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Microsoft pays for inaccurate "Apple Tax" study, issues 3rd TV ad

post #1 of 337
Thread Starter 
Hoping to persuade possible Mac buyers that Apple charges an arbitrary "tax" for its computers, Microsoft has paid one analyst to create a report that portrays Windows PCs as less expensive -- even if it has to artificially pad the Mac's price and hide Windows' costs to get there.

Analyst Roger Kay of technology research firm Endpoint Technologies was told to produce a paper that shows the "hidden tax" of buying Macs, both in the cost of the systems themselves as well as in the software and services to accompany them.

In the study, Kay claims that Apple has marginalized itself and its market share by producing a closed ecosystem that only allows users to buy Mac OS systems from Apple and thus prevents them from buying models that are potentially cheaper or in more appropriate configurations. The company has deliberately chosen to ask a premium for a small range of computers and, as a consequence, locked itself out of the wider market -- a boon when the economy was doing well and Windows Vista poorly, but not in the current financial climate, the analyst says.

"Apple’s premium pricing strategy actually enhanced the products’ appeal (for a select few). As in, only I can afford this fancy stuff," Kay writes. "[But] by holding a price umbrella over the entire market, even with arguably better products, Apple allowed the entire Windows ecosystem to establish itself underneath... Mac users may be paying more for image than substance and investing heavily in coolness that’s cooling off."

He also echoes Microsoft's recent marketing lines by questioning whether Apple systems are "really so cool" given the alleged extra overhead. Coincidentally, Microsoft has released a third anti-Apple ad which sees a mother and son that go to Best Buy to look for a gaming-capable notebook below $1,500. They dismiss Macs as too expensive and too small, ultimately buying a 16-inch Sony VAIO FW instead.



To illustrate his point, Kay draws comparisons between Macs and purportedly equivalent systems, but it's here that Microsoft's position as the source for the report manifests itself in multiple factual errors as well as calculated additions or omissions.

Roger Kay's notebook comparison: note the obsolete MacBook used as an example.

While pointing out that Apple's MacBooks lack memory card readers or HDMI video output, Kay uses an already-obsolete version of the white, $999 MacBook to portray the system as slower than less expensive PCs from Dell and HP. And while certain features such as the amount of memory and hard drive space are unambiguously in the Windows PCs' favor, he also consciously overlooks other figures when they would tilt in favor of Apple, such as newer processor generations or faster graphics chipsets.

The presences of Bluetooth or faster 802.11n Wi-Fi support, as well as portability considerations such as battery life and system weight, are also excluded from the available data.

Many of the same errors are repeated and at times magnified for desktops. Even when discounting glaring mistakes made in describing only discontinued Macs in charts but new models in text, the analyst dismisses the relevance of significantly faster graphics in the Mac mini, iMac and Mac Pro while simultaneously trumpeting relatively small advantages in the Windows PCs, like card readers and TV tuners. The processors, amount of memory, and storage in current-generation Macs are now equal to and sometimes better than the Dell and HP systems chosen by Kay and Microsoft for the comparison chart.

Unusually, Kay and Microsoft also choose to sidestep Apple's higher-end iMacs altogether and try to equate a Mac Pro with a HP Pavilion desktop; according to the paper, a modern Xeon workstation is feature-equivalent to a mid-range home system with a previous-generation Core 2 Quad processor and slower graphics.

Roger Kay's desktop comparison; all the Macs illustrated are obsolete and now outmatch rivals in some areas.

The Endpoint researcher further attempts to exaggerate any difference by attempting to portray a real-world scenario for buying a high-end desktop, a low-end notebook, accessories and software over a five-year span. Here, he claims a $3,367 "Apple tax" over the period but pushes the cost of the Apple system upwards by selectively adding systems and add-ons to the Mac that are unnecessary. Aside from picking the significantly more expensive Mac Pro instead of a 24-inch iMac, Kay forces the Mac buyer to maintain a 5-year subscription to MobileMe, a year of One-to-One service at an Apple retail store, an upgrade copy of iLife, and to buy copies of Microsoft Office and Quicken that he presumes the Windows user already owns.

Moreover, he insists that the Mac buyer must also make stranger and arbitrarily more expensive hardware purchases to equal the Windows sample. Rather than buy the equally Mac-compatible Linksys wireless router, the Mac owner is pushed to buy a more expensive Airport Extreme unit, and is told that a stand-alone Sony Blu-ray movie player meant for TVs is equivalent to an internal Blu-ray drive for computers, adding $205 to the price.

All told, the Mac user in a typical situation is asked in the study to pay $2,517 more than would be necessary over the period, assuming the example shopper buys a $1,799 iMac. While a gap still exists, the difference closes to just $850 and assumes not only that the systems are equivalent but that the Windows user has no other hidden costs, such yearly subscriptions to security suites (which remain more common than free alternatives) or the bundled trial software used to subsidize the actual cost of the PC.

Kay's five-year plan for Macs and Windows PCs. Note the Mac Pro, Sony movie player and unequal purchases of services and software.

Kay has already had an opportunity to present his point of view on the report since its publication and told CNET on Thursday that Microsoft had padded costs even further in the information it initially hand-fed to him to produce the report; if he hadn't excluded these, the portrayed gap between the Apple and Windows purchases would have been even higher. Still, he contends that it "wouldn't change things much" if he found some additional costs to pare back.

Endpoint's author also maintains that, despite the obvious discrepancies, Microsoft's core argument remains: since Apple only offers a relatively small collection of systems, buyers are less likely to get the exact systems they want or to know they're being charged fair prices.

"That particular piece of the economics seems to hold up pretty well," he claims.
post #2 of 337
Microsoft's on a roll
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post #3 of 337
Funny thing is that had they done a "fair" comparison, there would STILL be an Apple tax, and Microsoft wouldn't have to lie about what Apple charges for products. But being greedy completely destroys the validity of the study and thus it's complete trash.

Granted, even I have a MacBook Pro and I try to avoid the "Apple" tax as best I can by buying on eBay or refurbished. Plus, everyone seems to forget that Apple products sell MUCH better on the 2nd hand market than any PC EVER will. This is probably because of the premium charged on Apple products.


I wouldn't call it an Apple "tax", it's more like an Apple "investment" that you could potentially get a positive return on if you play your cards right.
post #4 of 337
Damn these guys are desperate, seems Apple has them scared sh!tless.

Why they don't address their Microsoft tax?
post #5 of 337
I'm guessing the shill, er author, left out any mention of resale value.
post #6 of 337
If Kay or any Microsoft employee owns a single product that is more expensive than the cheapest example that does the same thing, they have completely invalidated this report (and much of their marketing strategy recently). This includes their brand of cars, furnishings, clothes, and food. They would have us believe that Microsoft is an ascetic paradise.

So why aren't they all running Linux if that's the game they want to play?
post #7 of 337
Not only do Mac users buy MS Office (while Windows users use Wordpad, presumably), the tables forgot to add virus protection, something like Photoshop Albums, a DVD writing program, and something like garage band.

I'd actually be interested in reading a genuine comparison
post #8 of 337
OS X, OS X, OS X.

THAT makes a Mac worth every damn penny.

The value of Windows? What value??

Is it the value of:

Running antivirus software
Slowdowns over time
Regular maintenance
A slipshod UI
Poorly integrated software
Messy interface
Badly designed software
A massive target for virus writers
Conficker (which is now awake, have fun! (Again))
Hardware/software compatibility issues
The worst browser in history, fully integrated into the OS (Bonus!)
HIG guidelines that are hardly ever followed
An OS that so obviously tries to be an ass-backwards, upside down clone of OS X
Running Crysis faster than the other basement shut-in living next door
And . . .

The happy knowledge that you come off looking cheap, and worse, a loser that secretly lusts after OS X . . . mostly because MS said so in their ads. Isn't that nice? If I were a Windows user I'd feel beyond insulted. It's a horrible image.

Lots of value there. I'd pay extra (a lot extra) just to avoid all of that.
post #9 of 337
Throwing Apple's software advantage aside, I think Apple should update the standard memory and hard drive size for those who really don't know the whole picture and instead just look at "numbers." Available hard drive space and memory are numbers everyone "knows" and looks at today when shopping for a computer. They all want to know how much hard drive space they have to store their MP3's. I think if Apple closes the gap there, it is a done deal for the masses...
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post #10 of 337
the final list is ludicrous. is there any attempt to justify why all these purchases have to be made whereas they aren't on the windows side? mobileme is only really worthwhile if you own an iphone as well
post #11 of 337
What some people seem to overlook is that the uninformed, most consumers, will not understand these differences. To them, these ads are reasonable.
post #12 of 337
Quote:
Originally Posted by mrpiddly View Post

What some people seem to overlook is that the uninformed, most consumers, will not understand these differences. To them, these ads are reasonable.

And to a certain extent, I'm glad they buy Windows. Let Microsoft enjoy their patronage, and all that comes with it.
post #13 of 337
Quote:
Originally Posted by mrpiddly View Post

What some people seem to overlook is that the uninformed, most consumers, will not understand these differences. To them, these ads are reasonable.

Those are probably the same ones who are not, and probably will never be part of the Premium end of the market.

$400-$700 Dell victims need not apply.
post #14 of 337
Since when is MobileMe $149 a year?

Oh that's right; it's not.
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post #15 of 337
Quote:
Originally Posted by AppleInsider View Post

"Apples premium pricing strategy actually enhanced the products appeal (for a select few). As in, only I can afford this fancy stuff," Kay writes.

See, now, this is the kind of thing that really frustrates me. I've heard it I don't know how many times from PC users. And yet, I don't know a single Mac user who thinks like this. Not one.

Do Mac users frequently look at a $300 PC and say, "That's a piece of crap"? Sure. But it's not because they're taking elitist pleasure in having bought something out of reach of lesser beings. It's because they have a sense of what a well designed machine is like, and they want other people to share that sense.

A person with the attitude of "only I can afford this fancy stuff" doesn't want other people to buy that stuff. They're threatened at the idea of other people simply joining the ranks of their privileged elite. Every Mac user I know, on the other hand, is delighted to hear of a friend buying a Mac. In fact, I meet people all the time whose switch to Macs becomes a bonding experience. And that's the exact opposite of what would happen if Mac users were like what Kay describes.

Now, are Mac users partisans? Sure. Bitter partisans? Sometimes, sure. Do we treat Windows people as though they're somehow less worthy of respect? Sometimes no, but many times yes. But it's usually on the basis of a feeling that the Windows person has made a bad choice, either from having improperly-tuned values, or because they're somehow not perceptive enough to understand the value of what the Mac brings to the table. They'll go on and on about how the Mac is so nice in this way or that way (often to the point that even a Mac enthusiast like me wants them to shut up). But I've never once since the merest suggestion that the high cost you paid is somehow a badge of honor. Mostly, the argument that's made is that we're really not paying the premium you think. Sometimes you hear the "equivalently decked out systems actually cost [less/about the same]" argument and other times it's "the intangibles are hard to explain but easy to understand once you've made the switch" argument (which I hear MOST from recent PC converts, not from long term Mac users).

But the elitist thing is an asinine misrepresentation that does nothing other than fuel bigotries and polarize sides. I guess that's what it's meant to do, though...
post #16 of 337
Quote:
Originally Posted by Adjei View Post

Damn these guys are desperate, seems Apple has them scared sh!tless....

That's definitely what it seems like.

Sadly, all this reminds me of politics in this country. The press will report what you say, even if it isn't true. Once it's out there a certain amount of it will stick. Correcting the misinformation appears defensive, which isn't good either. Corrections and retractions don't get equal space, and the damage is already done.

That said, Apple's Mac-PC ads twisted things as well. But Microsoft's current campaign is out of control - - permeated with misinformation backed by nothing short of fraudulent presentation. A "Study" ? Please.
post #17 of 337
Went over to the site to refute their claims... Oddly, even in Safari running in Debug Mode as a Windows Explorer Environment, I wasn't able to comment. I cry foul.

Working in both Mac OS and Windows for 15+ years, I can tell you that with Windows, substantially more time is spent in OS repair, navigation, troubleshooting and sheer frustration than ever in Mac OS. Even going as far back as Mac OS 6.x.

To me, time is money, and I won't waste either on Windows ever again.
post #18 of 337
He's totally right. Just last week I purchased a family pack of Vista Home Premium....no wait!


Funny thing about these ads is this. Apple's done a pretty good job of not trying to attack Microsoft's bread and butter.

Office
Windows Server

Microsoft lives or dies by their OS and Office suite and Apple , despite having iWork, hasn't made a concerted effort to harm Office sales nor have them support ODF (a potential anathema to Office file formats) and they haven't encroached on the Enterprise with server and middleware.

Yet Microsoft is acting like a bunch of babies and attacking Apple. Sure the "get a mac" "I'm a Mac you're a stinking PC" adds are funny but Apple's not screwing with Redmond's cash cow.

From the way MSFT is acting you'd think it was Apple that had the %80 marketshare
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post #19 of 337
Quote:
Originally Posted by hmurchison View Post

He's totally right. Just last week I purchased a family pack of Vista Home Premium....no wait!


Funny thing about these ads is this. Apple's done a pretty good job of not trying to attack Microsoft's bread and butter.

Office
Windows Server

Microsoft lives or dies by their OS and Office suite and Apple , despite having iWork, hasn't made a concerted effort to harm Office sales nor have them support ODF (a potential anathema to Office file formats) and they haven't encroached on the Enterprise with server and middleware.

Yet Microsoft is acting like a bunch of babies and attacking Apple. Sure the "get a mac" "I'm a Mac you're a stinking PC" adds are funny but Apple's not screwing with Redmond's cash cow.

From the way MSFT is acting you'd think it was Apple that had the %80 marketshare

Let 'em.

The more MS portrays Apple as the premium brand, the more interesting and desirable it becomes. Conversely, all this advertising MS is doing actually makes them look like the bargain-basement brandyou don't choose, but have to settle for. Which would be true, anyway.
post #20 of 337
Although I think the Mac is the only way to go and pays for it's self in the long run, this latest commerical by Microsoft is the best one so far.
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post #21 of 337
ehh....

Those macs seemed to look better than all the windows PCs combined. :]
I'd be willing to pay extra to make myself look cool.
post #22 of 337
There is an even bigger story here than how Microsoft has resorted to lame tactics...

...that they are even using tactics at all.

Apple has come a long way in the short six or seven years since I switched. Microsoft has shifted from ignoring Apple to competing with her. That is the real news here. We have only come to see Microsoft actually investing money to market their products against the Mac within the last twelve months or so (definitely gives credibility to Apple as a rising competitor).

Unfortunately for Microsoft, is that they do not realize the popularity of the Mac has nothing to do with Apple's marketing (that only helps with exposure). Most switchers, according to what I have observed, have been "converted" by word of mouth or hands on experience with another Apple product (iPod, iPhone, etc.). Those forces aren't going to be swayed by these kinds of generic commercials.
post #23 of 337
Quote:
Originally Posted by Quadra 610 View Post

OS X, OS X, OS X.

THAT makes a Mac worth every damn penny.

The value of Windows? What value??

Is it the value of:

A massive target for virus writers
Conficker (which is now awake, have fun! (Again))
Hardware/software compatibility issues

Lots of issues with your post, but it is late and I am tired so here is a few:

a target fro viruses, sure, but that also means that there is a ton of Rand D and competition to find and remove them, if you were to write malware for the Mac, it would never get discovered until Symantec found it.

the hole that Conflicker hit was patched months before the malware came out, if someone exploits a hole in 10.5.2, that apple patched in 10.5.3 today, when we are on 10.5.6, is that still a black mark on Apple, or does it speak volumes about the users lack of running updates.

Yea, PCs have hardware issues, but it is a tradeoff, pc guys dont have to use a $3000 tower and $400 GPU to have a reasonable graphics experience for 3d apps
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post #24 of 337
Crazy M$
They really DON'T have to exaggerate details to show that apple computers are generally more expensive.
post #25 of 337
I heard that Apple has about 30% of computers sold at $1000 +. This is also where the the greater profits are.

I wonder what the market share for consumer/home used computers are.


Does Apple need to counter this?
I don't think so. More people accept that better products have a higher price and word of mouth is far better with Macs than with PCs. Again iPods and iPhones are the most expensive products in their markets but they are a great success.

I do think that Apple should promote the iLife software more. Time to make the PC in the ads a switcher and then move on to a new ad campaign.

Soon, with the direction already taken with the OS, a Mac cannot be compared so directly to a PC. It would be like comparing an iPod touch to a Zune.

Valan
post #26 of 337
Quote:
Originally Posted by a_greer View Post

pc guys dont have to use a $3000 tower and $400 GPU to have a reasonable graphics experience for 3d apps

3D apps?

You mean GAMES. GAMES aren't "3D apps."

Sorry, most Mac users could care less about Crysis. Some of us have outgrown them.

Macs were BORN to run Aperture, Final Cut Pro, and all the Pro grade "3D Apps" out there. Macs run all the graphics-intensive apps we need. And they are the industry standard. Macs are all about 3D apps.
post #27 of 337
As a long long time Windows user and Mac owner I think it's about time Microsoft started advertising their strengths. I think this article sounds like someone with sour grapes. Like the Apple ads are any more truthful. I have always enjoyed them. I think they are funny, but truthful they are not. The Microsoft ads are very accurate. You can buy an excellent Windows laptop, for less then the price of a Mac mini, that will last a long time. My family currently has 3 HP laptops that are 5 years old and two Dell laptops that are 2 years old. Total investment for all 5 laptops $3000.00. My daughter also has a Mac Book provided by the school she teaches at; $2000.00 for one laptop (it's no better then my two year old Dell).

I personally have never felt comfortable in an Apple store. Most people I meet there seem to feel they are better then anyone that owns a Windows machine.

I have virtually no problems with Windows or the Mac but I spend a lot of time helping others on both. Mac owners can mess up their machines just as well as a Windows user.

I personally get a kick out of buying something at the Apple store and as the sales clerk is knocking something about Windows I ask them how they like using Windows Mobile on their handheld point of sale device. Seems like the iPhone or iPod touch should be capable enough, but they must not be.

Everyone keeps mentioning the virus costs. There are several options on Windows that are free, including not running any (I don't run any on my home machines) I do scan my server drives for virus's (I've yet to find one except in e-mail attachments). You can get a virus/trojan on a Mac.

Open Office works quite well on Windows and Macs and it's free. You can use Neo Office on the Mac which is Open Office compiled as a native Mac app.
post #28 of 337
Quote:
Originally Posted by a_greer View Post


Yea, PCs have hardware issues, but it is a tradeoff, pc guys dont have to use a $3000 tower and $400 GPU to have a reasonable graphics experience for 3d apps

Yet there are $3000 towers and $400 GPU to be purchased in PC land so clearly there's a market for such hardware on both platforms. The only difference being Apple's not going to wade into low margin territory catering to "champagne tastes on a beer budget" end users.

Truth is there are plenty of people willing to pay the Apple premium and the meteoric success of Apple is a testament to that fact.
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post #29 of 337
The more telling thing is that there has been no response from Apple. Except sales.
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post #30 of 337
To sum it up, Apple makes bold claims about Microsoft not working and portrays all PC users as fat guys with a bad 80's suit, Microsoft makes bold claims about Apple's pricing as being insane and only rich white people can afford them, fanbois pour gasoline on their bodies and take to their platform of choice to start a new flame war, cats and dogs live together and Armageddon starts once again..

Rinse, repeat. yawn. \
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post #31 of 337
Quote:
Originally Posted by DdubRes79 View Post

To sum it up, Apple makes bold claims about Microsoft not working and portrays all PC users as fat guys with a bad 80's suit, Microsoft makes bold claims about Apple's pricing as being insane and only rich white people can afford them, fanbois pour gasoline on their bodies and take to their platform of choice to start a new flame war, cats and dogs live together and Armageddon starts once again..

Rinse, repeat. yawn. \

I prefer the second portrayal. Except you inserted the issue of race in there, where it didn't belong. Good job.
post #32 of 337
Being a computer supervisor at the Best Buy I work at (insert joke and/or rant here ), I have to say this "study" is completely ridiculous. Selling both Macs and PC's, I frequently see "less expensive" Windows computer getting rung up, and even with the upfront cost of everything combined, still coming out even or more expensive than our Macs. Not all the time, but it is extremely common.

Like others have noted on here, this study conveniently dismisses anti-virus cost over the life on the computer, which on average is about $60/year. They also failed to mention that you still need to buy Quicken and Office for a Windows computer as well, as well as any other software you will need (since they only give you trial versions), not to mention the fact that a Windows PC is obsolete in 2-3 years and has a higher repair rate and therefore cost. Macs generally last much longer, but even if you wanted to upgrade, resale value is MUCH higher with Macs.

Plus, where did he get these numbers for some Mac prices? I don't think he realizes that you don't have to get the family packs of MobileMe and iLife, and that iWork is half the price of Office 2008. And to get the same functionality as MobileMe on a Windows computer, an Exchange account is necessary (which is much more than MobileMe ever will be). Also, his Dell "warranty" does not cover one-to-one care (or a MobileMe equivlant, since he bunched that in there too), so why are those included in a supposed head-to-head cost? Also, does Dell have a network of retail stores and authorized service centers across the nation to get your computer looked at and fixed? Didn't think so.

The last thing that bugs me is the fact that while having an AirPort device is certainly preferable, any wireless router works with a Mac, including that linksys one he quotes for a PC. Plus again, an iLife upgrade (completely optional, by the way), is again $79, not $99. The funny thing is that this simply shows Microsoft is scared sh*tless about a company with 1/10th of their market share, because when they look into the future, I don't think it looks very good from where they're sitting. I guess we will wait and see, though.

</end rant>
post #33 of 337
Quote:
Originally Posted by mcloki View Post

The more telling thing is that there has been no response from Apple. Except sales.

MS did Apple's job for them.

Who the hell would be attracted to the kind of user-image MS portrays in those ads? MS has singlehandedly called their userbase cheap and tasteless. Smooth move.

And Apple's about to report a strong month . . .
post #34 of 337
The 3rd "comparison" drove me crazy!

they've listed the update of iLife or other software for MAC
but forget to list out the upgrades for WINDOWS and OFFICE!!!
post #35 of 337
Call me a contrarian, but I am truly happy if Apple continues to stay below 10% or so in market share. Apple should continue to be a high value-low volume-high margin player.

Apple should just stay the course and not veer from its extremely successful strategy. If these stupid Microsoft ads help Apple rediscover - rather than run away from - that value proposition, that's fine by me.

I say that as both an Apple shareholder and an Apple customer.
post #36 of 337
Gizmodo did a great article on the Apple Tax. Fair and balanced. Let's be honest there is one, but it seems to punish the low end buyers more so than the top end. It's more of a way for Apple to convince you to upgrade to the nicer model. This ensures two things... A. you'll be running their system on better equipment which leaves you with a better overall customer experience. B. you pay them more money. That's my overall take on it. Here's the article link.

http://gizmodo.com/5065133/the-truth...-the-apple-tax
post #37 of 337
Quote:
Originally Posted by BHoughton View Post

Since when is MobileMe $149 a year?

Oh that's right; it's not.

Of he sprung for the Family Pack since it's not his money...It's Microsoft's.

The other thing this study assumes is that Mac users are too stupid or lazy to shop around.
Amazon sells Mobile me for less than $70 and the family pack for around $90.
post #38 of 337
LOL, idiots, Mac never was promoted to be a games computer, it is meant to do other stuffs and games is just occasion. Why? cause Mac usually able to last around 5 years and if a computer were to last for 5 years, it won't be able to play the latest game during the 3-5th year period. Gamers own desktop cause it can be upgradeable, they own powerful instead of looks notebook cause they want gaming performance and eventually will sell it after a couple of years of use.

And yea, I am happy with Apple stay below 10%, less people whining, less trolls As long as Apple stays as a premium product company, I am happy

Anyway stupid (ms) + stupid (kay) = idiot (apple tax)
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post #39 of 337
Great free advertisement for Apple. Seriously. I remember way back in the day when Borland would mention (i.e. try to slam) Microsoft in their print/web advertisements. And where is Borland? I'm not saying Microsoft is devising its own doom with these adverts. I'm just saying it is at least ironic that Microsoft is going after Apple when Microsoft has HUGE market lead already. And by mentioning Apple, they are offering free advertisement for Apple. In the case of Apple's commercials ("I'm a Mac" "...and I'm a PC"), one could argue that PCs were getting free marketing. Except that Apple's commercials were clever, and Microsoft's PC commercials aren't especially clever. I think the best of the bunch so far from Microsoft were the "I'm a PC!" commercials. Not clever, but at least mildly amusing and not annoying.
post #40 of 337
Quote:
Originally Posted by Quadra 610 View Post

Those are probably the same ones who are not, and probably will never be part of the Premium end of the market.

$400-$700 Dell victims need not apply.

It is odd to me that you equate the cost of one's computer with their knowledge of computer hardware. Just because one spends money on something does not mean they understand it, you cannot purchase your way into knowledge.
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