Everyone who knows technology gadgets knows Apple’s products are more expensive. It’s easy to find an iPhone-like Android smartphone for less, or a Microsoft Windows 10 PC priced lower than a Mac, or a tablet that does all an iPad does for half the price.
Everyone knows that, right? But is it true?
Compare any of Microsoft’s Surface devices with comparably equipped– Apple to apples isn’t always easy– and you find the price tags are similar. The same thing works with iPhone. Premium brands have similar prices. iPad? Same thing.
What we’re seeing with Apple is a change in what is called the average selling price, or ASP. For the most recent quarter, ASP for iPhone was way down. ASP for iPad was way down. Mac ASP, too.
What’s going on?
We see it taking place across Apple’s entire product line. The company still pushes out expensive products which live on the premium end of the spectrum, but more affordable products are in the mix to help grow marketshare which reduces ASP.
For example, iPhone 8, due in a couple of months may exceed $1,000 (iPhone 7 Plus is almost there) but a new entry-level iPhone SE is due soon at $399. You see something similar with iPad. The entry-level model is $329 while the iPad Pro starts at $649 (and can hit $1,398 fully tricked out with 512GB SSD storage, cellular data, and Smart Keyboard).
See? Apple has products that compete with less expensive competitor models.
The anomaly seems to be the Mac. Pit a Mac against a comparably equipped Microsoft Surface and the price tag and specifications are similar. MacBook Air is the entry level model at $999 but the thin and light MacBook starts at $1,299 while the entry-level MacBook Pro is priced the same.
What we’re about to see is Apple’s assault on the premium end of the Mac spectrum with iMac Pro later this year at $4,999, and a modular Mac Pro next year. But the low end of the Mac pricing spectrum is topped by an aging to nearly end-of-life MacBook Air.
When Apple drops the MacBook price to $999 and discontinues the MacBook Air, even the Mac line will have a broader price spectrum, and a lower ASP.
Apple Watch seems to have taken a commanding position atop the smartwatch segment of the watch industry. The entry level Watch Series 1 and Series 2 both start at $269, but based upon case configuration and band choice can quickly top $1,000.
See? Apple has products that compete well against less expensive products, which reduces ASP, but still owns the premium end where the company soaks up most of the industry segments products.
The new strategy has Apple competing at a lower price point with lower ASPs, but still collecting the lion’s share of revenue and profits.