The Baffling Logic of Apple Products

Did you guys hear about the Apple Pencil? Apple recently announced a line of new products to placate the Apple hoard and eager investors.  The Apple Pencil is a fancy stylus for the creative class, oh and it is going to cost $99. It is a stylus with a seemingly transcendent form factor and has a myriad of features, such as a pressure sensor that detect the minor fluctuation in pressure being applied, it is the quintessential tool for the starv100517-antiapple-gring design student.   Oh yeah, to use it you need the new iPad Pro, which cost $800 for the 32 GB, $949 for the 64 GB and $1,079 for the 128 GB.  News sites are having a good time trying to figure out the Apple Pencil some are discussing the absurdness of it, while others are serving as Apple criers hailing the disruptive changes that the Apple Pencil is going to have on the design caste. But the recent announcement is a good time to talk about the rationality and logic of buying Apple products.

Apple has generated a vast sum of wealth for it’s investors, but is Apple really the innovative master that many claim it to be?  Does Apple really produce the best hardware?  Are the high premiums Apple charge for their devices worth it?  The Frugal Nexus, a site dedicated to frugality and anti-consumerism, the answer is probably not that surprising, but I won’t spoil here. After musing over the Apple phenomenon here are some points about the logic of buying Apple:

Apple is Bad Value for Your Money

Everyone knows that Apple is like SmartWater to tap water, or BMWs to Fords, it is the premium choice and no matter what that objectively means for their devices, it automatically has an aura of “better” despite what actually may be the case.  The skirmishes over what platform or device is better has been going on since the Apple fell from the tree and there is enough examples of Apple devices being objectively worse or nearly on par (in terms of specs) than comparable devices yet costing significantly more. Apple has been innovative and excellent at marketing their devices and has contributed to their legendary level of growth as a company.  Apple was valued more than the entire Russian stock market, although it should be noted that was possible more so because of the poor performance of the Russian economy. But who drives this stupendous level of growth for Apple?  Hoards of Apple groupies, conscientious millennials who have to buy their way into social acceptance and the ignorant who will pay the exorbitant Apple tax to buy their way out of a poor user experience on a bottom of the barrel machine.

One of the most illuminating examples of this is the iPhone.  A Juggernaut of Apple sales, people line up the day before to get in on the action, but why, considering the exorbitant cost that Apple charges for its iDevices. Let’s look at how much it cost to make an iPhone, then we can get a real appreciation on how big the “Apple tax” is.  It is estimated to cost ‘at least’ $191 on components to build a 16 GB iPhone 5S and $210 for a 64 GB iPhone 5S.  What does it cost off contract for you? From $649 to $849 depending on how much storage you want. Note that it costs an additional $20 for Apple to make the 64GB version, the cost off contract is an additional $200 more for you.

“But, but, but, I only paid $200 at the phone store!”, the price you pay for a phone on contract is a subsidized price. The carrier isn’t going to eat $649 for you, you pay for the device through your service plan.  Many carriers insist that if you buy a subsidized phone that you go on a two year contract and there is usually a minimum level of service you have to get.

But, but, but, the quality!” echoes from the shiny hall of Apple apologia. But as illustrated previously it cost around $200 for Apple to make an iPhone yet it cost you $649 for it. Yes, there are marketing cost to reap and research cost to reap but obviously Apple isn’t revenue neutral, it makes vast amounts of money off of Apple purchasers. The market cap for Apple is $654 billion (as of 24th of September), that is a huge sum of money and dwarfs the GDP of countries. By nominal GDP Apple would be 20th just behind Switzerland.  But at the end of the day, those who drink the Apple flavoured kool-aid are making Apple and it’s investors excessively wealthy.  If you are paying the $849 for the 64 GB version you are paying upwards of 4 times of the cost of the device.  This obviously isn’t frugal and from an anti-consumer point of view, this behaviour is baffling.

But, but, but, Samsung is doing it too!” Yeah, they are and it it absurd to buy a flagship Samsung phone too.  But on that note, from a frugal point of view there are many phones that you can get fairly inexpensive.  First stop is the Nexus line of phones, while, the Nexus 6 unfortunately betrayed their consumer friendly price point, the previous generations (which are still more than adequate) retail for ~$350. My point is that you can acquire a more than adequate smart phone for significantly less than the price of an iPhone. Do a rational look at phones and you will find inexpensive phones, the LG G3? Probably never heard of it, but it retails at my carrier for $350 and has good specifications.  A frugal approach would be to analyse your needs  and then do research.  It would mean doing research on devices and being prepared to look at other carriers to get the best deal.

It’s a Status Symbol

With the technical debate somewhat put aside for now, why would anyone buy an Apple product? Part of the story could be explained by conspicuous consumption.

Conspicuous consumption is the spending of money on and the acquiring of luxury goods and services to publicly display economic power

iPhones have an exclusive quality about them, because of their high pricing. In economics this is called a Veblen good.  A Veblen good seemingly betrays the laws of supply and demand, because they are in demand because the high price, people need to show that they are not poor. I’m not entirely sure that Apple products are Veblen goods entirely, only because Apple products, while being expensive, they are typically not prohibitively expensive. while Apple products are expensive they are still attainable by people willing to throw away money and make financially irresponsible decisions like signing up for a superfluous cell phone contract and then end up being straddled with a higher burden than if they had done some more research and chosen a more sensible device.

Second, Apple products are an identity crutch for people, whether they aspire for membership in the higher stratas of society or want to seem technologically superior, lets not forget that Macs were and still are often billed as brain dead easy to use (it just works).  Technology has traditionally been preserved to making our lives easier, but with rampant consumption, technology has become a fashion symbol, to be paired like a nice shirt for a night on the town. Much like fast fashion, technology has a short shelf life, with the yearly release cycle people mindlessly upgrade every year.  With Apple Care+ you pay $32 a month to get a new phone every year. A wasteful and unnecessary exercise in electronic consumption.

Lastly, the appearance of an Apple product has help cement the deal for many on the cusp of Apple procurement. Why anyone would pay the extravagant Apple tax for a device that is functionally similar to a myriad of other devices is a baffling proposition. The rectangular device form factor is ubiquitous, while various manufacturers will mix up the usual design by adding flashy materials to the back or a different colour, they are all visually similar. A close inspection will reveal that there are nuances, such variables include the inclusion of the the name of the manufacturer and button placement.  But it doesn’t matter in the end, 75 percent of smartphone owners use cases on their phones, while 87 percent of iPhone owners use cases and are more likely to use multiple cases during the life-cycle of the device.  This article on the website The Verge helps illustrate the ostentatious behaviour of cell phone case buying, the author says

“We buy cases by Chanel and Louis Vuitton and Kate Spade, we bedazzle and be-tweed our simple metal rectangles” – David Pierce

It defies conventional wisdom to buy a device in part because of the sharp design when you wrap it up in a case afterwards. But in the end buying a case becomes an exercise in conspicuous consumption and status seeking with designer brands getting in on the game.  The Verge article in a pull out quote on the side asks if we should pick out cases to match the phone.

Cult Status
Waiting in Line

Waiting for that new shiny box

Every Community has a legion of evangelicals who get their faith from the unabashed embrace of love from cold and loveless products, but Apple fanatics occupy a level resembling the social conservatives of the Tea Party.  Some Apple purchasers just buy Apple products because they are ignorant of choices in the market and are otherwise agnostic on brand loyalty.  But Apple’s wealth didn’t materialize overnight, it was built on the back of consistent purchasing and company loyalty, they have created an atmosphere where people will come easily to buy new products. The one thing I will applaud Apple is it’s marketing prowess. I have personally seen anti-Apple folk turn into Apple purchasers through Apple’s psychological string pulling abilities.

Human society has illustrated that allegiances can be made out of the most banal things, sport teams? Thousands proudly display their allegiances to highly commercialized teams who are not even hailing from the cities that adorn their Jerseys.  But the fact that allegiances can be made out of the most banal things does not excuse the collective behaviour of the Apple hive mind. And yes, this type of behaviour is exhibited in all group universes, but considering that Apple is the most valuable companies on the face of the planet, illustrates that Apple is one of the most successful brand cultivators. If you do not believe me, check a large web forum, when anti-Apple sentiment comes around the Apple crusaders typically come out of the woodwork with their bevelled shields to defend the glory of Apple.  Tech sites have often provided skimpy defence for Apple products declaring that their high prices are worth it because “the quality” and high sales as a proof of that.  Although these sites are ignorant of the powerful allure of the brand and ignorant of the competition that delivers with fire-power but weak in marketing themselves as  brands – save with Samsung being perceived as the Android equivalent in many circles to Apple. So at the end of the day mobile electronics is less about rational procurement and more about brand loyalty. While people dress up their brand loyalty by spewing specifications (But, but, but it has a Retina display!), in actuality their purchase was inspired by the following of the brand.

Putting on my frugal hat, as elucidated in the start of this article, Apple products are expensive for what you get, the myth of Apple superiority will continue to tick on. If you somehow think you need a lot of fire-power in your device I would urge you to do a rational procurement, many people skip this and let the salesperson have their way with them and the end out walking with something that is ill-suited.   I’m not suggesting that Apple products are technological low end, I’m suggesting that they are expensive for what they are. Second, participating in the Apple phenomenon is a trademark of high consumerism. While I acknowledge that many Apple goers are simply just not making rational procurements (I want the best, I’ll buy Apple) many buy because the brand and what they think it means, even if objectively it does not mean that.  Like my first point, it goes against rational purchasing.  My last point is, a mere observation that the Apple evangelicals are particularly mesmerised by devices and they continue to muddle the waters of rational procurement.

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