The Poor Man’s Mac

Microsoft wants you to buy PCs because they’re cheaper than Apple products, not because they’re better machines.

One surefire way of inciting violence among techies is to wonder idly whether Apple computers are really worth their inflated price tags. Mac devotees are sensitive about this subject: Tell a Mac-head that you can’t understand why anyone would pay $1,300 for a MacBook when a comparable Dell sells for $900 and you might as well be calling him a vain fool. Who wants to be regarded as paying for style over substance? Then try suggesting to your Windows-loving pal that there’s more to choosing a computer than looking for the lowest price. What about ease of use, long-term value, and the sheer pleasure of using a Mac? Now you’re calling your Windows friend a cheapskate. Either way, you’re asking for a black eye—or, at least, a three-hour earful about why price should or shouldn’t matter in your next computer purchase. (The black eye may be preferable.)

Until recently, both Apple and Microsoft have shied away from the price fight. In its “I’m a Mac/I’m a PC” ads, Apple avoids mentioning its machines’ higher prices; instead, it takes on Windows’ shortcomings. The implication is that if you go for a PC to save money, you’ll get what you pay for. I’ve been chronicling Microsoft’s evolving marketing strategy for a few months, and I’ve been mainly critical. The “Mojave Experiment,” which tricked people into trying Vista, didn’t exactly inspire confidence in the operating system’s standalone merits. And its last big campaign, featuring an ethnically diverse lot declaring that they were PCs, came off as the company trying too hard to be cool. Now Microsoft has taken off the gloves. In Web and TV spots that began airing during March Madness, the company is going after what it considers Apple’s greatest vulnerability, especially during this economy: Macs are too damned expensive.

The spots are the end result of a challenge that Microsoft’s ad agency, Crispin Porter & Bogusky, put to a few telegenic young people in Los Angeles. It offered them between $700 and $2,000 to buy any computer that they wanted and let them keep whatever they didn’t spend. In the first ad to air, a pretty, spunky redhead named Lauren is looking for a laptop with a 17-inch screen for less than $1,000. She goes to an Apple store and discovers that only the $999 13-inch MacBook is in her price range. Apple’s 17-inch MacBook Pro goes for $2,799, way beyond Lauren’s budget. “I’m just not cool enough to be a Mac person,” she huffs. Then she goes to Best Buy and finds an HP notebook that fits her specs selling for just $699.99. She’s elated—”I got everything that I wanted for under $1,000!”

Predictably, Mac partisans have found much to criticize in the spot. They say it appears staged, and they note that Lauren is an actress. Plus, they insist she’ll regret buying that cheapo machine—it’s terribly slow, has old-model parts, meager battery life, weighs a ton, is packed with annoying trial software, and features Windows Vista Home, the most basic version of Microsoft’s operating system. “It is the epitome of what people dislike about PCs,” writes Computerworld’s Seth Weintraub.

And that suggests the danger here for Microsoft. In the short run, its strategy makes some sense. The ads are well-produced, entertaining, and get across the basic point very well—if you, like Lauren, are on a budget, there are many Macs that you simply can’t afford. Today, lots of people are on a budget. Apple’s sales, which were flying high last year, have recently begun to show some strain.

But it’s a terrible strategy for the long term. What happens when the economy improves? What happens when young, telegenic people in L.A. can once again spend $1,300 or $1,500 or more for a laptop? What will they do when they hear from Lauren that her $700 machine is grindingly slow and that hauling it around is cramping her acting career? By selling people lots of cheap Windows PCs now, Microsoft risks cementing the idea that PCs are cheap. And in the computer business, “cheap” isn’t an adjective you want to court. Customers may start to think that paying a bit more will get them something better. And when they can afford to pay more, they will.

Indeed, this is essentially the argument that Mac fans offer when confronted with the idea that Apple’s machines are too expensive. Sure, they say, Macs might sometimes induce sticker shock, but that doesn’t mean they’re inherently much more expensive. It’s just that they include a lot of high-quality components as standard features, making for much more powerful machines.

Technologizer’s Harry McCracken, a nonpartisan in this fight, runs a regular series that factors this in when comparing Apples with PCs. He picks a sample Mac system, then prices out what rival computers would cost if outfitted with the same features. In October, he found that Apple’s new 13-inch aluminum MacBook—which sells for $1,299—was right around the same price as similarly equipped machines by Lenovo and Sony, though more expensive than a machine made by Dell. This week, he did the same comparison for the 17-inch MacBook Pro that Lauren found too expensive. Apple’s machine comes with a superfast 2.66 GHz Intel Core 2 Duo processor, two graphics chips, a screen with an LED backlight, and a battery that lasts for eight hours—lots of top-of-the-line features of the sort that someone like Lauren probably doesn’t need. When you rig up other laptops similarly, Apple’s computer comes out as slightly less expensive than ones from Dell and HP, a bit more than one from Lenovo, and a lot more than a Sony—in the middle of the pack, pricewise. And this analysis neglects the many Apple features that you simply can’t get on PCs—the malware-free Mac OS, Apple’s stellar reliability and customer service ratings, and the fact that Mac machines seem to live longer (or at least hang on to their resale value better).

Of course, when you’ve got only $1,000 to spend on a laptop, none of this matters much. Apple’s problem isn’t that its prices are too high, it’s that they’re too inflexible. There are certain specs below which it seems reluctant to go, meaning that its entry-level prices are higher compared with those for PCs. You can get a $400 PC notebook, but Steve Jobs has nixed the idea of a cheap Apple portable: “We don’t know how to make a $500 computer that’s not a piece of junk, and our DNA will not let us ship that,” he once said. Still, Apple’s pricing scheme could prove difficult to stick to in a prolonged downturn, and it will likely reduce prices slightly if sales slag. At the very least, it could sell that 13-inch white MacBook for $800 instead of $1,000.

At a conference the other day, Steve Ballmer, Microsoft’s CEO, argued that the economy had clarified people’s views about what they wanted out of their computers, and as a result, Apple’s recent gains in market share would be reversed. “I think the tide has really turned in the other direction,” he said. “Paying an extra $500 for a computer in this environment—same 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, he’s right; selling a logo is tougher these days. What Ballmer forgets, though, is that he, too, is selling a logo. In fact, that’s all he’s selling. Microsoft doesn’t make hardware; it makes Windows, the symbolic face of our machines. And in pushing low prices, Ballmer’s newest ads don’t tell you any of the great features that the Windows logo might stand for. Does it keep you safe from viruses? Is there an easy way to fix it if it breaks down? Is it environmentally responsible? Does it offer an easy way to make movies? Does it look awesome?

People want that stuff from their computers. When they’ve got money, they’re willing to pay extra for it; that’s why Apple dominated the notebook market last year. By focusing only on price, Microsoft is telling us only one thing about the Windows logo: It’s what you look for when you’re settling.