Apple by the gigabyte: What does $100 buy?

This is just awesome information.

Never heard this before!

So glad I read this blog.

Hope you have a nice week!

Linda

http://www.attentiontodetailgifts.com

Re: The iPod Touch price chart:
The $100 jump between models on the Touch is ue to consumer buying habits.
In general, most buying is Min/Max.
Either shoppers will get the base model of something to get in, or they’ll go all out and get the best version.

Using the current Pricewatch data:
$ 164.98 – cf 32gb
$ 63.99 – cf 16gb
$ 33.75 – cf 8gb

Apple wants all of the sizes to have some market value. If they only charged the difference in price between the 8 and 16 (approx 30 bux), who would buy the 8? At a 100 buck jump tho, they strengthen the 8gb’s position as the entry level. Moving the 16 up to 100 over the 8 also provides a solid step on the upgrade path to for those that fill up the 8. Going up another hundred (which is actually reasonable)adds to the perception that the 32gb is the elite device, as it pushes the $500 mark, tho there is no new tech, just a bigger CF.

It’s not bad marketing, and Apple know plenty of people will go for it.

This is crucial information to have in the consumer’s hands.

It helps in purchasing.

Thank you and Kudos!!

Linda
http://www.attentiontodetailgifts.com

You are not smart. SSD’s cost on average many multiples more to manufacture than compact flash cards or simple solid state memory. Adding the fact that the SSD in the Macbook Air is a 1.8 inch drive as opposed to the more standard 2.5 inch drive, cost gets driven up even higher. Apple makes money on elements of design and usability; this is where their products are marked up with high margins. Hardware and hardware accessories, such as the Macbook Air SSD, are sold at a fair market price, typically in line with the rest of the industry.

For the MacBook Air example, you neglected to consider the impact of the SSD on battery life.

Why does a six pack of Corona cost about 7$ at the store and one bottle at the baseball game is 7$?

I’m going to call my Congressman and get to the bottom of it. :)

Are you really comparing apples to apples?

Well,

Glad you gave us all a economics 101 real world class.

It is a company to make business.

Why does a 20 oz. bottle of Diet pepsi cost me $1.33 and at the store I can purchase 4 one liter bottle of diet pepsi for $4 or $1 a liter?

Tell me genius.

Apple and Steve Jobs is pretty much a tech cult. Only in the last few years (since the iPod)has more middle of the road consumers looked at Apple. This has created some friction because they are not Mac fans but rather good consumers who look at value and not blindly buy anything with a Apple on it.

This is an overly-simplistic view of how technology is priced, and it is a total stretch to try and compare the value of a GB in music player/phone to a computer.

Not only is it a stretch, but even if I accept what is being said here to be quite honest I don’t know what the author’s point is.

What if anything can anyone learn from this article? The answer is not very much.

Please wake up Phil Elmer-DeWitt! This phenomenon has been going on for years. Please tell me you didn’t just notice it now, and that in fact, you couldn’t think of anything newsworthy to write about.

Phil,

I understand your point on the iPods and iPhone. I agree with other comments regarding the fact that it is probably just marketing.

The problem with your analysis is when you compare the cost of the SSD to the memory in the iPod. To add memory to an iPod, Apple adds a chip (or two). To add the SSD, they are buying a new device, complete with memory, communication chips, a case, and connectors.

If you look at the ENTIRE cost of a 32GB iPod Touch and the cost of the SSD, it is the same on a $/GB basis.

Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

Is it truly amazing that someone can write such a senseless article so clearly devoid or any understanding under the name of Fortune.

Why does Fortune have things like this? Ratings? Write someone inflamatory without any understanding or information? Sounds more like the National Inquirer than Fortune magazine. Alas the state of blogging today.

Why the difference in pricing? Its a matter of convenience. The same reason you can buy a 20oz Coke for $1.29, and a 2 ltr bottle for $1.00. We are all willing to pay for the convenience of having the entertainment we want – smaller and more available – rather than carry the laptop around with me. I don’t have a pocket big enough for that one.

Spend More To Save More – nothing new here…

Apple is showing if you spend more, they’ll give you more memory for the buck, what is so devious about that, it is the same in any market space.

Have you checked the prices for 1.8″ 64GB SSD Drives? It’s almost cheaper to buy a Macbook Air, remove the SSD, sell it on E-bay and buy a 1.8″ 80GB HD.

Check out the prices:

http://www.google.com/products?q=1.8+ssd+64+gb&btnG=Search+Products&show=dd

thanks…Lee

Apple has a 91% PC market to look forward and conquer but they wont get any of it this year with $500 ipods and $1800 laptops. But the time is now when Vista sucks and Leopard rocks. However, Dell keeps churning out sub-1K laptops that measure up to $2.5K Macbook pros so slick Steve: its time to give up a little of those thick margins you operate with and work with some volume.

BTW: I just did a RAM upgrade myself on a Macbook which saved me 80% of what Apple charges when you buy it or if you have the upgrade done at a store. Apple is just margin obsessed.

Flash memory, by nature of the technology, has very fast read speeds, but much longer write speeds. It also uses very little power to read, but considerably more to write. Thus, the benchmarks stated are a direct reflection of the technology and not particularly interesting. In the chart, this is why unzip (which is primarily a data read operation) is faster than things like compiling, which require lots of data writes. In general, this probably means you don’t want to use a SSD macbook air to do heavy number crunching, but then, why would you? That is not its target market.

The main reason to use flash is that it uses significantly less power than rotating media, but also because there are no moving parts, which is a benefit for a small portable that may be used when not on a stationary desk. In the real-world use case, rather than benchmarks, flash can actually be quite a bit faster, because in order to save energy, rotating media is usually spun down when not in use and must be spun up again to access data. Flash has no such data latency and can always be accessed at full speed with no power penalty.

This is often the problem with technical articles written by business people – they fail to understand the technology first.

The value of a product is, by definition, however much customers are willing to pay for it, and it often cannot be reasoned out by linear models. This is especially true of top of the line electronics devices. Several factors come into play:

(1) you can charge a significant premium for the top of the line to capture the technolust of wealthy geeks. Example: MacBook Air.

(2) in contrast to item (1), some device categories have “glass ceilings” that you best not exceed. With the top of the line laptop, the glass ceiling is pretty high. Not true of the “media player” category. If the iPod Touch were to get much more expensive, virtually everyone would just say “forget it”. In other words, the new model is pretty much at that glass ceiling.

You have the right answer at one point: that Apple is just pricing things according to what they think they can get for them. But the way you come about that answer suggests that you think it’s an unusual thing, or worse, an unethical thing. I’ll say it right now: The MSRP is ALWAYS driven by what the maker thinks they can get. Once you realize this fact of the capitalist market, the rest of your article is an exercise in pointlessness. Interesting linear math based on component pricing and ratios, but little else.

Thompson

By the author’s logic, a 12×12 timber should be less expensive per board foot of lumber than, say, 2×4s, but it’s much MORE expensive. The reason is that it’s much easier to get 2×4s from a log: it’s harder to find a log that has enough straight-grained wood to make a 12×12. Silicon chips are much the same way. The larger the piece (or, the more transistors you have), the more likely you are to have a void or other defect. The reject rate is much, much higher on high-capacity chips than on low-capacity. If you had a 32 GB chip with an error, you could use part of it as a 16GB, for example. Thus, the cost of manufacturing memory chips per GB goes UP with higher capacities for the same technology.

For example, check the prices of memory modules at Other World Computing. Depending upon the source, a single 2GB module can be more expensive than 2 1GB modules. (Get much smaller and the cost of manufacturing and distributing the module, which is pretty much the same for all capacities, takes over.) Micron memory, for example, costs $%2.75 for 2 matched 1 GB modules, but $79.99 for a single 2GB module. For some other sources, the cost would be about the same, but the 2GB modules are NEVER CHEAPER than 2 1GB modules.

> as he states clearly many times in response to your lame brained comments….DO THE RESEARCH YOURSELVES!!!

As I said, a journalist wanna-be who creates the news instead of doing real investigations and reporting on it.

I am glad you agree.

It appears Mike Nolan’s post explains this pretty well. Pricing based on cost leaves a lot of cash on table. While used by a lot of companies, pricing based on cost is a dumb pricing technique that was probably concocted by a cost accountant.

Pricing based on what the customer sees as the value (big difference) of a product increases margins closer to the maximum amount so Apple brings in the most cash possible. That’s why they are ultimately in business.

Apple understands the psychology of consumer pricing as well as they understand intuitive interaction with a computer.

The price difference between RAM sizes are not always linear like others have mentioned. Denser RAM is often more expensive.

But, the bigger issue for Apple is that we are going into a recession and people are cutting back on discretionary spending (myself included). I’d love to get a new iPod Touch, but right now my iPod works so I’m holding off.

http://seekingalpha.com/article/63422-linux-creator-torvalds-calls-apple-s-os-x-file-system-complete-and-utter-crap?source=etrade

Have you ever looked at the price per GB for HDD. As the capacity increases the price per GB goes down. The 32 GB flash chip is new and has a lower cost per GB but a higher cost per chip. This chip is being used in the 32 GB touch which has two memory slots and the 16 GB Iphone which has 1 memory slot. If you factor in Apple’s cost and retail mark-up of about 50% this is a non- issue. As far as the 64 GB solid state drive vs a 1.8 in HDD. Have you figured in failure rates into your value calculation. A 1.8″ drive will fail in about 2 yrs vs a SSD which should last the life of a computer. Flash prices have dropped 75% this year so you’ll probably get a 64 GB SSD next year for alot less.

big lols to you r-tard bashers of the writer of this article…..

as he states clearly many times in response to your lame brained comments….DO THE RESEARCH YOURSELVES!!!

i know for a fact that apple charges more for less because they know there is a percentage of consumers, very small at that, that are just sooooo stupid they’ll pay more for less just because of a label.

quit bashing others because the stories they write make you feel like complete r-tard imbeciles…..

it isn’t de-witts fault your idiots! IT IS YOUR’S AND YOUR’S ONLY!!!

oh…im sure it doesn’t help that you’re losing your a$$ses on apple stock because it is going back to where it belongs…..you must feel like really, really dumb r-tards now!!!

lmao @ you technology noobs!

“so they won’t brake if you drop your laptop”

Do you mean “break” as in fall apart or “brake” as applying them to slow a vehicle?

I’m amazed at how little you have to know about Apple in general, and how very little you need to know about the specifics of a product and still be allowed to publish an article on this website.
This website continues to have a zero in reputation for providing anything resembling thoughtful information.

Stating that Steve Jobs is charging “More and giving Less” when comparing the MB and MBProd to the MBA is just stupid.
Anyone that actually believes the only difference between these products is the amount of gigs ihas completely missed the point.

The entire niche for the MBA is centered in portability. Saying the MB or MBPro could be faster is nothing new. In fact, it’s understood.
You’re buying the thinest computer in the world, lighter by the the feature.

Why don’t you compare it’s speed to a raided desktop…… it would make as much sense.

Apple tries to have a simple pricing structure and, at the same time, encourage its customers to move up to the more expensive models. So they want the 32GB iPod Touch to look like a great buy compared to the lower priced models. If they charged a proportional price, $599, no one would buy. The solid state drive in the MacBook Air is a different story as these drives are quite new and very pricy. Here Apple is targeting the early adopters who will pay anything for the hot technology. As that market saturates and the price of the drives drops, Apples prices will follow.

You compared the 16G with the 8G, then the 32G with the 16G. This is often not the right way to compare. You should:

Model Price Diff (compared to 8G)
8G $299
16G $399 $100
32G $499 $200

So, the additional cost for 1G in the 32G model is $200/(32-8)G or $8.33/G (not $6.25).

Another clueless columnist trying to make news instead of reporting it.

There are reasons to use the SSD disk in a notebook, and those reasons do not necessarily entail disk performance, but weight and power consumption.

Regarding the $100 per GB metric, perhaps different memory chips are being used that allow a better pricing at the 32GB price point.

No, instead of actually doing some journalism, and investigating those issues, the clueless (and lazy) reporter makes up stuff and leaches off the reporting of others.

Is this what Fortune magazine has sunk to nowadays?

apple charges too much-period. There’s one born every minute LOL!

Quote: That doesn’t explain why Apple charges LESS per gig in the 32 GB iPod touch.

that’s because they want to sell them fast it is most likely going to be the best selling ipod-iphone in the product line
if they sell more they sure get a discount when they buy the drives

oh boy this is poor research , I would say your next piece should be on the wholesale prices of SDD drives and memory .
As far as SDD drives speed it is not a a secret that traditional HD are faster in most tasks however there are a few very important advantages that SDD drives have …
first they have no mechanical parts so they won’t brake if you drop your laptop therefore saving your life
second battery consumption is way less than traditional drives..

ex ped: I suggest your read the Ars Technica review. It found, to my surprise, that the battery life on the SSD was “a disappointment.”

Price is a signal to the market – does Louis Vuitton justify its handbag prices by how much the leather costs?

Apple is great at using prices and feature to differentiate the market, keep competitors out, and create “aspirational” pricing.

Using features and price to segment the marketplace is basic marketing.

Hewlett Packer once inserted an extra chip to slow down printing speeds on a particular printer, so they could release a slower, lower priced model into the market. It was more expensive to produce the cheaper product, but they were able to segment the market better.

RE: That doesn’t explain why Apple charges LESS per gig in the 32 GB iPod touch.

If 32GB is cheaper per GB for them to buy than 64GB, then it explains it perfectly.

ex ped: But it doesn’t explain the price differential between the 16 GB iPod touch and the 32 GB iPod touch, where Apple seems to be charging less for gigabytes that, according to this reader, cost them more.

Y A W N….Shhhhh, be vewy, vewy quiet; I’m hunting wAPPL, hehehehehe.

Hi Phil, I would guess some of it has to do with what we see in Computer RAM. It always costs less for 2 1GB RAM than 1 2GB RAM. Just that there are more 1GB RAM produced so they are cheaper. Have a look here to see what i mean … http://www.crucial.com/store/listparts.aspx?model=MacBook%20Pro%202.6GHz%20Intel%20Core%202%20Duo%20%2817-inch%29

now Mr genius (not) go to the supermarket and anal-ise the way they price food and how items on sale dicount one price while other go alongs rise at the same time.

In fact while you’re at it do the same to gas, utilities, medical insurance, prescription drugs and maybe you’ll start questioning the whole capitalistic concept – and go live in the third world – idiot.

According to Pricewatch, a 32 GB CF is almost 3x the cost of a 16. (they don’t even list 64GB)

High capacity flash is always more. Try doing research next time.

171.49 – cf 32gb
63.99 – cf 16gb

ex ped: That doesn’t explain why Apple charges LESS per gig in the 32 GB iPod touch.