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Examining Microsoft's "Apple Tax" Comparison Charts

TMO Reports - Examining Microsoft's "Apple Tax" Comparison Charts

by , 7:30 AM EDT, October 17th, 2008

As part of its effort to push the notion that Mac users pay an "Apple tax," Microsoft has begun sending journalists charts that compare Macs at specific price points to PCs the company said has similar features, highlighting the price difference, or the "Apple tax." This is the same message recently pushed by a Microsoft executive in an interview, as the company works to fight market share gains by Apple.

In the e-mail sent to journalists, the company offers a variety of charts that many in the Mac world are used to seeing from Charles Gaba in his long running Mac vs. PC System Shootout series, or even at Windows-oriented magazines like PC World. In Microsoft's version, however, Macs are hundreds of dollars more than their PC counterparts, which the company is calling this the "Apple tax."

"Apple's been out saying a lot of things about PCs," Jay Paulus, Director of Product Management for Windows, told The Mac Observer in an interview. "This is just us out there trying to tell our side of the story."

He added, "I think that the guys at Apple do a really good job of selling [the intangibles associated with a Mac]. There's a lot of value to be had in a PC, and we wanted to tell that story."

Just like we have seen in the above-mentioned Mac-oriented shootouts, there are many things in Microsoft's charts over which Mac and PC partisans alike will find reason to bicker.

Fair Barbs

On the accurate side is a chart showing that an ATI Radeon X1900 XT Graphics Upgrade Kit for Mac Pro from Apple is priced at US$399, while a ATI RADEON X1900 XTX 512MB PCI-E DUAL DVI VIDEO CARD from RedTag.com is priced at $90. That's a very real and accurate price difference between Mac and PC choices -- that there are economies of scale issues involving driver development that are behind the difference is immaterial to the reality that Mac users pay more for high-end graphics cards than PC users.

Another accurate comparison involves getting a Blu-ray drive for your computer. Microsoft points out that Apple's solution is for users to buy a Sony-branded Blu-ray player for $299.95, while NewEgg.com offers an internal Blu-ray drive for PCs for $94.99. In Tuesday's media event, Steve Jobs told journalists on hand for the event that Apple was going to let the market continue to work out Blu-ray issues before offering its own solution.

Lastly, the company includes the cost of AppleCare in its charts as a cost Mac users will pay, at least those Mac users who choose to buy it. The computers the company chose on the PC side of its comparisons include extended warranties. For instance, the HP unit used in the iMac vs. Desktop comparison chart discussed in more detail below comes with a three year extended warranty, and Mr. Paulus told us that's why they chose to include the cost of AppleCare as part of the "Apple Tax."

Questionable

From there, however, we move on to some misleading comparisons. For instance, in several of the charts Microsoft sent out, Big Redmond lists the price of upgrading to a Family Pack license for iLife in the cost of owning a single Mac over several years. The Family Pack licenses are intended for customers with multiple Macs in a home, not a single unit.

The company also uses the cost of a Family Pack license for MobileMe as part of the price of buying a new Mac. As MobileMe really doesn't have an antecedent on the Windows side, including this as a cost of buying a Mac is curious, but using the Family Pack pricing is dubious.

When asked about this, Mr. Paulus told us that it may have been questionable to include the Family Pack licensing price, but pointed out that replacing those figures with single user upgrades lowers the cost of the Apple Tax by less than $70 over three years.

We should also note that Microsoft does not address the cost of achieving iLife compatibility on the PC at all, Family Pack license or no.

The iMac vs. Desktop PC "Apple Tax" chart

The most daring comparison, however, is the "Sample Apple Tax: iMac vs. Desktop Comparison" chart (see below). In this chart, Microsoft compares the cost of owning a Mac over five years to that of owning a PC over five years. In this chart, Microsoft has the Mac user buying an iMac for $1,199 in Year 1, selling it in Year 4 for half price (doable on a Mac, but not a PC), and then buying another iMac for $1,199 for years 4 and 5.

The total cost to the Mac user after upgrading to a Family Pack of iLife in years 2, 3, and 5, buying a Family Pack of MobileMe in all five years, Quicken Personal Finances 2007 for Mac, $70 for random software replacement (from their no longer usable Windows titles -- another of the very reasonable costs Microsoft lists), and two three year AppleCare plans, and one year of One-to-One Care is $3,576.90.

On the PC side, Microsoft has the user buying a desktop PC with a display for $980, and then using it for five years, with various hardware upgrades in year 4 (hard drive, Blu-ray drive, RAM, and video card standing in as possible such upgrades). Add in five years of Microsoft OneCare Live, and the cost, according to Microsoft, is $1,616. Note that Microsoft's plans leave the hapless PC user without warranty coverage during years 4 and 5, but they are, at least, covered with antivirus protection with OneCare Live.

We've observed anecdotally for years that Mac users keep their Macs far longer than most PC users -- Mr. Paulus told us that Microsoft's research didn't show either users of either platform keeping their computers longer than the other-- but ignoring that (possibly subjective) issue, Microsoft's point is that the PC can be upgraded more easily, and less expensively, than the Mac, which would have to be replaced in order to upgrade it.

We'll leave it to our readers to judge overall merits of Microsoft's assumptions, and we've already pointed out the peculiar nature of Big Redmond's choice of using Family Pack pricing in these comparisons.


Microsoft's iMac vs. Desktop PC "Apple Tax" comparison chart
(Click the image for a larger version)

Comparing Apples to Microsofts

The last point we'll make is another highly subjective one, and that is the intangible aspects in doing any comparison of this nature. For laptops, Microsoft is ignoring size, weight, and style. The company is pricing the differences between Apple's new aluminum MacBook to a Dell XPS M 1330. Many Mac buyers will be interested in Apple's styling and the fact that Apple's model is better looking, smaller and lighter than the Dell unit, but many PC users will argue that either the Dell unit is more attractive (a subjective issue with no objective answer) or that it doesn't matter (equally subjective).

This is the kind of thing -- just like ascertaining the value of trying to match iLife's functionality on the Windows side, or the value of being able to build-your-own PC -- that is often the source of much flamebaiting and arguing among computer partisans in Mac vs. PC debates. For its part, Microsoft should likely be excused for attempting to sell the version of its story the company finds most flattering, whether or not you agree with it.

Apple has certainly been doing the same thing for its part for years. It just happens to be the case that most of our readers -- and more importantly, a growing segment of the computer-buying public -- agree with Apple's reasoning on this issue more often than not.

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