Monday Musing: Is Apple a Budget Brand Now?

Last Friday I talked about the Steam Machine. One thing I failed to talk about but sort of hinted at was pricing. Given the current chaotic prices in hardware, the bigger you are and the longer-term your contracts are, the better off you are. We don’t know how long supply chains for hardware will be locked into data centers, so prices may start to decline or remain sticky.

Strangely enough, this puts Apple in a better position. Unlike, say, Microsoft, Apple has long-term contracts, massive buying power, and long-term deals. Plus, due to its designs, unified memory means Apple has an advantage. And that is only going to get bigger.

Yes, their margins may shrink a bit, but it’s possible people will buy more Apple products, therefore offsetting that. Unlike Microsoft, which now finds itself fighting against Apple on price for less performance. The price-to-dollar ratio here really does change.

The Surface Pro is $1,049, while the MacBook Air is $999. The base Surface used to be $799. A Surface Pro with 16GB is now $1,499, while Apple is at $1,099. You can keep going and see a similar pattern. This means these price hikes from Microsoft were really bad timing. It makes recommending non-Apple products here really difficult to do. Granted, there are reasons to avoid Apple, but price is starting to become a non-factor. Does this make Apple a budget brand?

To make matters worse for the competition, the MacBook Neo starts at $600. I still would consider other options, but Apple is looking quite good these days from a price point of view. Once you lock into the Apple ecosystem or take a bite out of the Apple, you stay stuck in that walled garden.

In many respects, Apple’s long-term thinking and focus on certain supply chains have suddenly made sense. Vertical integration is paying off here. It’s not all roses; Apple still finds itself locked into Asian supply chains with geopolitical risks over China, though the company has shifted some production elsewhere. But right now, Apple is sitting pretty.