December 16th, 2008
Does Apple need to learn how to make a $500 computer that's not a piece of junk?
If the data released by the NPD Group is correct, Apple isn’t as recession-proof as was once thought. As the recession bites should Apple start making more affordable systems?
The bottom line of the NPD data is that Apple sales have declined compared to a year ago:
Sales of Macs in U.S. stores last month declined 1% from a year ago, while industry-wide PC sales rose 2%, according to research firm NPD Group Inc., which tracks retail sales.
NPD analyst Steve Baker blamed a 35% drop in sales of desktop Macs, noting growth in Apple’s laptops still outpaced rivals.
Apple’s doing the right thing in not being panicked into bringing out cheap systems. Why? Because price cuts are a one-way street.Anyone want to offer a guess as to the reason for this decline? I’m guessing that a tanking economy has something to do with it. On top of this is the fact that you can pick up some very cheap PC deals from the likes of Dell and HP. Discounts in the region of 35% to 45% are quite easy to find, while savvy shoppers might be able to lay hands on discounts as deep as 50%. Apple’s holiday season discounts were more in the region of 5%.
Price is important after all.
Back during October’s earnings conference call Steve Jobs had the following to say:
“We don’t know how to make a $500 computer that’s not a piece of junk.”
If you’re shopping for a PC at the Apple Store with $500 burning a hole in your back pocket then you’re outta luck. The cheapest system on offer by Apple is the Mac mini, which is priced at $599. Problem with the Mac mini is that this system is long overdue for a revamp. If you don’t want to have to supply your own keyboard, mouse and display and would rather have a MacBook then you’d better have at least $999 ready to spend. If you’re in the market for an iMac then you need a minimum of $1,200.
I’m not going to get into the argument of whether Macs are overpriced compared to PCs (because I don’t think that they are and there’s nothing wrong with catering to the higher-end of the market), but given the current economic climate Apple is almost inevitably going to see sales slide, and a decline in sales over the holiday season is going to spook investors come the new year. A year ago AAPL stock was a whisker below the $200 mark, today the same stock is at $94 (for those keeping track of the numbers you’ll know that AAPL got as low as $80 a share in November).
Personally, I believe that Apple’s doing the right thing in not being panicked into bringing out cheap systems (and I say that as someone who doesn’t by Mac hardware). Why? Because price cuts are a one-way street. In order to realistically compete with the likes of Dell and HP on price Apple would drastically alter the way it does business, and once it introduced price as a competition point, the company would be locked into that model pretty much forever.
I know that there are a lot of people out there reading this who’d love to get their hands on a cheap Mac system. But the problem is most of these people would like a cheap Mac because they are disillusioned with their cheap PCs. I don’t think that cheap Macs are the answer.
Adrian is a technology journalist and author who has devoted over a decade to helping users get the most from technology. He also runs a popular blog called The PC Doctor. See his full profile and disclosure of his industry affiliations
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