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

Posted:
in Current Mac Hardware edited January 2014
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.
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Comments

  • Reply 1 of 343
    hmurchisonhmurchison Posts: 12,259member
    Microsoft's on a roll
  • Reply 2 of 343
    dagamer34dagamer34 Posts: 494member
    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.
  • Reply 3 of 343
    adjeiadjei Posts: 738member
    Damn these guys are desperate, seems Apple has them scared sh!tless.



    Why they don't address their Microsoft tax?
  • Reply 4 of 343
    hudson1hudson1 Posts: 800member
    I'm guessing the shill, er author, left out any mention of resale value.
  • Reply 5 of 343
    dluxdlux Posts: 666member
    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?
  • Reply 6 of 343
    gregalexandergregalexander Posts: 1,382member
    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
  • Reply 7 of 343
    quadra 610quadra 610 Posts: 6,743member
    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.
  • Reply 8 of 343
    razorpitrazorpit Posts: 920member
    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...
  • Reply 9 of 343
    jonnyboyjonnyboy Posts: 525member
    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
  • Reply 10 of 343
    mrpiddlymrpiddly Posts: 406member
    What some people seem to overlook is that the uninformed, most consumers, will not understand these differences. To them, these ads are reasonable.
  • Reply 11 of 343
    dluxdlux Posts: 666member
    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.
  • Reply 12 of 343
    quadra 610quadra 610 Posts: 6,743member
    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.
  • Reply 13 of 343
    Since when is MobileMe $149 a year?



    Oh that's right; it's not.
  • Reply 14 of 343
    ronboronbo Posts: 669member
    Quote:
    Originally Posted by AppleInsider View Post


    "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.



    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...
  • Reply 15 of 343
    walshbjwalshbj Posts: 864member
    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.
  • Reply 16 of 343
    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.
  • Reply 17 of 343
    hmurchisonhmurchison Posts: 12,259member
    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
  • Reply 18 of 343
    quadra 610quadra 610 Posts: 6,743member
    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.
  • Reply 19 of 343
    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.
  • Reply 20 of 343
    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.
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