'Apple Tax'? What a Load of Silly, Stupid Hogwash

Microsoft Corp.'s claim that customers pay a $3,400 "Apple Tax" when they buy Macs rather than Windows-based PCs is "silly" and "stupid," an analyst who follows Apple Inc. said Friday.

"You can make a reasonable case that Apple PCs are somewhat more expensive in a hardware-for-hardware comparison," said Ezra Gottheil, an analyst with Technology Business Research Inc. "But the comparisons Microsoft makes were just silly."

In a repeat from a late 2008 public relations campaign, Microsoft Thursday said that Macs cost more than PCs, again dubbing the difference an "Apple Tax." In a post to a company blog, Microsoft spokesman Brandon LeBlanc talked up the idea of a "'hidden tax' of owning a Mac."

Citing a Microsoft-sponsored paper written by analyst Roger Kay of Endpoint Technologies Associates Inc., LeBlanc claimed that over a five-year span, a family of four -- who currently run a pair of Windows XP-equipped machine -- would pay an additional $3,367 if they switched to Macs rather than continue to buy within the Windows PC ecosystem.

LeBlanc also argued that buyers get a better value when they choose PCs. "It is human nature to focus on the up-front price," he said, and referred to the Apple-bashing television ads that Microsoft has been running. "The harder thing to capture is the overall cost and the value. Cost is getting something cheaper. Value is a function of getting more of what you want, regardless of what you spend. And you're a lot more likely to find that with a Windows PC."

Gottheil strongly disagreed with Microsoft's conclusion. "Why do they think this is an effective comparison?" Gottheil asked. "They add MobileMe to the Mac, but that's a pure added-value service, and not necessary for the Apple experience in any way. Nor do they mention that there are plenty of free alternatives for the Mac [to MobileMe], just as there are for Windows." Kay's PC-to-Mac comparison listed an annual Family Pack subscription to Apple's sync and storage service; at $149 per year, the five-year total added $745 to the Macs' total cost, or about 22% of the "tax."

"And taking a Mac Pro as the desktop? That is just stupid. It's not a reasonable kind of comparison with what consumers buy," Gottheil said.

Kay used the most-expensive Apple desktop system, the Mac Pro -- which starts at $2,499 and is targeted at professionals, such as video editors and graphics artists -- rather than the lower-priced iMac in his comparison. Kay's paper didn't explain why the Mac Pro was selected, although he did note that the $1,199 iMac, a 20-in. model that now sports 2GB of memory and a 320GB hard drive, was a choice in what he called "mid-range" desktops.

"And Microsoft doesn't add anything [to the Windows side of the comparison] for Mac owners' ability to take their computers to a local store run by the company that made the device," Gottheil continued. Apple's retail stores offer free technical support for all Macs, whether or not they're covered by a current support plan.

Gottheil questioned Microsoft's thinking. "Microsoft can certainly make the point that Macs are a premium product. It's something that they can bang on Apple," said Gottheil, who has given the nod to Microsoft's newest TV spots, which harp on price differentials. "But this kind of thing just leaves them open to all kinds of criticism. It's an unfair comparison in all kinds of places."

In any case, Gottheil said, although it may make an impression on some people who are considering switching from Windows to the Mac platform, it will fail to sway those who already own Macs to switch back.

"The Mac is a premium product, one that customers choose to pay for," he said. "Microsoft is arguing that people pay this 'Apple tax' for the [Apple] logo or a certain styling, but in fact, the experience is quite a bit different on the Mac. The Mac OS is, day-to-day, hour-to-hour, far less taxing, as it were, to use."

Kay's 10-page white paper can be downloaded from Endpoint Technologies' Web site (download PDF).

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