Apple. Enough said.

When I was younger I thought that comparing the prices of two items meant looking at the price at purchase and comparing quality differences. I have since learned by unfortunate experience that this is a very incomplete and naive analysis. Product specification and tie in sales must be taken into account particularly if the item is an expensive and will require repair in the future, such as a computer. I had a PC. The little piece inside the computer that the power cord attaches to started to become looser and looser until it would no longer take a charge. How much would this 5 cm piece of metal cost me? $364. BEFORE shipping. It would also take 3 weeks. My PC was 3 yrs old, it was not worth half that in perfect condition. Since I am not great with computers, the genius bar availability at every apple store convinced me to purchase a Mac. Of course, all of these products (computers in general) are incompatible with any parts purchased outside of their company. This allows them to maximize profits. They can sell the initial product for a lower price anticipating that most of their customers will either lose their $79 power cord or have batteries that will eventually stop holding a charge and need to purchase a $120 new one. These prices are nowhere near marginal cost but the customer has no choice but to replace the part or forgo their entire investment and purchase a new computer. In this way, they are able to rope customers in at an initial price while still anticipating future earned profits from most sales. Furthermore, there are many accessories and programs that generate tie in sales for the company, particularly with Apple. This company has convinced most of America (including myself in my mindless state of greedy consumerism) that Apple products work the best with other Apple products. This is false. An iPod works equally as well with a Dell as it does with a Mac. This advertising strategy has in essence bundled the two products together in the minds of the public; those that have a Mac are most likely to choose an iPod as their MP3 player of choice. It is plausible to think that those who purchase iPods may make their next computer choice a Mac (my I pod broke, I took it to the genius bar they fixed it for free; I was hooked). This form of ‘bundling’ across economies of scale is brilliant in respect to profit maximization of firms. Their ability to capitalize on the tie-ins related is also a well-used strategy, but unfortunately, the consumer ends up paying more than they ought to.