*Words of Wisdom From The Elder

In 2001, or maybe it was 2000 2002 I purchased my first Apple computer. I bought a Powerbook 15inch with the G4 867MHz processor. Some of you know the model I refer to or even have seen me with it before in the past.  Not long after I purchased the Powerbook I got the wife an iBook 12inch notebook.  She got a lot of use out of it but it started showing its age.  Honestly the machine got to be so slow I couldn’t even stand to help her with her problems.  Remember the commercial about the Slowsky’s that like DSL over Comcast because it is slower?  Well they would have loved this machine.

Which One?  Apple or PC?

For several weeks I shopped for her a new notebook.   Quicken Loans offers a nice perk whereby team members can get a $1500 computer loan that is auto-deducted from our paycheck.  Since my last computer loan was paid off last January, and the computer I built myself a few years ago is still working very well I decided to upgrade the wife’s aging notebook.  Call it a “back to school” gift before she started teaching college again for the fall semester.

My wife is a creature of habit and hates change.  She’d rather hobble along than get something new.  This is a blessing and a curse.  When I first got her the iBook she hated it.  She didn’t understand it, couldn’t use it and wanted Windows back.   Since she didn’t have a choice she eventually accepted it and moved on but it took years for her to stop saying she wanted Windows back.  Now that I am looking for her a new computer she of course is used to the Mac so wants to keep the Mac (creature of habit).  To make her happy I started looking at what Apple had to offer and was extremely disappointed in their prices compared to PCs.  I first pulled up the choices for the MacBook and here is what I saw.

So for my $1500 and some change I could get at 13inch notebook with 1GB of memory and 160GB hard drive.  I wasn’t very thrilled spending all of the money on one thing and not getting her a new scanner which she also wanted.  A day or so later I was in Circuit City for something and decided to hit the computer aisle.  Browsing around I found an HP 17inch notebook model Pavilion dv9548us with the following specs:

• 2.4Ghz
• 2GB
• 200GB – 2 x 100GB hard drives (nice, data in one, operating system in another)
• DVD / CD Burner with Lightscribe
• Finger scan authentication
• 17inch XGA display
• 512MB Video
• Built-in TV Tuner for Media Center
• HDMI outputs
• Built-in video conferencing camera (which we use while I travel)

There were other features on the notebook but you get the idea, this thing was a beast of a notebook.  It is a true desktop replacement and with a 17inch screen my wife could finally stop squinting when she used the computer.

A day or so later I got a Circuit City ad and the notebook was on sale for $1199.00.  No mail in rebates or anything, just flat bottom price.  I took her to Circuit City to look at it and she was very impressed with all the features and loved the fact she could get a new scanner, wireless keyboard and mouse and carrying case all within the budget so we bough it on site.

At the end of the day we got a much better computer for her than we could have gotten from Apple.  I’m sorry Apple I just can’t afford your high priced hardware no matter how shiny you try to make it.  It is amazing that HP can sell the same components put together at such a drastic cost. 

How The Hardware Industry Works

I don’t know how much everyone knows about tier 1 manufacturers but I used to run a hardware company (one day I’ll write a book about all the things I have done) and when it boils down to it, the tier 1 manufactures don’t really pay that much for Windows as some might think.  HP is an example of a tier 1 manufacturer as is Dell so those of you trying to calculate the cost to build this HP laptop without Windows, trust me, HP isn’t paying that much for Windows.

Mom and Pop shops or local PC builders are the ones that really don’t get a discount on Windows.  To be “legit” and not get their doors closed by selling illegal copies (yet another story I’ll tell about one day) of Windows they must buy their copies from distributors like Tech Data or Ingram Micro.  These distributors sell items based on volume so if for example you are a local PC shop trying to build computers you might pay $189 for Windows yet you are supposed to sell it to the end user for $199.  Obviously there is no money to be made in the operating system so you make it up in the hardware, service, warranties, upgrades, etc.  However, with a tier 1 manufacturer like HP that has direct connections to the suppliers like Samsung, Seagate, Microsoft, Western Digital, etc, they have a lot more weight to throw around.  Think about it.  Would you rather loose the Mom and Pop local PC store as a customer or HP?  Pretty simple eh?  What keeps the local PC builder in business is the low cost of PC parts.  The low cost in parts off sets the cost of having to pay more for Windows and still makes them competitive for the most part.  If you don’t believe me, look around at the developer machines on blogs that are built that only cost $1500 that would completely rival any Apple desktop costing $3000 or other manufacturers. 

Any tier 1 manufacturer if they want to can squish a local builder though.  It is just fact.  If you don’t believe me, go to Best Buy or Circuit City and try to build out that computer that comes with a monitor, printer and scanner for $299 after rebate.  There are some deals out there in the PC market because of the competition.  This is why Apple can put whatever ridiculous price they want on their hardware, they don’t have any competition.

This is the #1 reason Apple has no thought or care to allow OSX to run on standard PC hardware, they would be out of business because of the cut throat PC business.  Trust me I know, I left it years ago because of this fact.  For those “new Apple fans” that keep telling me to buy an Apple at every corner Apple has already tried this.  Years ago there was a company called Power Computing  that built Apple clones.  If you wanted to buy an Apple, more than likely it was going to be a Power Computing built clone.  They were in local stores, catalogs and online.  The crazy thing is they built better and cheaper computers than Apple and when Steve Jobs took over he squashed them.  Don’t believe me?  Here is a quote from Wikipedia:

Power Computing released upgraded models until 1997 with revenues reaching $400 million a year. The Mac clone business was killed after Steve Jobs returned as interim CEO of Apple in July of 1997. In September, Apple bought Power Computing for $100 million in Apple stock and shuttered the Mac cloning business.

And then to top it off with a cherry:

“Apple has to let go of this ghost and invent the future, Mr. Jobs said. Instead of expanding the share of the market that used computers based on the Macintosh system, the decision to license clones simply ate into Apple’s own sales of hardware, he said.^[3]

Why Apple doesn’t reflect the true market value of hardware costs I have no idea. I have known for years they were overcharging people and obviously some people are willing to pay for that extra price because they feel they have something other people don’t. And to that accord they would be right, they are in the top 10% of the world, or the bottom 10% depending on how you look at it which means 1 in 10 people they come in contact with doesn’t own one. I think that makes the Apple owner feel somewhat special and feel good like “hey you should buy one too”.  And believe me out of the hundred people I know, the 9% that own one tell me every day I should buy one in one comment or another.  If I get told to buy another Apple I’m going postal!

Honestly when you break the parts down at the manufacturer level, Apple is making no less than 50% margin, maybe 40% which is a ridiculous markup compared to what Dell, HP and other places are making  but hey, people are paying the Apple tax. God bless ’em, I’m too poor to afford one.

Make no mistake about it, Apple loves their markup. So much in fact they have a monopoly.  Wait, didn’t people say Microsoft had a monopoly and sue them years ago?  Hmm, maybe I should start a class action law suit demanding the freedom to run the OSX operating on any hardware I want.  If any lawyers read this contact me, I’m in.

Stop Before You Respond

For those of you Apple fan boys that are about to start going on and on about OSX and how great it is, my wife could honestly care less.  She sits down at her computer to just work, that’s it.  She doesn’t play in iPhoto, iMovie, iCalendar, i this and i that.  She doesn’t have an iLife, she has an rLife (real life).  She writes email, does word processing, uses Powerpoint and during Christmas shops online for my presents.  That’s it.  Nothing more.  Thus, stop before you even start to write, I’m not listening, but if you want to buy her iBook or my Powerbook email me.  I’ll gladly part with both of them for a very large some of money (well, they are Apple’s right?).