Apple Fans Pay Thousands for Cool Factor
CUPERTINO, Calif. (TheStreet) -- Loyalty comes at a price. For Apple (AAPL) - Get Report, it's between $1,600 and $4,100.
With the launch of its iPad tablet last month, Apple established the four pillars of its tech toy box. If you want to be Steve Jobs' best buddy and become the most design-savvy techie in the coffee shop, you'll need an iPod, iPhone,
iPad
and MacBook.
The Apple clique's minimum buy-in -- which would cover a featureless iPod Shuffle, an aging and flawed iPhone 3G, an iPad with as much memory as your iPhone and a MacBook that hasn't gone Pro -- is $1,656. That doesn't include fees for wireless service for your laptop and wi-fi-only tablet, or the average $90 a month combined
AT&T
(T) - Get Report
charges for its iPhone data, calling and texting plans.
Given that
Consumer Reports
has found cheaper, more functional alternatives in each category, from the low-maintenance $30 Archon Clipper MP3 player to the $530 Toshiba Satellite T135 Windows 7 laptop, is Apple's cultural cachet worth its asking price?
"You can have a great marketing campaign, but it doesn't mean anything if you don't have a solid product to back it up," says Susan Kevorkian, an Apple analyst at
IDC
. "The products that have really worked for Apple have hit a nerve among consumers and filled a need that hadn't been filled in the past."
Though Apple's quality starts to outpace the pack in the upper echelons, so does the price. Amassing all of Apple's mid-range models -- an 8-gigabyte iPod Touch, a 16-gigabyte iPhone 3GS, a 64-gigabyte wi-fi-only iPad and a 160-gigabyte MacBook Pro -- would cost $2,296. On the high end, a 64-gigabyte iPod Touch, a 32-gigabyte iPhone 3GS, a 64-gigabyte 3G/wi-fi iPad and a 17-inch MacBook Pro with a 500-gigabyte hard drive would set fanboys back $4,026.
With the National Retail Federation predicting a 2.5% jump in retail sales this year, Apple may be onto something. The Cupertino, Calif.-based company will also reap a large chunk of the $6.2 billion consumers are expected to spend on applications this year, according to
Gartner
(IT) - Get Report
.
Apple's anchor MacBook has earned its keep so far, contributing to a 22% increase in computer shipments in the fourth quarter from a year earlier, Gartner says.
"Apple laptops end up at the top of the list in every size category," says Paul Reynolds,
Consumer Reports'
electronics editor. "Apple's tech support is also still better than that of any PC company."
It's in the other categories that Apple's luxury prices appear a bit gaudy. Adding video capability to the $150 8-gigabyte iPod Nano brought it in line with its mid-range competitors, but products such as
Samsung's
$100 8-gigabyte YP-Q2 and
SanDisk's
(SNDK)
$80 Sansa View offer higher quality and more features for a fraction of the cost.
Reynolds says the iPhone's value isn't diminished by the price of competitors such as
Motorola's
(MOT)
Droid,
Google's
(GOOG) - Get Report
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Nexus One and
Research In Motion's
(RIMM)
BlackBerry Storm. However, the cost differences become clear when you compare their service plans
AT&T has taken advantage of its position as exclusive service provider for the iPhone. Rival phone makers have been able to court customers by offering cheaper service through
Sprint Nextel
(S) - Get Report
,
Verizon
(VZ) - Get Report
and
T-Mobile
.
AT&T's service and cost has softened a bit for the iPad's $30-a-month unlimited usage agreement. The iPad also costs far less than the nearly $2,500
Dell
(DELL) - Get Report
Latitude XT2 or $1,900
Lenovo
ThinkPad X200 tablets, but the merits of a high-end $699-$829 iPad versus a $455 to $549
Asus
Eee tablet depends more on the person than the product.
This sums up the Apple cult. There may be cheaper, leaner, more functional devices out there, but who wants them? Apple's users want toys they can use without taking night school courses that will be durable enough to keep them out of
Best Buy
(BBY) - Get Report
for years at a stretch. Though products like the iPod Shuffle offer a cheap point of entry, it's just a sprinkle of sugar to get users strung out on the good stuff. While its competitors offer lower prices and enhanced integration, Apple is content to let prices climb.
"All tech companies want three screens -- TV, PC and cell phones," says Ross Rubin,
NPD Group's
executive director of industry analysis. "
Sony
(SNE) - Get Report
,
Panasonic
(PC)
and Samsung compete in a vast market with many different price points and feature sets. Apple has not taken that approach."
-- Reported by Jason Notte in Boston.
Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.
