Does Apple demand too much to be cool?

Today, Apple upgraded MacBook Pros across the line -- 13.3, 15.4 and 17 inch -- but I'm not weeping with excitement. Could new MacBook Pros be any less inspiring? The hardware improvements are marginal, "Me-too" upgrades against Windows 7 laptops. New MacBook Pros, like older models, are perceived premium brand at premium pricing delivering maximum margins for Apple. It's the price people pay to be cool.

About once a year I stir up this price-vs-value debate, mainly because of entry-model display resolution, system memory and harddrive capacity, for which MacBook Pros are arguably deficient compared to Windows laptops. Apple's iLife suite is one of the Mac's main benefits, but the `09 version launched in January 2009. The digital media suite isn't even keeping feature pace with third-party apps for iPad, iPhone or iPod touch. The point: I expect more from Apple? Shouldn't you, given what Mac laptops cost?

According to NPD, the average selling price of Windows notebooks at US retail -- including online and brick-and-mortar stores -- was $512 in February, down $40 year over year (March numbers release next week). By comparison, Mac notebook ASP was $1,343, down $159 from February 2009. Higher pricing, stronger branding and better retailing increase MacBook Pros' perceived value among many computer shoppers. Apple also benefits from newness, meaning that for many Windows PC owners (the majority of the market) a Mac is something fresh. They've used Windows.

Then there is the cool factor. People want to belong, to be noticed, to be appreciated. It's one reason consumers align themselves with celebrities and select brands -- or groupie girls chase some rock stars. Right now, Apple's brand is cool.

Value vs Price

To be cool, MacBook Pro buyers pay much more than Windows 7 laptop purchasers. MacBook Pro prices range from $1,199 (for the entry-level 13.3-incher) to $2,299 (for the 17-inch model). Windows 7 notebooks start as low as a few hundred bucks. My ho-hum reaction to today's upgrades is twofold: Apple offers incremental improvements over existing models, and hardware upgrades -- other than battery life -- mainly catch up with existing Windows 7 laptops for much more money.

RAM is a good place to start. The MacBook Pro line is now standardized at 4GB, which finally catches up with most Windows laptops. For notebooks sold at US retail, "most are 4GB and then 3GB," explained Stephen Baker, NPD's vice president of industry analyst. "Between the two of them they represent about two-thirds of all Windows notebooks, and three-quarters of total, excluding netbooks." As measured by memory configuration, Best Buy offers 185 different laptop models, 128 of which come with 4GB of RAM. The 3 1GB portables are netbooks. Among the dozen notebooks with 2GB memory, five are Mac laptops (some of which will be replaced by new models announced today).

How does storage compare? More than two-thirds of the laptops sold at Best Buy come with harddrives between 300GB and 899GB. Today's MacBook Pro upgrades leaves the entry 13.3-incher at 250GB, raises the high-end 13.3-incher's storage from 250GB to 320GB and moves up the entry 15.4-inch model to 500GB. Apple kept Intel Core 2 Duo processors for 13.3-inch MacBook Pro models, but modestly upgraded clockspeeds. The 15-inch and 17-inch models move up to faster Intel Core i5 and i7 processors.

Over at Engadget, Paul Miller astutely observes that the move to Core "has caused quite the unprecedented wait." Windows PC manufacturers have long offered i5 and i7 processors, and for considerably less selling price than new MacBook Pros. Apple's lowest-cost Core i5 model is $1,799 compared to $1,357.98 for the comparably configured HP dv6t model (HP display is slightly larger, screen resolution slightly less and graphics memory four times more). Windows 7 laptops with slightly slower Core i5 clockspeeds (2.26GHz instead of 2.4GHz) can be purchased for under $600.

Then there is the topic of screen resolution, of which there is some disagreement. I'm dissatisfied with 13.3-inch Mac portable screen resolution, which has stayed at 1280 x 800 for years. By comparison, my 13.1-inch Sony VAIO Z720 has 1600 x 900 resolution, and the display is simply breathtaking.

"The notebook market has shifted from 16:10 aspect ratio to 16:9," said John Jacobs, DisplaySearch's director of Notebook PC Market Research. "The new 16:9 aspect ratio displays at 13.3-inch or 13.4-inch are 1366x768, compared to Apple's 1280x800. So, more columns, but fewer rows." So he agreed with me there.

He emphasized: "When you compare that to the 15.6-inch 1366x768 display, which is the most popular notebook display on the market (about 40 percent market share), Apple is the winner there on both columns and rows...Apple's resolution is only lower, and only in one dimension (fewer rows) at only one size -- 13.3-inch -- compared to comparable products from brands that ship the Microsoft OS."

Apple's Logo Advantage

The slow move to Core i5 and i7 processors and marginality of other upgrades is typical Apple. The company maximizes margins at the front end, by offering a base set of features that deliver the best return on investment. As the product lifecycle progresses, Apple recovers its investment and supply-chain logistics lower production costs, incremental improvements begin. Apple typically starts by improving the hardware for the same price. Later, the company adds better hardware or features and cuts the price. Along the Mac's lifecycle, Windows PCs comparably come with faster processors, more storage and more graphics memory for considerably less money. Apple's starting price is always more -- $999 for the white MacBook.

There are many reasons why the strategy works for Apple, such as its tight end-to-end control over Macs, premium branding and fierce price competition among PC manufacturers (something that hurts comparable premium branding). The branding works, and people pay more to be cool.

There's a science to branding, for which logos are hugely important. A 2008 Duke University branding study by professors Gavan Fitzsimons, Gráinne Fitzsimons and Tanya Chartrand compared different logos. In a Duke University video, Gavan Fitzsimons explained the study sought to measure "incidental branding" -- very short exposure to brand logos. One a typical day the average person is exposed to between 3,000 and 10,000 different brand logo impressions. "We assume that incidental brand exposures do not affect us, but our work demonstrates that even fleeting glimpses of logos can affect us quite dramatically," he said in a statement.

Researchers subliminally exposed students to Apple and IBM logos. Those exposed to the Apple logo "had a goal to be creative," based on a seemingly unrelated additional task using bricks, Chartrand explained in the video. "Apple has worked for many years to develop a brand character associated with nonconformity, innovation and creativity."

The studies' results could easily apply to anything or anyone that people identify with. They inherit characteristics from the thing or person they attach to. Peer influence can magnify the sense of purpose or belonging. Will using an Apple product really make people more creative over time? Certainly they may feel more creative or feel better about themselves for the brand association. By comparison, what feeling does the Windows logo generate? Unfortunately, the study didn't use the Windows logo, but IBM's.

I bring up all this for an important reason: The Mac-vs-Windows PC pricing debate is often heated (at least in BetaNews comments) and unresolved. There are plenty of people looking at configurations and pricing -- how much more they could get from a Windows laptop vs a Mac notebook -- and expressing bafflement about why anyone would pay more for less. Human beings make many purchase decisions for emotional reasons, about how XYZ product or brand makes them feel.

Something is working right for Apple, regardless of Windows PC price comparisons. The Mac is but one product with sales momentum, which likely will be reconfirmed when the company next announces earnings -- on April 20. According to NPD, US retail Mac laptop unit sales rose 43.3 percent in February year over year. Unit sales for all notebooks rose 33.9 percent and 36.6 percent for Windows laptops (with netbooks removed). Mac notebook sales measured in dollars rose 28.1 percent compared to 24.7 percent for all notebooks or 21.6 percent for Windows portables (with netbooks removed). The point: The whole market is growing double digits, including Windows laptops, which is a major turnaround from early 2009.

Microsoft is benefitting from the release of Windows 7 and, perhaps more importantly, aggressive and quite good marketing. The "Windows 7 was my idea" advertising campaign is exceptionally good. But unlike Apple, Microsoft doesn't have a corporate logo. Apple's recognizable logo covers all products, whereas Microsoft has many logos, with Windows being the more widely recognized. Apple has a brand advantage in the single logo.

Perhaps the question shouldn't be "Does Apple demand too much to be cool?" but "Why don't Microsoft and its Windows PC partners demand more?" Apple doesn't have a monopoly on premium branding or pricing. Regarding new MacBook Pros, I expected more than Windows 7 laptop "Me-too" from Apple. Other people can debate the price comparisons, and comments below would be a good place to start.

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