Google Inc (GOOG), Microsoft Corporation (MSFT): Apple Inc. (AAPL)’s Products Are Now Overpriced

When it comes to smaller tablets, it’s even worse. The iPad Mini is an inch larger than most of its Android rivals, but that extra inch costs a lot. At $329, the iPad Mini is $100 more expensive than Google Inc (NASDAQ:GOOG)’s Nexus 7. It’s also significantly less powerful, with a slower processor, lower resolution screen, and worse camera.

How much does an ecosystem matter?
Despite being overpriced relative to their competition, people continue to buy Apple Inc. (NASDAQ:AAPL)’s products. Apple has a monopoly on one thing its competitors lack: iOS. The mobile operating system continues to be highly regarded, both for its ease of use and its app ecosystem.

Compare that to Microsoft Corporation (NASDAQ:MSFT): Despite a heavy ad campaign, including a $1 billion push for Windows 8, sales of its Surface RT tablet have been poor and the company was forced to take a $900 million writedown last quarter.

Based on hardware specs alone, the Surface RT isn’t bad. It’s about as powerful as the full-size iPad, but also has some key features the iPad lacks, like a USB port and the ability to expand its storage with an SD card. However, because it runs Windows RT, it’s fundamentally flawed.

Unlike iTunes, the Windows app store is terrible, missing numerous key apps like LinkedIn, Amazon Video, and HBO Go. Although these services can be accessed through a browser, consumers prefer dedicated apps. Research firm Flurry found that 80% of the time people are using a mobile device, they’re using an app.

What is iOS worth?
In the past, buying an Apple Inc. (NASDAQ:AAPL) device was an easy choice. They made the best products and sold them at the best prices. Nowadays, it isn’t so clear — Apple might still make the best devices, but they are far from fairly priced. In the end, it really boils down to iOS: its value to consumers and the premium they’re willing to pay for it. If iOS is worth that extra $100 — and it may be — Apple has nothing to fear.

But, investors should recognize that, over just the last year, things have changed for Apple. It has gone from a value leader to a premium brand, and the long-term ramifications of that shift aren’t readily apparent.

The article Apple’s Products Are Now Overpriced originally appeared on Fool.com and is written by Sam Mattera.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft.

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