Apple Users Love Spending Money

by JT McGee

Are you an Apple fan?

Do you rock black mock turtlenecks and Levi Jeans, to pace back and forth in envy of each new Apple product release?

If so, you might also be a rabid consumer, someone who spends far more than everyone else for almost everything.

Apple Users Love Apps

Let’s start off with apps. Here’s a comparison between app revenues per user for iTunes, Amazon’s App Store, and Google Play where Apple’s revenues are set as the basis for comparison at 100%.

As you can see, neither Amazon App Store customers (Kindle users, primarily) nor Google Play customers (Android phones and tablet devices) spend to the same degree as Apple users. On average, Apple users spend $1 on apps for their devices for every $.89 Amazon users spend or for every $.23 a Google Play customer spends.

But it doesn’t stop there.

Over the weekend, the Wall Street Journal mentioned that Orbitz also taps into the spend-happy lives of Apple electronics users. Apple users who go to Orbitz.com to rent a hotel room pay an average of $20 more per night than other users. The author of the brief suggests two reasons for heavy Apple user spending:

Anyone who pays a 50% or so premium for a Macintosh has more money to begin with. Either that or they’re the ideal consumer – the type that pays through the nose for a name brand.

Cha-ching!

iPhones Win the Female Heart

Elsewhere, in China, Apple iPhones are the gift of love. I’ve previously written about the off the charts male to female ratio in China that makes women so ultra-valuable to an unmarried man. An anecdotal story from one writer at Harvard Business Review says Chinese men are unlikely to have an iPhone, a $700 product in China, where phones are not subsidized by carriers.

However, women in relationships almost always carried their prized iPhone – a product that isn’t even remotely in the same league as other smartphones on the market. The iPhone 4S’s Siri cannot understand Chinese, the keyboard is difficult to use for Chinese speakers, and usability is second-rate compared to local offerings.

However, every woman with a boyfriend seems to own one. The boyfriends? Nope. The women with boyfriends? Yes – iPhone or nothing!

Interesting. Even in the emerging markets, cellular phones with a well-known Apple emblazoned on the back are a status symbol, a product for wealthier consumers who enjoy everything the Apple brand stands for.

So, is it definitive? Is Apple now a luxury goods maker before everything else? Who knows. What I do know is that Apple’s marketshare among wealthier consumers certainly doesn’t hurt the firm’s exponential revenue and earnings growth. The company is killing it:

Maybe Apple finally did what no company could ever do: turn consumer technology into a high-margin business in the long-haul. The edge in loyalty, spending, and responsiveness to branding is absolutely incredible.

{ 21 comments… read them below or add one }

scarr May 6, 2012 at 13:40

*guilty look* I just bought an iPhone last week . . . had an upgrade, had the cash . . .

My reply is less about the iPhone and more about the Apple brand. I had to buy a new computer this past year because the one I previously owned ended up getting dropped, hard (my renter’s insurance paid for the replacement cost: when in doubt INSURE). I found a great laptop on sale for $400. I compared the cost of my computer to a mac book pro with the same specs out of curiosity and yes I look at Apple as a luxury brand. . . . $1,200 difference!!!! I almost threw up. I might throw up just thinking about it. I assume several people that use computers need them for email and facebook and if you are in school a word processing program. I cannot even kind of justify spending that much on a laptop to basically spend 25% of the time writing papers and 75% of the time liking status updates.

I’m curious to know the percentage of people who either charge or finance iPads, iPhones and MacBooks and how many are able to pay cash for them. I own an iPod Classic and I will say it is, in my opinion, better than any other MP3 device, also I paid cash for it. I do not think the MacBook does anything better than my current laptop and I bought an iPhone because I want to sync it with my iTunes but I don’t necessarily think it is better than other phones.

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JT McGee May 6, 2012 at 13:54

I suppose I should add this for disclosure: I’m an Android user. The iPhone screen is too small for my terrible eyesight; though I do like how the smaller screen gives it much better battery life! Now my bias is more clear. 😉

In some respect, Apple is pretty much a luxury brand. Maybe not as much in North America, where higher-incomes allow for some additional rationality in the purchase decision, but if Chinese people are purchasing iPhones KNOWING that the device is crippled compared to cheaper competitors, then “luxury” is the only thing I can think.

I’ve seen numbers that show Apple customers to be higher-income than Android or Windows users. That doesn’t particularly surprise me, though it says nothing about actual wealth (how much their higher-income do they keep?!). I too would be interested in the differential as far as real net worth, but that in-depth statistical model would be pretty expensive to build. As far as cash vs. financing – I bet most electronics shoppers pay with a credit card. I always put expensive things on my credit card, even if I fully intend to pay it off immediately. Then again, you can finance things even if you pay with cash so that would be hard to figure out.

Thanks for your comments. I’ve appreciated your perspective on everything to Apple products to used and new cars.

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scarr May 6, 2012 at 15:19

I have a bit of a bias as well I am a Linux user on all my computers and I felt a little like a traitor buying an iPhone especially with all the Droid phones out there.

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JT May 8, 2012 at 13:01

The Android phones are, in my view, way better than the newest iOS tech. I think the difference comes down to the battery life – Apple is the only company smart enough to keep the screen size small relative to the mAH capacity of the included battery.

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PK May 7, 2012 at 10:45

Note that many statistical models of net worth are actually based on income – see th eIRS data set for one example (and it is often considered one of the bets). With a large enough universe you could come up with a good guess…

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JT McGee May 8, 2012 at 11:00

Challenge accepted?

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Financial Samurai May 7, 2012 at 01:10

Great bullish datapoint, and very good for the SF Bay Area economy! thx.

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Andrea @SoOverDebt May 6, 2012 at 15:35

You already know that I’m a rabid Apple fan. I have an iPhone, iMac, iPad, Apple TV, and a couple of older iPods. And I’m unashamed.

I grew up with a dad who’s an engineer/programmer. I’ve been surrounded by gadgets my entire life. When I was a kid, we made fun of people who owned Macs (or Macintrash/Crapintosh, as we were fond of calling them). But I loved the iPod when it was released (though I was a late adopter), and I loved the iPhone just as much (also a late adopter). Never had a problem with any of the ones I’ve owned and they do what I need them to do. When Steve Jobs went back, at least he knew what the hell he was doing.

There’s a perception that Mac owners don’t know anything about computers, and while I do think they’re great machines for someone who doesn’t know much, that’s not always the case. My dad used to time me disassembling and reassembling computers when i was a kid, for Pete’s sake – I’m pretty sure I can handle my electronics. Last summer, though, when my 4000th PC started giving me shit, I decided I was tired of working on them. I’m not an idiot; I know what I’m doing. I just don’t want to have to do it. So I bought a Mac and I’ll never own another PC. This thing has been fantastic to use. Even my dad checks it out when he’s over here (while pretending to search for flaws).

Yes, I pay more for my electronics. But I do it with cash and they last forever. If I’m stupid for wanting devices that work well and meet my needs, then pass me the dunce cap. I don’t care if other people buy Apple products; I’m not one of those “OMG Apple is awesome and everything else is crap!” kind of people. I expect people to buy the things that work well for them and that they enjoy, and I’ll do the same.

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JT McGee May 7, 2012 at 10:27

I think the perception is there because it is mostly true. Err, well, let’s put it this way: Apple users tend to have COMPLETELY different views on features, etc., which are usually outside the logical buying process for PCs. Also, I think if you know NOTHING about computers, you would be best to buy an Apple product, as it is certain to be a good pick. Otherwise, with PCs, you have to know what to look for, since companies love to release really crappy laptops that overheat, loaded with junk on startup, etc. to uninformed consumers.

I’ll give Apple credit for making very durable products, and having an operating system with a marketshare so small among business users that it is unlikely to attract people who make viruses. Many of the benefits aren’t inherent to Apple, it’s just that Apple has much better quality control compared to PC makers flinging out 9384053 SKUs of Windows computers.

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Amy @ Jobcred CV Builder May 6, 2012 at 16:27

I guess it is the social responsibility behind choosing Apple that makes the brand different from the rest. I remember visiting an Apple store where there is a pronouncement that the company is also hiring workers from my locality and buying certain items will let me help build more jobs.

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JT McGee May 7, 2012 at 10:28

What do you think of Apple’s Foxconn centers? There’s some unhappy people in the responsibility camp who aren’t too happy about it: http://www.huffingtonpost.com/2012/03/29/foxconn-apple-factories-labor-violations_n_1389392.html

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Financial Samurai May 7, 2012 at 01:09

Makes me so bullish about the economy! I’m so impressed people have so much disposable income to spend. You need about $250,000 in the bank with today’s money market rates to buy the lowest end iPad for a year’s worth of interest.

Perhaps not everybody who buys an iPad has $250,000 in a liquid money market, but I wouldn’t be surprised that the majority of people do, otherwise, they wouldn’t be able to buy such products.

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JT McGee May 7, 2012 at 10:29

That has to be it. In a nation where the savings rate teeters on 0-5% every single year, it must be the interest income from cash savings that makes us all spend-happy Americans.

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Financial Samurai May 7, 2012 at 13:20

The statistics lie. Don’t listen to what people say with their money, watch what they DO!

If you see someone who is spending big bucks on Apple products, it’s because they HAVE THE MONEY! You can’t spend what you don’t have, and everything is rational.

One people realize there is more wealth out there than one knows, people will start making tons more money.

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JT McGee May 7, 2012 at 14:03

Right. 44% of people have smartphones, of which roughly 30% have iPhones. Since Apple users are 100% part of the wealthiest core, we can presume that the 88%+ percentile of wealth is a perfect match. Therefore, anyone buying an iDevice has a net worth of at least $1.4 million using median net worth data from 2004.

Why would I disagree with you? The logic is oh so obvious.

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Financial Samurai May 7, 2012 at 14:05

JT, what you don’t understand is it’s all about HIDDEN WEALTH. There is an army out there that has WAY MORE MONEY than you can ever imagine!

Someone might be unemployed, but they are buying the latest gadgets b/c they HAVE THE MONEY! Nobody is that stupid as to put a superflous device before food and shelter.

I would say $1.4 million net worth sounds about right. Might be even low in SF.

Dr Dean May 8, 2012 at 13:34

OK, I’ve been a PC guy since before you were born. Bill Gates and I are similar ages, though I’m better looking.

I bought my first “i” product, an iPhone late last fall, and my business bought me an iPad recently.

I had never thought the premium for Apple products were worth it ’till I bought one.

I’m with Andrea, I’ve spent too much of my valuable time with fixes, viruses, waiting endlessly for re-boots, and removing crapware. When my current laptop dies, I’m buying a Macbook….
So there!

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JoeTaxpayer May 12, 2012 at 22:07

Maybe it’s “Apple Users know quality.”
I have a Dell Laptop running windows for my day job. It takes many minutes to boot, and offers a “blue screen of death” every other day or so. I am considering buying a Mac Air out of my pocket and handing back the work computer. Time and money don’t always interchange, but enough wasted hours each week, I’m ready to move on.
There’s data out there showing that the cost to maintain a PC over the years negates any price savings at point of sale. I’ve heard people talk about having “the computer guy” come over to address one issue or another on their home PC. Those visits aren’t cheap.

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tom buck June 15, 2012 at 06:52

lord above, who do you work for that they have you working on a laptop that is clearly craped out? How old is it? How much is it costing them to have you sitting about twiddling your thumbs while your 5 year old laptop is dying?
I use PCs and Macs, desk tops and laptops, I prefer PCs because I think they give you more control, you can see what’s happening and affect it; Macs, I think, tend to do everything for you and expect you to simply accept it. If you’ve grown up with Macs that’s probably fine because you don’t expect to see what’s going on, going to PC is probably horrible because suddenly you have to do everything yourself. But as a PC user I hate not being able to control processes.
That said Macs fire up much faster and they do last way longer than PCs, PCs definitely die much quicker – we usually start looking to replace after about 2 years.

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MA May 18, 2012 at 06:02

Let’s just accept the fact that Apple is for those who are well-off. It’s like designer’s clothes in the fashion world. And since these Apple owners are generally wealthier and they still have lots of money stashed somewhere, so it’s no wonder they but more apps. From the above comments, most of the Apple users bought it with cash…

Best regards,
Belinda

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JT McGee May 8, 2012 at 13:03

I’m sure there are a great deal of wealthy people purchasing Apple products. I’m also certain, given the frequent ads I see for Rent-A-Center type stuff, that there are plenty of people purchasing Apple products that have no money.

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