The New Oxford American Dictionary defines schadenfreude as “pleasure derived from another person’s misfortune”. As a long-time Mac user, I must confess that I’ve had quite a few schadenfreude moments lately as I’ve watched Microsoft try desperately to mitigate the damage done by Apple’s sly and searing Mac vs. PC campaign. But last week much to my surprise, Microsoft found itself a big gun and for the first time in along time put Apple in the crosshairs. Their new pitch is stunningly simple.
“Buy us… because we’re cheaper.”
It’s hard to miss the irony here. Microsoft spent the better part of last year and God-only-knows how much money trying to convince XP users that Windows Vista was a better computing experience. In the end, people not only disagreed but actually spent more money to keep Vista off their brand new computers. Like the prodigal son, Microsoft went off in search of a way to convince people it had a better product but when nobody believed it, they ended up turning around and coming home again. The shaky economy and justified fears over discretionary spending have created an ideal climate to float the idea that perhaps being cheapest is somehow like being the best. It’s a smart move for them. It plays to their strengths while highlighting a genuine difference (okay, weakness) of the competition. Furthermore it helps to reinforce the idea that low cost equals value and THAT is a message that Microsoft definitely wants to send right now.
The question is, are they right?
My fellow Mac brethren might howl at this admission but Windows PC’s are indeed less expensive than Macs. To be fair there are situations in which the Mac is competitive on price, but most of the time you do pay more for what amounts to the same collection of basic parts. Windows users are oftentimes quick to scoff at anyone who would willingly pay more for “computer A” than they would for “computer B”, especially when the component parts they share are similar or even identical. To them it must seem that Mac users are either too stupid to know that both computers are essentially the same or too hoodwinked to care. As Steve Ballmer, Microsoft CEO said at last week’s McGraw-Hill Media Summit “Paying an extra $500 for a computer in this environmentsame piece of hardware paying $500 more to get a logo on it? I think that’s a more challenging proposition for the average person than it used to be.” Of course, Mr. Ballmer was doing his best to disguise or dismiss the possibility that real differences actually exist between Macs and Windows PC’s, but that’s not surprising. Focusing on cost makes Microsoft look like a leader. Focusing on the product… well, let’s just say that this hasn’t been a position of strength for them lately.
Mac users, on the other hand, tend to have a much different definition of value. We tend to disregard the idea of value as a expression of pure cost. That’s not to say that we don’t all secretly yearn for Mac elegance at Windows prices, but value for us is more about long-term productivity and ease of use. Most mac users accept the fact that they’ll pay more on the front end but we ultimately believe that we’ll save time, money and aggravation in the long run. For us, that’s where the value lies. So what we have here is a fundamental disagreement about what constitutes value when buying a computer. Windows users tend to look for their value at the time of the initial purchase. Mac users, on the other hand, tend to look for value over the lifetime of the device.
Does Low cost PC really equal value?
If Steve Ballmer and Microsoft’s new TV ad are to be believed, then yes…it does. If they’re right then value is the money you save at the register and any problems you might encounter downstream from that decision are really of secondary importance. You saved money once, so be quiet or upgrade…..
In Microsoft’s new tv ad, a young woman is promised a free 17” laptop if she can find one to purchase that is under $1000. As you might expect, she comes up empty-handed at the Apple store but finds exactly what she wants in a Windows PC and is all smiles as she heads to the register. Not surprisingly, this is where the narrative ends. We never see whether she’s still happy with her purchase 6 months down the line. We never see whether it came loaded with the kinds of useful software she needs or whether it will work with her old peripherals. We never see whether she has any additional problems with viruses, reliability or tech support. We don’t see any of these things because they detract from the carefully-crafted illusion that value can be determined by price.
For apple, there is a real danger in Microsoft’s approach. Macs do cost more and in some cases dramatically more. People are looking for ways to save money and are eager to hear that “product A” is just as good as “product B”, even if perhaps in the long run it simply isn’t true. So what is the best defense against Microsoft’s penny-wise, pound foolish approach? Many think Apple should lower its prices to compete, but ultimately I disagree. Lowering prices would be a quick feel-good solution that might please consumers and stock analysts but would also very likely stunt or destroy long-term profitability. Instead, they should focus on delivering even more value, by which I mean more ease of use, more utility, more reliability and more functionality. The best argument that Apple can make is that quality is its own reward and that true value has less to do with how a product begins its lifecycle and more about how it ends it. There is an old expression that really applies here, “the consequence of poor quality lingers long after the thrill of a bargain is forgotten”
I don’t think rebuttals get any more potent than that.