Setting this report aside, we can also look at what has changed:
First iPhone came with a dock. That later became a $30 accessory, today it's $49, with the only change being the colour. The CCK came with a SD Card reader plus a USB adapter. Sold for $30. Today still being sold for $30, but per adapter, doubling the price. Replacing the glass used to be $60, then $90, then $229, then came the iPhoneX: $550 to replace the glass.
Obviously things have changed, especially with the glass/displays. But what all seemed 'reasonable' now come across as greedy to some...and these folks will likely be very sincere in their believes. Possibly even 'right'.
The prices outside the US are outrageous as Germany is not even really bad off. In other countries the differences to the US prices are even bigger. So your example just goes to show Apple is rightfully being criticized - at least outside the USA.
Do note that the prices do not include tax, so to compare the European prices you'll need to exclude VAT, ≈ 17-27%
Just saw a comment on Facebook about the market drop being led by Apple: "$1000 phones, what do you expect!" LOL
Well, the critics and haters have to have something to bitch about don’t they? For years it was performance, now it’s price. All the top flagship smartphones are approaching $1K but let’s single out the iPhone for ridicule. No amount of editorializing will stop the carping. The haters and disgruntled desktop crowd think they’ve found a new path to Apple’s doom and they will milk it for all it’s worth. Let them wallow in their negativity. Let them stew in their own hate filled juices. Let them be consumed by their own inadequacies. Let them think people who remain fans of the company are delusional.
This kind of talk doesn't help address the problem. Calling them haters or disgruntled is considered 'gaslighting' and that's exactly what you're doing, in a defensive manner to deflect any Apple issues. There are angry people and there are ANGRY people. The users who have owned Apple products for years have a right to be angry and that doesn't make them haters. And when you call those people 'haters', it makes the situation worse and they would view you as arrogant or ignorant, even both which is much worse.
Gaslighting behavior like your's is EXACTLY the problem at forums from here to other websites and it draws in angry posters.
I, for one, have followed Apple for years and prefer their older products because they were well produced. I own a 2010-11 iMac which still works to this day, original iPad, iPad Pro 12.9, iPhone SE ( my previous phone ) and iPhone 7 ( now my current device). I also have stored away an original lime green iBook, PowerBook G4 Titanium (old school workhorse ), and G4 tower. Those last three computers plus my iMac were user upgradable on RAM and it was beautiful, providing me flexibility for my graphic design/dgitial art needs. Those old machines I've had were worth it which is why I'm still holding on to my iMac until I find something more practical to upgrade to ( and no, not the new Mac Mini which I have serious reservations about ). EDIT: I also have an original iPad (click wheel ) and iPod Touch. I also have a Lenovo Chromebook for daily webmail and browsing which gets the job done. No need for a fancy $2,000 laptop to do the basic things nor do I need it to talk to my iOS eco-system which is also connected to my wifi and wireless Brother laser printer. Simple set up.
Am I impressed with Apple's current direction? No. Not by a long shot. They can do far, far better than what they're offering. I'm not saying Steve Jobs was perfect, but at least, he kept the company in line under an 'iron fist' with a laser like focus on quality while on the other hand, you have Cook who doesn't have the mojo to get things back on the right track with products' quality control slacking. Under Tim's watch. There's a reddit topic going on now which is growing regarding the nickle and diming and I'm not going to link it here but you can find it. And it doesn't make them haters as they're pointing out what's wrong with the products and the pricing.
Here's a good example of what's wrong with Apple now. The new iPad Pro 12.9's industrial design looks nice but the problem was that this was what they should've went with in the FIRST place including a magnetic Pencil stylus to charge on. Surface got it right the first time which Apple pooh-poohed and then they do a 180 degree turn by going with that design after a few years. See the problem? It's called arrogance. The original iPad Pro worked fine for me and still does but I found charging it at the port side to be. . .weird as if it was some kind of 'sick joke' by someone inside Apple when Microsoft, OTOH, got it right the first time. However, the 12.9 size may be handy due to the portable nature of it which is fine, although had they gone with, say, a 20 inch iPad Pro, it would've been more practical for the professional creatives so that we can view images or projects at 100% actual scale. For example, comic book artists use an 11 x 17 illustration board for each page to be scaled down and if they do it on iPad Pro, they have to do a lot of zooming/scaling to see the whole thing while a larger tablet would make it easier, providing more room for palettes and seeing the entire image at once. Or page layout for magazine designers so that they can view both page spreads at the same time. This is why large screened monitors are handy for this reason.
Although, I doubt having a USB-C outlet to an external monitor for iPad Pro would solve the problem because the process would require looking at the monitor to view the image's actual print scale. Why Apple didn't come out with an actual touch screen monitor at 21 inches or larger to dock with iPad or other devices is beyond me. And it's NOT the first time Apple has made docking products.
Remember the Powerbook Duo Dock from the 1990s? Look it up. All Apple. If they can do this back then, they should've already done it again by now.
But that's just one example out of many. And that doesn't make me a hater.
The prices outside the US are outrageous as Germany is not even really bad off. In other countries the differences to the US prices are even bigger. So your example just goes to show Apple is rightfully being criticized - at least outside the USA.
Do note that the prices do not include tax, so to compare the European prices you'll need to exclude VAT, ≈ 17-27%
I did not know that VAT was Apple exclusive. My bad for assuming Samsung was including it, too...
Seriously though. I will do the Math for you: 1649€ includes 19% VAT, so net price is 1385.71€. Converted it amounts to 1561$. That is still 112 $ more than in the US. And that premium isbeing paid by none-US customers everywhere. Hard to be an Apple customer in Europe and not come off like somebody who likes being taken advantage off.
Just look how much Jobs invested back versus how much cash has piled up since he died.
Steve was interested in product improvement, not in real-estate, luxury, or extreme wealth as such.
He warned against greedyness, and almost anything the current leadership prioritizes. Pioneers shouldn’t be compared to milkers anyway
The data doesn't support your supposition.
Then please explain where those hundreds of billions come from, and what percentage of earnings became invested back over the years. The problem is your micro-economic approach to macro-economic issues
We've discussed this ad infinitum over the last five years. Your problem is your own micro-economic approach, meaning Apple not directly appealing to you anymore as a customer in a shift in focus to a different product line, to a macro-economic issue. On a per-unit basis, Apple is making no more money as a percent of what it costs the company to make under Cook, than it did under Jobs. The difference is the stunningly higher user base that the company accumulated.
I understand where you're coming from, but you're conflating several different issues.
My approach is macro. I’m not looking at cost prices or margins, which is impossible because the prices they get at their volume are their best kept secrets. I point at the immense cash reserves accumulated AFTER SJ and where that got directed to. You seem unable to clarify those metrics from your micro-economical analysis and you avoid the questions I asked about them Whether or not their portfolio is appealing is an entirely different subject - that has nothing to do with wealth attribution. It’s not me who is conflating that.
Just look how much Jobs invested back versus how much cash has piled up since he died.
Steve was interested in product improvement, not in real-estate, luxury, or extreme wealth as such.
He warned against greedyness, and almost anything the current leadership prioritizes. Pioneers shouldn’t be compared to milkers anyway
The data doesn't support your supposition.
Then please explain where those hundreds of billions come from, and what percentage of earnings became invested back over the years. The problem is your micro-economic approach to macro-economic issues
We've discussed this ad infinitum over the last five years. Your problem is your own micro-economic approach, meaning Apple not directly appealing to you anymore as a customer in a shift in focus to a different product line, to a macro-economic issue. On a per-unit basis, Apple is making no more money as a percent of what it costs the company to make under Cook, than it did under Jobs. The difference is the stunningly higher user base that the company accumulated.
I understand where you're coming from, but you're conflating several different issues.
My approach is macro. I’m not looking at cost prices or margins, which is impossible because the prices they get at their volume are their best kept secrets. I point at the immense cash reserves accumulated AFTER SJ and where that got directed to. You seem unable to clarify those metrics from your micro-economical analysis and you avoid the questions I asked about them Whether or not their portfolio is appealing is an entirely different subject - that has nothing to do with wealth attribution. It’s not me who is conflating that.
I didn't avoid them, we've been writing about it for five years. Feel free to browse the history. A quick check of Apple's cash reserves back to 2006 shows that Apple had a proportionate stash to earnings for that entire time. Yes, even under Jobs, so to say that this is exclusive under Cook isn't accurate.
Just look how much Jobs invested back versus how much cash has piled up since he died.
Steve was interested in product improvement, not in real-estate, luxury, or extreme wealth as such.
He warned against greedyness, and almost anything the current leadership prioritizes. Pioneers shouldn’t be compared to milkers anyway
Wait, is that the same Jobs who didn’t care for buybacks and dividends? But hey, thanks for playing.
Marginal analysis has a lot of flaws that weren't taken into account in this article. For starters, MA assumes that items of comparable cost are taken into account, then the margins should match.
Except that the average starting phone price today is higher, vis a vis salary increases, than the original iPhone-iPhone 5.
Additionally, the average starting price for an Apple computer is also higher, for some models, vis a vis salary increases, than comparable models of just 3 years past. (ie: Mini, Air...et al.). That is, unless you think pv money conversions should increase by 50% on just a scant 4.5 years? No, of course not.
That is going to leave a relative sense of increased cost (and rightly so), when people have to dip into their own pocketbooks more, to reach for the same class products, even if such products were proportionately profitable to Apple. This cognitive dissonance makes sense, because Apple is in fact choosing a higher economic target market (or in the iPhone X-XS case...shifting the market).
Moreover, remember that as a whole, percentages represent disparities linearly. A constant percentage on higher sales will produce more money. A constant percentage on higher cost products will produce higher profits. If you price all your products 50% more expensive, even at comparable profit percentages, you'll make more money.
IE: 40% profit off a Mac Mini (for example only, since the markup for the Mini is much higher than 40%), that costs 500 dollars, is approximately 200 profit.
A 40% profit off a 700 Mac Mini will produce 280 dollars in profit. Shifting the market towards the higher price, forces customers to choose between the Apple product/ecosystem and an increased 80 profit increase (which is a relative 40% increase over the last profit)... or a shift to a competing Windows platform.
If Toyota kept their Camries profits at a constant 15% but raised the price from 25550 to 30550, their profits would increase, even as their marginal analysis would remain constant.
Remember that iMacs were initially sub-1000 machines. Minis were significantly cheaper just a scant few years ago and apple laptops like the Air cost only 1000, compared to almost a 20% increase today. These are all intentional choices by Apple. Not accidental.
Apple isn't a money-grubbing enemy but they're not cherubs. They're more expensive...and they know it.
Food for thought.
Is this report talking about gross margins or profit margins? Do you have a comparison of average selling prices over time?
Meaningless to to this discussion. When Dodge started selling the 12-cylinder Viper it would have had a positive effect on ASPs. But it offered a lot more power and sportiness. Apples latest iPhones offer a lot more performance and capabilities versus previous generations. You’d expect ASPs to climb. Gross margins is where the comparison should lay, and this article does a good job pointing out how they have not significantly moved during Cook’s tenure.
The 2010 MBA had more performance and capabilities than the 2008 model but it was cheaper. Same with the $329 iPad compared to the original. Anyone who doesn’t see that Apple is offsetting slower/flat unit sales growth with price increases is blind. New flagship iPhones used to start at $649, now they’re $999. Now you can argue the XS is $350 better than 6 was, that’s obviously subjective but it’s still more expensive. Take the new Mac mini. Starts at $799. The previous entry point was $499. Again, one can argue that the new mini is way better and deserves the $300 price increase but the bottom line is you used to be able to get into the Mac ecosystem for $499 and now the cheapest entry point is $799. The previous entry point to iPhone was the $399 SE. Now the cheapest entry point is the $499 7. And the cheapest iPad used to be $259; now it’s $329. In the past you could get an Apple TV for $99; now it’s $179. It costs more to get into the Apple ecosystem that’s just a fact.
It’s not appropriate to cast the comparison the way you have. Like saying the entry level cancer cure in 1950 was les expensive than today’s entry level cancer cure. These are different things you are comparing. I use an extreme example to illustrate my point.
As for being blind, I could accuse those who aren’t willing to acknowledge that Apple could certainly juice units sales year after year by simply designing and developing iPhone models spanning lower price tiers, as other vendors have done. How popular would be a 6” OLED iPhone priced at $400? Pretty popular, but Apple would make no margins on such a model. So it’s not that Apple is reacting to slower/flat unit sales. It’s quite the opposite; Apple has deliberately decided to go farther up market in capabilities, performance, etc, and at significantly higher prices. Slower/flattening unit sales is a result of that strategy, not the reason for the strategy. You see, those who aren’t blind can see that it’s acually the opposite of your characterization.
I don’t agree, or at least don’t agree that it can only be one or the other. I highly doubt that Apple would intentionally try to slow unit growth. Going “up market” allows Apple to still post record financials even when sales have flatlined. But for how long? How long can they keep increasing prices to offset flat to declining sales?
Marginal analysis has a lot of flaws that weren't taken into account in this article. For starters, MA assumes that items of comparable cost are taken into account, then the margins should match.
Except that the average starting phone price today is higher, vis a vis salary increases, than the original iPhone-iPhone 5.
Additionally, the average starting price for an Apple computer is also higher, for some models, vis a vis salary increases, than comparable models of just 3 years past. (ie: Mini, Air...et al.). That is, unless you think pv money conversions should increase by 50% on just a scant 4.5 years? No, of course not.
That is going to leave a relative sense of increased cost (and rightly so), when people have to dip into their own pocketbooks more, to reach for the same class products, even if such products were proportionately profitable to Apple. This cognitive dissonance makes sense, because Apple is in fact choosing a higher economic target market (or in the iPhone X-XS case...shifting the market).
Moreover, remember that as a whole, percentages represent disparities linearly. A constant percentage on higher sales will produce more money. A constant percentage on higher cost products will produce higher profits. If you price all your products 50% more expensive, even at comparable profit percentages, you'll make more money.
IE: 40% profit off a Mac Mini (for example only, since the markup for the Mini is much higher than 40%), that costs 500 dollars, is approximately 200 profit.
A 40% profit off a 700 Mac Mini will produce 280 dollars in profit. Shifting the market towards the higher price, forces customers to choose between the Apple product/ecosystem and an increased 80 profit increase (which is a relative 40% increase over the last profit... or a shift to a competing Windows platform.
If Toyota kept their Camries profits at a constant 15% but raised the price from 25550 to 30550, their profits would increase, even as their marginal analysis would remain constant.
Remember that iMacs were initially sub-1000 machines. Minis were significantly cheaper just a scant few years ago and apple laptops like the Air cost only 1000, compared to almost a 20% increase today. These are all intentional choices by Apple. Not accidental.
Apple isn't a money-grubbing enemy but they're not cherubs. They're more expensive...and they know it.
Food for thought.
Here's the thing, right? We've got equivalent profit margins, but in the heady Jobs days, Services wasn't even a thing and contributed far, far less to the company's bottom line as a proportion to the whole. So, we're actually dealing with lower hardware margins than in the late Jobs era, offset by much, much higher contributions from Services to maintain the percentages. This whole thing is just another another bogus and logically fallacious "this never would have happened if Steve was alive" thing.
And, nobody said that Apple was angelic, or inexpensive.
Is this report talking about gross margins or profit margins? Do you have a comparison of average selling prices over time?
Meaningless to to this discussion. When Dodge started selling the 12-cylinder Viper it would have had a positive effect on ASPs. But it offered a lot more power and sportiness. Apples latest iPhones offer a lot more performance and capabilities versus previous generations. You’d expect ASPs to climb. Gross margins is where the comparison should lay, and this article does a good job pointing out how they have not significantly moved during Cook’s tenure.
The 2010 MBA had more performance and capabilities than the 2008 model but it was cheaper. Same with the $329 iPad compared to the original. Anyone who doesn’t see that Apple is offsetting slower/flat unit sales growth with price increases is blind. New flagship iPhones used to start at $649, now they’re $999. Now you can argue the XS is $350 better than 6 was, that’s obviously subjective but it’s still more expensive. Take the new Mac mini. Starts at $799. The previous entry point was $499. Again, one can argue that the new mini is way better and deserves the $300 price increase but the bottom line is you used to be able to get into the Mac ecosystem for $499 and now the cheapest entry point is $799. The previous entry point to iPhone was the $399 SE. Now the cheapest entry point is the $499 7. And the cheapest iPad used to be $259; now it’s $329. In the past you could get an Apple TV for $99; now it’s $179. It costs more to get into the Apple ecosystem that’s just a fact.
It’s not appropriate to cast the comparison the way you have. Like saying the entry level cancer cure in 1950 was les expensive than today’s entry level cancer cure. These are different things you are comparing. I use an extreme example to illustrate my point.
As for being blind, I could accuse those who aren’t willing to acknowledge that Apple could certainly juice units sales year after year by simply designing and developing iPhone models spanning lower price tiers, as other vendors have done. How popular would be a 6” OLED iPhone priced at $400? Pretty popular, but Apple would make no margins on such a model. So it’s not that Apple is reacting to slower/flat unit sales. It’s quite the opposite; Apple has deliberately decided to go farther up market in capabilities, performance, etc, and at significantly higher prices. Slower/flattening unit sales is a result of that strategy, not the reason for the strategy. You see, those who aren’t blind can see that it’s acually the opposite of your characterization.
I don’t agree, or at least don’t agree that it can only be one or the other. I highly doubt that Apple would intentionally try to slow unit growth. Going “up market” allows Apple to still post record financials even when sales have flatlined. But for how long? How long can they keep increasing prices to offset flat to declining sales?
Exactly. Ironically, the flattening of iPhone sales isn't even their fault. The market is just saturated. There's only so many phones people can keep buying. If Apple wants new growth, they need a new, revolutionary product and they need to be the first/second mover into that market.
Is this report talking about gross margins or profit margins? Do you have a comparison of average selling prices over time?
Meaningless to to this discussion. When Dodge started selling the 12-cylinder Viper it would have had a positive effect on ASPs. But it offered a lot more power and sportiness. Apples latest iPhones offer a lot more performance and capabilities versus previous generations. You’d expect ASPs to climb. Gross margins is where the comparison should lay, and this article does a good job pointing out how they have not significantly moved during Cook’s tenure.
The 2010 MBA had more performance and capabilities than the 2008 model but it was cheaper. Same with the $329 iPad compared to the original. Anyone who doesn’t see that Apple is offsetting slower/flat unit sales growth with price increases is blind. New flagship iPhones used to start at $649, now they’re $999. Now you can argue the XS is $350 better than 6 was, that’s obviously subjective but it’s still more expensive. Take the new Mac mini. Starts at $799. The previous entry point was $499. Again, one can argue that the new mini is way better and deserves the $300 price increase but the bottom line is you used to be able to get into the Mac ecosystem for $499 and now the cheapest entry point is $799. The previous entry point to iPhone was the $399 SE. Now the cheapest entry point is the $499 7. And the cheapest iPad used to be $259; now it’s $329. In the past you could get an Apple TV for $99; now it’s $179. It costs more to get into the Apple ecosystem that’s just a fact.
Exactly, increasing prices to offset lower demand is never a good strategy. It works in the short term, but there's only so far you can go (and Apple's already there) before it affects sales in the medium to long term. I think Cook saw the revenue growth go negative in 2016, and to correct it just applied the easy fix of raise prices. The number one problem I and everyone I speak to has with regards to Apple products is the price. Apple gear is just not good value for money anymore. And articles like this don't help matters in Apple's favour; if articles excusing Apple's pricing need to exist, there's a big enough proportion of people who are concerned over the pricing, meaning there's a problem with it. People don't mind paying a bit more for quality and customer service, but people don't want to be ripped off.
Like I said, it’s subjective whether someone thinks a product is priced fairly. But it absolutely is a fact that Apple products are getting more expensive.
It is, there have always been a minority of people who have complained about Apple’s pricing, but they just weren’t Apple’s target market or couldn’t see how Apple’s devices were in fact good value. Apple doesn’t make machines for the budget end of the market so there’ll always be complaints from those people. The minority complaining about price has ballooned in recent years, and now seems to be the majority. Maybe Apple’s just trying to go after the high end; the Ferrari of the market - which would explain the pricing. Only thing is the performance doesn’t equate to the high pricing.
Yes, and we all know Apple has always been a premium brand. I’m not even comparing Apple’s pricing to the competition (though I do think from a hardware standpoint the competition is getting better). It’s not rocket science. When you’re not growing sales like you used to the only way to grow revenue is to raise prices and/or try and extract more money out of existing customers. And when Apple creates new more expensive price tiers it allows them to move other price tiers higher. The entry level XR is a good deal compared to the XS but it’s still more expensive than flagship models were a few years ago. And the cheapest model in the lineup is $100 more than the cheapest model was a year or two ago.
I just compared a Xs Max 512GB $1449 to a Note 9 512GB $1249, Apple’s premium is 16%. For that you get premium material (all glass, stainless steel), superior security, processor, screen among others. Noting that Samsung supply themselves with the display so it costs them less. Why doesn’t Samsung get some of this criticism?
Is this report talking about gross margins or profit margins? Do you have a comparison of average selling prices over time?
Meaningless to to this discussion. When Dodge started selling the 12-cylinder Viper it would have had a positive effect on ASPs. But it offered a lot more power and sportiness. Apples latest iPhones offer a lot more performance and capabilities versus previous generations. You’d expect ASPs to climb. Gross margins is where the comparison should lay, and this article does a good job pointing out how they have not significantly moved during Cook’s tenure.
The 2010 MBA had more performance and capabilities than the 2008 model but it was cheaper. Same with the $329 iPad compared to the original. Anyone who doesn’t see that Apple is offsetting slower/flat unit sales growth with price increases is blind. New flagship iPhones used to start at $649, now they’re $999. Now you can argue the XS is $350 better than 6 was, that’s obviously subjective but it’s still more expensive. Take the new Mac mini. Starts at $799. The previous entry point was $499. Again, one can argue that the new mini is way better and deserves the $300 price increase but the bottom line is you used to be able to get into the Mac ecosystem for $499 and now the cheapest entry point is $799. The previous entry point to iPhone was the $399 SE. Now the cheapest entry point is the $499 7. And the cheapest iPad used to be $259; now it’s $329. In the past you could get an Apple TV for $99; now it’s $179. It costs more to get into the Apple ecosystem that’s just a fact.
It’s not appropriate to cast the comparison the way you have. Like saying the entry level cancer cure in 1950 was les expensive than today’s entry level cancer cure. These are different things you are comparing. I use an extreme example to illustrate my point.
As for being blind, I could accuse those who aren’t willing to acknowledge that Apple could certainly juice units sales year after year by simply designing and developing iPhone models spanning lower price tiers, as other vendors have done. How popular would be a 6” OLED iPhone priced at $400? Pretty popular, but Apple would make no margins on such a model. So it’s not that Apple is reacting to slower/flat unit sales. It’s quite the opposite; Apple has deliberately decided to go farther up market in capabilities, performance, etc, and at significantly higher prices. Slower/flattening unit sales is a result of that strategy, not the reason for the strategy. You see, those who aren’t blind can see that it’s acually the opposite of your characterization.
I don’t agree, or at least don’t agree that it can only be one or the other. I highly doubt that Apple would intentionally try to slow unit growth. Going “up market” allows Apple to still post record financials even when sales have flatlined. But for how long? How long can they keep increasing prices to offset flat to declining sales?
Exactly. Ironically, the flattening of iPhone sales isn't even their fault. The market is just saturated. There's only so many phones people can keep buying. If Apple wants new growth, they need a new, revolutionary product and they need to be the first/second mover into that market.
Which is what ‘services’ is supposed to be. But without a compelling narrative around it it will just be spun as the company trying to extract more $$ from their existing customer base. Like Apple getting into original video content. Are they doing it because they think the can offer more compelling programming than Netflix, Amazon, HBO etc. or is it just a bunch of Apple execs seeing Netflix get $15 a month and saying we want a piece of that pie too (especially if companies like Netflix move away from giving Apple a cut of the subscription).
Marginal analysis has a lot of flaws that weren't taken into account in this article. For starters, MA assumes that items of comparable cost are taken into account, then the margins should match.
Except that the average starting phone price today is higher, vis a vis salary increases, than the original iPhone-iPhone 5.
Additionally, the average starting price for an Apple computer is also higher, for some models, vis a vis salary increases, than comparable models of just 3 years past. (ie: Mini, Air...et al.). That is, unless you think pv money conversions should increase by 50% on just a scant 4.5 years? No, of course not.
That is going to leave a relative sense of increased cost (and rightly so), when people have to dip into their own pocketbooks more, to reach for the same class products, even if such products were proportionately profitable to Apple. This cognitive dissonance makes sense, because Apple is in fact choosing a higher economic target market (or in the iPhone X-XS case...shifting the market).
Moreover, remember that as a whole, percentages represent disparities linearly. A constant percentage on higher sales will produce more money. A constant percentage on higher cost products will produce higher profits. If you price all your products 50% more expensive, even at comparable profit percentages, you'll make more money.
IE: 40% profit off a Mac Mini (for example only, since the markup for the Mini is much higher than 40%), that costs 500 dollars, is approximately 200 profit.
A 40% profit off a 700 Mac Mini will produce 280 dollars in profit. Shifting the market towards the higher price, forces customers to choose between the Apple product/ecosystem and an increased 80 profit increase (which is a relative 40% increase over the last profit... or a shift to a competing Windows platform.
If Toyota kept their Camries profits at a constant 15% but raised the price from 25550 to 30550, their profits would increase, even as their marginal analysis would remain constant.
Remember that iMacs were initially sub-1000 machines. Minis were significantly cheaper just a scant few years ago and apple laptops like the Air cost only 1000, compared to almost a 20% increase today. These are all intentional choices by Apple. Not accidental.
Apple isn't a money-grubbing enemy but they're not cherubs. They're more expensive...and they know it.
Food for thought.
Here's the thing, right? We've got equivalent profit margins, but in the heady Jobs days, Services wasn't even a thing and contributed far, far less to the company's bottom line as a proportion to the whole. So, we're actually dealing with lower hardware margins than in the late Jobs era, offset by much, much higher contributions from Services to maintain the percentages. This whole thing is just another another bogus and logically fallacious "this never would have happened if Steve was alive" thing.
And, nobody said that Apple was angelic, or inexpensive.
I don't doubt that the stores and services/support or free OS all contribute to costs.
But unless you can conclusively prove that those costs offset an average 40% price increase across the board for most of their products over the past five years alone, I'm going to assume that their price increases are a conscious effort to undermine the public perception that their growth has slowed.
Which it has.
As a side note:
Over the past five years alone:
iPhones have increased 40% in avg price. Base model Mac Minis have increased 50% in avg price. (higher spec models are even more) Airs have increased 20% in avg price. MBPs have increased 20% in avg price.
And this is only off the top of my head.
If you're affirming that Apple is spending that additional money entirely on support, I'd love to see it. It's more likely they're *pocketing* more of it, which goes back to supporting all the point Lorin, I and so many others have made.... Apples are more expensive today than yesterday and that profit margin on a far more expensive product...produces MORE profit.
Marginal analysis has a lot of flaws that weren't taken into account in this article. For starters, MA assumes that items of comparable cost are taken into account, then the margins should match.
Except that the average starting phone price today is higher, vis a vis salary increases, than the original iPhone-iPhone 5.
Additionally, the average starting price for an Apple computer is also higher, for some models, vis a vis salary increases, than comparable models of just 3 years past. (ie: Mini, Air...et al.). That is, unless you think pv money conversions should increase by 50% on just a scant 4.5 years? No, of course not.
That is going to leave a relative sense of increased cost (and rightly so), when people have to dip into their own pocketbooks more, to reach for the same class products, even if such products were proportionately profitable to Apple. This cognitive dissonance makes sense, because Apple is in fact choosing a higher economic target market (or in the iPhone X-XS case...shifting the market).
Moreover, remember that as a whole, percentages represent disparities linearly. A constant percentage on higher sales will produce more money. A constant percentage on higher cost products will produce higher profits. If you price all your products 50% more expensive, even at comparable profit percentages, you'll make more money.
IE: 40% profit off a Mac Mini (for example only, since the markup for the Mini is much higher than 40%), that costs 500 dollars, is approximately 200 profit.
A 40% profit off a 700 Mac Mini will produce 280 dollars in profit. Shifting the market towards the higher price, forces customers to choose between the Apple product/ecosystem and an increased 80 profit increase (which is a relative 40% increase over the last profit... or a shift to a competing Windows platform.
If Toyota kept their Camries profits at a constant 15% but raised the price from 25550 to 30550, their profits would increase, even as their marginal analysis would remain constant.
Remember that iMacs were initially sub-1000 machines. Minis were significantly cheaper just a scant few years ago and apple laptops like the Air cost only 1000, compared to almost a 20% increase today. These are all intentional choices by Apple. Not accidental.
Apple isn't a money-grubbing enemy but they're not cherubs. They're more expensive...and they know it.
Food for thought.
Here's the thing, right? We've got equivalent profit margins, but in the heady Jobs days, Services wasn't even a thing and contributed far, far less to the company's bottom line as a proportion to the whole. So, we're actually dealing with lower hardware margins than in the late Jobs era, offset by much, much higher contributions from Services to maintain the percentages. This whole thing is just another another bogus and logically fallacious "this never would have happened if Steve was alive" thing.
And, nobody said that Apple was angelic, or inexpensive.
I don't doubt that the stores and services/support or free OS all contribute to costs.
But unless you can conclusively prove that those costs offset an average 40% price increase across the board for most of their products over the past five years alone, I'm going to assume that their price increases are a conscious effort to undermine the public perception that their growth has slowed.
Which it has.
Of course hardware growth has slowed. The entire smartphone and computing market in all aspects is contracting. Notably, however, depending on segment, Apple's either holding its own with no loss of ground, or slowing less than everybody else from a units shipped perspective.
Marginal analysis has a lot of flaws that weren't taken into account in this article. For starters, MA assumes that items of comparable cost are taken into account, then the margins should match.
Except that the average starting phone price today is higher, vis a vis salary increases, than the original iPhone-iPhone 5.
Additionally, the average starting price for an Apple computer is also higher, for some models, vis a vis salary increases, than comparable models of just 3 years past. (ie: Mini, Air...et al.). That is, unless you think pv money conversions should increase by 50% on just a scant 4.5 years? No, of course not.
That is going to leave a relative sense of increased cost (and rightly so), when people have to dip into their own pocketbooks more, to reach for the same class products, even if such products were proportionately profitable to Apple. This cognitive dissonance makes sense, because Apple is in fact choosing a higher economic target market (or in the iPhone X-XS case...shifting the market).
Moreover, remember that as a whole, percentages represent disparities linearly. A constant percentage on higher sales will produce more money. A constant percentage on higher cost products will produce higher profits. If you price all your products 50% more expensive, even at comparable profit percentages, you'll make more money.
IE: 40% profit off a Mac Mini (for example only, since the markup for the Mini is much higher than 40%), that costs 500 dollars, is approximately 200 profit.
A 40% profit off a 700 Mac Mini will produce 280 dollars in profit. Shifting the market towards the higher price, forces customers to choose between the Apple product/ecosystem and an increased 80 profit increase (which is a relative 40% increase over the last profit... or a shift to a competing Windows platform.
If Toyota kept their Camries profits at a constant 15% but raised the price from 25550 to 30550, their profits would increase, even as their marginal analysis would remain constant.
Remember that iMacs were initially sub-1000 machines. Minis were significantly cheaper just a scant few years ago and apple laptops like the Air cost only 1000, compared to almost a 20% increase today. These are all intentional choices by Apple. Not accidental.
Apple isn't a money-grubbing enemy but they're not cherubs. They're more expensive...and they know it.
Food for thought.
Here's the thing, right? We've got equivalent profit margins, but in the heady Jobs days, Services wasn't even a thing and contributed far, far less to the company's bottom line as a proportion to the whole. So, we're actually dealing with lower hardware margins than in the late Jobs era, offset by much, much higher contributions from Services to maintain the percentages. This whole thing is just another another bogus and logically fallacious "this never would have happened if Steve was alive" thing.
And, nobody said that Apple was angelic, or inexpensive.
I don't doubt that the stores and services/support or free OS all contribute to costs.
But unless you can conclusively prove that those costs offset an average 40% price increase across the board for most of their products over the past five years alone, I'm going to assume that their price increases are a conscious effort to undermine the public perception that their growth has slowed.
Which it has.
Of course hardware growth has slowed. The entire smartphone and computing market in all aspects is contracting. Notably, however, depending on segment, Apple's either holding its own with no loss of ground, or slowing less than everybody else from a units shipped perspective.
Because it's decided to increase its pricing by as much as 50-75% in some cases (and at least 20% in most other cases).
With the exception of the iMac, I can't remember one Apple product that hasn't increased in price by 20% *over the past five years*. The iMac *has* gotten more expensive but their price jump occurred over a decade ago from sub-1000 to the low 1000s the small iMac sits at today.
However the MB, MBP, iPhone, and now Mini/Air have all undergone explosions in pricing over the last five years to erase that perception of a slowing of growth. And that's not a great decision, imo, in the long term.
(Before anyone tells me that Apple leadership knows more than me...let's remember that Apple was almost an afterthought 20 years ago). This conscious decision to increase prices may help in the short-medium range. But it may cause issues down the line. Catastrophic issues? Probably not.
Marginal analysis has a lot of flaws that weren't taken into account in this article. For starters, MA assumes that items of comparable cost are taken into account, then the margins should match.
Except that the average starting phone price today is higher, vis a vis salary increases, than the original iPhone-iPhone 5.
Additionally, the average starting price for an Apple computer is also higher, for some models, vis a vis salary increases, than comparable models of just 3 years past. (ie: Mini, Air...et al.). That is, unless you think pv money conversions should increase by 50% on just a scant 4.5 years? No, of course not.
That is going to leave a relative sense of increased cost (and rightly so), when people have to dip into their own pocketbooks more, to reach for the same class products, even if such products were proportionately profitable to Apple. This cognitive dissonance makes sense, because Apple is in fact choosing a higher economic target market (or in the iPhone X-XS case...shifting the market).
Moreover, remember that as a whole, percentages represent disparities linearly. A constant percentage on higher sales will produce more money. A constant percentage on higher cost products will produce higher profits. If you price all your products 50% more expensive, even at comparable profit percentages, you'll make more money.
IE: 40% profit off a Mac Mini (for example only, since the markup for the Mini is much higher than 40%), that costs 500 dollars, is approximately 200 profit.
A 40% profit off a 700 Mac Mini will produce 280 dollars in profit. Shifting the market towards the higher price, forces customers to choose between the Apple product/ecosystem and an increased 80 profit increase (which is a relative 40% increase over the last profit... or a shift to a competing Windows platform.
If Toyota kept their Camries profits at a constant 15% but raised the price from 25550 to 30550, their profits would increase, even as their marginal analysis would remain constant.
Remember that iMacs were initially sub-1000 machines. Minis were significantly cheaper just a scant few years ago and apple laptops like the Air cost only 1000, compared to almost a 20% increase today. These are all intentional choices by Apple. Not accidental.
Apple isn't a money-grubbing enemy but they're not cherubs. They're more expensive...and they know it.
Food for thought.
Here's the thing, right? We've got equivalent profit margins, but in the heady Jobs days, Services wasn't even a thing and contributed far, far less to the company's bottom line as a proportion to the whole. So, we're actually dealing with lower hardware margins than in the late Jobs era, offset by much, much higher contributions from Services to maintain the percentages. This whole thing is just another another bogus and logically fallacious "this never would have happened if Steve was alive" thing.
And, nobody said that Apple was angelic, or inexpensive.
I don't doubt that the stores and services/support or free OS all contribute to costs.
But unless you can conclusively prove that those costs offset an average 40% price increase across the board for most of their products over the past five years alone, I'm going to assume that their price increases are a conscious effort to undermine the public perception that their growth has slowed.
Which it has.
Of course hardware growth has slowed. The entire smartphone and computing market in all aspects is contracting. Notably, however, depending on segment, Apple's either holding its own with no loss of ground, or slowing less than everybody else from a units shipped perspective.
As an aside, while I thought the article wasn't offensive at all and made its point respectfully, the title was a tad defensive. And it wasn't defensive against Wintel/Android fanboys, which is far more understandable but against Apple enthusiasts. Which is odd.
We have posters in this thread alluding that anyone that disagrees with the article is a "hater", without knowing anything about the poster.
I think criticizing Apple is ok and I still own my Apple IIc, 2004 White eMac, 2010 MBP, iPod Nano G1, iPod Touch G1, iPad 1, iPad 4, iPhone 5C, iPhone X SG 256, and two 27" iMacs (1 2017 i7/580, the other 2013 i5/780m) thunderbolted together. (edit: I forgot my 2009 27" iMac Core 2 Duo/4850).
Not everyone that criticizes Apple is a "hater". We need to be inclusive of one another.
Consistent gross margins don't tell me anything about changes to the affordability of products. One doesn't need to be a financial analyst to figure out that the price of a 15" MacBook Pro is substantially higher, even after inflation, than it was five years ago. If the reason for that isn't growing margins, then obviously costs have also increased. Maybe Apple has a problem with cost control and/or spending decisions?
Or maybe the ratio of costs to selling prices have remained steady for cutting edge technologies. If it were milk or toasters we were talking about then I could understand your implication that input costs should not be increasing and perhaps even be going down. But Apple is doing the same thing today as it was doing 10, 15, 20 years ago; developing new products with increasing performance and capabilities. Seems that will always remain the same percentage of total costs.
I hear you, except that price increases are accelerating compared to the past. Why are costs so much higher lately than they used to be?
It may well be that this is just how much it costs to make fancy-pants computers now. I'm neither qualified nor adequately informed to offer an opinion about what Apple should or could do. All I'm saying is the current approach is moving the income level required to be an Apple user even higher. Our middle-class household can no longer afford the products we used to buy on a three-year cycle. Maybe I need to just accept that and walk away. I hope not, though.
Consistent gross margins don't tell me anything about changes to the affordability of products. One doesn't need to be a financial analyst to figure out that the price of a 15" MacBook Pro is substantially higher, even after inflation, than it was five years ago. If the reason for that isn't growing margins, then obviously costs have also increased. Maybe Apple has a problem with cost control and/or spending decisions?
Or maybe the ratio of costs to selling prices have remained steady for cutting edge technologies. If it were milk or toasters we were talking about then I could understand your implication that input costs should not be increasing and perhaps even be going down. But Apple is doing the same thing today as it was doing 10, 15, 20 years ago; developing new products with increasing performance and capabilities. Seems that will always remain the same percentage of total costs.
I hear you, except that price increases are accelerating compared to the past. Why are costs so much higher lately than they used to be?
It may well be that this is just how much it costs to make fancy-pants computers now. I'm neither qualified nor adequately informed to offer an opinion about what Apple should or could do. All I'm saying is the current approach is moving the income level required to be an Apple user even higher. Our middle-class household can no longer afford the products we used to buy on a three-year cycle. Maybe I need to just accept that and walk away. I hope not, though.
It's worse than that. Not only are the products quickly escaping low-mid middle class household budgets but high-mid household budgets and even low-wealthy households are hard pressed to justify the cost.
Example.
I'm in the market for a next-gen iMac. I'm looking for the 2019. A Core i7 is fine. I'm sure they'll have 8th-9th gen in there by then. I'm sure they'll have 16 GB of DDR4. The screen is spectacular and that's ok. Storage is fine. But a lot of my work (3D modeling and real-time texture rendering) requires a beefy graphics card and the current 580 I have is good (but not great). I expect the new iMac to have 1080-class performance 2 years after the RX 580 iMac. At least 1080.
Let's assume that by virtue of the fact that Apple refuses to contract with NVidia that AMD is the only supplier they have (which Soli thinks they probably also develop nyuk nyuk). The 680 isn't ready yet. And if it isn't ready by next May-June on iMac release, Apple may just shove another 580 in the high end non-Pro iMac. Well, that means I'm looking at the same performance as the 2017 model for 2500-3000 dollars. Ridiculous.
My point is, it's not just about the price eliminating middle-tier families from purchasing Apple products (although that's likely to happen) but also shooing away professionals and prosumers that can get Wintel systems at the same price that, no, may not run Mac OS but are literally 100% faster. We can see that situation plain as day with the new Mini.
It's not that Apple is simply more expensive than ever before. It's that they seem to offer less than ever before for those high prices.
Comments
First iPhone came with a dock. That later became a $30 accessory, today it's $49, with the only change being the colour.
The CCK came with a SD Card reader plus a USB adapter. Sold for $30. Today still being sold for $30, but per adapter, doubling the price.
Replacing the glass used to be $60, then $90, then $229, then came the iPhoneX: $550 to replace the glass.
Obviously things have changed, especially with the glass/displays. But what all seemed 'reasonable' now come across as greedy to some...and these folks will likely be very sincere in their believes. Possibly even 'right'.
Source: https://en.wikipedia.org/wiki/European_Union_value_added_tax
Gaslighting behavior like your's is EXACTLY the problem at forums from here to other websites and it draws in angry posters.
I, for one, have followed Apple for years and prefer their older products because they were well produced. I own a 2010-11 iMac which still works to this day, original iPad, iPad Pro 12.9, iPhone SE ( my previous phone ) and iPhone 7 ( now my current device). I also have stored away an original lime green iBook, PowerBook G4 Titanium (old school workhorse ), and G4 tower. Those last three computers plus my iMac were user upgradable on RAM and it was beautiful, providing me flexibility for my graphic design/dgitial art needs. Those old machines I've had were worth it which is why I'm still holding on to my iMac until I find something more practical to upgrade to ( and no, not the new Mac Mini which I have serious reservations about ). EDIT: I also have an original iPad (click wheel ) and iPod Touch. I also have a Lenovo Chromebook for daily webmail and browsing which gets the job done. No need for a fancy $2,000 laptop to do the basic things nor do I need it to talk to my iOS eco-system which is also connected to my wifi and wireless Brother laser printer. Simple set up.
Am I impressed with Apple's current direction? No. Not by a long shot. They can do far, far better than what they're offering. I'm not saying Steve Jobs was perfect, but at least, he kept the company in line under an 'iron fist' with a laser like focus on quality while on the other hand, you have Cook who doesn't have the mojo to get things back on the right track with products' quality control slacking. Under Tim's watch. There's a reddit topic going on now which is growing regarding the nickle and diming and I'm not going to link it here but you can find it. And it doesn't make them haters as they're pointing out what's wrong with the products and the pricing.
Here's a good example of what's wrong with Apple now. The new iPad Pro 12.9's industrial design looks nice but the problem was that this was what they should've went with in the FIRST place including a magnetic Pencil stylus to charge on. Surface got it right the first time which Apple pooh-poohed and then they do a 180 degree turn by going with that design after a few years. See the problem? It's called arrogance. The original iPad Pro worked fine for me and still does but I found charging it at the port side to be. . .weird as if it was some kind of 'sick joke' by someone inside Apple when Microsoft, OTOH, got it right the first time. However, the 12.9 size may be handy due to the portable nature of it which is fine, although had they gone with, say, a 20 inch iPad Pro, it would've been more practical for the professional creatives so that we can view images or projects at 100% actual scale. For example, comic book artists use an 11 x 17 illustration board for each page to be scaled down and if they do it on iPad Pro, they have to do a lot of zooming/scaling to see the whole thing while a larger tablet would make it easier, providing more room for palettes and seeing the entire image at once. Or page layout for magazine designers so that they can view both page spreads at the same time. This is why large screened monitors are handy for this reason.
Although, I doubt having a USB-C outlet to an external monitor for iPad Pro would solve the problem because the process would require looking at the monitor to view the image's actual print scale. Why Apple didn't come out with an actual touch screen monitor at 21 inches or larger to dock with iPad or other devices is beyond me. And it's NOT the first time Apple has made docking products.
Remember the Powerbook Duo Dock from the 1990s? Look it up. All Apple. If they can do this back then, they should've already done it again by now.
But that's just one example out of many. And that doesn't make me a hater.
Seriously though. I will do the Math for you: 1649€ includes 19% VAT, so net price is 1385.71€. Converted it amounts to 1561$. That is still 112 $ more than in the US. And that premium isbeing paid by none-US customers everywhere. Hard to be an Apple customer in Europe and not come off like somebody who likes being taken advantage off.
I’m not looking at cost prices or margins, which is impossible because the prices they get at their volume are their best kept secrets.
I point at the immense cash reserves accumulated AFTER SJ and where that got directed to.
You seem unable to clarify those metrics from your micro-economical analysis and you avoid the questions I asked about them
Whether or not their portfolio is appealing is an entirely different subject - that has nothing to do with wealth attribution.
It’s not me who is conflating that.
Wait, is that the same Jobs who didn’t care for buybacks and dividends? But hey, thanks for playing.
Exactly. Ironically, the flattening of iPhone sales isn't even their fault. The market is just saturated. There's only so many phones people can keep buying. If Apple wants new growth, they need a new, revolutionary product and they need to be the first/second mover into that market.
Yes, and we all know Apple has always been a premium brand. I’m not even comparing Apple’s pricing to the competition (though I do think from a hardware standpoint the competition is getting better). It’s not rocket science. When you’re not growing sales like you used to the only way to grow revenue is to raise prices and/or try and extract more money out of existing customers. And when Apple creates new more expensive price tiers it allows them to move other price tiers higher. The entry level XR is a good deal compared to the XS but it’s still more expensive than flagship models were a few years ago. And the cheapest model in the lineup is $100 more than the cheapest model was a year or two ago.
I don't doubt that the stores and services/support or free OS all contribute to costs.
But unless you can conclusively prove that those costs offset an average 40% price increase across the board for most of their products over the past five years alone, I'm going to assume that their price increases are a conscious effort to undermine the public perception that their growth has slowed.
Which it has.
As a side note:
Over the past five years alone:
iPhones have increased 40% in avg price.
Base model Mac Minis have increased 50% in avg price. (higher spec models are even more)
Airs have increased 20% in avg price.
MBPs have increased 20% in avg price.
And this is only off the top of my head.
If you're affirming that Apple is spending that additional money entirely on support, I'd love to see it. It's more likely they're *pocketing* more of it, which goes back to supporting all the point Lorin, I and so many others have made.... Apples are more expensive today than yesterday and that profit margin on a far more expensive product...produces MORE profit.
With the exception of the iMac, I can't remember one Apple product that hasn't increased in price by 20% *over the past five years*. The iMac *has* gotten more expensive but their price jump occurred over a decade ago from sub-1000 to the low 1000s the small iMac sits at today.
However the MB, MBP, iPhone, and now Mini/Air have all undergone explosions in pricing over the last five years to erase that perception of a slowing of growth. And that's not a great decision, imo, in the long term.
(Before anyone tells me that Apple leadership knows more than me...let's remember that Apple was almost an afterthought 20 years ago). This conscious decision to increase prices may help in the short-medium range. But it may cause issues down the line. Catastrophic issues? Probably not.
As an aside, while I thought the article wasn't offensive at all and made its point respectfully, the title was a tad defensive. And it wasn't defensive against Wintel/Android fanboys, which is far more understandable but against Apple enthusiasts. Which is odd.
We have posters in this thread alluding that anyone that disagrees with the article is a "hater", without knowing anything about the poster.
I think criticizing Apple is ok and I still own my Apple IIc, 2004 White eMac, 2010 MBP, iPod Nano G1, iPod Touch G1, iPad 1, iPad 4, iPhone 5C, iPhone X SG 256, and two 27" iMacs (1 2017 i7/580, the other 2013 i5/780m) thunderbolted together. (edit: I forgot my 2009 27" iMac Core 2 Duo/4850).
Not everyone that criticizes Apple is a "hater". We need to be inclusive of one another.
It may well be that this is just how much it costs to make fancy-pants computers now. I'm neither qualified nor adequately informed to offer an opinion about what Apple should or could do. All I'm saying is the current approach is moving the income level required to be an Apple user even higher. Our middle-class household can no longer afford the products we used to buy on a three-year cycle. Maybe I need to just accept that and walk away. I hope not, though.
It's worse than that. Not only are the products quickly escaping low-mid middle class household budgets but high-mid household budgets and even low-wealthy households are hard pressed to justify the cost.
Example.
I'm in the market for a next-gen iMac. I'm looking for the 2019. A Core i7 is fine. I'm sure they'll have 8th-9th gen in there by then. I'm sure they'll have 16 GB of DDR4. The screen is spectacular and that's ok. Storage is fine. But a lot of my work (3D modeling and real-time texture rendering) requires a beefy graphics card and the current 580 I have is good (but not great). I expect the new iMac to have 1080-class performance 2 years after the RX 580 iMac. At least 1080.
Let's assume that by virtue of the fact that Apple refuses to contract with NVidia that AMD is the only supplier they have (which Soli thinks they probably also develop nyuk nyuk). The 680 isn't ready yet. And if it isn't ready by next May-June on iMac release, Apple may just shove another 580 in the high end non-Pro iMac. Well, that means I'm looking at the same performance as the 2017 model for 2500-3000 dollars. Ridiculous.
My point is, it's not just about the price eliminating middle-tier families from purchasing Apple products (although that's likely to happen) but also shooing away professionals and prosumers that can get Wintel systems at the same price that, no, may not run Mac OS but are literally 100% faster. We can see that situation plain as day with the new Mini.
It's not that Apple is simply more expensive than ever before. It's that they seem to offer less than ever before for those high prices.