The Apple Price Premium: Are Mac Computers, Ipods and Iphones Worth the Extra Money?

apple products computers iphone worth the extra moneyFrom my seat on the couch I can look around and see my fiancee’s iPhone 5, my old iPhone 4, my Apple TV and oh yeah I’m typing on a MacBook Pro.  Obivously, we’ve been using Apple products for quite some time now but I still remember our family’s first Macintosh computer in the early 90′s.  Mac products have come a long way since then and the company has come to epitomize a top of the line electronics brand.

The sales statistics are staggering and if you invested in their stock(AAPL) any time in the past 10 years, you’ve probably made some money.  I don’t own any shares specifically but I know they’re one of the top holdings in all my large cap index funds.  I’ve never really been an Apple fan boy, but I have enjoyed many of their products over the past 10 years.  I’ve owned everything from iPods and shuffles to currently, my Apple TV and MacBook Pro.  They’ve always been on the cutting edge of technology and their products are very simple and easy to use.

But even though I’ve made countless Apple purchases in the past, I’m slowly shifting away from the Apple brand.  I ditched my iPhone 4 for the Galaxy S3 a few months ago and couldn’t be happier with my decision. I’m currently in the market for a new desktop computer, and in addition to RAM, memory and technical details, I look at the quality of antivirus software offered on a new desktop computer, Mac has literally hundreds of options.  In addition, the price of a PC is literally 3-4 times cheaper than a comparable Mac. I don’t even use my iPod anymore since I primarily play music through my phone so there’s no need for a redundant device there. While Apple does still make some good products, I think you can find other brands of comparable quality for a lot less.

Price Premium

When you hear the word Apple behind a product’s name, you know it can be trusted.  When iPods first came out, the Apple iPod was vastly superior to others.  I remember using a Rio MP3 player in middle school and that thing was an absolute piece of crap.  At the time, Apple was so far ahead of other companies, it made sense that their iPod cost 2-3 times more than a Rio MP3 player.

I don’t know if people still buy iPods(since you can use a smartphone to play music), but I don’t see one good reason to pay the Apple price premium anymore.  Other companies are producing electronic devices of the exact same quality but cheaper(Apple’s iPad vs Amazon’s Kindle Fire).  In fact, most of the suppliers for Apple parts are allowed(and do) sell the exact same parts to any third or fourth party.  The iPhone 5 A6 chip was even manufactured by Samsung, makers of the Galaxy S3, one of the iPhone 5′s biggest rivals.

Apple Keeps It Simple

I think most would agree that you’re going to pay top dollar for Apple products.  They don’t need to have sales or deals on their products since more than enough people are willing to line up when their newest products hit the shelves.  But one of the reasons their products are in such high demand is their simplicity.  I’ve seen everyone from 5 year old kids to 75 year old grandparents using Apple products.

But their are a couple drawbacks to this approach.  Ever wonder why you can’t visit websites that use Flash on an Apple phone or iPad?  They have very strict developer rules which severely limits third party software.  Companies like Google take more of an open source approach with their products: everything is customizable, everything is accessible and you can make your phone or your computer the way you like.  Personally, I like the customizability aspect of Google products.  I want to have the ability to change settings, update software, etc.

With Apple, it’s either their way or the highway, and it’s getting worse.  In the past, you could always buy a Mac computer with minimal RAM and pay anywhere from $30 – $100 to upgrade it yourself(if you go through Apple, they charge hundreds of dollars for RAM upgrades – ridiculous!).  But with Apple’s newest MacBook Pro, the RAM is soldered onto the motherboard so you can never upgrade the RAM or replace corrupted RAM.

Where’s The Innovation?

Apple has done a great job building their brand to the point where they can release a 5th version of a phone that is exactly the same as the previous(except for a weird vertical extension in length) one and it becomes their best selling phone ever.  The iPhone 5 still sold millions but I think people are eventually going to notice this lack of innovation.

I don’t see the same ingenuity that Apple products once had, therefore, I don’t see a reason to pay top dollar for them anymore.  I don’t care what brand name is on my phone(I’m probably going to put a cover on it anyways).  As long as the product delivers and keeps me happy, I’m going to pay the lowest price possible.

Readers, do you buy Apple products because of the name or do you truly think they make a better product?  Have you ever tried switching from say an iPhone 5 to a Galaxy S3 or a MacBook Pro to a Windows PC?  Don’t be scared, do it and I think you’ll be surprised.

-Harry @ PF Pro

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Hi, I'm Harry, the owner and head writer for Your PF Pro. I started this site back in 2011 in order to create a place where young professionals could come and get all of their financial questions answered. On the site, you'll find articles on everything from asset allocation for retirement to saving money at Chipotle! So enjoy..

Comments

  1. says

    Fiancee? Are congratulations in order? :)

    I think I paid about $700 for a reasonably powerful desktop PC that should last me for quite awhile a few years ago.

    I remember my Rio MP3 player! I do have an iPod, but I managed to hold onto my last one for ~4.5 years and I will hopefully do the same thing with this next one. When traveling, it’s great to have because it has WAY better battery life.

    And I’m Android phones all the way. iPhone is just too locked in.

    • says

      Haha yes as of one week ago! Thanks :)

      I definitely prefer PC’s for my desktop computers but I prefer MACS for my laptop(which I use more casually).

      That’s a good point about the battery life. I still like to take my phone when I travel though b/c I can use the wifi still in other countries. And GPS still works even if you have no service.

      • says

        Congratulations! That is a pretty exciting development :)

        Oh, I always take my phone for wi-fi, but for listening to music on the plane, I’d rather use something that I don’t need to worry about using once I land.

  2. says

    I’ve never bought an Apple product before so I can’t say from personal experience, but from what some of my friends tell me, they can’t live without their iPhones or iPads :D I like Apple a lot. In fact, I’m a shareholder. But they don’t make products in the consumer electronic market that I’m usually interested in. I play games on my computer so I think my PC would be better than a mac, in terms of performance and price. I have a feature phone right now. Apple doesn’t maker feature phones so that’s why I have a Samsung. I also have an Acer net book, I would have considered buying Apple, but as far as I know Apple doesn’t play in the netbook space.

    • says

      Ah ok those are good points. PC’s are definitely better for gaming since you can really juice up the computer with extra RAM, graphic cards, etc really easily. I do prefer my macbook though for casual use, I think it’s a lot more user friendly for surfing the net and things like that.

      Whenever I want to do real work, I run windows parallels on my mac and go that way haha.

      • Douglas says

        Baloney. Be legit. If you want to play games, you get an x-box. Computers are for computing, and you get one that best suits your computing needs. I have used both win and MacOS, and win BLOWS; MacOS is vastly superior. Most peecee user have never even tried MacOS yet attack and insult it unreasonably. Macs run great and will last forever. Thus the premium. Macs only get tossed when they have become obsolete. Like your netbook. It has been rendered obsolete by tablets. Happens.

        • says

          Maybe you misinterpreted my article a bit. I own lots of Apple products but there is definitely a price premium on them. I’m willing to pay more for things like my Macbook Pro because I think it’s a great computer. I use a PC desktop at work and I would much prefer that to using my MAC for business purposes. I just upgraded the RAM on my MAC too so it’s running faster than ever.

  3. JY says

    I once owned an Ipod but currently have a SanDisk that was much cheaper and seems just as reliable (if not more so). Funny, I also had a Rio MP3 player and it did not last long at all. What ever happened to that company?

    I have always found the PC to be a better deal financially and have no interest in owning a Mac since I use windows at work and already so used to the OS. But I know many people can’t live without the Ipad or the Macbooks.

    As for the smartphone I am hoping to continue without a data plan for as long as possible. I have an LG non-smart phone that I can get online with in case of an emergency (i.e. flight check in or the rare occasion I absolutely must check the email). I just can’t justify spending more than the $60 per month my wife and I spend for a shared 550 minute plan. We do use text messaging with a now phased-out plan of 200 per month for $5 (per phone). Since I can get online at work and home usually that is more than enough.

    • says

      I think everyone owned a Rio at some point since they were so much cheaper than iPods :)

      Windows is definitely nicer at work, but I hate the fact that you can get malware/spyware on it so easily. My work has a solid blocker though so I don’t have to worry about it there. With my old windows laptop though, seems like every other week I was getting attacked!

      Yea I don’t think data is necessary but once you get used to it, it’s tough to go back. My suggestion would be to hold out for as long as possible.

  4. says

    I had an iPod years ago, but now use my Droid for my music. My wife is a major Apple disciple and we’re going to be getting her an iPhone in a few weeks. I know she says that she likes how Apple makes things simple…it’s just not worth the premium to m.

    • says

      Anyone interested in the latest tech stuff probably doesn’t like Apple. The Android OS is so much more customizable it doesn’t even compare.

      But not everyone wants this, so the iPhone is a good choice for those that want access to data, internet, etc but don’t want to take the time to learn a whole new complex system.

  5. Bichon Frise says

    Congrats as well!

    Of course, anyone who bought AAPL this summer one has probably lost money at this point.

    One “nice” thing about AAPL is they do have some customer service. The plug for my macbook pro died and we took it in to the Apple store, which is tres annoying, BTW. I was assuming I was going to be out anywhere from $50-$100. They replaced it for free on a 4 year old computer. Not to mention, when I bought the computer they shipped me one with double the RAM and an upgraded video card. They didn’t want the computer back or any extra money either.

    It seems things are starting to move towards android phones and I will probably get one of those next time, especially since we have android tablets already. I was in Korea a couple weeks ago and those crazy people all carry Samsung…I wonder why?

    • says

      Yes that is true, they make so much money that they can afford to just give out ‘refurbished’ products if yours breaks. I’ve heard of people going in way after their warranty has expired and getting new phones just by being really nice :)

      Customer service is important but at some point, if the product is the same, CS shouldn’t matter as much. I can effectively create my own insurance by buying a laptop that is less than 2x the price of an Apple, right? If I pay $800 for a PC laptop that costs $2k at Apple, my PC can break after a couple years and I can go out and get a new one with better specs and still be cheaper than a MAC right? I don’t know if the price differences are that extreme but you get my point right?

  6. says

    I think that they are. Ease of use and good design are still worth the extra bucks. Not to mention, I think claims of an “Apple tax” are exaggerated, as they come with more quality software built in. Plus, they hold their value much better than anything else, which makes it easy to sell a used Apple product for quite a bit. Finally, you can ease the cost difference by buying from Apple’s refurbished store or a gently used product from someone off of a forum or Craig’s. Apple people typically treat their hardware with more love, I’ve discovered.

    Nice post!

    • says

      You’re right! I completely forgot about that, Apple products hold their value really well. But that also means that they stay very expensive should you need a replacement. You can usually resell the old model iPhones for around $200 so every time they come out with a new one it’s effectively free(if you don’t count the 2 year contract).

    • says

      The one thing I don’t like about my S3 is they don’t have a built-in podcast system. I like listening to podcasts and the apple store is great for that, but with Android you have to download third party software that doesn’t work very well.

  7. says

    Congrats on the engagement Harry!

    I don’t buy Apple products because I don’t believe in closed-loop innovation. It hinders progress and Apple is the best at it. They are also very rude to developers of apps, so I choose not to support them. Their products do not justify the cost, but I understand why they charge the price they do. People will continue to buy the stuff because of the Brand. Most arguments for Apple that I hear are from people that couldn’t work their way out of a cardboard box.

    • says

      Thanks Grayson. I don’t have a problem with Apple because they’ve obviously done a great job promoting their brand and they have millions of people who will buy anything they release.

      That takes acute business acumen to be able to pull that off. But personally, I’m on your side, I don’t think they make superior products so I’m not going to be paying extra for them until they do.

  8. says

    Congrats on the engagement!

    I think there’s some exaggeration as to how much Apple costs a lot of the time. I bought a refurb mac book pro this summer that was a July model when I bought it in early August. So it was basically brand new. It cost $1089 after tax. We plan on purchasing Apple Care, which will add a couple hundred to the cost.

    The computer it replaced was a 7 year old ApplePowerbook that I paid ~$1300 for (after education discount) in 2005. I believe that price included Apple Care. Since that was the last model before they switched to the Intel chip, and I bought it when the intel chip was being introduced, it probably would have lasted even longer if I had opted for the Intel model. Mr PoP has wiped my computer and once we get motivated we’ll sell it on Craigslist for something since it still works.

    During the 7 years that I had my Powerbook, a friend went through 2 Sony Vaios and 2 Net books. And by went through I meant they were unusable at the end. Eeek! And we’re using the computers for the same stuff. Basic “home use” stuff – which doesn’t include gaming or major photo/video editing.

    She not only spent more, but she had the added aggravation of losing data from crashes and having to restore backups 3 times! That’s a lot.

    I’m not saying Apple’s perfect by any means, but for someone who wants to buy one thing and hold on to it for a while, it’s treated me pretty well – and Mr. PoP, too. His Mac Book is now 6 years old and going strong as a “daily driver”.

    • says

      Thanks! We’re both very excited.

      I agree with you that sometimes the price of Apple may be exaggerated and you should always compare your options when shopping around. Some people aren’t willing to buy refurbished(not sure why, it’s the same thing!) though so that can add to the cost.

      Apple products definitely last longer though in my experience. But if you know what you’re doing with a PC you can definitely make it last. You have to know how to make a back up and do a complete wipe reformat which is moderately difficult but you should always be able to restore it to the factory settings. I think laptops are a little tougher since they get so physically hot sometimes and that can mess with the chips and drives, but desktop PC’s should be able to stay around for a long time.

  9. says

    I’ve never been much of an Apple person myself. I was never a fan of their mouse in the 90′s and never bought an Ipod.
    It seems the more marketshare they get the more they’re trying to milk the cash cow. I know a lot of my friends were pretty upset when they upgraded their phones a few months ago because all of their adapters had to be replaced. I suppose it’s the nature of the beast. Technology moves on and either you keep up or don’t worry about it.

    • says

      Yea I think that was more the advancing technology portion than Apple trying to milk it’s consumers and I say that as someone who doesn’t buy Apple anymore. Technology will always be advancing pretty fast, and it’s too expensive to keep up IMO.

  10. says

    I am an apple fanboy through and through. We also have a LOT of apple products in our household and will continue to buy them! They just work, they look good and above all their customer service is unrivaled

  11. says

    While I don’t know how long you have been engaged, congrats.
    Back to your question: well, I’m not an Apply fanatic. I do have an iPhone 5. It’s my first Apple product. Like you, I don’t see the difference between my iPhone 5 and my friend’s iPhone 4s except for the length.

    I’m currently going back and forth between a MacBook Air or not. I’m still shopping and comparing. Any suggestions on a non-Apple laptop?

    • says

      Hi Ornella, thanks! It’s been about 2 weeks, haha.

      I thought it was so funny how all the Apple die-hards tried to explain to me the difference between the 4 and the 5. Dude, it’s the same phone!

      Anyways, I like macbooks, I think they’re still a great product for casual/personal use. I would not get one for business use but I prefer doing real business-type work on a desktop anyways. But macs are good for blog work :) If you decide to go non-apple though I’d either go for a cheap powerful computer or a quality mid level like Lenovo or Dell. I haven’t bought a PC laptop in years so I may not be the best person to ask but I know there are some good ones.

  12. says

    I used to buy Apple products but switched to Samsung about a year ago. The reason was simple, it was cheaper and offered more functionality.
    My wife still uses Apple, but only because she isn’t interested in learning how to use a new operating system.

    • says

      Yea I really like the ability to customize everything and I think it’s important to stay up on the latest technology. Maybe it’s because I grew up with computers, but I don’t ever want to be a helpless old person who doesn’t know how to turn on a tv or use a computer. I embrace new technology/change :)

  13. Matt says

    Congrats on the engagement Harry!

    The CEO of Greenlight Capital, David Einhorn, who is famous for shorting Allied Capital, Lehman, Green Mountain Coffee, Chipotle, etc., has a big stake in AAPL, though I think he’s been trimming recently. Anyway, he bought in 2010, at around $250 a share. Here’s what he had to say about AAPL in his 2012 Q1 letter to shareholders (found here http://www.scribd.com/doc/95352205/Einhorn-Q1-12-Letter-to-Partners):

    “Despite its size, AAPL remains one of themost misunderstood stocks in the market. AAPL is a software company. The value comesfrom iOS, the App store, iTunes and iCloud. A Motorola RAZR phone was a one-time winner because when someone else made a phone that was just a little better, RAZR sales stopped. In contrast, a consumer with one AAPL product tends to want more AAPLproducts. Once the user has a second device, AAPL has captured the customer. At that point,a future competitor has to make a product that isn’t just a little better, but a lot better to get people to switch. The high switching cost makes AAPL’s business much more defensible than that of its predecessors.

    Further, AAPL’s ability to consistently offer innovative features (as opposed to marginal improvements on the current features) encourages users to upgrade every couple of years. This provides a recurring revenue stream. And because AAPL embeds its software into its hardware, it doesn’t face Microsoft’s piracy problem. If the Chinese want AAPL, they have to buy AAPL. Rather than view AAPL as a hardware company, we see it as a software company that monetizes its value through the repeated sales of high margin hardware.

    We continue to hold AAPL. Not only do we think the skeptics are misguided, we believe the shares remain cheap. AAPL trades at a lower multiple than the average company in the S&P 500. A below-market multiple implies that this is a below-average company. We have a hard time seeing how anyone ranks AAPL as below average.”

    • says

      Thanks Matt. That’s a good analysis of Apple’s software hold on the market but I don’t necessarily agree that they are going to continue growing. They do a great job of inter-linking all their products and it was a PITA to switch all my music over when I switched from my iPhone to S3. But that being said, I probably won’t be switching back.

      I think Apple is here to stay but I think even their die hards were a little upset with their latest iPhone. If I had to bet one way or the other I would say Apple’s stock price will be going down.

  14. Jeff says

    I got fed up with Windows in 2005 and bought a Mac mini. It served me well for 7 years – it’s still running, but since it only has 512M of RAM, it is quite slow. And, since it has a Power PC chip, it doesn’t run much new software since not many developers are writing universal code any longer. So, time to upgrade. What a headache!!! Migration Assistant didn’t work, so I had to manually transfer the files and I found that OSX 10.8.2 is very different from 10.4.11. It is much more Windows-like, with right-click options that didn’t work in 10.4.11. Oh, and there are no arrows in the vertical scroll bar in Firefox or in Safari – you have to use the scroll wheel on the mouse. The biggest beef I have with Apple, though, is their rent-seeking behavior. They’ve got an Apple Universe (iTunes, iPad, iPod, MacApp Store) that they strive to rope everyone into and milk them dry and it just goes against my grain. In addition, you can’t upgrade the memory in the newest iMacs. And have you checked out the price of a 27″ monitor? $1,100???? The TrackPad is Bluetooth only – here I come, Batteries+! I’m not sure that my next box is going to be an Apple – it might just be a Windows or a Linux box – I’m that irritated with Apple’s antics. Whichever software writer decided that all of the icons in Mail were going to be gray should be shot. The icons in Finder can be colorized with third-party software, but not the icons in Mail.

    • says

      Jeff, I’m glad you could vent to someone haha There’s definitely going to be a big jump from 10.4 to 10.8. Usually though, most of the changes are for the better. I’ve gotten pretty used to the new OS(Mountain Lion) now and I’m not in love with it but like I said, I really only use this computer for surfing the net and blogging. I don’t like doing any excel work or MS office stuff on my Mac, it’s too hard to navigate around and like you said nothing is customizable.

      The great thing about Windows is that you can literally change everything and customize it the way you want. I also feel like it’s a lot easier to do real work on a Windows. The Mac screens are nice but way overpriced. You could get a big screen tv for half that price. I just upgraded the RAM(2009 MBP) from 4gb to 8gb and it’s running really well again. Everything is fast and it allows me to split the RAM for when I run windows parallels.

  15. Occidental Charlie Hearse says

    I started out with an Apple (Apple IIgs, not Mac) desktop. Eventually I switched to a Mac. After about 10 years, I began to use Windows, and continued using PC desktops for an additional 10 years.

    About 3 years ago, I needed a new desktop, and decided to return to Macs in spite of the extra cost. I couldn’t be happier. I bought a Mac mini, and used my PC peripherals with it. I still need Windows to run Quicken, but Macs can use both the Mac OS and Windows. I use the Mac program called Parallels, and Windows XP, which allows me to switch back and forth without rebooting.

    I’ll soon want an additional machine, and I plan to buy another mini or a 27″ iMac. Yes, both will cost much more than a PC, but Ive used both OSs for several years, and I prefer the Mac, in spite of the initial extra cost.

    By the way, I still run XP on a laptop, but I only turn it on about once a month to back up my Quicken files. Macs have served me well over the years.

    • says

      Nice. Seems like the majority of people prefer Macs. I just upgraded my MacBook Pro to 8 GB of RAM so now I’m running MAC OS and Windows on Parallels very smoothly. It was a little slow before but like you I like Windows for Quicken and a few other Windows only programs.

      I think Macs are still a superior computer but I feel like the price gap is widening. PC’s are getting cheaper while Macs are getting more expensive and it’s all the same technology.

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