Wednesday, January 28, 2015

Why Do Macs Hold Their Resale Value?

Apple Tax: Why Do Macs Hold Their Resale Value?

By Justin Pot
You’ve probably heard it before: Macs may cost more, but they hold their value. You get more of the up-front cost back by selling your Mac. Is this true, and if so why?
Jeff Trachsel, the CMO of electronics reseller NextWorth, says Mac fans aren’t just crazy: the trend is real.
“Apple products are generally worth about twice as much as other devices at the same period in their lifecycle,” he said in a Gizmodo article published back in 2013.

Some Quick, Unscientific Research

This intrigued me, so I quickly did some research.
I turned to eBay, looking only at recently completed auctions. First I looked for my laptop: an early 2011 13 inch Macbook Pro with 500 GB of hard drive space, 4 GB of RAM and an i5 Intel processor. It’s nothing fancy, but I couldn’t find anything selling for less than $400 – and it wasn’t uncommon for them to sell for $600 or more. Even broken Macbooks sell for $250.
I also checked for my wife’s newer laptop, a Lenovo Ideapad u410 with 8 GB of RAM, 750 GB of hard-drive space and an i5 Processor. It was made in late 2012, and is is almost identical to my Macbook in terms of size and weight. The metal case is also similar. In spite of this, I couldn’t find any of these laptops selling for anything more than $500 – and it wasn’t uncommon for them to sell for as little as $250 (which, again, broken Macbooks were selling for).
This indicates there’s a range of prices where these laptops overlap. But overall my Macbook sells for more than my wife’s newer, and arguably nicer, Ideapad. You can do your own research, if you like, but generally you’ll find the same conclusion: Macs sell for more than PCs with similar specs.

Supply And Demand Is What’s At Work

Why is that? As with any price, supply and demand are the two factors here. And they both work toward higher prices for used Macs. A quick summary:
  • Low Supply: Apple sells a lot of Macs, but there are still way more PCs out there overall. If you’re looking for a used Mac, you’re buying from a smaller pool of sellers than someone open to buying a PC.
  • High Demand: Lots of people want Macs, and if you want to spend less than $899 for a laptop then you’ll need to buy used.

Higher Initial Cost

Let’s get this out of the way: part of this has to do with up-front cost. This is debatable if you only compare high-end PCs to Macs (Apple doesn’t compete at all in the low-end market, with only a few products aimed at mid-market), but it’s true overall: Macs cost more.
This explains, in part, why used Macs sell for more. But it’s hardly the whole story: Macs tend to hold more of their initial value than PCs.
“Apple products are generally worth about twice as much as other devices at the same period in their lifecycle,” says Trachsel.
Part of this might be the appeal of OS X, and all the great Mac software that comes pre-installed. But there’s more at work here.

No Cheaper New Options Means Higher Demand

When it comes to finding cheap Macs, used is basically the only option.
If you want to buy a laptop for $500, you’ve got a lot of choice. There’s the used market, sure: you might be able to find an older high-end laptop for that price if you dig long enough. But there are also plenty of brand new laptops you can buy for $500 or less. They’re not top-of-the-line, sure, but they come with warranties and that new laptop smell people love so much. Lots of people will look at these laptops before even considering the used market.
But what if you want to buy a Mac laptop, specifically, for $500 or less? There are no new options: the Macbook Air starts at $900. You could potentially buy a refurbished Mac from Apple, but you’re not likely to save more than $100 or so. This means anyone looking for an affordable Mac laptop is looking for a used laptop – and there are a lot of people doing this. Trachsel says demand for used Macs is higher than PCs “by a factor of two”.
Put simply: used Macs are a sellers market.

There’s A Smaller Supply Of Used Macs

Apple’s sales are higher than than ever as more people switch their PCs for Macs, and Apple’s computers made up 14 per cent of the US computer market late last year. From IDC’s quaterly summary of the PC market:
This is great news for Apple, but still means that for every 14 Macs sold there are 86 PCs from other vendors. If fewer people own Macs overall, it stands to reason that fewer people will be selling their used Macs later – meaning the supply of used Macs on the market is much lower than that of other PCs. Combined with the higher demand for used Macs, you can see why the higher prices persist.
Again: it’s a seller’s market.

Will This Trend Continue?

I’m simply trying to explain a trend that I’ve noticed – but I could be missing something. I’d love it if you could offer your own explanations in the comments below.
It’s worth pointing out that there are exceptions. There aren’t many legitimate uses for a PowerPC Mac at this point, and anyone trying to sell a Mac from that era will probably see less of an advantage. Rumours of Apple switching to their own processor means Intel Macs might meet a similar fate not so long from now.
But I also want to talk to anyone who’s upset by what I’m suggesting. You might not agree that Macs should sell for more than other PCs – and you’ve probably got a good point. Comparing only specs, and arguably even build quality, the prices should be closer. But the market doesn’t lie, and right now used Macs sell for more than used PCs.

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