A funny thing happened on the way to the 21st century. Computer hardware became more capable and prices continue to drop, even at Apple Inc. Among so-called PCs, Google’s Chromebook became the darling of schools because it is, 1) dirt cheap compared to Windows PCs and especially against Macs and iPads, and 2) more secure than Windows PCs, and 3) software and management is mostly free.
That’s the race to the bottom we’re seeing these days in the personal computer industry, and even Apple has upped its game by going downward on a few prices here and there. So has Microsoft with an expected competitor in Windows 10 Cloud devices; basically low end PC notebooks with limited storage, but with touchscreens and keyboard.
Apple seems content to ride out the race to the bottom by keeping iPhone, iPad, and Mac prices well above the industry’s averages for each product segment, but even there we see some cracks in Apple’s product line.
First, the iPad. $329 makes the iPad competitive with Chromebooks and Windows 10 notebooks; a device which has far more capability than the latter, but remains competitive with the former.
Second, Apple has price point leaders. It keeps the $999 MacBook Air around because it needs a price point leader, isn’t willing to drop the MacBook’s price below $1,000, and because it’s popular and sells well. For now. The Mac mini pays homage to the low end of the product spectrum. The entry-level iPhone SE is similar.
Third, Apple’s AirPod wireless earbuds are an exceptional product in a crowded space with plenty of competitors, yet is priced about in the middle and not the high end.
Fourth, Apple Watch wasn’t the first smartwatch to market, but compared to some Android smartwatches, remains positively affordable, easily the most affordable device that does the most; far more than simple fitness trackers which are priced half as much.
What bothers me about this slow race to the bottom– you see it with Android smartphones, too, and Samsung struggles to differentiate its products from lesser known and cheaper Android manufacturers– is perceived value. Why buy a Windows Surface PC when similar devices also run full-on Windows 10 for half the price. Why but a Samsung Galaxy S-whatever, when many very good Android smartphones are half the price.
That race to the bottom impacts every device manufacturer, and even Apple has made an adjustment here and there. The iPad’s sales have gone down each year for a few years, so Apple adjusted the iPad’s price tag to become more competitive at the low end of the product spectrum.
Though Apple differentiates its products through design, components, and operating system software, the company still must contend with the competition seemingly racing with eyes closed straight to the bottom of a profitless barrel. That explains why Apple has entry-level examples, each less expensive than Apple’s averages, but more expensive than lesser competitors.