Saturday, March 21, 2009

Hey Steve, here's ten bucks, buy a clue!

Just last Friday Microsoft CEO Steve Ballmer was asked about the big mo’ that Apple has been getting lately. Ballmer’s first crack was to point to recent data showing Apple having a sales slump. "Apple gained about one point, but now I think the tide has really turned back the other direction," Ballmer said, via webcast. "The economy is helpful. Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be."

Great commentary, Steve. First, everyone is having a sales slump. Second, Apple is slumping back in market share towards where they were two years ago. They still have more market share than then. Third, if you take out the netbook sales (incredibly low margin) then Apple’s share is about even or a little better.

Now let’s get down to the core of your argument. Apple buyer’s are paying $500 extra for the logo. The first point is the number, $500 is a huge exaggeration. If you look at similar specs for similar machines the price difference is usually less than $100 in the US market. Apple just don’t compete at the bottom end - my partner has an Acer laptop that was “cheaper” by far than a Mac, but it comes with only 512Mb of RAM and a slow, small hard drive (hey, it was before we met, she didn’t know any better.) To get it up to decent spec machine now it would end up costing more than if she had bought a MacBook in the first place.

Second thing you might like to think about Mr Ballmer is that right now people in the netbook market can buy a Dell Mini 9 for $249 running Ubuntu Linux or pay 20% more for Windows XP. That’s right, they can save 20% by not buying your product. Notice that I said XP, no one wants your latest operating system at this end of the market as it requires too much hard disk space and wants a high end graphics card and a high end processor with more RAM before it runs at a reasonable speed. Oh, and in case you are wondering some hackers have made it possible to run Apple’s latest, OS X 10.5, on the netbook and it runs extremely well.

Third, you might like to think about what you get for that extra money when you buy Macintosh. Apple computer design is better than the average PC, they look better, the keyboard is a little better. Then you get to the advantages of buying a computer from a company that controls both the hardware and software. On a Mac plug and play works better. The integration also means that you have considerably less problems with drivers. It also means that driver updates are delivered automatically and well tested as part of operating system updates.

So yes, Mr Ballmer, it costs a little more for a Mac. Mac users just know that it is worth the money. Over the three or four year life of a computer it doesn’t take too many crashes, too many lost documents before Windows costs me more in time than that $100.