Does Apple need to cut Mac prices?
Posted Aug 06 2008, 01:07 PM by Kim Peterson
Filed under: Apple, Kim Peterson
Former Jupiter analyst Joe Wilcox notes that the average selling price for a Windows-based notebook is $700. But for Mac laptops, it jumps to $1,515. And on the desktop side, Mac desktops cost more than they did two years ago, and they're running at about $1,000 above Windows PCs.
Wilcox says that Apple can't maintain these margins and expect to gain market share. "Prices must go down and configurations bulk up," he writes. "The math is simply undeniable."
Mac prices are of particular interest right now because Apple has warned that its margins will drop nearly 5% in the next year or so to 30%. Apple won't say the reason for the drop, and Wilcox and others are expecting price cuts on computers.
Here's another way to frame the question: What does Apple need to do move Macs into the mainstream? Or does it even need to?
Even at premium prices, Macs are selling well. Market share in the U.S. has gone from 6.6% to 8.5% in a year. Strong Mac momentum has buoyed Apple's quarterly results and contributed to the company's high margins.
But the Mac is still a niche product.
Wilcox is right. If Apple want's to un-niche itself, and zoom into double-digit market share, it must drop prices and take the hit on margins. And now's the time to do it, while consumers are still unsure about Microsoft's Vista operating system (Microsoft is planning a Vista marketing blitz this year).
Apple doesn't need to go after the budget market. But if it does, the company could see unprecedented growth.
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