Washington Post Story on Apple’s Product Prices

Geoffrey Fowler and Andrew Van Dam, writing for The Washington Post:

Apple this year became a trillion-dollar company. But it also became the thousand-dollar company: Suddenly you need at least 10 Benjamins to get the best new iPhone or the big iPad Pro.

Apple has never made cheap stuff. But this fall many of its prices increased 20 percent or more. The MacBook Air went from $1,000 to $1,200. A Mac Mini leaped from $500 to $800. It felt as though the value proposition that has made Apple products no-brainers might unravel.

Here’s the nut:

Most technology products are commodities that go down in price over time. Apple has worked very hard not to become a commodity.

I don’t think most of the Post’s comparisons are fair. Apple’s prices are going up not because they’re raising prices for the sake of higher prices, but because they’re designing more expensive products. Stainless steel costs more than aluminum. OLED costs more than LCD. Two cameras are more expensive than one. The new Mac Mini is significantly more expensive than the old one, but it’s a very different product even though from the outside it looks very similar — the old Mac Minis were built using mobile components; the new ones are built with desktop ones. The Mac Mini has gone pro, and its prices reflect that.

Imagine if Apple Watch had started out with only the aluminum models, and the stainless steel versions hadn’t appeared until this year. Clearly that would be considered a new higher-priced product, not a higher price for the same product. Likewise, no one is arguing that Apple has significantly reduced Apple Watch prices because they’re no longer selling the Edition models.

You can certainly argue that Apple is making a strategic branding mistake by making more expensive products. But it simply wasn’t an option to sell the iPhone X/XS as it exists for iPhone 7 prices.

Wednesday, 12 December 2018