Print - MacBook Announcement Proves Microsoft Is Right About 'Apple Tax'

On a day in which Apple released a long-overdue update to its notebook computer line but refused to lower prices on its expensive new hardware, Microsoft shared its thoughts about it calls "the Apple Tax." The idea, basically, is that Windows still offers better value for consumers because Apple includes hidden extra costs in its solutions. This is true both in the up-front cost of Macs--which are generally significantly more expensive than Windows PCs--and after purchase.

"You can get a PC laptop with a bigger hard drive, more RAM, a media-card reader, more USB ports, and a bigger screen, for much less than a Mac," a Microsoft representative told me. "[And while] you can upgrade just about any Windows desktop PC, the only significantly upgradeable Mac is the Mac Pro, [which has a base price of] $2799.00." And that's sans display.

Macs aren't just more expensive than PCs. They also do less out of the box than PCs. You can get modern features like HDMI, Blu-Ray, eSATA, MediaCard Readers, built-in 3G, Fingerprint readers, and TV Tuners built-into PCs, but none of these features ship with any Mac models, meaning you'll have to add them externally and pay extra, over and above the more expensive base price of that Mac.

This fact is especially noticeable on the just-released new MacBook machines. In typical Apple-knows-best fashion, there are no media card options, no integrated 3G wireless networking, no fingerprint readers, and no docking solutions offered. And the machines are expensive, all the more so after you factor in the additional cost of buying the needed external peripherals that aren't even offered.

This release comes amid an historic financial crisis. But rather than address the needs of a changing market, Apple actually raised the base price on its new notebooks by $200: An entry-level MacBook now costs $1299, compared to $1099 for the previous version. (the next model up is $100 more than its predecessor.) To silence critics, Apple is also selling a stripped down version of the previous MacBook model for $999. But this is a previous generation machine that first went on sale in early 2006. It is also Apple's first and only-sub $1000 notebook, and it is competing with a huge number of new PC notebooks that cost as little as $500.

Microsoft notes that the Apple Tax extends far past the initial purchase, however. If you need to do things like add a wireless router, add more storage, or perform other tasks, the relevant Apple solutions are often several hundreds of dollars more than the PC-based solutions. And if you're switching to the Mac, the cost of repurchasing necessary software can be hugely expensive.

To be fair, Microsoft's Apple Tax concept, while very real, is also self-serving: The company is trying to stem the flow of Windows users to the Apple platform. But you don't have to spend too much time in an Apple Store to notice the differences between the Apple and PC worlds. That surprised look you see on customer's faces in Apple retail locations has as much to do with the price of Apple's solutions as their industrial design.

Critics of the software giant--by which I mean fans of Apple--will complain about Microsoft's Apple Tax theme, but I think it's accurate. That's especially true when you consider the rumors that were floating around last week about Apple's supposed plans to ship a $799 MacBook model. Apple miss that target by a whopping $500--the price of dozens of PC laptops at your local Best Buy, by the way, And the company only artificially made it into the sub-$1000 price category by continuing to sell a dated, previous-generation machine. As Stanley Morgan commented in a recent research note, "The remaining source of growth [in the PC market] is increasingly the sub-$1,000 market where Apple does not play."

"You can get modern features like HDMI, Blu-Ray, eSATA, MediaCard Readers, built-in 3G, Fingerprint readers, and TV Tuners built-into PCs, but none of these features ship with any Mac models" The VAST MAJORITY of home users will never use ANY of those features. The VAST Majority of home users don't know how to un-install the tons of crapware that most/all PCs. The VAST Majority of home uses really like the iLife suite which comes with all Macs and see the value in it, since there really is NO equivelent on the Windows side of things. I really like Paul and enjoy his podcast, but I really think he needs to look at your average Joe Smoe Home User. BTW, Question for Paul: Is your Wife still using the Mac Mini/OSX? If so, why has she not switched to Vista?

Sorry, missed the Media card readers. Most home users will obviously use that. The past few SD cards I purchased came with a USB adapter. Universal USB adapters are $10. Not a show stopper here...

Um Paul? Consider the source! (Microsoft) Apple has without question the most innovate laptops on earth. LED backlit display, keyboard lights, solid-state hard drives, mini display port, MagSafe power, built in iSight camera, motion sensor, multi-touch trackpad, dual graphics processors, not to mention the new slim aluminum unibody enclosure. (Plus the new MacBooks are perhaps now the most environmentally friendly computer.) Every PC is virtually the same - hardly any innovation at all. The only differentiating factor between PCS is the brand name. Instead of talking about any of the numberous innovations in the new MacBooks you simply parrot Microsoft's marketing message about the Apple Tax! There are countless Total Cost of Ownerships studies which continuously show that Macs have a lower TCO then Windows - where are your sources besides Microsoft's marketing department? Paul, the bottom line is that apple's Marketshare is exploding and has been outperforming the PC market for 14 of the last 15 months. The reality is that people want a computer that works and works well and they are tired of the constant crashes virus and incompatibilities of the PC world and they are simply frustrated by Vista. Paul, how about some real tech reporting instead of being a parrot for Microsoft?

"If you need to do things like add a wireless router, add more storage, or perform other tasks, the relevant Apple solutions are often several hundreds of dollars more than the PC-based solutions." This isn't the 1980's anymore... you can go into your local computer store and purchase most any wireless router (linksys, d-link, cisco, etc) printer/scanner (hp, epson, canon, etc), or any external storage device and it will work with your Mac

Apple Tax? Seriously? How about the following: Windows Server Client Access License Microsoft SQL Client Access License Microsoft Exchange Server Client Access License Yearly antivirus subscription

Apple is VERY good at marketing their offerings. In a very brand conscience society, this is important to note that this fact alone, helps Apple get the extra $$$ for their hardware. I do think OSX is a great OS, by the way.

"HDMI, Blu-Ray, eSATA, MediaCard Readers, built-in 3G, Fingerprint readers, and TV Tuners built-into PCs" And don't forget with a woefully small amount of available USB ports, adding those becomes even more difficult. For a company that is all about average consumer users ease of use (supposedly), not including something like a SD card reader is very strange. And for media types, not including FireWire on some of these new models is also strange. "solid-state hard drives, mini display port, built in iSight camera, motion sensor, dual graphics processors" Apple is certainly not the only manufacturer with these features. SSD's are very popular as the cost has come down. The mini-display port is a proprietary port that only connects to one expensive peripheral. Embedded web cams are plentiful. Motion sensor? Lenovo has had that for YEARS. The dual graphics processor is cool and all, but you have to log out to switch between them (Vista does this on the fly BTW). So, ho-hum.

Short version: Blog article of known Windows shill proves that MS get nervous about sinking mind and market share. BTW. You need to reboot your Windows servers more often. Seems they have problem serving web pages to standard compliant browsers.. ------- Error Occurred While Processing Request Element PUBID is undefined in GETARTICLEINFO. Please try the following: Enable Robust Exception Information to provide greater detail about the source of errors. In the Administrator, click Debugging & Logging > Debugging Settings, and select the Robust Exception Information option. Check the ColdFusion documentation to verify that you are using the correct syntax. Search the Knowledge Base to find a solution to your problem. -------

"...not including something like a SD card reader is very strange." I don't get what the issue is. Go to your local hardware store a purchase a SD card reader (like the Sandisk ImageMate 5-in-1 for just $20) and you are good to go! Yes Apple doesn't provide it built-in but out of all the PC laptops out there, how many people actually have and use their integrated SD reader? (The DisplayPort is not proprietary but it is license-free and royalty-free.) Listen, we can argue the pros and cons of each platform all day long, but the fact is that Apple's marketshare is exploding and has gone from around 2% to a rumored 10% worldwide and 21% in the US in just a few short years. (http://apple20.blogs.fortune.cnn.com/2008/04/01/analyst-apples-us-consumer-market-share-now-21-percent/) That means something. It means customers are voting with their wallets that Apple is doing something right and they are tired of Microsoft's mediocre products. Paul would be advised to pay attention and pressure Microsoft for better products (competition is good) rather then repeating the absurd claima about an "Apple Tax". "The dual graphics processor is cool and all, but you have to log out to switch between them (Vista does this on the fly BTW)." Expect an update from Apple shortly now that the new MacBooks are out. And by the way, if you like Vista you can run Vista on a Mac side-by-side with Leopard. Mac hardware is in fact the only hardware where you can run Windows XP, Visa, Leopard, and Linux operating systems and applications. How's that for software compatibility and choice! While PC's have more hardware choice, Macs now have the most software choice.

THE REAL FACTS: The following site provides links to Total Cost of Ownership studies comparing Macs vs Windows by: IDC Brookfields Gartner Evans Research Ingram Labs J.D. Powers Consulting Technology Newsletter Gistics ...and many others. STUDY AFTER STUDY SHOW THAT MACS HAVE A SIGNIFICANTLY LOWER TCO! So in conclusion: My sources = Independent research provided by IDC, Brookfields, Gartner, Evans Research, Ingram Labs, J.D. Powers, Consulting Technology Newsletter, Gistics. Paul's sources = Microsoft's marketing department. Web site: http://www.macvspc.info/pages/03.html

First of all, people are criticizing Apple because they did not meet the expectations of some *rumor*? Apple never said it would make a low-priced laptop. It will never sell a low-priced laptop. It has no interest in that market. It needs the higher margins to fund the R&D that provide the value that people seem to be happy to pay for. People like design; they like beautiful objects - not beige boxes. They like design touches that seem to show care, like the MagSafe power cord. They like innovation, like the multitouch trackpad. Apple said that they took months just to get the coefficient of friction right on the trackpad -- great attention to detail. People like that and they pay for that. They must because Apple grew 30x the PC market in Q308 -- 30 times. The "Apple Tax" is meaningless; it's like saying there is a BMW tax. Well, duh. People are willing to pay more when they get more. The more here is quality. Vista and the concept of quality do not go together. Windows 7 is merely what Vista should have been out of the box two/three years ago; it's Vista SP2 - Microsoft is pretty much admitting that. What is MS going to do when Snow Leopard come out with still more real OS innovation? What are people going to do when they find out Windows 7 will NOT come with Calendar or Mail or Movie Maker -- that these are going to be Live services (cloud computing) which you are now going to have to pay a monthly service fee to have? They will perceive MS as M$ and they will move to the Mac even more quickly.

Daringfireball.net says it best ... "Other PC makers fight viciously over pricing because it’s the only factor on which they can differentiate. Few of them bother trying to make better computers — most just build bland, junky wrappers around Intel’s reference chipsets. (Notable exceptions in the laptop space include Sony and Lenovo.) None can offer better software because they all ship the same version of Windows. They’re stuck with Vista. They all seem, for whatever reason, incapable of producing Apple-level marketing and advertising. And none of them who’ve tried have been able to do their own retail stores successfully. Price is all they have. "Cook then showed two pie charts. One showing the Mac’s unit share in the U.S. retail market at 18 percent, up from “a single digit number, just a few years ago”. Cook then drops the kicker, the single key point you need to grasp to understand Apple’s Macintosh business: “And what’s more impressive than this is if you look at revenue share. Because we focus on fully-features systems, and we don’t compromise on quality, our revenue share is over 31 percent. That means that one out of every three dollars that’s spent on computers in U.S. retail is spent on the Macintosh. What a difference a few years makes.” "31 percent of the money on 18 percent of the unit sales. Those numbers are stunning — and they would not get more impressive by selling $800 MacBooks. Yesterday’s entire event, the whole thing, could be summarized by these five words from Cook: “We don’t compromise on quality.” " Again, one out of every three dollars that’s spent on computers in U.S. retail is spent on the Macintosh ... So much for Paul quoting Ballmer about PC outselling Macs 32 to 1. Forget "Apple Tax," Microsoft -- where are the products???

While I agree with Paul that Apple hardware lacks some useful features like the SD reader, I can't agree with him that a fingerprint reader or an eSATA port are useful for those whom the MacBook and MacBook Pro are targeted. As an owner of many Apple laptops, the only thing that I miss is the SD reader and perhaps the 3G connectivity. Anything else that Paul mentioned I never used or ever needed. But, instead of complaining about the Apple Tax, please realize that the engineering of the new cases is simply awesome. And the laptops look gorgeous. Even if you want to run Windows on them, the design, style and quality of the new laptop offerings I think it's exceptional.

In other news, Chevrolet has decried the "Lexus Tax", pointing out that the Chevy Geo offers exceptional value without forcing you to pay for all those annoying extras.

"If you need to do things like add a wireless router, add more storage, or perform other tasks, the relevant Apple solutions are often several hundreds of dollars more than the PC-based solutions. " That's a lie, and you know it. Standard items from a variety of vendors (such as routers, "storage", etc.) all work equally well on both platforms. And what are these "other tasks" that will cost you hundreds more? You're spreading FUD big-time here. While Apple-branded items may come at a premium, they are rarely, if ever, the only choice available. Stop lying, Paul. It's beneath you.

blah blah blah from all the Mac people as always...not sure why the Mac people are bringing up servers, since I believe the main discussion was about PCs...but I can tell you that Mac server will NEVER catch up with Windows servers, period!! Not in the real world. Also, I have a Macbook pro, and an HP laptop, and have been using the Macbook pro exclusively for the last 6 months and have to say that for what you pay for, I'm not really impressed. It's ok, but for the money, I'd buy a pc anyday. And home users most of all are looking for ways to SAVE money, not spend more!! Quoted from previous message"--------------- "Apple Tax? Seriously? How about the following: Windows Server Client Access License Microsoft SQL Client Access License Microsoft Exchange Server Client Access License Yearly antivirus subscription" ------------------------------ Dude, we're talking PCs, not servers here!! Those are server licenses...nothing is free in the server world! Incuding Mac servers...oh yea, Mac servers can't run that software...

why anybody would waste their money on an apple system is beyond me. The iphone is the only single trully inovative product apple has put out in the last 10 years. With the ipod sales stalled and phone makers catching up to the iphone's appeal (not to mention better network choices), it is inevitable that apple's golden days are coming to a day. even with the disaster windows vista was, and the years of microsoft sitting around doing nothing to debunk apple's lies, apple failed to capitalize on the pc market to the degree it should have. now there are cracks on the apple's pillars and it is only a matter of time before their game comes crashing down. It is inevitable. sad part is they did it to themselves. by making the iphone development scheme as friendly as the north korean government and by trying to squeeze every cent out of their users, they have lost the chance to overtake microsoft and google to the next generation platforms. This is why they lost to microsoft in the 80s and history just repeats itself.

I'm a Windows expert since the early Windows 95 and before, as well as Mac user at home. I occasionally do computer support for my friends and neighbors (you know the trick). For me the major difference between Mac and Windows is really the user experience. What you say below about hardware and price is certainly true. But I'm sorry to say, non expert users, are pretty lost when confronted with Windows XP or Vista, even for such simple things everybody needs, as configuring the wireless home broadband access. I recently did that for a couple of friends who own both a Mac and a Vista PC: setting up their wifi was done in seconds on the Mac but took a fair amount of time with errors and retries on the Vista PC. So the Apple tax might very well be dollars, but there is also a Windows tax in grey hair and support needs. For some people, this Mac extra cost is probably worth it then. I would compare this to buying an expensive house downtown versus a big villa with swimming pool in the suburbs for the same or less amount of dollars. There is clearly a "downtown tax" here. But the suburb tax is paid daily in traffic jams or public transports nightmare...

"How's that for software compatibility and choice! While PC's have more hardware choice, Macs now have the most software choice." visitor, that's a shoddy argument and you know it. Apple doesn't allow you to run OS X on anything but Apple hardware, so that is not the fault of anyone except Apple, and it is them RESTRICTING choice, not expanding it. And my only point about the SD card slot is about the average Joe consumer, that the Mac has been heavily touted as being friendly and easy to use, and a lower cost of ownership, until you need an SD card reader and you need a USB hub for your Air, or you need a DVI or VGA adapter, all add cost and add complexity, when the ports could have easily been integrated inside. They tout the abilities of the Mac as being superior at easily manipulating family photos and the like, but they don't include a standard SD card slot, the card format of most cameras these days, or no longer a FireWire port that most camcorders support. This is contrary to the ease of use argument that many on the Mac side like to tout, when the reality is that it isn't as easy as they make it out to be. As far as I'm concerned, the mini-DisplayPort is proprietary, since it only works on one piece of hardware right now. I'm sure that the variety of choices will expand (until the next standard arrives of course), but if MS had foisted such an oddball standard, the same outspoken coterie of Mac supporters would be all over MS for promoting another standard. However, when Steve does it, it is revolutionary. "You need to reboot your Windows servers more often. Seems they have problem serving web pages to standard compliant browsers.." Wrong! I'm afraid the errors have nothing to do with Windows. Read the error you posted and you will see it says ColdFusion, which is NOT a Microsoft product, and that is what is generating the error.

Paul, get back to us when you and Microsoft learn the difference between the words "cost" and "value".

"Paul, get back to us when you and Microsoft learn the difference between the words "cost" and "value"." +++[Insighful] The spec idiots look at the specs sheets and think what they see is what they get. However, those cheapo hardware add-ons are mostly junk. E. g. the HP I use at work has a sound card which produces mainly heavy background noise because of lousy shielding - what's the value of a piece of junk like that? I looks good on the spec sheet but is utterly useless. "As far as I'm concerned, the mini-DisplayPort is proprietary, since it only works on one piece of hardware right now." The Dell 30' monitor in front of me has DisplayPort. Hardly proprietary (and thanks to the value of Apple hardware, no need to buy an extra Dual-DVI graphics card to use it - contrary to those *ah* 'superior' *coff, coff* low cost Dell/Acer/ notebooks that comes with smarmy parts). "I'm afraid the errors have nothing to do with Windows." If this so called IT "Pro" site is not even able to handle their software properly, how can they manage a weak, ugly and overly complex OS like Windows?

"The Dell 30' monitor in front of me has DisplayPort" Ah, but not mini-DisplayPort, which is precisely my point. If Dell had made such a decision, you would have derided it.

When Microsoft came out with the whole 'Apple Tax' thing, I had to wonder what they meant, sure it's arguable that a Mac is more expensive - but surely, that's bearable if you /choose/ to buy something different that you perceive as better. Thankfully, Microsoft has come out with a 'comparison table' of what it says is the cost you'll pay for an Apple Mac, over a PC - and it's laughable. The table shows the cost over five years, and before we even get off the first row there's a problem - on the PC side, they say you'll buy a PC, and then keep it - but for the Mac, apparently I'll be buying a new one in year three - artificially inflating the price by 50% (they graciously allow you to 'sell' the old one on ebay) - of course, this is a huge assumption, and is not real-world applicable. Then, they insist that you'll NEED to subscribe to MobileMe - and for some reason, they quote the higher-priced family license. Why they chose this is not explained, but I can tell you that I DON'T use MobileMe - and I get on just fine using alternatives from the likes of Google for my email etc - all for free. Then they insist that you'll be paying repeatedly for things like iLife (again, family license used) - and be shelling out cash to replace your existing software (which is surely an acknowledgement from Microsoft that users who choose Windows, are locked in to the platform). Essentially, they've made up a huge number of costs that just don't apply to the majority of users, and even go so far as to say upgrades like TV Tuners, media readers etc /aren't available/ on the Mac - which is a total lie. Paul, you call out Apple plenty of times for what you say is their marketing hype - but Microsoft are clearly stretching the truth directly into the realm of full on lies and deceipt - far from being accurate, the whole thing is nonsense.

Update: MacObserver have posted Microsoft's table up here: http://www.macobserver.com/article/2008/10/15.9.shtml Have fun justifying /that/ as 'accurate'

"but not mini-DisplayPort" You may not realise it, but a cable has to ends. E.g . no problem to connect a handy with a mini USB port to a normal USB port. Or use a mini DVI-out on a monitor with DVI-in. All you need is a cable with the right connectors on both ends. What was your problem again?

The 'Apple Tax' thing is actually the MS' "embrace and extend" strategy applied to the "Microsoft tax". Go buy a PC and you'll end up paying a Windows licence even if you buy a PC without OS..

>>How's that for software compatibility and choice! >>While PC's have more hardware choice, Macs now >> have the most software choice." > visitor, that's a shoddy argument and you know it. > Apple doesn't allow you to run OS X on anything > but Apple hardware, so that is not the fault of > anyone except Apple, and it is them RESTRICTING > choice, not expanding it. The simple fact is that Mac users can run the Mac operating system and thousands of Mac software AND XP/Vista including the thousands of Windows software AND any linux operating system and software. You can't run all 3 operating systems on any other platform which means Macs have THE MOST choice in terms of operating systems and software. That's a simple fact. Mac Hardware = the most operating systems and software.

Oh, Paul. I just love how you feel justified in uncritically parroting Microsoft's talking points like a mindless shill, yet routinely attack defenders of Apple as lemmings of the "iCabal". Your boosterism is hilarious. Your hypocrisy is blatant. While the rest of the OEM assemblers can continue destroying their margins in a race to the bottom, I'm very happy to see Apple successfully balancing price, performance and profit while continuing to grow their share. The Apple platform is healthy and growing. The WWDC is selling out in weeks. The iPhone is likely to outsell Windows Mobile on a quarterly basis very soon. All this adds up to a winning strategy. If you think the value equation in the Mac isn't there... don't buy one. But arguing that they don't have a successful strategy is just stupid. Pursuing market share at the expense of profit with no other benefit is a strategy of failure. Apple's share is good enough to entice growing development. That why you see big devs like Intuit re-writing their apps like Quickbooks and Quicken for leopard. They're investing in a great platform with a userbase that actually BUYS SOFTWARE. That's all that matters. Paul, you work for Microsoft. Officially or not. You are an organ of Microsoft's marketing department.

Wow... just saw that Microsoft "apple tax" chart. Talk about outrageous deception and dishonesty. Claiming that the average PC user upgrades their 4 year old computer with a new video card and blueray drive is hilarious. Where did they get those statistics? Mars? I believe Paul himself has advocated the replacement of machines younger than 5 years old for anyone buying Vista. Last time I checked, Vista shipped with a graphics subsystem that wouldn't work on systems far younger than 5 years old, while Leopard runs and looks identical on 866mhz G4s. Sorry, but most people don't upgrade their video cards. Never mind that you can't upgrade laptops, which are becoming the dominant computer for most users. That Paul finds this kind of thing acceptable from Microsoft but calls Apple a lying company is classic. Paul has truly become a pure shill. He's nothing more than an extension of Microsoft's marketing, from his criticism free celebration of all of their advertising, to this mindless repetition of their talking points.

People can go on and on about Mac vs PCs... but going back to the point of this article and the so called, "Apple Tax", I am going to repeat what I wrote before and that shuts down Paul's ridiculous argument - study after study shows Macs have a LOWER TCO then PCs. -- THE REAL FACTS: The following site provides links to Total Cost of Ownership studies comparing Macs vs Windows by: IDC Brookfields Gartner Evans Research Ingram Labs J.D. Powers Consulting Technology Newsletter Gistics ...and many others. STUDY AFTER STUDY SHOW THAT MACS HAVE A SIGNIFICANTLY LOWER TCO! So in conclusion: My sources = Independent research provided by IDC, Brookfields, Gartner, Evans Research, Ingram Labs, J.D. Powers, Consulting Technology Newsletter, Gistics. Paul's sources = Microsoft's marketing department. Web site: http://www.macvspc.info/pages/03.html