I will state it more clearly then Apple sets their hardware margins higher then Dell and HP so they can provide things to the customer that Dell and HP don't, Like good customer support or best in class software or including applications on the system which are not trialware or bloat. All these things cost real money, but if you focus on hardware BOM and hardware margins you miss what Apple is all about. Apple is vertically integrated so they care about customer experience and they actually want you to live in their ecosystem. They may charge more upfront but the total cost overtime is about the same and the experience is much better. You are free to pick your own path.
Hm... sounds like you are mixing price and margin.
Having higher price in order to cover for higher support (and other expenses) is one thing, but if you end up having higher margins than rest of the industry, that must mean you are not really spending much more on support etc.
It is still perfectly possible that Apple's support is better organized and more efficient than rest of the industry, but that doesn't mean it is more expensive for Apple.
That's exactly what people ignore. Apple has spent an amazing amount of money building all the software, content deals, etc. If they didn't make any money, they wouldn't get any content deals because nobody would take them seriously.
As soon as Steve Jobs announced the pricing, I thought it was about $100 too much (on each version). Obviously companies can charge anything they want, but if they knocked $100 off the price for each one, they'll have tons more people buying it.
Maybe they don't WANT tons more people buying it? There are already stories of massive orders in certain countries. What if their initial factory order will ALL sell immediately at $500 per unit? Why charge less?
Then, when the sales reduce and your inventory starts to increase, you can lower the price to where you want it to be and have the inventory to meet demand.
I bet that Apple think they won't be able to keep this thing in stock once it launches. If they're wrong, they'll just drop the price a bit sooner than they anticipated.
Not a chance the price will drop. $499 is cheap. I expected the base model to be in the $700 range. I imagine they will bump the specs up, but probably not in the near future.
True, but other companies producing IT tech go through same expenses, and still manage to sell with lesser difference between manufacturing costs and RRP. It is hardly a secret that Apple do keep fatter margins than most if not all IT brands.
That being said, they are free to set their prices, and if they can sell - good for them. Real question for me here is: with lower margins, would Apple sell more (enough) units to cover for profit loss per unit, and gather more market share?
Its a new product line mate, not a new company. Kinda blowing it our of all proportion. Apple is making a nice profit on its hardware simple as that. Its a big ipod touch, me thinks the same developers/engineers might have been used, along with legal and accounting, and the ipads will not get delivered in their own special trucks
Do you understand what I was referring to when I prefaced the list with the question, "What do you think that they should charge/assign/account just for:
Or are you suggesting that once your mother has one child, any other costs nothing?
I will state it more clearly then Apple sets their hardware margins higher then Dell and HP so they can provide things to the customer that Dell and HP don't, Like good customer support or best in class software or including applications on the system which are not trialware or bloat. All these things cost real money, but if you focus on hardware BOM and hardware margins you miss what Apple is all about. Apple is vertically integrated so they care about customer experience and they actually want you to live in their ecosystem. They may charge more upfront but the total cost overtime is about the same and the experience is much better. You are free to pick your own path.
No company gets to set their margins -- if only it was so easy! A margin is the difference between what a product costs to make and what people are willing to pay for it, and every company on the planet wants to maximize that spread. A successful company knows how to induce their customers to pay more. Apple does it by some of the means you state, but that's not the same thing as setting margins. They are always, always trying to push them higher.
Hm... sounds like you are mixing price and margin.
Having higher price in order to cover for higher support (and other expenses) is one thing, but if you end up having higher margins than rest of the industry, that must mean you are not really spending much more on support etc.
It is still perfectly possible that Apple's support is better organized and more efficient than rest of the industry, but that doesn't mean it is more expensive for Apple.
How many HP, Acer, Lenovo etc. stores are there? AFAIK .... none .. zero ... nada.
Apple is one of the few computer/tech companies that are dedicated to selling their own brand only via a brick and mortar type operation. Do you not see an expense factor here that the rest of the industry largely avoids by just wholesaling their product to many retailers?
How many HP, Acer, Lenovo etc. stores are there? AFAIK .... none .. zero ... nada.
Apple is one of the few computer/tech companies that are dedicated to selling their own brand only via a brick and mortar type operation. Do you not see an expense factor here that the rest of the industry largely avoids by just wholesaling their product to many retailers?
But those many retailers are surely adding their margins to the retail price for non-Apple IT tech as well..? One way or another, retail price for Apple product and retail price for, say, Asus product do have same factors included, even if those factors are not originating from the same (relative) source.
Coincidently, I think Apple hasn't got their own shops here in NZ. There are some specialised shops (Magnum Mac etc.) but I'd say majority of Apple sales here come from big chains like Harvey Norman, Noel Leeming, Dick Smith... who equally sell both Apple and other brands.
The price of a product is determined by the market. Not by vendors.And certainly not by component costs.
Crudely, the profit on a line = the number of units sold x the profit per item
When a company sets a price, it has to fine tune that number.
Too high a price for the market and you will reduce the quantity sold. And profits will suffer.
Too low a price will sell more units but reduce the profit-per-item. And profits will suffer.
Consequently, there is very little freedom for the manufacturer. The market signals what the correct price is. If the company ignores that signal, then they throw profits away.
All manufacturers understand how to set prices to optimise profits.
Everything Apple sells is overpriced. Now before some fanboy goes flaming me, keep in mind I own both a MacBook Pro and iPhone 3G. I choose to pay that price, but I have no illusions about the how their products being over priced. It's the reason I've never owned a Mac Pro... sorry but I'll build an Xeon for $1,500 with a bigger HDD, twice the RAM, and a better graphics card, instead of paying their $2,500. Sure it's a beautiful looking machine, but is good design really worth $1,000... some people would say yes, others would say no. All I'm saying is any Apple customer who has doubts that they're being over charged need only look at the facts. It's a choice, it's a luxury item... some people chose to buy it and others don't. There's no right or wrong here, and I'm not judging anyone for buying Apple products (I own 2 of them)... but the markup on Apple products is notoriously high.
The technology changes all the time. The device can either do what you want or not. If not don't buy it, wait for the next version.
It is quite unlikely that the iPad 2 will have a proper aspect ratio for movies. And multiple iOS versions have come out, with none of them implementing multitasking. Or support for most of the video websites.
I think that I'd wait forever if I adopted your strategy.
It should be a felony to display the profit margins of any company. Think about it. Like anyone wants to disclose cost of goods. I don't think so. I use to work for Tandy/Radio Shack back in 1980. I was privy to costs of goods. Margins were very impressive. Had I been blabbing about this, legal action would have ensued.
So you think the rights of a single corporation should trump the rights of a free press? Keep in mind that no trade secret figures are being exposed here, they're all extrapolated and estimated.
I don't think you understand that these are estimates, it's even in the title of the article. The figures don't come from inside Apple. If they were displaying Apple's component costs with information from Apple, then that would be a problem. If you didn't notice, Apple hasn't sued, despite this going on for many years. As it should be.
But you still see his (or their as there are several of 'them') comments in the replies. The real problem is that people reply. I don't worry about stupid comments - its when people engage in stupid dialogue that it becomes annoying. There would be nothing wrong with a forum with stricter rules. It wouldn't need to be undemocratic, just a much tighter moderation based on a subjective criteria or policy. Then certain posters would / could be banished forever. If people didn't like the tone, or policy of the forum, or the enforcement of the above they wouldn't have to hang around. But this isn't that kind of forum, for better or worse. I do think the moderators could be a little more judgemental, personally. There are times when the conversations definitely would benefit from being closed down, or users 'told' to shut up. Like banished for the remainder of a thread, for instance, if that is possible. They would probably complain wildly which may result in again being banished and hopefully this would eventually make them leave for good of their own accord. Hmmm... nice thought, anyway.
I am going to report this post as being off-topic.
At least a couple of times I have been so incensed by his general behaviour on a thread that I click on his hidden comments just to see, and then am immediately so angry that I simply have to respond.
You need to learn some better self-control. If you get emotional because of words of a screen, that seems to me to be a problem.
What else causes you to lose it? How often does it happen? Is it all because of folks who do not like your favorite brand name products? Do you get angry when someone calls your favorite beer a bad name?
Apple has higher margins because they provide customer support. Guess what if you try to get your Dell fixed you talk on the phone endlessly and throw up your hands whatever the cause your fault or Dell's.
That's what I heard too. But I got a Dell laptop anyways. I had a problem and decided to call support. The advice I got was nothing less than excellent. Indeed, I mentioned a couple of other minor things to the tech, and he had great advice.
Quote:
Originally Posted by pats
If you have a similar problem with an Apple product and you take it to the Genius they either fix it or replace it on the spot in most cases. Apple has a great rep because they provide service to their customers so people are willing to pay a little bit more and avoid some of the hassles.
My experience with Apple support is exactly the opposite. I have been told many untrue things. And on many other occasions, the tech has been clueless. Their method was to waste my time searching Apple Support Forums, and parroting the bad advice found there.
And my iPhone Compass still doesn't work for shit. I was told by the Genius that it was within spec. But then when I asked to see the specs, it turned out none exist. She assumed that I knew nothing about magnetic declination, and that was confusing me. She tried to just get rid of me by walking over to a display computer and bringing up the Wiki page on the subject.
I tried to demonstrate the problem for her, but she refused to allow me, saying "there's too much magnetic interference in here" despite the fact that she claimed to be able to determine, despite the interference, and despite the lack of specs, that the device was "within specs".
In summary, based on my own experience, which is mere anecdote and not determinative, I think that Apple's tech support is generally clueless. OTOH, the Dell guy in Bangladore knew exactly what he was talking about, efficiently diagnosed my configuration snafu, and went beyond my inquiry to help me get the most efficient boot sequence for my particular situation.
Did I mention the time I called Apple to help me figure out how to add a bookmark to a specific new folder in Safari? It took them over an hour to get me the answer. I spoke to 2 clueless folks who were no help, and then finally, after being on hold for a long time, the "Product Specialist" found the answer in the support fora.
ISTM that the support reputations for the two companies are based upon old information. IMO, Apple's tech support sucks.
Comments
I will state it more clearly then Apple sets their hardware margins higher then Dell and HP so they can provide things to the customer that Dell and HP don't, Like good customer support or best in class software or including applications on the system which are not trialware or bloat. All these things cost real money, but if you focus on hardware BOM and hardware margins you miss what Apple is all about. Apple is vertically integrated so they care about customer experience and they actually want you to live in their ecosystem. They may charge more upfront but the total cost overtime is about the same and the experience is much better. You are free to pick your own path.
Hm... sounds like you are mixing price and margin.
Having higher price in order to cover for higher support (and other expenses) is one thing, but if you end up having higher margins than rest of the industry, that must mean you are not really spending much more on support etc.
It is still perfectly possible that Apple's support is better organized and more efficient than rest of the industry, but that doesn't mean it is more expensive for Apple.
I gather you have the expertise to price out the variables and other fixed costs.
What do you think that they should charge/assign/account just for:
- Research & Development
- Packaging
- Advertising/Promotion
- Sales & Marketing
- Distribution/Shipping
- Accounting
- Legal
- On-line/In-Store Support
- OS
- Apps
- iTunes App/iBook Book Store
- Third-Party Licenses
- Liability Insurance
- Fixed Overheads, e.g., equipment depreciations/property taxes/salaries
- Keeping Green
Or don't you believe in free enterprise?That's exactly what people ignore. Apple has spent an amazing amount of money building all the software, content deals, etc. If they didn't make any money, they wouldn't get any content deals because nobody would take them seriously.
As soon as Steve Jobs announced the pricing, I thought it was about $100 too much (on each version). Obviously companies can charge anything they want, but if they knocked $100 off the price for each one, they'll have tons more people buying it.
Maybe they don't WANT tons more people buying it? There are already stories of massive orders in certain countries. What if their initial factory order will ALL sell immediately at $500 per unit? Why charge less?
Then, when the sales reduce and your inventory starts to increase, you can lower the price to where you want it to be and have the inventory to meet demand.
I bet that Apple think they won't be able to keep this thing in stock once it launches. If they're wrong, they'll just drop the price a bit sooner than they anticipated.
True, but other companies producing IT tech go through same expenses, and still manage to sell with lesser difference between manufacturing costs and RRP. It is hardly a secret that Apple do keep fatter margins than most if not all IT brands.
That being said, they are free to set their prices, and if they can sell - good for them. Real question for me here is: with lower margins, would Apple sell more (enough) units to cover for profit loss per unit, and gather more market share?
Could you give some supported examples?
Its a new product line mate, not a new company. Kinda blowing it our of all proportion. Apple is making a nice profit on its hardware simple as that. Its a big ipod touch, me thinks the same developers/engineers might have been used, along with legal and accounting, and the ipads will not get delivered in their own special trucks
Do you understand what I was referring to when I prefaced the list with the question, "What do you think that they should charge/assign/account just for:
Or are you suggesting that once your mother has one child, any other costs nothing?
I will state it more clearly then Apple sets their hardware margins higher then Dell and HP so they can provide things to the customer that Dell and HP don't, Like good customer support or best in class software or including applications on the system which are not trialware or bloat. All these things cost real money, but if you focus on hardware BOM and hardware margins you miss what Apple is all about. Apple is vertically integrated so they care about customer experience and they actually want you to live in their ecosystem. They may charge more upfront but the total cost overtime is about the same and the experience is much better. You are free to pick your own path.
No company gets to set their margins -- if only it was so easy! A margin is the difference between what a product costs to make and what people are willing to pay for it, and every company on the planet wants to maximize that spread. A successful company knows how to induce their customers to pay more. Apple does it by some of the means you state, but that's not the same thing as setting margins. They are always, always trying to push them higher.
Hm... sounds like you are mixing price and margin.
Having higher price in order to cover for higher support (and other expenses) is one thing, but if you end up having higher margins than rest of the industry, that must mean you are not really spending much more on support etc.
It is still perfectly possible that Apple's support is better organized and more efficient than rest of the industry, but that doesn't mean it is more expensive for Apple.
How many HP, Acer, Lenovo etc. stores are there? AFAIK .... none .. zero ... nada.
Apple is one of the few computer/tech companies that are dedicated to selling their own brand only via a brick and mortar type operation. Do you not see an expense factor here that the rest of the industry largely avoids by just wholesaling their product to many retailers?
How many HP, Acer, Lenovo etc. stores are there? AFAIK .... none .. zero ... nada.
Apple is one of the few computer/tech companies that are dedicated to selling their own brand only via a brick and mortar type operation. Do you not see an expense factor here that the rest of the industry largely avoids by just wholesaling their product to many retailers?
But those many retailers are surely adding their margins to the retail price for non-Apple IT tech as well..? One way or another, retail price for Apple product and retail price for, say, Asus product do have same factors included, even if those factors are not originating from the same (relative) source.
Coincidently, I think Apple hasn't got their own shops here in NZ. There are some specialised shops (Magnum Mac etc.) but I'd say majority of Apple sales here come from big chains like Harvey Norman, Noel Leeming, Dick Smith... who equally sell both Apple and other brands.
Could you give some supported examples?
For what? That other companies have more or less same expenses..? Las time I've purchased HP notebook, it came in a box, you know
Or that Apple has higher margins? That was posted within these forums number of times.
Crudely, the profit on a line = the number of units sold x the profit per item
When a company sets a price, it has to fine tune that number.
Too high a price for the market and you will reduce the quantity sold. And profits will suffer.
Too low a price will sell more units but reduce the profit-per-item. And profits will suffer.
Consequently, there is very little freedom for the manufacturer. The market signals what the correct price is. If the company ignores that signal, then they throw profits away.
All manufacturers understand how to set prices to optimise profits.
C.
It should be a felony to display the profit margins of any company.
Publicly traded companies should be totally transparent, in order for investment decisions to be based upon universally-available information.
The technology changes all the time. The device can either do what you want or not. If not don't buy it, wait for the next version.
It is quite unlikely that the iPad 2 will have a proper aspect ratio for movies. And multiple iOS versions have come out, with none of them implementing multitasking. Or support for most of the video websites.
I think that I'd wait forever if I adopted your strategy.
I still believe Apple should have the right to keep their data private.
Tell it to the SEC.
It should be a felony to display the profit margins of any company. Think about it. Like anyone wants to disclose cost of goods. I don't think so. I use to work for Tandy/Radio Shack back in 1980. I was privy to costs of goods. Margins were very impressive. Had I been blabbing about this, legal action would have ensued.
So you think the rights of a single corporation should trump the rights of a free press? Keep in mind that no trade secret figures are being exposed here, they're all extrapolated and estimated.
I don't think you understand that these are estimates, it's even in the title of the article. The figures don't come from inside Apple. If they were displaying Apple's component costs with information from Apple, then that would be a problem. If you didn't notice, Apple hasn't sued, despite this going on for many years. As it should be.
Everything Apple sells is overpriced.
If an item is overpriced, the market responds very quickly.
The item sells in fewer numbers, and the upshot is reduced profits.
If Apple repeatedly over-priced its products, wouldn't the effect would be lower profits for Apple?
This does not seem to be the case.
Perhaps the market is happy to pay higher prices for Apple products, because the market believes Apple products have greater value?
C.
But you still see his (or their as there are several of 'them') comments in the replies. The real problem is that people reply. I don't worry about stupid comments - its when people engage in stupid dialogue that it becomes annoying. There would be nothing wrong with a forum with stricter rules. It wouldn't need to be undemocratic, just a much tighter moderation based on a subjective criteria or policy. Then certain posters would / could be banished forever. If people didn't like the tone, or policy of the forum, or the enforcement of the above they wouldn't have to hang around. But this isn't that kind of forum, for better or worse. I do think the moderators could be a little more judgemental, personally. There are times when the conversations definitely would benefit from being closed down, or users 'told' to shut up. Like banished for the remainder of a thread, for instance, if that is possible. They would probably complain wildly which may result in again being banished and hopefully this would eventually make them leave for good of their own accord. Hmmm... nice thought, anyway.
I am going to report this post as being off-topic.
At least a couple of times I have been so incensed by his general behaviour on a thread that I click on his hidden comments just to see, and then am immediately so angry that I simply have to respond.
You need to learn some better self-control. If you get emotional because of words of a screen, that seems to me to be a problem.
What else causes you to lose it? How often does it happen? Is it all because of folks who do not like your favorite brand name products? Do you get angry when someone calls your favorite beer a bad name?
Apple has higher margins because they provide customer support. Guess what if you try to get your Dell fixed you talk on the phone endlessly and throw up your hands whatever the cause your fault or Dell's.
That's what I heard too. But I got a Dell laptop anyways. I had a problem and decided to call support. The advice I got was nothing less than excellent. Indeed, I mentioned a couple of other minor things to the tech, and he had great advice.
If you have a similar problem with an Apple product and you take it to the Genius they either fix it or replace it on the spot in most cases. Apple has a great rep because they provide service to their customers so people are willing to pay a little bit more and avoid some of the hassles.
My experience with Apple support is exactly the opposite. I have been told many untrue things. And on many other occasions, the tech has been clueless. Their method was to waste my time searching Apple Support Forums, and parroting the bad advice found there.
And my iPhone Compass still doesn't work for shit. I was told by the Genius that it was within spec. But then when I asked to see the specs, it turned out none exist. She assumed that I knew nothing about magnetic declination, and that was confusing me. She tried to just get rid of me by walking over to a display computer and bringing up the Wiki page on the subject.
I tried to demonstrate the problem for her, but she refused to allow me, saying "there's too much magnetic interference in here" despite the fact that she claimed to be able to determine, despite the interference, and despite the lack of specs, that the device was "within specs".
In summary, based on my own experience, which is mere anecdote and not determinative, I think that Apple's tech support is generally clueless. OTOH, the Dell guy in Bangladore knew exactly what he was talking about, efficiently diagnosed my configuration snafu, and went beyond my inquiry to help me get the most efficient boot sequence for my particular situation.
Did I mention the time I called Apple to help me figure out how to add a bookmark to a specific new folder in Safari? It took them over an hour to get me the answer. I spoke to 2 clueless folks who were no help, and then finally, after being on hold for a long time, the "Product Specialist" found the answer in the support fora.
ISTM that the support reputations for the two companies are based upon old information. IMO, Apple's tech support sucks.