Behind the Brand
Companies want you to believe there are clear differences between their product and the competition's. We'll help you see through that claim.
(MONEY Magazine) - Shopping for, say, a DVD player means sorting through a series of choices: price tags that range from $35 to $200, brand names you recognize and brands you've never heard of. But if you were able to take the tops off a couple of the machines, you'd come to a startling conclusion: They're all the same. Okay, not exactly the same, but the parts inside aren't made by the name on the box, and--more important--those same parts can be found in several models at various prices. Indeed, in some cases the biggest difference between a DVD player that costs $35 and one that costs $200 is $165.
The past 20 years have seen a fundamental shift in the way companies build things in industries ranging from autos to apparel. Once upon a time, Sony Ericsson would have designed, engineered and fabricated its own cell phones. But increased competition has made it more cost-effective to farm out that work to suppliers that can operate faster and more cheaply than large, integrated producers. Nowadays, Sony Ericsson (like thousands of other firms) doesn't actually make a whole lot: It outsourced 66% of production in 2005, up from 5% in 2000, according to market researcher iSuppli.
Not that companies want you to know this. No matter what you're shopping for, they're betting you'll pay more attention to the brand name than to what's inside. But by peeking behind the scenes, you can save a ton of money and get everything you want--except the label.
• Consumer Tech
Pricing in the electronics industry relies on keeping you in the dark. Every brand takes advantage of jargon and technical specs to convince you that its product is unique and better than the competition's. That's not always the case. Whether your home PC is a Dell or an HP, it's likely that its micro-processors, hard drives and graphics cards came from the same suppliers. Only a handful of companies manufacture the electronics for digital cameras. That's why, when some Sony image sensors failed recently, Nikons, Canons and Fujis had to be sent back to the shop too. And big flat-screen TVs? Five companies (Fujitsu-Hitachi, LG, Panasonic, Pioneer and Samsung) make 99% of the world's plasma panels--which become the screen of a plasma TV--but they sell those panels to other brands on the market. Geeks take pride in deciphering these puzzles; seek their counsel at sites such as AVS Forum (avsforum.com) and CNet.com, and they'll help you figure out what's bunk and what's a bargain.
The Deal You may be paying $3,000 extra for things you'll never even notice.
The Vizio lacks a tuner, but if you have a cable or satellite box, you don't need that anyway. Only you can decide whether you like a TV's picture, but if the Vizio looks good to you, you're not sacrificing any reliability by going for the no-name brand.
Is it a Panasonic or a Leica? With an X-ray, it's hard to tell the mainstream from the high-end.
Specs They Share 1 Leica DC Vario-Elmarit lens 2 8.6-megapixel image sensor 3 2.5-inch display with 207,000 pixels 4 Self-timer with two- or 10-second delay
The Deal You're paying $200 for Leica's fancy reputation.
Sure, the D-Lux 2 comes with a larger memory card and different software, but thanks to a joint venture agreement between the two companies (Leica gets digital know-how, Panasonic gets Leica optics), the lenses and technology are identical to those of the more proletarian Panasonic.
• Performance Outerwear
MOST DAYS, your clothing has one job: to make you look good. Except, of course, for outerwear, which is designed to keep you warm and dry on the slopes or on a camping trip. And so there are various waterproof treatments and insulation materials, not to mention companies, including W.L. Gore (Gore-Tex), Malden Mills (Polartec) and 3M (Thinsulate), that consumers have been trained to ask for by name. But just as one computer with "Intel inside" is comparable to the next, one jacket with a Gore-Tex membrane will keep you as dry as another Gore-Tex shell, regardless of brand. And there isn't all that much difference between Gore-Tex and an in-house technology that does the same job (Patagonia's H2No or Columbia's Omni-Tech, for example). "They're all based on the same technologies," says Kurt Gray, who has designed clothing for the North Face, Lowe Alpine, and 3M. "Among mainstream brands, there isn't an in-house waterproof breathable that doesn't work great."
Arc'teryx Theta AR ($450) VS. Eastern Mountain Sports Backcountry ($325)
Hardware Both have underarm zippers, adjustable hoods and drawstrings.
Zippers Both have fused zippers that have been laminated to keep out water.
H2O Resistance Both garments are seam-sealed, three-layer Gore-Tex jackets that are equally waterproof.
The Deal Unless you're in the 10th Mountain Division, the Theta may not be worth the extra $125.
The Theta is a bit lighter (by about eight ounces). That may matter to hard-core outdoor enthusiasts who count every ounce they carry, but if you don't, buy the Eastern Mountain parka and spend the extra money on lift tickets.
PLATFORM SHARING--building several cars from a common set of parts--has been an open secret of the auto industry for decades. Sometimes it results in vehicles that have far more similarities than they do differences. For example, the Volvo S40 and the Mazda3 share 40% of components (including the transmission, suspension and brakes) and perform similarly on the track, but they start about $6,600 apart in price. Is that a fair premium for a Volvo with eight more horsepower? "That's where a little knowledge can help," says John Wolkonowicz, an analyst at automotive-consulting firm Global Insight. "Some platforms are fundamentally good, and that's one of them." If you are in the market for a new car, go ahead and dream of a luxury model, but also be sure to test-drive its humbler cousin.
The Deal How Swede it isn't. The 9-2x ("the Saabaru") is a far cry from the old, quirky models that used to come from the land of the ice and snow. The 9-2x does have different interior and exterior details, as well as a retuned suspension, but otherwise it's as Scandinavian as sukiyaki.
The Deal The original, and still the best. The Impreza, on which the 9-2x is based, is one of the great values in the world of small wagons--and is a hoot to drive as well. Both brands used to be under GM's umbrella, but Subaru is now attached to Toyota.
Don't be Hoodwinked by What's on the Hood
FOUR COMPANIES MAKE 90% of the home appliances sold in this country--under more than a dozen brand names, of course. Whirlpool, for example, manufactures KitchenAid, Whirlpool, Roper and Estate; Maytag also makes Amana and Jenn-Air. And they all make products for Sears' house brand Kenmore, which doesn't actually manufacture anything. Suffice it to say, there's plenty of technology shared among brands. "Consumers don't tend to worry about where the product is made, as long as it's designed for them," says Paul Klein, general manager of brand and advertising at GE (which makes appliances under the Hotpoint, GE, GE Profile and GE Monogram brands). "So we of course try to look at where there are common platforms and how we can take advantage of that." Two dishwashers, for example, may clean dishes exactly the same way, using the same jets, motor, drain and filter, but you'll pay for "platform independent" conveniences: hidden controls, a timer or an automatic dish-dirt detector. When you're at the appliance store, keep in mind that the most expensive mainstream product and the least expensive premium product from the same parent company may be basically the same thing.
Whirlpool $1,399 VS. KitchenAid $1,699
The Whirlpool and the KitchenAid are manufactured in the same plant in Fort Smith, Ark. They share the same dimensions, cooling systems, dispensers and filtration technology. Where they differ is in features and exterior design elements.
CHILL OUT This Whirlpool fridge has a shelf where the KitchenAid has a wine rack. SEE CLEARLY Both have H2O filters, but the KitchenAid's is larger. BE COOL The Whirlpool has one freezer drawer. The KitchenAid? Two.
The Deal Three hundred bucks for a wine rack and a freezer drawer?
Seems like a considerable chunk of change when you consider how much else is the same. Both refrigerators are EnergyStar certified and have the same power demands, so operation and maintenance costs are identical. Better deal: Get a dedicated wine fridge for your $300, or a case of Saint-Emilion--it doesn't even need to be chilled.
When It's Different
Whether you're indulging a hobby or a spouse, there are times when you'll want to spring for the expensive stuff. Here's when it's worth it.
• It's Lightweight
In consumer electronics and technical gear, shaving pounds and ounces takes money and expertise. "Lighter fabric takes longer to make, because the fibers are so little," says outerwear designer Kurt Gray. Eventually those refinements appear in lower-priced products, but by then there's something even smaller and lighter in the pipeline.
• It's Brand New
Refinements are one thing, but if you want to be the first on your block with, say, an HD-DVD player or an induction cooktop, you're going to pay for that privilege too: New technology always starts out pricey. If you can wait until it hits the mass market, you'll pay less--but by that time everyone will have one.
• It's Custom-Made
Appliances that match your kitchen cabinetry will cost more, as will a computer built to your hard-core gaming specifications. The good news: You'll often get better customer support on custom products. The bad news: They can be hard to return.
• It Really Is Different
Knowing who makes what can make all the difference--so long as you're comparing apples to apples. But a front-loading washing machine, for example, is fundamentally different from a top-loader: It uses less water and treats your clothes more gently. That costs money, and it should. Put your dollars toward real differences in technology--not just needless whiz-bang features.