Originally Posted by DarkVader
So, here's the problem with that: Apple was here before.
Back in the early '80s, Apple had damn close to 50% marketshare in microcomputers. But this funny thing happened, prices for other computers started dropping. Apple said "that's ok, we'll take the high end" and kept prices high.
Actually Apple had close to 100% of the microcomputer market share in the very early '80s with the Apple Iie. THEN what happened was IBM entered the microcomputer business. The general saying back then was "No one ever got fired for buying IBM." The name IBM was spoken with a bit of awe in one's voice. The IBM PC was 16-bit to Apple's 8-bit architecture and could address more RAM... but most of all the outside of the box said IBM. The price was didn't begin until (1) Brand X computers became IBM-compatible, and (2) brand X computers began to outperform IMB computers, and (3) a price war broke out among Brand X computer vendors. The big problem with Apple was that they had nothing that was IBM compatible. It didn't matter what the price was, overnight Apple wasn't compatible. Then, during the IBM-compatible cat fight there was no advantage to building a computer that was as fully tricked out as a basic Mac. Everything was priced bare bones, and then plus a sound card, plus a hard disc, plus this and plus that.
By the late '80s, Apple was building the best, most innovative computers out there, and losing marketshare like crazy. People weren't only ok with "good enough", they were buying absolutely unusable garbage, because you could get a PC clone for under $2k, but the cheapest Mac was nearly $3k. And they bought a lot of that unusable garbage. When we hit the mid '90s, it was even worse. Apple had moved to the PowerPC, had the best operating system out there, and marketshare had dropped like a rock. "Apple is dying" articles were everywhere, you could spend over $2k on an entry-level Mac system or under $1k on a PC.
Thank God for the education market, because Apple's networking could be set up and maintained by a classroom school teacher... not so with the IBM-compatible. The school system saw the advantage of the Mac and has been fairly loyal to the brand. Even today, the mac is easier to set up and run on a network than a current IBM-compatible. The difference in cost of the hardware was more then saved by not requiring an IT person on every site. (IT kingdom-building was rampant in the corporate world and aided by Microsoft's buggy networking software, is still a safe profession)
What turned Apple around wasn't just innovative design and the best operating system out there, it was price cuts, especially at the entry level. The iMac sold for as little as $699, and the iMac was a complete system. A G4 tower started at about $1500, and outran anything x86. Apple computers were not only reasonable, they were a great value. Sure, you could spend more on a high end machine, but the low end was there, and was accessible.
No, no, a thousand times, NO. Hardware costs never was a saving aspect of Apple's success. It was the COST of ownership and the EASE of setup and use. The tag-line, "It just works," was what was Apple's constant user experience... and STILL is. Yes, Apple makes a headless Mac Mini, which is especially useful for users coming over from the dark side and want to use their monitor and keyboard from their old system, but long-time Ma users will buy the all-in-one iMac or a Mac Pro if they don't buy an Apple laptop of one kind or other. Apple's never been the low-price hardware leader in portable computers — ever.
Today we're dealing with the too expensive problem again. Apple could sell a $300 phone, and could do it easily. Apple could sell a $1000 tower Macintosh, and could do it easily (I know that one with absolute certainty, since I've built nice Hackintoshes for less. Apple can get much better part prices than I could ever hope to get buying retail). But Apple can't see the long term importance of marketshare, even though it damn near destroyed the company once.
You are only partially correct here. Apple's price keeps them from having more of the market then they now have. I don't argue that. However, Apple's prices also prevents their iDevices from being thought of as a "commodity" product. Apple is clearly thought of as a prestige product (Prestige refers to of a good reputation or of high esteem) by it's customers and of the general population. A company can't buy that mantle but a company can sure lose it by letting their brand stand for cheep in price or quality.
What we've seen happening since 2007 is that ALL of Apple's products carry the aura of a prestige product, so while the PC industry sales have been in a tail spin, Apple's Mac sales have generally increased. Price has not been a driver to Apple's sales numbers, people buy Apple products because they have an expectation of having a better experience. As a long-term Apple customer I have been bewildered by the kinds of problems PC owners are faced with regularly. Even very experienced PC owners fussing over their recalcitrant PC which suddenly stopped recognizing to a printer it can see attached to itself.