Loss Leader Not in Apple’s Vocabulary
by John Paczkowski
Posted on March 6, 2009 at 5:27 AM PT
This year will see one of the worst slumps in the PC industry ever. But as grim as things may get, they will perhaps not be so bad for Apple. According to TBR analyst Ezra Gottheil, the company has so far avoided the “permanent and structural” collapse of overall average selling prices for PCs and the related decline in revenue. In the fourth quarter of 2008, for example, there was a 13 percent drop in the average selling price for PCs and an 18 percent decline in PC revenue. Yet Apple’s ASP held relatively steady. “Apple’s a special case in that not only are its ASPs much higher than the others, but also they have been amazingly flat over the eight years of data that I have, while the others have showed a steady erosion,” Gottheil explained. “The differences have only gotten wider over the years.”
And that bodes well for Apple (AAPL). Because while its sales might be slowing along with the rest of the industry (though not nearly as badly; the company’s unit sales rose only nine percent in the December quarter, down from a 44 percent increase in the year prior), its price points and profit margins are holding nice and steady.
Comments
OMG.
Posted by Dave Barnes at March 6th, 2009 at 7:52 amCall your broker and short AAPL.
If Apple doesn’t drop prices no one will buy their [currently] over-priced [elegant] computers.
There was a <sarcasm> tag wrapped around my comment, but this comment system seems to dislike fake HTML tags.
Posted by Dave Barnes at March 6th, 2009 at 7:54 amPC Buyers do not seem to get that Macs are NOT PC’s … Pc buyers only buy on one factor – price. They would switch from an HP to a walgreen’s PC if it saved them $75 … as the NPD data also supports along with this chart – WINPC’s at $1k+ have fallen in marketshare in the last 8 years from 98% to to 34 at retail% Why, because at 66% of PC buyers are unwilling to pay $1k for a machine – for WHATEVER reason. They can range from less income to just not willing to pay more than $299 to $499 for a PC personal computer. That is THEIR choice to make. Macs on the other hand have a few $1k models but the bulk sold? $1,500 and up – why? Of course, to PC buyers, Mac buyers are “stupid,” why pay more than $299 for a computer but just as we ALL value things differently from cars to food, Mac buyers have access to the EXACT same knowledge as PC buyers but choose DIFFERENTLY. Perhaps they value an OS without viruses or trust issues? Perhaps they appreciate knowing there is a store that will answer and fix things for FREE – in some cases 24/7 … that is called VALUE. If HP offered the same one they sold for $1,499, it would be overpriced but Macs are not PC’s in a multitude of ways but it’s sort of like explaining air flight to someone who has never gone on one. It’s DIFFERENT. And it works for Apple – if sales were drastically lower, they would have to call in the analysts – clearly with only another 60 days to go in the quarter – sales are in line with projections.
Posted by joe belkin at March 6th, 2009 at 10:16 amApple has maintained certain key pricepoints for the iMac & laptops for about seven years running.
Each and every time they replace a machine it has been with a better one running an ever more stable and full featured OS.
Whether or not a Mac is for you really depends on what you’re planning on doing with it. For the email & browser only crowd, buy a netbook or a nice phone.
In a household full of kids like mine, we’ve bought six macs in the last eight years (new & on eBay), and all of them are still functioning and used daily.
None of my PeeCee using friends can say that, and they’ve definitely spent more per machine per year including extra graphics upgrades, software etc. And that doesn’t include the time they put into troubleshooting or diagnosing random incompatibilities.
Posted by gordon meacham at March 6th, 2009 at 10:21 am