The App Store and Retailers
Computerworld, as usual not seeing the whole picture:
Apple’s decision to sell the Mac OS X Lion upgrade through its own Mac App Store won’t hurt the company’s bottom line but will certainly impact traditional retailers, a market analyst said Friday.
“The Best Buys, the Staples, the PC Connections, they all still have a decent Mac software business,” said Stephen Baker of retail research firm NPD Group. “This will have an impact on all those guys. [The release of an OS upgrade] is always a good opportunity for them to connect to customers, get them into the store and thinking about upgrading their devices.”
That may be, but the real impact of Lion’s upgrade mechanism will be that it forces Apple users to use the App Store at all–something which many are doubtlessly avoiding as they hang on to traditional outlets. Once they are forced to use the App Store to download Lion, they may start looking around, could start finding some good deals, and might recognize that the App Store is a handy one-stop method of buying apps, as well as the later realization that it keeps them up-to-date on upgrades. If they also start seeing lower prices in general, they may start doing what shoppers did when firms like Amazon and Netflix swept them away–rarely if ever going to a brick-and-mortar store to buy media again. Apple started encroaching on the retail market with their own brick-and-mortar stores, now they are simply taking the next logical step–for Apple.
Is this a good thing or a bad thing for consumers? Depends on who you ask. The App Store does tend to be a convenience, and can help you find lower prices (perhaps because of its DRM nature). But what about competition? Well, frankly, there’s less of that in the Mac world. Especially with Apple’s stuff–they tend to control prices pretty firmly. There is probably a lot less comparison-shopping out there for Apple stuff than there is for PC stuff. One rather unfortunate side of the Apple world is that sellers assume that Apple users will pay higher prices for everything. I see this in Japan; stores like Labi, for instance, charge way more for Apple gear, despite it being essentially that same stuff as PCs use.
I think the argument could be made that Apple, despite its reputation for premium price tags, is actually saving consumers more–especially when it comes to stuff Apple doesn’t make. They made it a lot cheaper to buy music, no doubt about that–you usually don’t have to buy an album to get the one or two songs you want anymore, and albums themselves are now a lot cheaper digitally. And they made software cheaper with the App Store, especially on mobile platforms. And while some Apple stuff can be pricey, Apple does have its bargains. The iPad was certainly priced to move. And Apple’s office suite traditionally cost only $99, which may have led Microsoft to price their own suite down to a similar level–except now, in the App Store, the suite can be had for $60. And the OS upgrade for Apple, which previously was $130 and cheaper than Microsoft even then, is now $30, as we discover that Snow Leopard was not just an aberration. Let’s see Microsoft match that. I have a feeling that if they priced Windows Ultimate at $50 and MS Office at $75, they might not have as good a profit margin. Apple gets away with it because their profits are driven by hardware; Microsoft doesn’t have that cushion.
The only thing we can be sure of is that Apple will continue to try to slowly rake more and more business its way. Whether it will gain enough market share to let it charge more, or start charging more when it is able, is anyone’s guess. While certainly an outfit bent on making large profits, Apple is clearly not a consumer advocacy organization–but they do seem better at paying attention to customer needs than Microsoft.