which are major pluses. Especially when you're responsible for other's tech support.

cletus3• 16 years ago

And this, ladies and gentlemen, just proves Gruber's argument that many people buy PCs based on bullet point specs having never seen the enclosure.

With MacBook Pros you get:

- a backlit keyboard with ambient light sensor;

- a high quality display;

- significantly better battery life than any Windows lapt I've ever seen (due in part to software admittedly);

- the best trackpad I've seen on any laptop ever (seriously... Why do Windows laptop trackpads STILL suck??);

- better graphics than much of the laptops Macbooks are compared to;

- a pleasing industrial design.

3 years ago I would've agreed. Now? The "Apple Tax" is small to nonexistent.

Upgrades are often expensive. That's still true but ever big PC manufacturer does this. Dell is probably the worst offender, offering a really crappy spec for a low headline price and then offering, say, a CPU anyone can buy for $300 outright as a $400 upgrade from a $100 CPU. And that's with Dell's buying power.

And yes I know it isn't quite that simple: Dell may have a quota of CPUs they neex to move, etc but the assertion that they charge through the nose for upgrades is (IMHO) irrefutable.

rythie• 16 years ago

There are many best seller laptops on Amazon in the $500-600 range, so I'd have to disagree.

If you want a midrange or high end laptop then Apple's don't look bad, most people don't though - but then they don't care about the OS either.

zdw• 16 years ago

tl;dr version: Apple has the volume advantage because it buys a huge amount of flash memory, displays, etc. that it can make products at price points other vendors can't compete with without cutting corners.

napierzaza4• 16 years ago

Thank you, it's never worthwhile reading long-form Gruber.

pchristensen• 16 years ago

Also iPod/iOS compete as devices (a la consumer electronics) as opposed to competing as specs (a la PCs), which makes build quality and design much more important.

jseliger2• 16 years ago

This is not accurate and ignores the bottom paragraphs, which are about how companies compete on design and quality in phones whereas they don't do so in PCs, which are more frequently judged based on specs. You can see this when Gruber transitions: "But there’s another major factor at play, which I believe is more important than volume pricing."

The above comment is an example of why you frequently shouldn't trust the "tl;dr version:" those versions are frequently wrong, or they sheer away a sufficient amount of detail as to become wrong.

trotsky7• 16 years ago

I see daring fireball has never heard of archos.

http://www.engadget.com/2010/08/31/archos-unleashes-five-fiv...

ary4• 16 years ago

It's difficult to know exactly which point in the article you take issue with. I didn't see anything that indicated Gruber is unaware of the Archos.

rimantas4• 16 years ago

My take is that gp talks about equivalent to iPod touch, but I cannot really see how Archos are in this category. The smaller ones have resistive touchscreens with lousy resolution, the bigger ones are different form factor, pricier and no Android market :(

trotsky7• 16 years ago

various quotes:

Now, even putting quality aside, competitors can’t match Apple’s prices.

no one else can afford to match the iPad’s price with a comparably sized touchscreen display

iPods, iPhones, iPads. Across all of them, Apple’s prices are either comparable, or lower, than their competition.

rimantas4• 16 years ago

Let's see:

  I would love to buy a $229 Android device that’s the
  equivalent of the iPod Touch

Which one of the Archos is equivalent to iPod touch?

trotsky7• 16 years ago

Well, I had the archos 10" tablet in mind when I made that post.

Archos clearly intends the 4.3" device to compete in the ipod touch space. The fact that it lacks a capacitive screen means it really doesn't, and seems like a mistake. But given Archos' price points ($200 4.3" resistive and $275 7" capacitive) it's hard to believe that component and manufacturing prices would prevent them from shipping a closer mimic.

Schlaefer• 16 years ago

http://www.archos.com/products/ta/archos_32it/index.html?cou...

Other Android devices in the iPod touch class are out there (e.g. Samsung http://www.wired.com/gadgetlab/2010/10/samsung-galaxy-player...).

irons2• 16 years ago

Any "Android tablet" lacking Market access, as these do, might be competition for the iPod nano, or the Nook, but it's not in the same space as the iPod touch.

trotsky7• 16 years ago

The claim of the article is that apple can price their mobile devices lower than the competition because they benefit from superior supply chains and manufacturing. The fact that google chooses to restrict the market application to OHA member devices with SIM cards doesn't change the fact that archos is delivering products in the same basic hardware class for less money.

ugh2• 16 years ago

I would very much like to know how exactly they can be so cheap. Their 10" tablet will sell for $350 (16GB), the spec-wise very similar 16GB iPad costs $150 more. (The one downside is that you cannot buy it yet, it’s supposed to be out “this fall”.) Oh, and if Archos can do that, why not Samsung?

protomyth5• 16 years ago

Well, not shipping and the resolution on the screen is worse (1024 x 600).

andreyf6• 16 years ago

A theory: Archos has obviously created prototypes to send to the press, but it doesn't look like they're pulling off mass manufacturing at the advertise prices just yet (except the Archos 5, which has a resistive screen). Could it be that the prices quoted are simply an over-ambitious projection?

jwhitlark2• 16 years ago

The 70 has been shipping for a week. It also sold out on the first day. And it has a capacitive screen.

Interestingly enough, when I ordered mine, I got a $25 discount, for no particular reason I can discern. Brought the total cost to $256, delivered. We'll see how it measures up.

You can install the market easily; my understanding is there isn't the logic in the market (yet?) to handle a wider range of devices, (without 3g, gps, etc.). With android market advertised for google tv advertised for the spring, I'm wondering if they're prepping the market for a much wider range of devices...

heiti2• 16 years ago

It's a bit disappointing when "the world" and "USA" are used interchangeably. The US market is fairly small. Things are quite different in other places.

maxawaytoolong2• 16 years ago

The USA is the world's largest consumer goods market, surpassing the next one, Japan, by a factor of 5.

http://en.wikipedia.org/wiki/List_of_largest_consumer_market...

ugh2• 16 years ago

That’s interesting but is it also a good reason to use “USA” and “the world” interchangeably?

Germany, the UK, France, Italy, Spain, the Netherlands, Poland, Belgium, Greece, Sweden, Austria, Denmark, Portugal, Finland, Ireland and Romania combined – all EU member nations – are about equal to the US. They have a larger combined population (about 460 million v. about 310 million) but the USA certainly don’t beat them by a factor of 5 even taking population into account, more like a factor of 1.5.

Oh, and 10 divided by 2.8 is 3.6, not 5.

pedrocr• 16 years ago

Only because that list segments by country. If you add up the EU countries you'd have a bigger market than the US and that is as much a single market as the US states are if what you're selling is electronics.

Caspian• 16 years ago

I imagine the really cheap mp3 players would sell pretty well outside the US. I was quite surprised he couldn't find digital audio players much cheaper than an iPod. I've seen mp3 players for well under half the price of an iPod shuffle in Australia, and I imagine in China there would be an even bigger difference.

nowarninglabel4• 16 years ago

The 2nd paragraph: "Now, even putting quality aside, competitors can’t match Apple’s prices."

Does not jive with the prices mentioned later:

Apple Ipad - $599/$699 for the 16/32 GB models

Samsung Galaxy S - $594

HTC A8181 Desire - $527

I don't know what the author's definition of "match" is, but seems to me Android tablet makers have matched prices quite well. *Edit: fixed my formatting

alanthonyc• 16 years ago

7" screens vs. 10" screens?

arron612• 16 years ago

7" vs 10" screens but failedl to mention that the Galaxy Tab also has dual cameras, a GPS chip, a cellular chip, and etc - things not seen on the ipad.

I think the Tab could have been priced lower but Samsung wanted to see if they could technically compete with the ipad at the same price point first. And if things don't go well, reduce the prices later. Why shoot yourself in the foot to begin with?

And additionally when Android lifts the hardware requirement to obtain the Android Market, you will definitely see much cheaper tablets such as Archos and even the Galaxy WiFi Tab.

tcskeptic• 16 years ago

Actually the linked item is an unlocked phone with a 3.7" screen. The parent comparison is invalid. Gruber is actually comparing it to an unlocked iPhone for $599/$699 as he should be, he is not comparing it to an iPad.

harpastum• 16 years ago

The A8181 Desire you link to has no built-in memory and a screen that is less than a quarter the size of the iPad's. You're comparing apples to oranges.

ary4• 16 years ago

His definition of "match" seems to be device dimensions, performance, and battery life.

Juxtaposing the iPad with a smartphone in an attempt to compare the prices doesn't seem right (you linked to an HTC A8181, but mentioned the Galaxy S). Did you mean to compare it to the Tab?

nowarninglabel4• 16 years ago

The author is the one comparing to Galaxy S, I was just pointing out:

"These prices compare quite well to the competition. The Samsung Galaxy S — a decent choice for the current “Best Android Phone on the Market” title (check back next week, though) — costs about $600 unlocked from Amazon, and only has only 8 GB of built-in storage. The HTC Desire costs just under $600. Google’s Nexus One, while they were selling it, cost $529."

andreyf6• 16 years ago

He's talking about cost of actually building the device. A big part of the iPhone's consumer price ($700 for 32gig) is markup, as he points out in comparing it to the price of the iPod touch, which is $300 for a comprable model.

In other words, he's claiming that Apple could undercut the A8181 Desire or the Galaxy S on price, but keeping the customer choose between "FREE* shiny new phone" or "$200* shiny new phone" reinforces the perception of Apple as a premium brand.

* with 2 year contract

jon_hendry2• 16 years ago

" as he points out in comparing it to the price of the iPod touch, which is $300 for a comprable model."

But the iPod touch has some corners cut. No anti-oil coating on the screen, for one. It also retains the former body shape, not the flat-glass-on-both-sides iPhone 4 style.

nowarninglabel4• 16 years ago

If that is what the author is talking about, then the author is still off (at least based on this analysis):

Galaxy S $205 build cost - http://bit.ly/bocdoe

Apple Ipad $264.27 - http://bit.ly/aW8mvu

(bit.ly links cause the links are huge, goes to Isuppli)

mitmatt• 16 years ago

For the record, the iPad is $499/$599 for 16/32 GB (WiFi) models, not $599/$699 as you stated:

www.apple.com/ipad

http://store.apple.com/us/browse/home/shop_ipad/family/ipad?...

kemiller3• 16 years ago

Another factor here is that mobile devices are all a tier or two down from personal computers in terms of the raw number of dollars. Seems like a 15% premium is something people will consider paying if it only amounts to $30, but might not if it's $300.

This was especially true in the early days of the PC revolution. The Mac 128K sold for $2495 at the time, which is more than $5000 in today's dollars[1]. I can't find any good stats on what a typical PC cost at the time, but let's say it was half that. That's a HUGE difference; a mortgage payment (or more than one!) and not something many individuals or businesses are going to pay, even for substantially better quality.

Other factors:

* No amount of speed was enough. People bought computers to, well, compute things, and there were real limits users experienced because of slow processors. This is no longer true for most uses. Faster speeds are nice to have, but it's no longer true that 20% faster number crunching is a huge win for many people.

* With such expensive kit, businesses were understandably reluctant to commit to any platform that didn't let them multiple-source parts and perform repairs. Backups were expensive or non-existent. By contrast, a defective mobile device is simply exchanged or written off.

* In 1984, worldwide PC shipments totaled 6.3M units. Commodity parts were the only way to achieve any kind of economy of scale, not to mention the benefits of competition. 20 years later, it was 177M. [2] At that level, even a minority player can get the same economy of scale that the entire PC industry enjoyed a decade earlier.

Anyway. Nobody knows how this will all shake out. But the spectacular success of the modular PC market doesn't mean it's the inevitable outcome.

[1] http://bit.ly/9P293K

[2] http://bit.ly/a9XLJF

protomyth5• 16 years ago

Cost isn't everything, even in 1984. The PC wasn't the price leader of the era, check the market share and price of a C64.

kemiller3• 16 years ago

No, but it was arguably price-performance leader, which the Mac, in raw terms, decidedly was not. I guess the other piece at the beginning was the IBM brand, but that wasn't enough to make it take off like a rocket.

flomo• 16 years ago

In 1984, my buddy received a $2500 Mac 128K for his birthday. I got a $800 Apple //c.

To this day, I believe I recieved the better gift, at the time. The original Mac, while "groundbreaking", was not only overpriced, but pretty useless.

jseliger2• 16 years ago

I think your first bullet point is especially significant, and I wrote about a similar issue here: http://jseliger.com/2010/09/30/computers-and-network-effects... . If your primary uses for a computer these days are e-mail, browsing the web, using office software, playing DVDs, and listening to music... pretty much any computer in the last five to ten years will do just fine. You won't get massive increases in speed and ease like you did in the 90s.

mturmon• 16 years ago

The PC, once purchased, sits under your desk.

But the laptop and the phone, you touch and carry with you in public. It's a personal accessory.

People will pay more to have nicely made personal accessories -- for many reasons -- looks, durability, pleasant to use, feels well made, status signaling.

nikster5• 16 years ago

Yes, that's exactly the difference between the PC market, and the mobile phone / gadget market. The number one thing about a phone is looks. Then comes status. Then comes usability.

Though I might say the iPhone has turned the focus on usability much more than it was in the past - just because you can do so much with it so easily, so people now expect that from all phones.

netcan4• 16 years ago

The industry has changed and is continuing to change into a world that suits Apple better. Getting in early and big (eg iphones & ipads) is letting them influence the change even more in their favour.

What caught my eye in this article was: "Nobody knows what kind of CPU they have in their phones." That's a world that suits Apple. Interestingly, PCs are unique in that people take an interest in components. Do people know what kind of wood and textile is used in their couch (beyond the external, visible components.) The only products I can think of that compare are houses and cars at many times the cost.

allenp• 16 years ago

What you're describing is essentially the computer turning into an appliance, and I agree this is what Apple is gaining tremendously from (and of course encouraging).

I think you'd find that most enthusiasts or hobbyists have in-depth knowledge of the components of their hobby and that "computer people" are no different.

Most people have no idea what is inside their computer - I think the majority of PC owners don't even know the size of their harddrive, for example, and that is something they might actually need to know, let alone RAM or CPU specs.

napierzaza4• 16 years ago

Untrue, if you care you know. Cars for car enthusiasts. Espresso machines for espresso enthusiasts. Apple is targeting the lowest common denominator with their tiers. But it works because their vertical approach works better than what you get with Windows anyhow.

InclinedPlane• 16 years ago

Musicians know what wood or metal their instruments are made out of. Many people know what materials their clothes are made out of. Rock climbers know what materials their gear is made out of. Artists care about the quality of the graphite in their pencils. Sailors know what their boats and sails are made out of. Etc.

Enthusiasts care, not everyone cares.

sdz• 16 years ago

I think a related part of Apple's pricing advantage comes from the fact that they are good at taking technologies developed for the iPhone and using it in other places instead of reinventing the wheel for every product.

The iPod touch, Apple TV, and iPad are all variously stripped, screenless, and scaled versions of the iPhone. They share the same processor and underlying OS. This allows Apple to not just sell a lot of stuff, but to sell a lot of the exact same stuff. So not only are their marginal costs lower from buying in bulk, their fixed costs of research and development are lower, too.

Could an iPad's cost $499 or an Apple TV $99 if they didn't sell the iPhone? Probably not, and definitely not if they wanted to keep the kind of margins they command right now.

mediaman• 16 years ago

This reminds me of a quote from Bill Gates, early on in his career, in which he says that Microsoft's business model is "creating variable revenue streams from fixed engineering costs."

Although that's true of many software companies, Apple is proving to be very adept at creating revenue streams across multiple, very different product categories from the same engineering investment.

marze• 16 years ago

Lucky for Apple's competitors they have Android, otherwise they'd really be up a creek.

With the hardware volume purchasing advantage combined with the many-year head start they have on the OS, it will be surprising to me if any competitor obtains a 10% market share in the iPad or iPod Touch markets.

rchowe2• 16 years ago

I'd argue that if the competitors didn't have Android, the tablets would just run on x86 processors. And run either windows or linux. I believe that the presence of ARM early in this market is actually good on the OS side, because it doesn't lead to shoehorning windows onto a tablet. x86 tablets aren't going to succeed both because of the pressure to run desktop OSes, but also because x86 processor companies only seem to be able to produce and market market clock speed and not what really matters in this case (low power consumption and heat output).

schultzor4• 16 years ago

With the failure of Linux netbooks, I don't think it'd do any better on tablets, ARM or x86.

martythemaniak• 16 years ago

At this point, you should probably remember that Android came out 2 years ago and managed to overtake the iPhone in that short time frame. I highly doubt Apple will have even a plularity (let alone a majority) of the tablet market in 2 years.

Anechoic• 16 years ago

You're presuming that the Android vs iPhone sales figures are indicative of popularity vs the iPhone only being restricted to one network provider (at least in the USA). The iPad doesn't have that restriction.

It may very well happen that Android tablets overtake iPads but Android vs iPhones market is an apples-to-oranges comparison.

jsolson• 16 years ago

> At this point, you should probably remember that Android came out 2 years ago and managed to overtake the iPhone in that short time frame. I highly doubt Apple will have even a plularity (let alone a majority) of the tablet market in 2 years.

More Android devices are sold than iPhones, yes. Add the iPod Touch to that and I'm pretty sure Apple still has a substantial lead (and possibly growing).

Also, how many of those Android devices are being sold with 1.6 and aren't able to upgrade the 2.x series due to manufacturer laziness or hardware limitations? Is it really fair to compare an Android 1.6 device sold today to an iOS device sold today? The iOS device will, based on history to date, be eligible for OS upgrades for at least two years. The Android 1.6 device is already two years out of date and not getting any younger.

fragmede• 16 years ago

iPad aside, the tablet form factor has been tried and failed before. The original 7" EEE, which retailed for $400 bore a whole new 'netbook' segment. That was a multi-million dollar gamble which ultimately paid off. Give the previous failures of tablets, that no one is stepping up to the plate to try again at that price, even given Apple's success (hey, they're Apple) isn't surprising.

tibbon2• 16 years ago

This puts a hole in the "Apple is more expensive" claim (which I've believed to be false for years)

mattmaroon3• 16 years ago

First of all, I priced this at work out of curiosity when buying some Mac Pros and some Macbook Pros. You can get a PC with the same hardware specs as a Mac Pro for about half the cost. You can also get a PC with the same specs for about the same cost if you get one of the gamer brands, but just a Dell or HP Quad core machine is far cheaper than a Mac Pro, assuming all things that can be compared on an apples to apples basis are the same.

In notebooks the price disparity is not quite as large, but it's still large. You'll get about the same notebook for $800 that you'd get for $1,200 from Apple. Also, stuff like RAM upgrades and SSDs cost far more for the same thing. Again though, you could find comparable Windows units for about the same prices, or at least close, if you went with higher end notebook brands.

Second, in phones the price disparity is still large because of Apple's deal with AT&T. They're getting not only the $600 unsubsidized prices, but some extra fee as well taken from the contract. You might argue that AT&T is paying that, not you, but your bill may be higher as a result, or you may be on AT&T rather than Verizon since VZW wouldn't agree to that, etc.

Even in tablets, competitors definitely can match the iPad's prices. The Nook is $250. I of more tablets costed below the iPad than above.

frou_dh• 16 years ago

Mac Pros have Xeon CPUs and ECC RAM. Were you comparing with similar "workstation" grade PCs?

(Whether the average Mac Pro user gets any real benefit from these parts is another question)

yardie• 16 years ago

Consider that now is the time when manufacturers are putting memory test utilities into firmware and that intersects with systems coming with 4-8-12GB of memory that take can take multiple hours to fully test. I would say its worth it.

If the Mac detects a bad DIMM it locks it out and informs you which one. You don't have to have do the RAM shuffle to find out which one is the bad DIMM. Your computer also doesn't crash because of it (it shouldn't but I've seen instances where even ECC couldn't recover).

napierzaza4• 16 years ago

Did you just compare the Nook to the iPad? How is that at all comparable to the feature set of the iPad? Go on.

You're also somehow assuming that other phones are not subsidized??? This has been going on before the iPhone existed so don't be surprised if the Android is too. So no, what AT&T pays doesn't count.

One of the main things I've never heard enough about in comparing Macs and PCs is the service. The ease of service with defects and breakage with Apple is world class. That's surely something that Apple factors into the price and Apple thinks it's worth it. Software etc as well. So I don't know why Gruber thinks he can really compare those things.

mattmaroon3• 16 years ago

From a hardware standpoint the Nook isn't that far off of the iPad. Any differences in feature set are largely due to them running some custom version of Android which probably cost a lot more than running stock. Just slapping Froyo on it would have made the feature set as comparable as you could get.

So in terms of pricing (and probably only pricing) it's a fair comparison. It illustrates that vendors could compete with Apple on pricing if they wanted. I think they're quite wise not to, everyone saw the race to the bottom on PC margins that happened in the late 90s and decided they'd opt out this time around.

You're right about the phones, others are subsidized, though usually with an upfront fee rather than an ongoing. The rumors in the early days were that Apple's monthly fee is much more than most other phones get, and that's why AT&T got them over Verizon, but who knows.

Many PC vendors have service at least as good as Apple's. I've dealt with both HP and Apple, they're pretty comparable. And with HP you never have to hear the term "genius bar".

jules• 16 years ago

Dell is still way more expensive than buying the parts and assembling yourself, about 2x more expensive where I live.

nikster5• 16 years ago

Not doing this again now, but in my experience over the past few years the "Apple tax" on notebooks based on specs alone was about $100 - $200.

Apple doesn't sell cheap laptops but when you compare a $800 machine to a $1200 Mac, I dare say that many of the components in the $800 PC will be inferior, CPU, screen, etc. Not even mentioning the chassis where nobody can touch the unibody design of the Macs.

Apple makes premium stuff that comes with premium components - high end PCs which also come with premium components usually cost just as much, or just a tad less.

For the Mac Pro, it's probably a similar situation - you can probably make a cheap junk PC with the same CPU and as much HD space for much less, but if you use high quality components you'll be right up there fairly quickly.

As for tablets - Gruber's argumentation is way more conclusive, sorry.

guelo• 16 years ago

While it is true that Android phones haven't been able to undercut iPhones by much, the argument doesn't hold up for tablets and iPods because these markets haven't really been entered by the Android manufacturers yet. The Samsung Galaxy tablet is at the forefront but the real wave of Android tablets is months away waiting for the release of Gingerbread. Expect a lot of announcements around CES time. As for the iPod market, Android has a lot of catching up to do with it's media software so that will probably be a bit further out.

swombat• 16 years ago

Great, so they'll have an iPad competitor out round about the time that the second version of the iPad comes out and blows the current iPad out of the water, then?

Colour me unimpressed.

schultzor4• 16 years ago

Weren't multiple Android tablets announced/demoed at last year's CES, or am I mistaken? Maybe all the OEMs just rushed demo samples out without figuring out how they were actually going to produce them...

metageek3• 16 years ago

Archos has had Android PMPs for about a year now.

b3b0p• 16 years ago

When I purchased my Apple machines I also took into account the cost of the tools I would be using the operating system.

Macbook Pro + Xcode + Mac OS X

Lenovo or Dell upper end model + Visual Studio + Windows 7

Visual Studio adds a considerable amount to the final cost, but I'm also willing to put down a fair amount more for having Mac OS X.

awa• 16 years ago

So you are comparing Visual studio to Xcode and saying you went with Xcode cause it runs on Mac OS?

recoiledsnake• 16 years ago

Visual Studio and SQL Server have free Express editions.

ChRoss• 16 years ago

Can you also add the cost for becoming Apple Developer then?

mbreese2• 16 years ago

Umm... $0.00?

It costs nothing to become an Apple Developer. It costs $100 to be an iPhone developer, or $100 for their Mac developer program. Both of which give you previews of OS updates and the ability to sell your software in their stores. Otherwise, you don't have to pay anything.

jrockway2• 16 years ago

First, Apple is the world’s leading volume buyer of a precious, expensive component: flash storage. They get better prices and priority availability from suppliers.

Do they get better prices than Samsung? Because Samsung is who designs and makes the flash memory. (Also, Wikipedia seems to say that Sony buys more than Apple.)

wtallis5• 16 years ago

If Apple has a long-standing contract for deliveries of flash, Samsung probably can't easily say that they'd prefer to keep the flash memory for use in their own gadgets. Considering that at times Apple has placed orders for more than half of Samsung's annual output, such a contract is likely to exist.

jrockway2• 16 years ago

That was back when flash was new and exotic, right? Every music player on the market is flash-based now, and so are many computers. Samsung's Wikipedia page says that Apple accounts for about 2% of their sales.

GHFigs• 16 years ago

Wikipedia seems to say that Sony buys more than Apple

The table on the Samsung page lists companies by fracton of Samsung's total sales, not just flash memory. Nor, for that matter, does Apple only buy flash memory from Samsung.

cletus3• 16 years ago

I've had this argument far too many times.

Specifically regarding the iPad vie put several theories forward regarding the 7" vs 10" tablets:

1. Apple has tied up the world supply of 10" capacitative touch screens. That's not far-fetched;

2. Price: as per Gruber's argument;

3. Fear: no one wants to directly compete with the iPad so they're seeking some form of differentiation. Nikon did this with DSLRs and Canon. It wasn't necessarily fear but Nikon DSLRs weren't positioned directly against Canon equivalents: they were in between; or

4. Volume: to Apple's credit they bet big on a market with very little evidence. To the victor the spoils. The rest are much more sheepish hoping something sticks before going all in. This is much like the "shotgun marketing" vie mentioned previously.

I'm reminded of a scene from "How I Met Your Mother" several years ago. Barney made a video resume. His argument was that Corporate America wants someone who looks like a bold risk-taker but does risk anything because taking risks gets you fired.

There's a lot of true in that and the response to the iPad can be construed as a collective aversion to risk by all the people involved.

Once more all this highlights the importance and strategic advantage of having a committed product guy at the helm of a tech company.

netcan4• 16 years ago

All these might be true, but still be on-the-margin effects.

In the PC world (and I think the old audio player world), any new Apple product was met a competitor with the similar specs (often better) at close to half the price (taking into account sales and such). Like the post concludes, if it was possible to make an android tablet (even a 7" one) that was a direct alternative to the ipad at $350 someone would be

ZeroGravitas5• 16 years ago

Archos 10 inch tablet: $300.

http://www.archos.com/products/ta/archos_101it/specs.html?co...

I'm not saying it's the best tablet ever, though on a spec checklist it might actually win (camera, HDMI out, USB host, multimedia formats etc.). I'm more interested in the fact that the vast majority of Gruber-style pronouncements about how special Apple is require you to not have any knowledge of what's actually happening outside the Apple bubble.

It's also worth noting that the Samsung Galaxy Tab price has been on a constant downward trajectory. Last I saw the Carphone Warehouse in the UK was selling it for £489 for 32GB (compared with $599 for iPad 32GB) a £110 difference rather than the $30 dollar one Gruber quotes. Comparing list prices favours Apple since they, somewhat unusually, rarely if ever sell below that price.

GFischer• 16 years ago

What? 7'' "APad" tablets are being sold even in Uruguay, at far less than U$ 350 (U$ 199), so they're probably closer to U$ 80 or so in another country:

http://articulo.mercadolibre.com.uy/MLU-20365527-tablet-pc-7...

Edit: here's an English post:

http://www.ubergizmo.com/15/archives/2010/04/the_apad_is_ano...

which says that it has a resistive touchscreen variety (instead of the capacitive multitouch like in the iPad) and thus much worse.

andreyf6• 16 years ago

There's a lot of true in that and the response to the iPad can be construed as a collective aversion to risk by all the people involved.

Except Apple ;)

jedbrown• 16 years ago

The T-mobile Vibrant (aka Galaxy S) is $499 off-contract from T-mobile, with 16 GiB of internal storage. You can call them and unlock it for free immediately. This is slightly different from the quoted $600 with 8 GiB internal. /pedantry

teyc• 16 years ago

Apple priced iPad very aggressively. No question about this. This is a brand new product category and Apple wanted to own it, and priced it that competitors find hard to compete. In fact, Jobs had warned about this, saying margins with iPad will be lower (i.e. no Apple tax). It was on the strength of this comment that I bought an iPad, something I would not normally do. In contrast, all the Windows tablet systems are still priced in the 3k mark.

gcb• 16 years ago

apple tax is no more in price of the device, as those are cheap for apple now.

Apple tax today is control!

While mobiles are moving farther from the locked-in model (i get my phones unlocked for some 5 yrs, and before that, used to unlock them) apple is moving computers to it.

An apple store on the desktop, with DRMed software, is a full circle to mainframe in computer history.

Heck! the iphone, with subsided price along with mandatory monthly bills and approved catalog of software and only one choice of network is already as close the main frame as you can get!

It would be interesting to compare the at&t iphone contract with a 70's IBM mainframe lease one. anybody has one around? :)

elai• 16 years ago

Gruber, they're not competing on price.

ck2• 16 years ago

Yup, Apple's factories have the suicide rate to prove all that goes into their products.

jamesk2• 16 years ago

The Android vs. iOS marketshare race is one in which iOS is hobbled because of iOS's exclusivity. When the iPhone 4 hits Verizon next year, $199 Android phones will take a massive hit in demand and they will quickly be dropped in price to spur demand.

Apple has dropped it's prices to compete before. It'll be really interesting if Apple drops the price of the iPhone below the top of the line Android phones.

buro9• 16 years ago

I believe that the price advantage comes not insignificantly from the market side of reselling software, apps, music and video and taking a not insignificant slice of the sale of those items.

If you remove the market from the equation Apple's bottom line isn't as impressive, in fact the rise of Apple in recent years is coupled to the rise of their market place.

So strong is their domination over music distribution that I'm starting to think that when an investigation starts against Apple that the target should be to split Apple into two companies; one for hardware (and OS) and one for the markets. Only then will Apple operate on a level playing field with regards to other hardware manufacturers, as it is the advantage of the market that enables them to subsidise the price of hardware, and as they have grown dominant in hardware (especially in music players) they should be treated as a monopoly of that market and competition encouraged (by just levelling that playing field slightly).

I realise that these views aren't in line with the opinion of the vast majority of people I speak to, especially online and in circles who use Apple gear. But this is long term speculation stuff, the "What-if"... years ago I speculated how dominant itunes could be and it mostly has come to pass and is still increasing (25% of all US music, 69% of digital music as of mid-2009).

rimantas4• 16 years ago

  Only then will Apple operate on a level playing field
  with regards to other hardware manufacturers, as it is
  the advantage of the market that enables them to subsidise
  the price of hardware

I must be reading it wrong but it sounds a bit like „let's make it worse for Apple, because others cannot quite catch-up“. iPod'a are not the cheapest players, are they?

wtallis5• 16 years ago

You seem to be operating under some misconceptions about antitrust law in the US. Being a near-monopoly is not illegal. Abusing your monopoly to force your way into a new market is, but simply using profits from one product line to fund R&D on a new product doesn't count.

Even if Apple has achieved a near-monopoly over digital music or sales or portable music, it's not at all clear that they have had the opportunity to abuse that monopoly. There have been cases (Psystar, etc.) that have tried to get the bundling of Mac OS X and Apple computers ruled as illegal tying, and they have failed. For the foreseeable future, there will not be grounds for a federal antitrust case against Apple.

You should try to conceive of Apple as the poster child for a successful business strategy: vertical integration. A large part of the success of Apple's expansion beyond computers is due to the fact that they can and have ensured that the products work well together, and that most of the products they have introduced have been natural complements of their existing products.

You also seem to be somewhat ignorant of the timeline of Apple's rise over the past decade. The iPod was on the market and gaining traction for a year and a half before the iTunes Music Store opened. At the time the iTunes Store opened, DRM was mandated by pretty much all the content owners. If this contributed to Apple getting a monopoly on digital music sales, the blame should fall on the music studios for not insisting that the online stores they deal with use a single interoperable DRM system, and not on Apple, who had no incentive to promoting interoperability with other music stores and players.

The profits of the iPod+iTunes Store combo provided most of the funding for the Intel switch and the development of the iPhone. Like the iPod, the iPhone was on the market and gaining traction for about a year and a half before the App Store opened. It's hard to argue that Apple's computers have been helped much by the iPod and iPhone other than by generally strengthening the Apple brand.

Each step of the way to their current position, Apple has done it by introducing products that can be at least moderately successful on their own, without the hardware/software tying you are complaining about. None of those individual steps has been anywhere as close to monopoly abuse as, say, Microsoft's entry in to the video game console market, which faced no significant legal challenges. Nor has Apple clearly erected any artificial barriers to entry for competitors. Their agreements with content producers are not exclusive, and now that DRM is not applied to music sales, there's no significant barrier to using music purchased through iTunes on other music players. To the extent that Apple has created any barriers to competition, it has only been by raising the standards for usability and quality.

fs111• 16 years ago

Does he even read the things he links to? The amazon page of the HTC desire says 499$, that is not "just under 600$". Why do people link to this fan-boy all the time?

eftpotrm3• 16 years ago

Apple cheap - hmm, not sure I buy that.

Why does an iPhone cost more than an iPod Touch, a standard 2G phone and a 3G USB dongle? That's all the hardware is.

Why does an iPad with a 10 inch screen cost twice as much as a netbook with a 10 inch screen and a keyboard?

Apple may have found some good niches to milk for cash with some attractively designed products, but cheap they most definitely ain't.

metageek3• 16 years ago

>Why does an iPhone cost more than an iPod Touch, a standard 2G phone and a 3G USB dongle? That's all the hardware is.

Currently, that's not true. The iPhone 4 has a much better camera than the current iPod Touch. Not sure if there are any other differences.

eftpotrm3• 16 years ago

OK, sorry, a generation out of date :-) Still, a 5mp lens/CCD/flash package, even allowing for miniaturisation, isn't more than a few tens of pounds at absolute maximum. There's still a hefty markup IMHO.

metageek3• 16 years ago

>Why does an iPhone cost more than an iPod Touch, a standard 2G phone and a 3G USB dongle?

I suspect the real reason is that Apple keeps the iPod Touch cheap to sell to people who can't get an iPhone for some reason (they're too young, they can't afford the data plan, their employer insists on BlackBerries). When they have a chance to buy a smartphone of their own, it'll probably be an iPhone, so they won't have to learn a new UI, or walk away from the apps they've bought.

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