Apple Doesn't Feel The Need To Compete On Value Anymore

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Apple has never competed on price, that would be something that could stain its reputation as a premium label. That doesn't mean that it hasn't offered value for money though. The longevity of its machines, the high specification of its components and the quality of its backup services all went someway to offset the initial pain of the sticker price.

In the PC market I believe Apple has decided that it no longer needs to compete on value for money any more and I think I can explain why.

With the MacBook Air abandoned or discontinued Apple has two models of portable to sell: the lightweight MacBook and the unremarkable MacBook Pro. Here in New Zealand that's either a $2,199 or $2,499 entry point.

Neither is anything close to competitive. You can pick up a similarly light and powerful Asus Ultrabook for close to $1,000 less than the MacBook and similarly powerful HP Envy for over $500 less than the entry-level MacBook Pro. Both offer the same premium build and component quality.

In the past you’d expect that the overall Apple ownership experience would make up for some of those additional costs, but I don’t think it does today. Windows 10 has surpassed OS X in so many areas of capability and Microsoft is doing an amazing job of rolling out updates and new functionality, almost on a weekly basis.

The value proposition no longer holds up. And Apple doesn’t care. Why? For the same reason why Microsoft is concentrating on premium products for the Surface line. The PC has passed its peak and the market is shrinking. Trying to grow market share in a shrinking market by competing on price is madness. Much better to sell fewer machines at a greater profit.

If you want a cheaper Apple computer (and aren’t happy with the steam-powered MBA 13, which props up the OS X portable line) then Apple will point you in the direction of the iPad Pro. The premise being that the iPad Pro is all the computer you need. At that price point anyway.

Ultimately if you can’t run to an Apple portable and need more than an iPad Pro, Apple probably doesn’t care what you buy. It is really only interested in two numbers, the average selling price per unit and the average profit per unit. You’ll see the evidence for this in the way it reported iPad sales last quarter, Units down, but revenue and profits up.

Fewer units, higher prices. That’s where Apple is right now. Are you still willing to pay the entry fee?