Microsoft – keep the change

Dan Lyons’s article I’m a PC. Keep the change was pointed out to me by John Gruber.

There are a couple of interesting facts presented here that I would like to comment on. However, before I delve into commentary, I would like to provide a couple of disclaimers.

1. I am an Apple customer. I shifted to an Apple MacBook a couple of years ago and recently moved to the latest MacBook Pro. Prior to my shift to a MacBook Pro, I was a diehard PC user working on most of the operating systems that released for the PC platform – from Windows 3.1 through XP and almost all flavors of Linux. And I have loved experiences on both sides of the stream.
2. My analysis here is going to be on the branding and marketing side of things.

I enjoyed the advertisement by Microsoft. I thought it was brilliant and was certainly a good response to the creative ads by Apple that I enjoy equally. I believe in healthy competition. As my finance professor, Prof Kimball said –

Capitalism is a sucky system. It blows. However, its only saving grace is competition.

Dan Lyons is an industry analyst writer and I would certainly hope that he knows what he is talking about. However, I see a major flaw in his argument.

Apple unit sales have been dropping since October, while unit sales of Windows PC have been growing over the same period, NPD says. Much of the growth comes from “netbooks”—those tiny, low-cost notebooks that are all the rage now. Most run Windows. Apple, so far, has refused to make one, though it’s rumored to have one in the works. Instead, in January the company rolled out that 17-inch laptop with a $2,800 price tag. Talk about tone-deaf.

Here, Dan Lyons is comparing Apple to oranges. Windows PCs are dime a dozen. They are present for various sectors, various genres of people. From the average consumer, to the prosumer you have tons of options, tons of companies fighting for these consumer segments. So, it’s unfortunate that Dan Lyons, a highly reputed reporter is comparing the netbook segment to prosumer segment. Apple’s 17″ laptops are targeted at the media professional who wants to use the laptop as a mobile powerhouse. The closest you can compare is a powerful gaming laptop from the likes of Alienware, Dell XPS and that of Voodoo, where prices match up. Furthermore, upon feature parity comparison of these machines, you would clearly determine the winner to be Apple for the bang for the buck.

The counter argument that you can propose is that I do not need Apple’s high quality screen. I do not need the extended battery life in an Apple’s laptop. I certainly don’t need the powerhouse options that Apple provides. In that case, you don’t need an Apple laptop. People who buy Apple laptops, to a large extent, know what they need, know what they get and are willing to pay the required amount (in comparison, it’s clear that they Apple tax is minimal).

Coming to the point of the average consumer, Apple is fighting a quality war and NOT a price war. This is the reason why Apple is still riding on piles of cash as a business. It is the reason why people prefer Apple laptop and desktop computers.

As I see it, there is no point in arguing about this. It is true that an Apple laptop or a desktop computer is NOT for everyone. Take my friend Harsh for example. He doesn’t care what OSX provides him as features. He doesn’t care about beautifully designed applications and he doesn’t care about beautifully designed computers. He values function and works on purely that. We discuss on the merits and de-merits of both types of computers and he respects the reasons why I purchase an Apple computer and I respect his decision to purchase a Windows-PC. This is customer’s value perception, which comes under Marketing 101. It is indeed sad that people continue to have debates and publish wrong information when the whole premise is meaningless.

The other point that I had gripes with in the article was the subtle propagation of herd mentality. I certainly did not expect this from Dan Lyons, whom I respect and consider a very creative writer.

The ad makes an obvious point: Macs cost more than Windows PCs. But there’s a far more damaging subtext: that people who buy Macs aren’t necessarily cool, clued-in hipsters. In fact, they might just be poseurs who paid too much for a computer–slash–fashion accessory. The deeper subtext is that these days, wasting money doesn’t make you hip and smart—it makes you stupid. In the age of the collapsing economy, frugality is the new cool.

I am not an expert in the American consumer, however, if you consider the world as a whole, people are frugal all the time, be it in a collapsing economy or not. Yes, it has certainly helped people make changes. However, for a person that values the benefits of an Apple computer, the economy doesn’t change the value of an Apple computer. It is *only* for the price-sensitive consumer that the collapsing economy makes a change. (Un)fortunately, for Apple, their target customer is not the price-sensitive consumer, but the people who believe that a good computer is worth paying for.

This is the reason why Apple computers from the G5 age are still being used and held dear as opposed to a 2 year old PC.