Windows vs. Mac: Is the Price Debate Still Relevant?

December 2, 2008
By

Adrian Kingsley-Hughes

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Whenever there’s a Windows vs. Mac debate, the question of whether Macs are overpriced inevitably comes up. Phrases such as “Apple tax” and “Windows tax” will be thrown around liberally, and if it weren’t for the distance and isolation offered by the Internet, these flame wars could well end with someone getting hurt.

But are Mac systems pricier than Windows systems? And more importantly, is the price debate even relevant? Let’s see …

Let’s begin at the beginning – Are Mac systems pricier than Windows-based systems. That means a trip to the Apple Store and Dell’s website. From what I can see, the cheapest Apple notebook is the 13” “white” MacBook, priced at $999, and the cheapest desktop system (excluding the Mac mini) is the 20” iMac, priced at $1,199.

From the Dell site the cheapest Windows Vista systems I found were the Inspiron 15 notebook, priced at $479, and the Inspiron 530e which with a 17” monitor came to $439. In both instances, the Mac offering was more than twice the price of the Dell offering.

Conclusion – Macs are dearer than Windows-based systems.

Ahhh, but wait a minute. There’s a heck of a lot of difference between the spec of the Macs I chose and those of the Dell systems.

• 13” “white” MacBook – 2.1GHz Core 2 Duo | 13” screen | 1GB RAM | 120GB hard drive | Intel GMA X3100 graphics

• 20” iMac – 2.4GHz Core 2 Duo | 1GB RAM | 250GB hard drive | ATI Radeon HD 2400 XT

• Inspiron 15 – 2.0GHz Celeron 550 | 15.4” screen | 1GB RAM | 120GB hard drive | Intel GMA X3100 graphics

• Inspiron 530e (plus 17” monitor) – 2.2GHz Celeron 450 | 2GB RAM | 320GB hard drive | Intel GMA X3100 graphics

Things aren’t as clear cut now, are they?

Apple’s system have better CPUs than the Dell systems, and the desktop has a better GPU, but the Dell rigs come with bigger screens and the desktop has more RAM. Here the advantage is far from clear.

Put the Dell systems next to those from Apple and start using the systems and you quickly realize that the Mac systems are superior systems, while the Dell systems scream “budget!”

This gives us an interesting insight into Apple – that the company doesn’t cater to the lower-end of the market. In fact, during the company’s last investor conference call Steve Jobs said, and I quote:

“… we choose to be in certain segments of the market and we choose not to be in certain segments of the market.”

And:

“There are some customers which we choose not to serve. We don’t know how to make a $500 computer that’s not a piece of junk, and our DNA will not let us ship that.”

So, Apple chooses to be in the higher-end segments of the market and chooses not to cater to the lower end. It also chooses not to serve those looking for a sub-$500 system. Apple doesn’t have a budget system, so when you compare purely on price you’re comparing Dell’s budget PCs to Apple’s mid-range systems.

Yes, Dell systems work out cheaper overall, but cheaper doesn’t mean better. Start comparing systems with a similar spec (or performance), for example, the “white” MacBook with, say, an Inspiron 13 from the Dell range, and the price difference starts to collapse ($999 vs. $820 after discount).

And bear in mind that Dell is probably the cheapest OEM out there. Compare Mac systems with like-for-like Sony, HO or Lenovo systems and the Apple rigs might actually win on price.

Side note: One significant difference between Apple and other OEMs is that you get less choice with Apple. When buying from Dell, HP, or Lenovo for example, you get the option to configure your system so you only pay for what you want. Depending on your needs, this can work out cheaper.

But do Apple prices matter? I don’t think that they do. Sure, if you’re price sensitive and you’d like to own the latest Mac but don’t have enough in the piggy bank to make that possible, then price comes into it. But when you consider that Apple is shipping some two and a half million Mac systems a quarter, it doesn’t look like your average Mac buyer is all that price sensitive.

Bear I mind that there are only so many Macs that Apple can make and ship in a quarter, and dropping the price might not increase overall sales by that much. People spend what they’re willing to spend on something, and depending on individual buyers Macs either fall into this price range or don’t.

However, what’s clear is that on the whole, Apple has priced its systems in such a way that it can both create demand and then keep up with demand, without devaluing the price of the product (a trap that Dell fell into years ago, where it cut the price of PCs so much that there was hardly any money to be made by any company, no matter what the size).

Apple has managed to maintain the image of a designer label product on what is rapidly becoming mainstream and mass market. Given it’s selling products with a pretty hefty price tag, that’s no small task under the current climate.