AirPods and Apple Watch "Underpriced" to Bring New Users into Apple Ecosystem

Megalith

Megalith

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Analysts are claiming that the fruit company has intentionally dropped the brand tax on some of its newer products in an effort to tempt more buyers. An example would be their wireless AirPods, which retail for $159—a supposed bargain compared to competitors’ offerings, which are priced as high as $300. Wait a second, can’t you get Bluetooth headphones for like, $20?

Apple is underpricing AirPods and the Apple Watch in an effort to bring new users into its ecosystem, according to Neil Cybart of Above Avalon. The analyst said this pricing strategy was "unimaginable" ten years ago, when Apple was often accused of pricing products artificially high, aka "Apple Tax." Cybart believes a strong case could have been made for Apple to price its AirPods at $249, or even $299, but by selling them for $159, he thinks Apple has "removed all available oxygen from the wireless headphone space" and forced competitors to cut pricing in an attempt to better compete.
 
I don't see a scenario where Apple is just selling a product at a normal price the market will bear. They are not the cheapest, and they definitely aren't the most expensive. They just are.

With Apple I products I see it as you either have a problem with the price or your don't. There are other aspects to using their products that are more important to know then the price.

To me this is like someone saying they were going to get a Mercedes, but they went with the Altima cause you know, it was just cheaper. No....you were never seriously going to get a Mercedes.
 
The Jabra were higher priced and had larger drivers and supposedly sounded better, so I snagged a pair of their Bluetooth headphones. They are pretty amazing IMO.

I've heard that the AirPods sound just like the EarPods with no wires. I was never impressed with the fit of the EarPods, and always got a set of aftermarket headphones anyway because they seemed to sound worse than stuff I already owned.
 
I got the BeatsX as a gift. I like them quite a bit though I doubt I would have bought them for myself.

I can't stand the AirPods though. Even if you set aside the fact that they're so easy to lose, they look downright idiotic. To each their own I guess.

I really don't think Apple could have sold them for $300. The sound quality just isn't good enough.
 
I have a nice set of LG Bluetooth headphones and the AirPods sound and fit quite a bit better. I've contemplated buying them but I have a 5 year old that likes to steal my stuff, use it and then hide it.
 
Perfectly happy with my Bluetooth headphones that are connected around the back of my head. I would shit bricks if I somehow ever misplaced one of the earbuds because they were completely seperated from each other. Also, mine were only $89 and sound pretty damn good. MEE Audio X7 Plus. I haven't heard the AirPods but I doubt they blow anything out of the water, even with their "low introductory price" of $159.
 
Um, in what world is a $350 smartwatch that only works if you have a (minimum) $650 phone "underpriced"!?
 
Learn your history! One of Apple's original competitive advantages was their computers were affordable! This kind of started turning around the time the iMac and such came about. It's too bad they didn't keep going with affordability because it probably would have made them even more profitable all these years!
 
Mohonri said:
Um, in what world is a $350 smartwatch that only works if you have a (minimum) $650 phone "underpriced"!?
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The same world that you pay extra for a bigger screen on your phone, but then have to use 2 hands to operate the device that has 6x smaller screen area.
 
BloodyIron said:
Learn your history! One of Apple's original competitive advantages was their computers were affordable! This kind of started turning around the time the iMac and such came about. It's too bad they didn't keep going with affordability because it probably would have made them even more profitable all these years!
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If you watch the 2012 "The Lost Interview" you can see what Steve's vision was. This is a great interview and it changed my mind about Steve Jobs. This is in 1995 and he had already long been kicked out of Apple, but hadn't been hired back yet. Apple was looming on the brink of disaster and you could tell that he was very bitter about having his creation taken away from him and watching it crumble. He gave an extremely candid interview, both about why people hated him and what HIS vision for Apple would be going forward.

Now the reason this is important, is because Steve knew he could never beat Microsoft. Microsoft was the king of utility. You bought a PC because you needed it, or because it was the easiest to acquire. He said, if he were in charge of Apple, he would instead make a computer that you wanted to buy. But to do that, he would have to make it a lifestyle thing. And of course, in 1995, a computer was anything but a lifestyle for average Americans. So he pretty much set the ground rules for the iPod and the whole idea of the ecosystem.

It's a rare glimpse into a time capsule. The interview was supposedly lost shortly after it was filmed and it was only after Jobs died that his copy was found and that is what the 2012 released version is sourced from. So again, this guy was sitting on evidence of vindication of his ideas and vision the whole time and he never made a big deal about it. He said in the interview that he is an asshole, but that that was what he did. He made really good people even better by being the nagging asshole. Forget the Ashton Kutcher film and all that. Watch this version. Get the words straight from the sources. It's easy to see why Apple has lost it's magic touch.
 
I think the article is right about the airpods to an extent. I also think they leave out the apple pencil. I think they are wrong about the iwatch.

If you look at what the bluetooth headsets were going for, a connected pair of them were going for $40-100. The independent pairs were going for $250-400. There was obviously a shitload of margin in them. Apple dropped a best of breed (feature wise anyway) set of independent wireless buds for $150 and sucked a huge chunk of margin out of the segment. But they needed to to make the iphone 7 not look like nay more of a headphone jack apocalypse than it was.

The apple pencil is probably one of the best stylus input devices on the market, and at $95, while proprietary and embedded (deeply) in a specific ecosystem, it's still less than brands like microsoft and sony are upcharging to add on an inferior stylus to their products. One could argue that the products these devices are inextricably tied to is where the real product choice is made, so apple had to keep the price from sealing the deal.

The watch however is just priced like it's a generation old, and if the article actually listed android compatible products contemporary with it, it would see equal or greater discounting.
 
Apple? Underpricing? Is it April 1st or something? :D
 
this reminds me of a stroy about gibson guitars.

Gibson's pricing strategies have actually been used as examples in business classes, and were the subject of a series of articles in the Wall Street Journal, and other places.

In the late 1980s or early 90s, I think, Gibson's then-ownership implemented a ton of new cost-efficiencies and managed to bring the retail price of brand-new Les Paul Standard down from something like $1,200 (1980s price), to something like $700-800, without compromising quality. As in, the metrics of quality and consistency were better, the reviews from guitar magazines, customers, and sponsored-players were equal or better-- there was no skepticism that they had pulled a Fender and cut corners: their cost-cutting was strictly by streamlining inventory, investing in better machining, cutting down on error-rates and waste with better management practices, etc. Not by cutting corners on sound, appearance, or playability.

This was all done in response to a new wave of high-quality guitars being offered at much lower prices, especially from Japanese companies like Yamaha and Ibanez. Gibson's guitars were, at the time, seen as old-fashioned and over-priced compared to the fast necks, double-locking tremolos, flashy shapes and color-schemes, multi-tap pickup options, 24-fret shred machines from the height of the hair metal era.

The thing is, the more they cut prices, the lower their sales numbers were. They had a loyal following among older and more affluent hobbyists, but the "kids" were still buying Yamahas and so on, even when Gibson was close to the same price. There was real fear that Gibson's days as a mass-market guitar-maker were over.

And so Gibson began a process of re-inventing their marketing as a boutique, "olde timey" specialty guitar-maker, and raised their prices to reflect lower sales-volume and a perception of exclusivity. Lo and behold, their sales-volume went up. So they raised prices again. And again. And the more they raised prices, the more guitars they sold, and the more market-share they took from similar-quality competitors.

Just so we are clear: these price-changes were literally calling up their retailers, and telling them to take off the $700 price-tags, and replace them with $1,000 price-tags, then $1,200 price-tags, then $1,500 price-tags, and so on. They were literally selling the exact same guitars faster, by raising their price. (Remember this was the pre-internet age, and people would go shopping for a new guitar maybe once every few years, and there was no easy way to compare prices except to drive to a bunch of different stores, so it was much easier to do things like this, back then).

This seemed to fly in the face of common-sense, not to mention basic theories of business and economics. It was literally front-page news on the Wall Street Journal, with a series of articles, in which Gibson execs were remarkably candid about how they finally concluded that the ideal price for a Les Paul was around $1,600 or something (remember, this was early 90's, pre-internet age, and business executives had little fear that their comments in the Wall Street Journal were going to "go viral" among guitar-players. It was an era where suits still used the business and financial press to brag to each other about their ability to exploit market-inefficiencies.)

The narrative explanation was basically that customers didn't see buying a Gibson as a value-proposition, they saw it as a status-symbol, and as a sort of heirloom/piece-of-history. Compared side-by-side with more value-competitive guitars, a Les Paul had fewer features, an old-fashioned appearance, less versatility, was heavier and harder play fast on, etc. But when put on a pedestal, as the kind of super-premium thing that you had to save up for, something that didn't even try to compete with the others... then it felt like buying a piece of Jimmy Page, or something. This was hailed as a genius move in the business-press, this "Gibson pricing model" of raising prices as a way to boost sales and value-perception.

Now, an important caveat to all this, that Gibson execs and the financial press missed out on (or omitted), was that all this took place right around the same time as a sea-change in musical tastes, just as Guns N Roses emerged as the biggest hair-metal band of them all, and also just as the tide began to turn to tastes like Nirvana and "alternative" rock, many of whom eschewed the neon-colored shred-machines in favor of weirder or older guitars.

But in any case, Gibson guitars are expensive, because they sell more guitars that way.

I apologize for not having sources at hand for any of this, I read it in the paper press as a young guitar-player and economics-enthusiast, but I am sure that intrepid googlers can dig it up. I can't swear to precise numbers or dates, but the front-page WSJ articles would have been sometime around the mid-90s, I think '96 or so.

TL;DR: Gibson tried charging less money for their guitars, and people bought less of them. So they raised their prices (without changing the guitars), and people bought more. It was famous in the business and finance-press for a while.
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TL;DR low price =bad high price = status symbol.
 
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