mac

Noting that the Mac’s share of the PC market has risen almost continuously over the past decade (with just a brief dip in 2012) despite costing an average of $700 more than competitor machines, Needham’s Charlie Wolf is quoted by Fortune as saying that it “seems to defy the laws of economics.”

The only explanation that we see is the now-mythical halo effect. Beginning with the iPod in the middle of the past decade and then extending to the iPhone and iPad, a meaningful number of Windows users who bought these products seem to have switched from a PC to a Mac [...]

What should be underscored is how unique the Mac phenomenon is [...] we view the Mac’s success as the rare instance where sales increased in the face of rising prices.

The halo effect of the brand undoubtedly plays a part, but he seems to have missed the rather obvious point that OS X is a rather better operating system than Windows, and the slickness of the ecosystem makes a Mac an obvious choice for anyone who already owns an iOS device …

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24 Responses to “Mac sales success “defies the laws of economics,” says analyst”

  1. Goods that sell more when prices rise are referred to as Giffen goods. Items that are usually considered to be of better value.

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    • Tim Jr. says:

      Correct.. AND It’s not that rare either.. why do people buy really expensive bags (Pen & Quill comes to mind).. It happens ALL THE TIME..

      In IT, our company pays a lot more per laptop, average of $1000 per laptop.. why? extended warranty, quality expectations ,etc. Downtime = lost money. Personally, I get Mac for reliability and lack of overwhelming Malware.. It still happens to some people, but it’s a rare thing to see first hand.. I’ve not seen a Mac get infected myself yet… For work, I’m disinfecting Windows systems at least 3-4 times a week.

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    • Incorrect. your definition describes a Veblen good, where the high price of a luxury good counters the laws of demand due to the perception it presents in value or status. A Giffen good is always an inferior good.

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    • Another factor to consider is that “cheap” does not always mean “less expensive”.

      Apple’s computers are not configured as bottom-feeders, using the cheapest and lowest spec’d components and materials to bring the price down to Walmart levels.

      If you do compare Macs to equally configured Windows PCs, the prices are usually equal, and sometimes even less expensive than the Windows PC.

      An example would be the new Mac Pro (Apple’s most expensive Mac). If you configure any Dell or HP or other PC with similar spec’s, not only will you find the Windows PC more expensive, but you end up with a big box with noisy fans to cool it down, and a real energy hog.

      Now add into the mix:
      1) that Macs require less maintenance (there are no expensive services for getting rid of malware like there are for Windows PC users, since that type of service is not required for Macs).
      2) that Macs on average have a longer “life span” than Windows PCs (so your per year expenses are lower)
      3) that Macs have a much higher resale value than Windows PCs (in fact people with Windows PCs often just junk their PCs or give them away, because it is not worth trying to sell them).

      Putting everything together, a very rational case can be made to prove that Macs are actually a lot less expensive over the entire life of the computer, than Windows PCs!

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  2. As one of those who switched recently I can state that yes, in part, it was the ‘eco-system’. The Mac OS itself was not a draw, and now, after having used Mac OS for a year I still fail to see how it is superior to Windows. I do enjoy the Mac OS, I just don’t see how it is so much better than Windows. Perhaps under the covers it is – but what we users see does not seem vastly better or worse. No, what drew me was that I had, for 15-20 years prior, been again and again disappointed in the build quality of the Windows machines I was purchasing. I tried many brands and I was forever disappointed. On the other hand, when I picked up a Mac Book Pro I could feel the engineering and quality. A year later and my opinion has not changed. SO, for this user, the draw was, and remains, the quality of Apple products. The sharing of the ‘eco-system’ was just a very nice bonus for me.

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    • I think the 15-20 years prior is what keeps people from changing. Yes they are far superior to other manufacturers build and OSX IS much better under the covers and in my opinion MUCH prettier to look at, but it’s the under the covers that MAKE the experience better. After all you don’t just stare at it or feel how nice it is, you USE it. I use a Windows PC for work and have for 20+ years, and it’s baffling to me the frustration I still have with Windows. They still have not gotten it right and stable. I have 3 Macs at home and have had for the last 15 years, my oldest being 10 years old, and they work like the day I bought them. Something you can’t say for a 10 year old Windows machine. If people weren’t so afraid to learn something new, I think Apple’s market share would be MUCH higher, despite the higher cost of entry.

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    • pecospeet says:

      Neil – I had the same opinion as you. The look and feel of Mac OS just did not seem to be better than Windows overall, just different.

      Then it dawned on me that I have not had an operating system issue in two years of using a Mac whereas I would usually face some Windows issue every other month. Combine that with a quality built machine and I’m convinced.

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      • See, right there is the difference between us. I have ongoing issues with the Mac OS. Regularly my USB ports stop working and I am forced to reboot. Not 5 minutes ago I was forced to reboot because it was not detecting my bluetooth connection to my iPad, which I was using for tethering to get onto the Internet. So, where you’ve had no issues for the past year, I have the regularly. Not any more than I had with Windows mind you, but enough that it makes me say “what’s the big difference?”

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    • vkd108 says:

      Windows has through its versions increasingly vast amounts of interface elements directly lifted from Mac OS. Do some research. OK, Apple lifted stuff from Xerox but we don’t hear of Xerox marketing home computers.

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      • Apple has since Jobs’s return steadily lost the plot on usability. One of the first things he did when cost-cutting was to fire the human interface team. The Mac OS since then has drifted from one interface fad to another (can you spell “skeuomorphism”?).

        The original Mac interface was based on evidence-based design for usability.

        With a new generation of users for whom a mouse is second nature and super-big screens (compared with the original Mac’s 9″ screen) we are long overdue for another wave of evidence-based design.

        Microsoft isn’t going to do it.

        No one in the free UNIX world is doing it.

        Apple isn’t doing it either.

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  3. James Quilty says:

    But PCs are…oh screw it, i’m buying a Mac.

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  4. I switched to Mac in 2010. I had been using a Windows desktop, and experimenting with a G4 Powerbook. The lack of intrusions(i.e. pop-ups, notifications in the taskbar) is what really pushed me towards Mac. In spite of the price difference. Things just worked better, awake from sleep worked worlds better than Windows, scrolling was smoother, gestures actually enhanced my experience, I had programs out of the box that I would actually use(iPhoto, iTunes), etc. Those things to me are worth the price.

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  5. It’s easy to defy economics when you have a product that works 99% better than 99% of the competition.

    Mac – It just works.

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  6. If by “Halo effect” you mean people want a computer of superior build quality that works as well as their iPhone and iPad and is seamlessly integrated with all their devices and “just works”, then yes…. that Halo effect. Once a PC user picks up and iPad and gets a taste of that Kool Aid, there’s no going back.

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  7. Among people who can afford to spend slightly more, not for an Apple product per se but for a mid to upper end laptop, Apple is great choice, especially if you don’t care much for Windows 8.

    I just bought a 13″ Samsung Ativ Book 9 to use in my business along with my MacBook Pro Retina. The Samsung, one of the best Ultrabooks, is almost exactly the same price as the comparable 13 inch MacBookPro Retina – $1750 versus $1799. The Samsung is well built, a little thinner and lighter than the MacBook Pro, and includes a touchscreen with a 3200×1800 resolution, while the 13″ MacBook non-touch Retina display is 2560×1600. The MacBook includes twice as much SSD space (512GB versus 256GB) at that price. I don’t care much about the touch screen, so the specs are roughly a wash for me. However, the Samsung came with bloatware I haven’t been able to fully remove, and no other useful software.

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  8. moofer1972 says:

    Now-mythical halo effect? Seems more like “now-proven halo effect”…

    Also, “The halo effect of the brand undoubtedly plays a part, but he seems to have missed the rather obvious point that OS X is a rather better operating system than Windows, and the slickness of the ecosystem makes a Mac an obvious choice for anyone who already owns an iOS device …”

    He didn’t miss the point. The fact that the Mac lives in a slick ecosystem, is the entire reason the halo effect exists. People get a taste of the ease of use, UI, and ecosystem, and then they branch out to other product lines within the company. Point wasn’t missed, point was nailed.

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    • Ben Lovejoy says:

      Halo effect generally relates to irrational factors. A good example was back in the days when Concorde was flying, BA as a whole benefited from the halo effect of being the (main*) airline to fly the ultimate airliner.

      *Air France also flew it, of course, but never seemed to succeed in marketing it the way BA did.

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    • You’re describing why the brand is popular, not a halo effect. A halo effect is one of many kinds of errors in judgment and perception.

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  9. veggiedude says:

    It’s hard to find a web app developer these days that does NOT work on a Mac. Seems to be the UNIX box of choice.

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  10. Pedro Meyer says:

    the only fools who still believe in PCs are the Wall Street analysts, who have never understood Apple. But eventually they will. From my experience, my banker friends, started out with the iphone, then the tablets, now slowly the “get it”…. what Apple is all about.

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  11. jimstead says:

    What laws of economics? People are and have always been willing to buy a better steak or a better car or a better house for more money (assuming they have the money). Whether everyone agrees on what is “better” is an irrelevancy.

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  12. How is it defying economics? We demand great computers and Apple supplies them.

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  13. Bob Forsberg says:

    Used Macs and Wintels all my life. Watch a movie, use the internet, check email, organize/store/edit pictures, edit home movies…..used a Mac…..the other boring stuff, used a PC.

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