Apple: Its Products are more Hype and Overpriced?

Hola Todos!

I am not a journalist but as a professor whose career is predicated on the double-blind review process, I know a faulty argument when I see one.

In the article “The Unspoken Truth About Apple” (click here) by Don Reisinger (a contributor to Fortune.com), believes “the Cupertino company’s products aren’t always the highest of the high-end.”

The argument is flawed on many levels but I can sum it up in one line: he’s not comparing apples to apples (sorry for the pun).  For instance, Mr. Reisinger asks, “Is Apple really the company that delivers the highest of the high-end? Not a chance.”

As evidence, he presents the following argument:

“Let’s take the iMac, a popular, all-in-one computer Apple sells at a price starting at $1,199. For that sum, consumers are getting Mac OS X, which is a plus, as well as a 21.5-inch screen. A 2.5GHz quad-core processor and 500GB hard drive help round out the offering.  There’s just one issue: Dell has it – by a mile. For just $850, consumers can buy an all-in-one PC with a 23-inch screen and the same 2.5GHz quad-core processor. Add that to the 1TB hard drive and 1080p display, and it’s clear customers are getting a better value from Dell.”

Flaw #1 in Mr. Reisinger’s article is he’s confusing “the high-end” meaning “the cutting edge” with “a higher price.” Sure there are computers, smart phones, and other technology devices that have features that are more cutting edge than Apple; Near Field Communication for instance.  However, the assumption of “the best technology” is “the best for the consumer” is flawed logic.  Is it really best for the consumer to have a cutting edge technology like NFC that is not widely accepted by retailers, banks or vending machines? If a consumer chooses Android over iPhone because of NFC, yet cannot find one place to use the NFC, is the cutting edge technology really useful?

Flaw #2 in Mr. Reisinger’s article is he’s confusing “higher price” with “value.”  He admits the iMac’s design is significantly better than anything HP or Dell has but then insinuates that Apple consumers are overpaying for the design.  In the same Dell argument above, he feels Dell has Apple beat because a it has a cheaper price and you get a larger hard drive, and a larger HD screen.

The main flaw is he is only comparing price with the similar specs and not the dissimilar specs.  Once or twice a year, The Wall Street Journal stalwart Walt Mossberg reviews the best bang for the buck in PCs and consistently states that the beyond the OS, the other software that comes free with Apple computers (iTunes, iCloud, iPhoto, iMovie, GarageBand, etc), clearly makes up for or is better than the difference in price between Apple and the competition.  Try making a movie from your family vacation on any pre-loaded software from Dell.  The same could be said for organizing your entire music collection (let alone buying music, movies or books) or your photo collection on anything Dell has preloaded.

And if that wasn’t enough, what happens when a Dell malfunctions?  You either have to ship it somewhere or go to Geek Squad and pay though the nose.  Apple customers just visit the Genius Bar.

If you want to talk about value, for technical products, Apple’s “killer app” is really their after sales experience with the free classes they offer in the stores and the Genius Bar trouble shooting.  Try and do that with a Dell or an HP.

Sorry Mr. Reisinger, your argument has a great headline that might attract some attention but the article does not have the depth or detail to support its claims.  Perhaps your editor put you up to it…

Something to think about today…

 

Best regards,

Dr. Dan-o

 

Daniel M. Ladik, PhD

Associate Professor of Marketing

Stillman School of Business

Seton Hall University

 

 

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