lorin schultz

madan said:

GeorgeBMac said:

elijahg said:

rogifan_new said:

elijahg said:

rogifan_new said:

radarthekat said:

rogifan_new said:

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.

That maybe used to be true.

Ferrari doesn't shove Mazda engines into Ferrari chassis and call it a day.


The Mini is a prime example of that.

You think? I dunno...

The mini has really fast RAM (fastest ever in a Mac?), and it allows for a healthy amount of it. It has ridiculously fast storage (to the point of overkill), and provides two channels of Thunderbolt 3 to add more. I don't know enough about CPUs to assess where the ones in the mini sit, but they seem pretty decent (am I wrong?).

The only really weak point is graphics, but if it's true that the most common uses of minis don't involve using a monitor at all, there isn't much point in buyers paying for a powerful graphics chip they'll never use. Besides, because a mini isn't something you carry around with you, adding an eGPU is a reasonable option for people who need graphics grunt.

jkichline said:

[...] Mind you that modern Macs mostly have the storage soldered to the motherboard so you would need to replace that too.

I think you'd have the replace the entire motherboard, since there's no practical way to replace the soldered-on storage. That's one of the reasons I'm not happy with that design choice.

jkichline said:

The whole notion is that your Mac has enough storage to work for most of what you need and if you need more storage, you have Thunderbolt 3 which is PCI Express on a cable running 40 gbit/sec.

Except that getting enough storage for most of what I need now costs as much as a good late-model Buick, and having to carry around external storage for my laptop is inconvenient and inelegant.

radarthekat said:

lorin schultz said:

To pick a nit:

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.

hammeroftruth said:

[...] They also don’t understand that a lot of competitors devices get sold at a discount as loss leaders, or in the case of Samsung, they will sacrifice profits for marketshare. 

Loss-leaders and low-profit marketing strategies may be bad for certain companies, but they're a hands-down no-brainer WIN for the buyer! What's not to understand about a lower price? If Apple's price is justified because it offers a high feature-per-dollar ratio, then ipso facto, a device that offers less may also be a good value because the price is lower. Which is a better value -- an $80,000 Mercedes or a $30,000 Toyota? The answer is "it depends on what you want." Same with phones.

hammeroftruth said:

They also are STILL comparing the cost of purchasing an iPhone to the past when you had carrier financing. They don’t know the true cost of the iPhone and instead believe that Apple is ripping them off.

I suppose there may be a few who don't know the difference between carrier subsidized versus retail price, but they're going to be the same people who don't know the difference between a skunk and a cute kitty with a pretty white stripe.

MOST people go to their carrier's web site and look at how much it will cost to get a new iPhone. That presents an even playing field, as the phones from each manufacturer are presented the same way.

People know how much it costs, and they know it's "a lot."

hammeroftruth said:

They also do not know the difference between lcd screens and OLED screens. 

It's not that people can't tell the difference, it's that it doesn't matter to them, or that they don't perceive enough value in it to justify the cost premium. They could also get a car that accelerates twice as fast as their Honda if they paid more, but they don't because that capability isn't on their list of things to care about.

hammeroftruth said:

[...] They don’t understand what kind of development goes into making a phone you can still use after 4-5 years.

Neither do I. Which phone are we talking about? Each iPhone I've used has been rendered all but useless after three years. Because each successive model is two or three times as fast as the last one, developers write increasingly demanding code. After two or three years the current software requires faster processing than what's available on an old phone.

Technically a phone that old may still be supported, and would work fine if you installed whatever you want at the time of purchase, never installed any new apps after the first year, and never installed any app or OS updates, but for most people that's obviously not an attractive option. That means the idea that an iPhone is worth more because it lasts longer is a non-starter. It doesn't matter that the hardware continues to function if using it is a drag.

Rayz2016 said:

lorin schultz said:

To pick a nit:

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 they’re spending more on R&D

R&D is a spending decision.

I'm not saying all spending is bad. I'm saying Apple's prices are quantifiably higher now than in the recent past, and if margins haven't changed, the only other variable is costs. Maybe some of Apple's costs are good and some are wasteful. Maybe they spend too much overall. Maybe ALL Apple's costs are valid and that's just how much products like what Apple makes are going to cost now. I don't pretend to have the slightest idea. All I know is that Apple products now cost more than my demographic can afford. Maybe that's just the way it is now.