Apple - What A Difference Eight Years Can Make

conq writes "It's been eight years since Michael Dell was asked after a speech at a Gartner conference in Orlando what he would do if he were in charge of Apple Computer. His answer: Shut the company down and give the money back to shareholders. BusinessWeek in its new Byte of The Apple Blog looks at how the tables have turned since then. For example, over the last four quarters Dell has been coming in with a net profit margin of about 6.5%. Meanwhile Apple just finished its fiscal 2005 with a profit margin just shy of 9.6%."

Comments

Apples to Apples

[erick99]

Micheal Dell would have been smarter had he reserved judgement. Arrogance can sure come back 'round and bite you in the ass. In terms of profit margin one has to consider that Dell is bringing in revenue of around 14 billion a quarter versus Apple's 4 billion so I am not sure how to judge the differences in profit margin given the difference in revenue. Dell probably has a great deal more infrastructure. Oh, well. Just saying we should make sure we are comparing Apples to Apples (funny, huh?).

Re:Apples to Apples

[TimmyDee]

True, but in terms of a financial future, Apple's is certainly brighter in spite of their smaller market cap. Dell's business model inherently undercuts its financial stability. In order to stay competitive, they need to continue to cut costs. Pretty soon, cutting costs comes at the expense of things like customer service, R&D, and other things that are required to maintain a viable, growing business.

Apple has certainly come a long way since then. I think it's safe to say that we are comparing Apples to Apples in this case, since Apple was on the track to commoditization in the mid to late 1990s. However, when Jobs took over, they made a conscious decision to move away from commoditization and towards innovation as their primary driving force. What I think we're seeing here is the results of that decision. Had Apple continued down the path they had set out during Spindler/Amelio, they would have ended up like Dell -- perhaps a larger market share in the short term, but a much more dismal future outlook. Instead, they are a vibrant company that has great promise to grow its market share in a far more sustainable fashion.

Re:Apples to Apples

[Golias]

I'd previously been an advocate of this since it is my current opinion that I will never buy Apple's overpriced, proprietary hardware BUT... ... you will buy overpriced, proprietary hardware if it says "DELL" on the front with that slanty "E"?

The more I use my Dell Latitude in the office, the more I appreciate how much my iBook is worth every penny I spent on it. YMMV, obviously.

Re:Apples to Apples

[TGK]

I think you're using the term "Commoditization" in a different way than I would.

While I ponder what you mean by the word, let me interject my views here. Yes, Apple has turned down a path of trying to sell innovation... but only sort of. Apple is more in the buisness of selling "little and cute."

I don't mean that in a derogitory fassion. Little and Cute seems to be making them buckets of money. I think that Apple's revenue stream comes from a fundamentally different viewpoint on the same basic idea. Apple sells brand name consumer electronics. They have a look and feel to them that says "I'm an Apple." Like many consumer electronics, they do exactly what they're billed as doing and little else. In the case of the iPod line is this restrictive, but appropriate.

In the case of the G4 line, this is less restrictive (though still somewhat limiting for those who don't fall into the Unix poweruser category). Fundamentally though, I think that Apple's success stems more from their successfull attempts to brand their systems as more of a appliance than a tool. There is a fine line that they are walking with the desktop/laptop products they make, but even in that case, there is definately a feel to them as being less generalized than a pc.

Apple has definately hit on something here, but they have to keep running. The question for the next eight years will be this. Can Apple summon the willpower to keep running?

Re:Apples to Apples

[MECC]

"cutting costs comes at the expense of things like customer service, R&D"

Dell does R&D? To them it must mean 'ruin and destroy'. We haven't had a dell server that hasen't had some kind of hardware problem - out of dozens. Our Apple servers haven't had any problem at all.

I guess by 'shut it down', he meant what would happen if he ran a company that had to make good hardware to stay afloat....

Re:Apples to Apples

[SydShamino]

Pretty soon, cutting costs comes at the expense of things like customer service, R&D, and other things that are required to maintain a viable, growing business.

Pretty soon? R&D is the first thing they cut when things go bad. Heck, I even watched a television show about Dell that explained precisely this as their corporate strategy.

I was offered an R&D job at Dell when I graduated from college years back. I am so glad I didn't take it; I would have been layed off in less than a year when the 2001 recession took effect. Instead I work for a company that invested in R&D through the recession and is now reaping those benefits.

Re:Apples to Apples

[Mr. Underbridge]

Dell's business model inherently undercuts its financial stability. In order to stay competitive, they need to continue to cut costs. Pretty soon, cutting costs comes at the expense of things like customer service, R&D, and other things that are required to maintain a viable, growing business.

Yeah, that's working out terrible for both Dell and Walmart. There will always be a market for the cheapest major vendor for any product. Always has been.

In general, I'd say Dell's future is at least more stable because the market for computers is stable and certain. Apple's fortunes are completely tied to the iPod right now, and that's a market that's less certain. For Apple to maintain their fortunes, they need to either hit another home run, and/or keep up their 75% market share in the portable player market. Both are tough, though not impossible.

Re:Apples to Apples

[Wellspring]

Dell moved in the direction of building a commodity product-- that is, he wanted what economists call "perfect competition" where products are interchangable and people are cost-sensitive. Then his excellent supply chain let him undercut everyone on price and still make a tidy profit.

In a perfect competition game, low costs are EVERYTHING. You stick to open standards and off the shelf components. With high volume from having the best price, you get the volume you need to improve your costs even further through economies of scale. Not alot of profit per box, but LOTS of boxes.

Apple's strategy has been what economists call "monopolistic competition", where products are imperfect substitutes for one another, and buyers are willing to pay a premium to buy a product that better suits their needs. Apple's high quality, feature-rich, very fashionable product is a luxury item.

Apple's costs are high, but their prices are even higher-- giving them those very nice profit margins. In a luxury item game, your only challenge is when others try to imitate you at the top end of the market-- something that Apple's proprietary software helps protect them from. You don't need alot of market share to win at that game.

I'm a big fan of Gil Amelio-- his reforms helped get apple back on track, and I think Jobs took much of the credit because he was around when Amelio's reforms started to pay off. But Jobs and Jobs alone deserves credit for building the boutique business that took Apple from "no longer in danger of collapse" to "no longer in danger of mediocrity".

Re:Apples to Apples

[jcr]

Dell does R&D?

They do, but it tends to go to researching ways to reduce production costs.

-jcr

Re:Apples to Apples

[fermion]

Companies whose primary innovations is low price are not stable firms. Look at how easily Walmart took out Kmart. Cheaper prices, less ghetto, more customers. Walmart did much good in lower prices through a better supply chain, just like Dell, then continued by cutting off any supplier that did not provide deep disccounts, or, even better, just contract the factory. Now, in desperation, walmart is resorting to illegal employee pracitices, like illegal aliens, withholding wages, and the like. At some point, keepping prices low will result in signficant executive reductions, and will result in the problems we have seen with other big retailers.

What Walmart and Dell share is lack of growth prospects. In the US all the people with no choice already shop, and the only others that shop at Walmart are the very rich looking for some chic trash for their third home. Walmart is not finding much success in finding new lands, and the foriegn market has not been success, as Walmart cannot meet local needs. The problem them becomes supporting the huge infrastructure. The very existance of the computer networks, warehouses, and trucking liabilities is what makes Walmart such a juicy target. Anything as large as walmart is inherently ineffecient, and must at some time collapse under the weight of it own excess.

On the other hands, firms of more reasonable size,that can more easily changes in market conditions, are more likely to work out. Look at how Target was able to redevelop it's image and capture the very customers that Walmarts now covets, but are unlikely to shop at a store whose main purpose to push cheap products.

Re:Apples to Apples

[jayratch]

Dell does well because they make decent stuff cheaply.. They are the Honda of computer makers, and though they ain't perfect, they are pretty darn good and TONS of people like 'em.

Umm, No.

I've owned Hondas. Honda cars last forever and ever and are painfully bland. I put 99000 miles on a Civic and had one problem... a turn signal switch that didn't return automatically. I got rid of the car because it bored me.

Honda also makes excellent motorcycles, ATVs, lawnmowers, etc, and in every area of industry that they exist, their customers swear by them, and their products are innovatively designed with intelligent features and bulletproof reliability.

Not terribly unlike Apple.

Dell, on the other hand, would more aptly be compared to one of the American car companies, say back in the nineties before they started to wake up. Mediocre products that, when it really comes down to it, are just ever so slightly lacking in quality or innovation, slightly subpar design, but sold in huge numbers because of price and familiarity, and the oft misplaced "buy American" philosophy. (Not sure this applies quite as much, as most American car makers are starting to correct themselves, but it's still mostly true.)

I think you're trying to compare Honda and Dell on the commodity nature of their product? Hondas are commodities because of another attribute of commodities: they're reliable. A true commodity item, ie coffee or oil, does not vary substantially in quality, and can be reliably priced as a function of supply and demand and other market/economic forces. Honda cars are ubiquitous enough to ALMOST meet this definition, but even in that case, consumer perception plays enough of a role to skew it off; people will pay more for a Honda than for a Chevy, to the tune of paying >sticker vs sub-invoice.

Sadly, you're right about "tons of people like 'em". I got a phone call recently from a friend who wants help picking out a Dell laptop. It has to be a Dell, he says, because his company gives him a discount with Dell. You can't compete with them on price alone, and to most consumers that's all that matters, especially when you have a geek family member to fix it when it breaks. I've had at least three Dell laptops, and while they were decent for the price, I'd never actually pay money for one. The only computer I've ever bought in once piece was a Mac, and I'm never going back.

R&D

[BWJones]

Fundamentally, Apple Computer has invested in research and development and has come out with revolutionary products that functionally make things easier while Dell has simply operated as a reseller and box builder. Where is the innovation coming out of Dell?

Although I just yesterday placed an order for two $379 commodity boxes from Dell that I will run headless behind OS X boxes for security reasons, almost all of our purchases have been going to Apple. From the Mac Mini to iMacs to dual G5s with 30in Cinema Displays, Apple has been building systems around an operating system, OS X that meets our needs. In addition, the security issues make them easier to administrate, freeing up time to get work done that we are actually interested in.

Re:R&D

[Richard_at_work]

Why does there always have to be innovation? Dell is Walmart - stack it high, sell it cheap and make profits in the process, wheres the need for innovation in that? Let others spend the money to do that, when theyve perfected what the market wants, you step it and do it a billion times with better margins.

Re:R&D

[brkello]

You know, there are different types of innovation. I just attended MILCOM and one of the guest speakers was talking about innovation and they listed both Apple and Dell. What did Dell do? They innovated the process of purchasing and distributing a PC. They are able to offer lower prices and make PCs accessible to a greater number of people. You may not think that type of innovation is as important as Apple's...but really, Apple didn't do anything technically innovative. They are innovative in design and user interfaces that appeal to the masses.

Comparing Apple to Dell is comparing apples to oranges. Saying one company is more innovative than another is just plain silly. They have totally different business models. Then trying to back up your opinion by saying your organization is buying more Apples than Dells is totally irrelevant. Who cares? I really don't get the emotional attachment to tools. Apple systems are a tool. PCs are a tool. Just like any tool, there is a right tool for the job.

Re:R&D

[anaesthetica]

...Dell has simply operated as a reseller and box builder. Where is the innovation coming out of Dell?

That is exactly where Dell's innovation lies: in being able to produce on the fly boxes in large or small volumes customized to the user's designs at a very low cost. Their innovation is in logistics and supply chain, not necessarily computing technology. Still, it is a genuine innovation, and one that has made them piles of cash.

Re:R&D

[rsborg]

I just attended MILCOM and one of the guest speakers was talking about innovation and they listed both Apple and Dell. What did Dell do? They innovated the process of purchasing and distributing a PC.

Problem is, Dell's innovation wasn't something they could patent and protect, whereas, with Apple, some of their innovation is very protected (OSX UI, iPod interface, iTunes, iTMS exclusive contracts, etc).

Taking a look at Apple's supply times and online ordering capabilities, they have not only copied Dell's direct-to-customer innovation, but even gotten some of Dell's efficiencies of scale in effect. Problem is, Dell relied on:

• Microsoft to push the (software) innovation angle
• Intel to push the hardware innovation

Leaving them to really innovate in the supply chain area...

However, now that both MS and Intel are no longer the innovation leaders, and they have their own troubles to deal with, Dell is stuck without any way to push those companies to do that innovation. It remains to be seen whether this will mark a slow decline in Dell's fortunes, or they make a bold move to re-establish themselves as not only a market leader, but innovative and interesting.

Re:R&D

[nathanh]

Fundamentally, Apple Computer has invested in research and development and has come out with revolutionary products that functionally make things easier while Dell has simply operated as a reseller and box builder. Where is the innovation coming out of Dell?

Huh? Enough is enough with the Apple fantasy. The iPod was a concept introduced to Apple by Tony Fadell. The iTunes software was called SoundJam and it was bought; it did not spring forth from the forehead of Steve Jobs. The Mac was Raskin's idea which he came up with while at university and he had to fight Apple to convince them it was worth pursuing as a product (or more accurately, he had to wait until Steve Jobs believed it was Steve Jobs' idea). The MacOS itself was an entirely unimpressive operating system - quite retarded in many ways - the only interesting thing was the GUI, which was a decades old R&D field even in the early 80s, and even then was mostly a slick implementation of ideas developed at Stanford and PARC.

Apple is not an R&D company any moreso than Microsoft or Sun or (god forgive me) Dell. They all invest in R&D to some piddling extent but even that is mostly for PR. The real R&D powerhouses are the universities. If you want to see where computing will be in 10 years, you don't look to the Apple website, you go and speak to the postgrads at MIT or UCB.

Apple is primarily an integration company. That's what they're good at and that's why their products are slick. They take ideas which have been figured out by university postgrads, they integrate them into an existing product line, and they apply a whole lot of polish and elbow grease. Apple takes ideas that others have developed, they file off all the sharp edges, they wrap it in glitter and they put it in a box that the great unwashed (you and me) can purchase. Is that innovation? Only if you devalue the word until it has no meaning.

More than this, your attitude of dissing Dell really pisses me off. Anybody who thinks Dell isn't as interesting a company as Apple has their head stuck so far up their arse they can see daylight. While Apple has focussed on integration to please the end-user, Dell has done an incredible job of integration to please the PURCHASER. Dell can deliver high volume at a low price with reasonable quality. They also have tight integration between sales, factory and shipping. They have after-sales support that is truly excellent; next-day hardware replacement, no questions asked. In my corporate dealings, I'm always pleasantly surprised with Dell's business acumen, even though with my techie hat on I'm always slightly disgusted with the hardware.

Contrast that with Apple who after more than 20 years still couldn't sell their way out of a second hand car yard. I've owned 6 Apple computers over the past 10 years and although I'm usually pleased with the hardware/software, I'm constantly pissed off with the rest of their business. Everything from the initial sale to the after-sales support and service is just atrocious. I would love nothing more than to recommend Apple desktops to corporate buyers, but in the few occasions where I've seen it attempted the after-sales support from the Applecentre has been so abyssmal that the customer has sworn off Apple and returned to (you guessed it) Dell and Microsoft.

Michael Dell is really crying

[Reality Master 101]

For example, over the last four quarters Dell has been coming in with a net profit margin of about 6.5%. Meanwhile Apple just finished its fiscal 2005 with a profit margin just shy of 9.6%."

As a wise man once said to me about allowing investors in my company, "Would your rather have all of a grape or a slice of watermelon?"

Apple is dying!

[Generic Guy]

With Dell's recent quarters slipping and Apple's recent quarters showing growth there can only be one conclusion:

Apple is dying!

Re:Apple is dying!

[macrom]

Apple is dying!

Don't you mean beleaguered ?

Which would you rather?

[tkrotchko]

I'd rather have 6% of a huge number than 9% of a large number.

No seriously, Dell is an amazing company when you consider they are competing in one of the most cutthroat market segments in high tech. IBM sold the last bits of their PC business a few months ago. Gateway is now pretty much irrelevant... even the Japanese titans can't compete with Dell.

Re:Which would you rather?

[DarkBlackFox]

..And as a result of all it's cost cutting and cut-throat business tactics, Dell may eventually implode under itself. I'm not saying it will happen overnight, but like many here on Slashdot, I work "in the industry." I work for a small computer sales/service retailer, and over the past 2-3 years I've experienced a sharp increase in the number of Dell computers coming in for service, relative to the number of other brands. Granted, many were for virus/spyware infections, and the large number may be more because of larger market share. Beyond viruses though, I have seen more than enough Dell components fail, particularly the lower end/bargain models, both Desktops and Laptops. Ordinarily that wouldn't bother me, but I've heard from customers how bad Dell support is now, with the call centers moved offshore. I've had to fix Dell computers still covered under warranty because the owners got so fed up with trying to get help from the support lines.

A number of years ago, Dell built it's business up on quality parts and service- winning numerous awards for customer service, and were recommended all around. The beige box Dells in particular, which went for over $1500, were pretty solid machines. Back when profit margins were high enough to cover the costs of quality support. Now the conditions of the market have changed, and Dell has to trim the fat off what's already become an anorexic business model to stay competative. People who once came in to my shop swearing by Dell now swear AT Dell, and promise to never buy anything Dell again, after their 6 month old Inspiron 1150's LCD inverter burnt out, and Dell refused to replace it, even though it had a year warranty. Despite numerous calls, all the call center would say is insert the recovery CD and reinstall the operating system.

Bottom line- Dell became the bohemoth it is now based on reputation of quality machines. Take the quality out, and they are just another retailer. They still enjoy brand recognition, and the higher end systems aren't too bad. But they grow marketshare by offering $299 PCs, and $699 laptops to anyone who thinks any Dell is a good Dell, even if on the cheap (without understanding that You Get What You Pay For). As a result, it's userbase will slowly erode away.

Re:Which would you rather?

[jsight]

I can't agree... I've dealt with their support online through the chat system and it was absolutely phenomenal. I actually had a rather cheap Dell laptop with some major overheating issues (design issue, many of the same model had) and they absolutely made the situation right, even out of warranty!

Re:What was the total profit for those quarters?

[Anonymous Coward]

Really? So you would rather own shares in a big company that returns you 6% on your investment, than own shares in a small one that returns 9%?

I think you might want to re-think that.

Glad to see Apple turned around...

[RandoX]

Although I've never owned an Apple Computer myself (just an iPod), I remember playing on a friend's Mac when I was younger and felt sad to see the company in trouble. It's nice to see a company turn around and become profitable again. Probably human nature to root for the underdog, but anything that stimulates competition and consumer choice can't be all bad either.

Re:Glad to see Apple turned around...

[soft_guy]

It is nice to see a comment like this from a non-Mac user. I can't help but think that more choices are better and that's why I've always been so baffled by folks who root for Apple to go out of business.

I only use Macs, and I was sorry to see the Amiga come to a bad end. I was sorry that Be didn't make it. I applaud when Linux makes gains. I don't wish for Windows to disappear.

He may have been right anyway.

[Jerry Coffin]

It may sound arrogant, but it's entirely possible that Mr. Dell really had it right -- Apple's making 9.6% profit margins today, but certainly hasn't for that entire eight years. The real question isn't "how well is Apple doing right now?", but "would the stockholders be better off if they'd invested elsewhere?"

At the same time, the fact is that most stockholders are reasonably intelligent adults, and (IMO) it's perfectly fine that it's been left up to them to decide to keep their money there instead of investing elsewhere. If the investors had all agreed with Michael Dell, Apple would simply be gone -- or perhaps, like SGI, being de-listed for having too low of a stock price.

--
The universe is a figment of its own imagination.

Re:He may have been right anyway.

[kmo]

The real question isn't "how well is Apple doing right now?", but "would the stockholders be better off if they'd invested elsewhere?"

Eight years ago a share of AAPL was selling for $4.61 USD (split adjusted). It is currently selling for $60.68 USD. I'm sure any investor that stuck with them for those 8 years is pretty happy with the decision.

Re:He may have been right anyway.

[MasonMcD]

It may sound arrogant, but it's entirely possible that Mr. Dell really had it right -- Apple's making 9.6% profit margins today, but certainly hasn't for that entire eight years. The real question isn't "how well is Apple doing right now?", but "would the stockholders be better off if they'd invested elsewhere?"

Actually, if you look at any period in comparing their stock up to today, unless you bought Dell nine years ago or earlier, Apple's stock has performed better. Plug in whatever time period you like.

http://money.cnn.com/quote/chart/chart.html?showna v=true&pg=ch&symb=AAPL&time=8yr&compidx=aaaaa~0&co mp=DELL&ma=0&maval=60&freq=1dy&type=2&uf=0&lf=1&in d_compind=

http://money.cnn.com/quote/chart/chart.html?showna v=true&pg=ch&symb=AAPL&time=7yr&compidx=aaaaa~0&co mp=DELL&ma=0&maval=60&freq=1dy&type=2&uf=0&lf=1&in d_compind=

etc.

Re:Could have been lucid advice at the time..

[drhamad]

If everyone followed what something looks like at the time, because of their fiscal or market share position, all the PC companies should have shut down in the face of IBM, or even before that IBM should have not started a PC division because Apple ruled that world. TWA should have sold out to Pan Am. Torvalds should have joined Microsoft. T-Mobil would fold up in the face of Verizon. The Bell's would never have formed Cingular.
etc etc.

If "lucid advice" just means /;the company looks like it's doing badly," we'd never have half the innovations or companies of the world.

Stock market is flawed

[imag0]

If you think about it, the stock market does not award companies for doing well, maintaining a good fiscal outlook and treating it's employees good, it awards companies that grow. What happens whenever a company has utterly grown itself so large that there's really no room to go anywhere (ala Microsoft)?

Sure, it's a treadmill that everyone wants to get on, but it wears down and kills all but the strongest. Not to be outdone, it drives competing companies against one another to the point that now, a little over a hundred years later, companies are little more than rabid beasts. Clawing and looking for any way to get a little larger piece of the pie. If they slip in the slightest they are injured. If they slip a few more times they can be ripped apart by other competing companies- broken apart by others more ruthless.

Anyone wonder why the laws and regulations are changing so much in favor of the big corporations?

They might not be able to get off the treadmill, but it doesn't stop them from coercing others to come to their aid.

Does that make sense?

Re:Profit Margins

[2nd Post!]

You can't conceive that perhaps Apple isn't over-charging, but that Apple offers more value (that is consequently worth more money) than Dell?

Case in point: A soda costs $0.05 at Taco Bell. It costs you $0.99.

Yet how much value is there for you in:
1) Lugging around syrup
2) CO2 canisters
3) Mixing equipment

Myself, I drink water, but the point stands: If Apple offers more value, Apple can effectively price higher and not be over-charging.

Another example would be the $0.99 burger at Wendy's. In raw part it would cost you only $0.25
Do you want to lug around a fridge, fresh lettuce, a package of buns, a grill, ground beef, and cheese whenever you feel like eating a burger for lunch?

It's not going to last...

[HerculesMO]

OS X is Apple's real core product yet, they are becoming more and more, instead of the Apple Computer Company, rather the iPod company. I know I may get modded troll, but I'd much rather see Apple making its sales off of OS X instead of on the iPod which is a relatively mediocre product in a sea of other mediocre products. Sure, the interface is great, the scroll wheel brilliant, but in the end it only does one thing -- play music (and videos now -- poorly).

The cost of entry to use a *nice* Apple is just too damned high -- and this coming from an Apple FAN! Microsoft is already seeing the consequences of its horrendous licensing schemes with the upstart of Linux use and development -- I am unsure why Apple cannot see the same thing.

There will be an iPod killer at some point -- when the iPod isn't as 'cool' as it is now. And just like the Windows 95 debut, the time will come that the all supreme market leader will be playing catchup. In Apple's case however, the fact that their business model is structured now around iTunes and iPods instead of the great OS they created is unfortunate and will put them in a predicament in the future.

The day Apple decides to put OS X onto a DVD and let you install it on your whitebox built computer is the day the grave is dug for Microsoft. With the closed environment of OS X right now, I liken it to Betamax and VHS. Betamax was a superior technology but because Sony wanted to keep the rights to themselves, they got beaten handily by VHS. In the future Betamax was a niche product -- and successful for video editors etc, but oh, what could have been?

I hope not to ask about Apple 5 or 10 years from now, "Oh, what could have been?" I worry more and more however, that I will wind up with a really nice and fashionable MP3 player and an OS that is used as a niche product, being better or not.

Re:It's not going to last...

[2nd Post!]

Financial data

Apple has made $1.6b from it's computers and $1.2b from it's iPods. Maybe this next quarter won't see the same relationship; but we may be surprised yet again!

Re:It's not going to last...

[R2.0]

"...the iPod which is a relatively mediocre product in a sea of other mediocre products. Sure, the interface is great, the scroll wheel brilliant, but in the end it only does one thing -- play music (and videos now -- poorly)."

So your definition of a great product is one that does many things as opposed to just one thing. Others have a different aesthetic - I would rather have a device that does 1 thing REALLY well versus doing many things.

For instance, I carry a great pocketknife. You would tell me that it's a mediocre pocketknife because it's not a Leatherman. But I'm not looking to carry a Leatherman - I want a pocketknife.

Re:It's not going to last...

[nine-times]

Why is this insightful?

in the end it only does one thing -- play music (and videos now -- poorly).

Uhhh... what should it do? I mean, besides play music, video, store contact info, calendars, photos, play games, work as a stopwatch, and work as an external hard drive, what is the iPod supposed to do?

The cost of entry to use a *nice* Apple is just too damned high

$500? Geeze...

There will be an iPod killer at some point -- when the iPod isn't as 'cool' as it is now.

Sure, *eventually* people won't be buying iPods, but when is that going to happen? Who's to say Apple won't be prepared? And what product won't become old and obsolete at some point? I'm sure Apple is shaking in their boots that the iPod won't be so trendy in 20 years.

The day Apple decides to put OS X onto a DVD and let you install it on your whitebox built computer is the day the grave is dug for Microsoft.

Maybe, but it's also the day their current business model is ruined. Apple is basically a hardware company that also makes the software to run their hardware. That's kind of how they work-- selling the whole package. I'm not saying being a software company, selling OSX, couldn't be a profitable business, but it would damage their hardware sales, which is, right now, their bread and butter.

Re:It's not going to last...

[FFFish]

The cost of entry to use a *nice* Apple is just too damned high -- and this coming from an Apple FAN!

How do you figure this? I purchased a 12" iBook this summer. It cost about the same as my last Windows laptop. The iBook feels as fast, or faster; it came with more memory, wireless, bluetooth, firewire, larger hard drive, and a far better OS. And it looks to me that a Mac mini is about price-equivalent to low-end Windows boxen.

I'm not exactly seeing the "too damned high" here. Perhaps 10% higher price, but with more than 10% extra value, IMO.

Re:It's not going to last...

[pauljlucas]

The day Apple decides to put OS X onto a DVD and let you install it on your whitebox built computer...

For the millionth time, this will never happen. Aside from the fact that Apple is a hardware company and the $99 price of OS X is enormously subsidized by the sales of hardware, OS X isn't (and never will be) developed for and tested on the myriad of PC boxes having various motherboards, video cards, sound cards, etc.

One of the reasons OS X works so well is because Apple knows exactly what hardware it will run on -- their own. Apple doesn't want to deal with the nightmare of having to support OS X on a generic PC box. Besides, what kind of support do you expect for $99? Do you really expect that a Mac Genius at an Apple Store is going to spend time diagnosing OS X on your PC?

The cost of entry to use a *nice* Apple is just too damned high

Not really if you compare it to a comparable PC. That aside, apparently Apple doesn't care that some people can't afford their computers just like BMW doesn't care that some people can't afford their cars. Yet you don't hear people bitching about the price of BMWs. A Mac is simply better (not to mention more stylish) hardware that "just works" with a killer OS. Better things tend to cost more. Get used to it.

Re:It's not going to last...

[Slackrat]

Yet you don't hear people bitching about the price of BMWs.

That's because it's hard to hear much of anything over death rattle of my Volvo station-wagon.

Check out their stock performance

[Cr0w T. Trollbot]

Here's a comparison of Apple's stock vs. Dell's stock over the past five years.

Buying Apple five years ago would have netted you a 450% profit. Buying Dell five years ago would have netted you...a small loss.

Crow T. Trollbot

Re:Check out their stock performance

[DECS]

No it tells the same tale:

Dell's performance has passed - five years back.

Dell is now in the position of trying to find new markets for the same old PCs. They rely upon Microsoft to for OS software innovation, and have no real software development efforts that will spur new hardware sales. They rely on MS' WMA to run their mobile music products, and WMA has failed dramatically. PocketPC has also done poorly, as have tablet PCs and everything else MS has offered its licensees lately.

If MS scores big with the XBox, it may turn into strong competition for gamer PCs, which comprise a significant chunk of Dell's high end PC sales. Dell can't be happy to have MS competing with its bread and butter while they rely on MS for their OS.

Apple grew PC sales of ~43% vs Dells ~17% this last quarter, and made higher margins on each sale. Plus, Apple's hardware sells new copies of OS X, and Apple software: low end iLife, and pro apps ($500-$1000 apps) like Logic, FCP, Soundtrack Pro and Aperture, which in turn sell 30" displays. iPods sell Macs, Macs sell iPods. iPods sell iTMS music tracks. Macs sell .Mac subscriptions.

All of Apple's software/services add profits that Dell will never see, because Dell sells no software. And that software buys customer loyalty.

Dell is in a huge pinch because anyone who buys a Dell does so because the price is OK. If HP or CompUSA offers a cheaper PC 3 years down the road, that customer has no reason to stick with Dell.

Apple customers, three years down the road, would have to find replacements for all their software in order to buy a PC from another vendor. Plus their stuff wouldn't work swimmingly together as it does now. Dell customers have loyalty as long as Dell is cheap.

Dell's drive into new markets has involved disposable printers with proprietary toner carts, and home theater. But who wants a Dell home theater? They have massive competition in the TV space, and its difficult to differentiate in that market. Dell is competing in price with Apple in the large flat panel display space, but there's nothing but TV to drive PC sales of 22 to 30" displays. Apple has an entire new wing of Pro apps that take advantage of dual 30" displays.

Dell:
no obvious growth markets
beholden to Microsoft to supply its vision and leadership into new markets
competing with major PC vendors and retail outlets selling commodity PCs, and home built parts PCs
competing with cutthroat TV / home theater makers
competing with cutthroat printer makers

Apple:
obvious growth markets:
  - owns 75% of music downloads, music players, owns podcasts, and poised to take over portable video
  - owns UNIX on the desktop (promising markets in higher ed, biotech, super computing servers, film)
controls its own vision and leadership in developing new markets
isolated from competition
  - owns its own PC designs, its own OS, its own web development and software dev)
  - mostly sells premium hardware (powermacs, powerbooks, xserves)
  - popular hardware for Linux users
  - great reputation for quality and reliability, good service
owns its own growing fleet of high fashion retail stores
owns the youth market with the iPod, and sells them the popular iMac / iBooks / Mac minis

So yes, you're right. The story is that the tables have turned: Dell was selling lots of PCs while they took over the market, but now Dell is in trouble and Apple is just getting started.

Was that really so wise?

[King_TJ]

I might actually say not.... The slice of watermelon requires a lot more work to eat. All those seeds to remove, and a messy outer skin you're left with afterwards too. The grape = instant enjoyment.

So too, it is with Apple. They might always just be a "niche company" compared to the PC/Windows market, but millions in profit is still millions in profit - and heading up a company you can truly be proud of can mean a LOT more than even more millions in profit on your ledger sheet.

As it was recently pointed out with portable MP3 players, how "cool" and "stylish" or "trendy" is it right now to wear around a player with a big, blue DELL logo stamped on the front of it? Compare that to carrying around an Apple iPod. Apple has achieved something no other computer company has ever really achieved -- the ability to make computers and technology "hip" instead of "nerdy/geeky/dorky".

So no, Michael Dell isn't "crying". He has one of the most successful businesses around mass-producing PCs as commodity items at as low a price as possible. But if I could be another Micahel Dell or another Steve Jobs, I'd have to pick Jobs. His company actually does R&D, experiments with possible product ideas just for the sake of seeing how they work out, and he still has time to head up Pixar - a company creatively doing very fun AND profitable things with computers.

Re:Was that really so wise?

[CastrTroy]

This is exactly where Nintendo is sitting. Nintendo will always turn a profit, and in turn, make cool products that people like. Sure sony and MS might outsell them, and make more money, but some companies are just happy knowing that they are making a good product that people enjoy, and being creative in the process. A company doesn't have to make the most profit, or sell the most units to actually be the best company.

Re:Was that really so wise?

[sedyn]

Claiming higher moral ground is one of the hardest things a person can do. It's near impossible for a company.

Why? Because every company wants money. To get money they have to have some appealing quality.

Dell, creates cheap computers, sells a lot of cheap computers, and when many customers* get what they pay for they call tech support which, due to the cost of computers, does not have the funding to properly support the number of incoming calls. Have you ever had to tell someone that their brand new laptop needs to be replaced? I can tell you that it's not pretty.

Apple* on the other hand is no saint either, they will justify any action in the name of high quality. To better service their customers, they'll open up an apple store, shutting the local apple store out of business.

*I own both products from both companies (this is being typed on an iBook, for instance), and have worked tech support for dells.

Low profit margins intentional

[G4from128k]

Dell does NOT maximize profits -- I've heard several Dell executives speak (including Micheal Dell) and their pricing strategy is more subtle that just maximizing the short-term revenue minus costs bottom line. In fact, they said that they will actually penalize sales divisions that create too high a profit margin.

The reason is that the higher the profit margin, the higher the price. The higher the price, the lower the market-share. Dell is more interested in gaining market-share than in maximizing price. For a commodity such as PCs, the way to achieve long-term success is high volume with a more modest profit margin. Undercutting competitors is more valuable than earning more on each sale.

The key is that total profits are a second-order curve as a function of price. Too low a price results in too low a total profit. To high a price means lower sales volume and lower total profit. The optimum price foregoes some profits per PC, but makes it up in volume.

Perhaps the big lesson is that Dell and Apple are NOT in the same business. Dell is just one more PC maker that sells a commodity that is strongly subject to price competition (Dell is very good at competing on this). Apple is a sole-source for an intrinsically valued product. Sure, some people do avoid Apple because of price, but many buy Apple (and don't even consider buying a PC) because of the unique value provided by Apple.

Re:Low profit margins intentional

[coult]

Of course they are maximizing profits...what about your description is not maximizing profits? They are simply choosing to use different model for their profit than just "next quarter" or "next year," and choosing to maximize total profit rather than profit margin as a percentage of cost. You seem to think that maximizing profit means maximizing profit margin as a percentage, which of course it does not.

Michael Dell shut down Dells Rep by outsourcing IT

[digitaldc]

Dell shut down Dell's good reputation for service (probably its only strongpoint beside price) when it offshored its support services to foreign countries. I have heard numerous complaints about their new support being not very helpful. Apple, on the other hand, has produced new, highly popular products that many people seem to enjoy and actually use. People get excited about new products that are fun and well-designed. Dell seems to think that people only care about cheap PCs.
In a race to the bottom, Dell's stock has suffered. It is now just another PC Maker, with little or no excitement or fun. Yes they are cheap, but they are not very innovative.
Read this article, it talks a bit about Dell:
http://edition.cnn.com/2005/BUSINESS/11/01/dell.ma in.reut/
On a personal note: NEVER buy a DELL printer, unless you enjoy a beeping misfit that jams intermittently during times it is needed most.

Re:Got some bad news for you Mr. Dell...

[RingDev]

" Not everyone is content with the same uniform workstation at home that they have to use at work / school."

Err hello, Macs historicly where completely homogenized, there was only 1 producer (Apple) and only 1 case style. Even now, sure, you can get a different color plastic bit, but all Macs in their product line will have the same case.

I don't understand why so many people are anti-microsoft and pro-apple. Apple is just as evil as Microsoft, just not as successful.

-Rick

Re:What was the total profit for those quarters?

[Golias]

Oh, you want to talk about ROI? Let's look at how the value of Apple's share has moved in contrast with Dell and their ilk:

http://www.itmanagersjournal.com/blob.pl?id=424489 9e4e6356c1df1ec7b8b67d8578

pwned.

More importantly...

[Winterblink]

... we can also focused on what hasn't changed: Michael Dell is still an asshole.

Re:Profit Margins

[argent]

Which would you rather have?

Depends on who I am. If I'm Michael Dell, probably the 6.5%. If I'm a stockholder or an employee, who has the same absolute amount of income or stock riding both percentages? I'll take the 9.5% thanks.

Re:Brown Apples ...

[MightyMartian]

The fact is that Apple is still around despite the idiotic pronouncements of a decade ago. Apple has shaped the computing landscape, and while it's still a small player, in the last few years it has done some pretty darn impressive things.

Re:Got some bad news for you Mr. Dell...

[sammy baby]

I feel compelled at this juncture to point out that your Civic has 170,000 miles on it.

My last car was a Ford Taurus. A bad fitting caused the radiator hose to pop off one day, which caused all the coolant to drain out, which caused the engine to completely overheat in fairly short order. Result: a few weeks later, the head gasket went. It would have cost about a thousand bucks to repair. That car had just shy of 100K miles on it.

170K suddenly doesn't sound so bad.

Re:Not Apple Computers

[Itchyeyes]

That's not true at all. Apple's last earnings report showed a 47% increase over last year in Macintosh sales. While that's not quite as impressive as the nearly 200% increase they showed in iPod sales, it's still incredibly good, especially when you compare that to the computer manufacturer growth rates and take into account the coming transition to Intel.

Re:What was the total profit for those quarters?

[MyLongNickName]

The comments made were from eight years ago. If you are trying to do an analysis on whether the comments were correct or not, you'd have to look at eight years... not one.

Try again.

Re:What Self Expression?!?!

[Ikn]

You're not looking at it in the right way; the machines compared to each other may not be unique, but choosing a Mac in and of itself, is the expression. And self-expression doesn't always mean sticking it to the man...but, in this case you are. The man is Microsoft.

Innovation vs. raw profit (Re:Apples to Apples)

[Anonymous Coward]

"Had Apple continued [commoditization], they would have ended up like Dell... Instead, they are a vibrant company that has great promise to grow its market share."

Well, here's the problem. The benefits of small market share, and in fact the entire Apple experience, are intuitive for a certain kind of person. Artists, fashion mavens, leftists, and other creative personalities can sit down with an R&D-heavy business plan and comprehend its sensitive, tasteful aesthetic. It's a rare instinct, this appreciation for beauty and truth; accountants and other such pencil-pushers haven't a prayer.

In summary, unattractive squares should stick to Linux and Windows. Vertical integration is for different thinkers.

Re:Innovation vs. raw profit (Re:Apples to Apples)

[shotfeel]

The benefits of small market share, and in fact the entire Apple experience, are intuitive for a certain kind of person. Artists, fashion mavens, leftists, and other creative personalities [imageshack.us] can sit down with an R&D-heavy business plan and comprehend its sensitive, tasteful aesthetic

I've always wondered about this view of Mac users, because from my experience, the people on the "opposite end" have traditionsally been heavy Mac users too. By "opposite end" I mean scientists and researchers. Particularly in University research labs yoiu find Macs all over the place (and have for decades). Its in the business domain that Window and Intel have domintated.

Re:Innovation vs. raw profit (Re:Apples to Apples)

[pomo monster]

Scientists, particularly in academia, probably fall into the category of "...and other creative personalities." Think about it. They're unafraid to question established doctrine. They rave about theoretical "elegance" and "beauty," in fields ranging from physics and mathematics to astronomy and earth sciences. Science used to fall under philosophy's umbrella, you know.

Re:Innovation vs. raw profit (Re:Apples to Apples)

[CptNerd]

Well, I'm about as conservative as they come, and I've been a Mac owner since '91. I was a Mac programmer for two years before that, thanks to a DARPA project I wrote code for. From then on I've appreciated the ease of use and general trouble-free nature of Macs. I tried to go Linux for a while, but I was spending most of my time just keeping up to date with kernel patches, new versions of applications, and just trying to keep XFree86 recognizing my graphics card/monitor. I'd much rather spend my time just using the computer than trying to maintain it.

Gee, I've stayed with the same platform for nearly 15 years. How... radical.. of me.

    ^======^

Re:Innovation vs. raw profit (Re:Apples to Apples)

[silverkniveshotmail.]

It's hard for some people to understand that just because a lot of the loudest mac users are like that it doesn't mean most mac users are.
and everone seems to think that everyone who has a mac is exclusively a mac user. We have 3 PC desktops and 3 apple laptops between the three of us.

Re:Got some bad news for you Mr. Dell...

[SquadBoy]

Only if you consider some random store brand of tool to be comparable to Dewalt. Granted you *can* and I have and do build high end PCs that a pro would be proud to have for a tool. You can also buy Macs (12" iBook in my case) that will take your breath away and make you glad to compute again.

Pros have *always* been willing to pay for their tools and to reject the low end. I have a hard time understading why so many people working with computers have a hard time with this concept. But clearly I'm serious about my tools. This is why a mix of high end PC gear and Macs are my tools of choice.

Apple is the Dewalt of the computing world.

Re:Not Apple Computers

[eqkivaro]

Actually, I'm going to take my comment back. It's not that the apple computers aren't selling well. The point I wanted to make is the turnaround in company performance has MORE to do with the iPod peformance. Not just from a sales standpoint, but an image standpoint.

FWIW, from the latest 10-Q, sales this quarter compared to the same quarter last year show that desktop sales increased 65%, laptop sales increased 8%, and iPod sales increased 616%(!!).

link to the 10-Q: http://media.corporate-ir.net/media_files/irol/10/ 107357/reports/10QQ3FY05.pdf

Re:What Self Expression?!?!

[JLEGERE]

Ok, I'll give you that - but HOW is it an expression? By simply choosing not to use the defacto computing platform? I guess I just don't understand the whole moral superiority complex that Mac Fanatics carry around with them.

Is it just because they're such a minority and feel the need to stick together? I've owned Macs and PCs and liked them both for different things, but I really didn't get any enlightenment from using either. So not sure where the mystical self-expression comes from....

Just my .02 - and I'd like my change back...

Re:Ha, Ha!

[VaderPi]

You should be more sensitive. Even bytes get lonely for a little bit.

Trends are even more important

[hellfire]

As many threads have already noted, the percentages are misleading because Dell's total amount of profit is larger than Apples total profit. Dell's 4th quarter profit for 2005 was 667 million while Apple's was 430 Million.

Okay, Dell's revenue is higher, but it's not that much higher. Also, Dell's profitability is falling while Apple's is rising. Del's profit was 749 million last year. I think it's premature to rub anything in Dell's face but I do think that even thought they are percentages, they are significant. The percentage is even more significant since Dell's revenue and expenses over all are higher than Apple's. This means that they are more severely effected by slimming margins.

The article might be premature, and it's most likely hype, but there is a valid point here, and that is 8 years ago Dell wrote off Apple, and now Apple is trending up, while Dell is trending down.

Making all the "do you want a whole grape or a slick of a watermelon" analogies you want, but If the watermelon slice is dried out and sour, and the grape is perfectly ripe, I'll take the grape. (see I can make analogies too!)

Re:Its against the Geneva convention

[happyemoticon]

Well, I'm pretty sure he's actually right there. Properly speaking, administrate is an erroneous back-formation. However, it's used so often that it's gaining acceptance.

See here:

noun : verb
calucation : calculate
articulation : articulate
demonstration : demonstrate

even the hideous
dissertation:dissertate

is technically correct.

However, this stuff isn't:

administration : administrate - wrong, administer
amplification : amplificate - wrong, amplify
multiplication : multiplicate - wrong, multiply
indemnification : indemnificate - wrong, indemnify

The only difference is that words like "multiplicate" are totally hilarious, whereas most people think of administrate as a an accepted part of the language. I wouldn't get out my red pen if I saw administrate, personally, though I to avoid using it in official materials.

To hell with Dell

[Quattro Vezina]

Anyone still remember all the "to hell with Dell" banners and stuff eight years ago, when Michael Dell first made those comments?

I think this is even better

[Anonymous Coward]

From
Dell: Apple should close shop

To
Dell: We Would License Mac OS X

This reminds me.

[tthomas48]

I was out smoking at Dell one day when I encountered a marketing exec. I mentioned that I thought PCs wouldn't really take off as home appliances until they brought out colors and made them look interesting so they matched the decor (this would have been about 1996). He scoffed and said that Dell would NEVER have a computer that was any color other than beige, because that wasn't what customers wanted. Dell's entire culture has become built around trailing the pack and just finding out a way to build the "current thing" cheaper than everyone else.

Corporate Market?

[SpasticThinker]

Apple may be doing well in the home computer market. But if you're going to compare the two of these companies, consider the corporate market as well.

Dell can afford to sell its home computer stuff so cheap because it's making more money on the high-end stuff. Don't forget, Dell produces (or at least brands) backup systems, storage solutions, servers, racks, etc. You name it, Dell makes it for your business. They have captured a ton of that market, and their sales structure for businesses of all sizes makes it easier to buy there again.

So I think financially, Dell is doing very well...when you consider that solid corporate market.

Re:Corporate Market?

[The GooMan]

"Dell can afford to sell its home computer stuff so cheap because it's making more money on the high-end stuff."

Exactly! I was talking to a co-worker just yesterday about the money our organization spends on servers every year. It seems like every day there are pallets of PowerEdges on the loading dock. It used to be Sun & HP but now Dell is the big dog where I work. There is absolutely no telling how much money they make from just our organization. I would guess that probably 75% of all our PCs come from Dell too. I have no problem with Dell, I just bought an Inspiron 6000 for my wife from them a couple of months ago, but it seems the people in charge here won't even consider it if it doesn't come from Dell (Unix/Linux boxes excluded of course). Some of the exec level people here are starting to catch on because I see more and more RedHat boxes on the floors. What is really sad is I can turn around and walk down the hall about 30 feet and be face to face with 3 or 4 Sun v880s that only cost about $150,000 a piece. Total waste. :-(

Dell could start giving PCs away and stay in business for a long time just by riding their server sales. That is where the margins are.

Just for the record I have at home: a Dell PC, Dell laptop, an old Dell box running Linux, and 2 Macs. Me loves the Apple stuff.

Re:Got some bad news for you Mr. Dell...

[Jeremi]

Apple is just as evil as Microsoft, just not as successful.

Microsoft is very successful at aggressively marketing poor quality products. Apple markets high quality products to a niche market (whether they do so successfully or not is a matter for debate).

Therefore, if we are to define "evil" as proportional to the amount of pain a company inflicts on the world through its products and practices, Microsoft wins hands down.

I think where you are going wrong is that you are attempting to define evilness by guessing at the companies' intentions -- but intentions are impossible to ever really know; you can only infer intention by looking at the companies' actions and statements, and those are always open to interpretation and thus endless, pointless debate.

Failure to learn from VHS vs. Betamax

[tm2b]

People really like to repeat that VHS vs. Betamax canard, while completely missing the important lesson.

The thing that really killed Betamax wasn't so much the licensing issues as the fact that you for early US models, you couldn't put a 2 hour movie on a betamax tape, but you could on a VHS.

That's huge. Being able to ship movies on a single VHS tape is what estabilshed the distirbution channels for those tapes and is what encouraged people to buy in to the VHS technology, in turn creating the demand for more VHS tapes, and so on.

And that's the big lesson lurking behind it all: pay attention to what your customers actually need, and what aspects of the technology will support the distribution and consumption models. It doesn't matter if your product will do a thousand things more cheaply than the other product, if most people can't easily get it to do the one thing they really buy it for. That's why the iPod has been so successful, even though there are tons of cheaper, more feature-rich products out there.

R&D???

[LWATCDR]

Dell doesn't do R&D. They use Intel CPUs and usually Intel chipsets. I believe even the motherboards are Intel reference designs. Dell assembles parts into boxes. Apple is frankly going the same route at least when you are talking about hardware. They will use Intel cpus and chipsets. That is the whole point of Apple going to Intel. They can buy solutions. At least Apple does it's own OS.

Re:R&D???

[akac]

No, but they did a lot of it. Apple helped Motorola and IBM on the chips. Not only that, but who do you think designed all the bridge and controller chips? Apple.

Re:R&D???

[LWATCDR]

Yes Apple does currently but Jobs said that one of the reasons for the move to Intel was that they offered complete solutions. The X86 OS/X boxes that Apple is currently shipping uses an Intel Motherboard with an Intel chipset. I wasn't bashing Apple. They really do RnD unlike Dell. They are just going to do less PC/Hardware RnD in the future and I hope more software RnD.

Re:R&D???

[NutscrapeSucks]

In terms of actual $$, Dell does R&D than Apple, at least last time I checked. Of course Dell is supporting a huge line of hardware, while Apple only has about 6 models.

The theory is that by going with Intel, Apple can offer a broader range of models without spending additional money on R&D.

Re:R&D???

[Halfbaked Plan]

Yes, and the fact that Apple designed the chips in their systems is what keeps them cruddy consumer machines, as compared to what IBM does with the POWER architecture in their systems.

Apple has just piggybacked on hardware vendors for the entire life of the company, all the way back to them choosing the 6502 because it was cheap and available.

Re:Where Would Apple Be

[painandgreed]

If they hadn't gotten a $150 million cash infusion from Microsoft in 1997? That kept the company afloat when it was about to go down for the third time.

I have points and would mod you Flamebait, but assuming that you actually don't know what you're talking about: at the of MS's buying of non-voting stock, Apple still had about $5 billion of cash reserves. $150 million was nothing even at Apple's worst and never "kept the company afloat". If it did anything, it was tell investers that MS had no intentions of attacking Apple and give them confidence in buying Apple stock, but as far as the money goes, it was a token amount.

Dell? Dell?

[Darius Jedburgh]

Remind me. Try as I might I can't think of an interesting product from a company called "Dell". Can someone jog my memory.

Re:Dell? Dell?

[nuckin futs]

i guess you haven't heard of their iPod line killer :p

Re:Dell? Dell?

[Darius Jedburgh]

What's that pink thing on the right? Looks like some kind of strap on dildo that plays music. OK, I take it back. That's pretty interesting.

Re:Profit Margins

[Carnage Pants]

All this means is that apple is overcharging for its products.

Overcharging? No. More akin to getting what you pay for. A quality product that does it with style. To me, aside from the fact that I just vastly prefer OS X to Windows for a plethora of reasons, Apple just knows how to make things look good. I look at my friends' laptops here at school, and the various Dells or Sony VAIOs are just plain ugly. I think the price of my 15" Powerbook is perfectly justified.

Scoreboard, tough guy

[Douglas Simmons]

Well, they might indeed not be stupid, but from where I'm sitting they could have been doing better relative to Apple over the year. The legal obligation of these public companies is to do everything they can to make their line go up over the X axis, not necessarily to impress Joe Slashdot.

Re:Scoreboard, tough guy

[ultranova]

The legal obligation of these public companies is to do everything they can to make their line go up over the X axis, not necessarily to impress Joe Slashdot.

Actually, no. The legal obligation of a company is to do its best to obey the wises of its owners. Those owners usually want the company to concentrate on increasing its share price; however, no law whatsoever forces them to. For example, if the majority of shareholders agreed that the companys number one priority was to provide humanitarian help to catastrophe zones, then that would be the companys number one priority.

Dell was right.

[hey!]

Just because he was proven wrong doesn't mean that what he said wasn't justified. I have friends who were Apple fanatics who in those days had stock in the company for sentimental reasons. They've done way better than they had any reasonable right to expect.

Apple makes money by doing everything that is supposed to be suicidally stupid. It sells hardware and software tied to each other. It tries to do many things well instead of concentrating on one area of strength. But it breaks the rules because it sees the opportunity created by others following the rules, which is that things built by this kind of cross corporate ecosystem just don't work that well together. But even seeing this possibility is a long way from taking advantage of it: there are plenty of contrarian schemes that sound good on paper but never succeed. You need actual leadership which is connected to realities of consumer behavior.

I detest Steve Jobs' personality. I think he's a self-centered, manipulative bully. But he's also got the brains to match -- I'm just grateful he's not in politics. Bastards who think they're geniuses are common enough, but bastards who are geniuses, who are way out on the right hand of the bell curve on both scales, those are rare. If Apple didn't have Jobs or somebody alike to him as two peas in a pod, they'd have been bought out by some far east PC manufacturer by now.

Re:Where Would Apple Be

[jamrock]

"If they hadn't gotten a $150 million cash infusion from Microsoft in 1997? That kept the company afloat when it was about to go down for the third time."

It wasn't the money that kept Apple afloat. Jobs and Gates settled the old "look-and-feel" lawsuit brought against Microsoft by John Sculley, with an agreement that Microsoft would buy $150 million of non-voting stock (which they've long since sold for a tidy profit, so would all the "Microsoft bought Apple" theorists kindly go away), and much more importantly, Gates' promise to continue making Mac versions of Microsoft Office for a five year period. While the $150 million was nice, it wasn't what kept Apple afloat; Office for Macintosh did.

Incidentally, the five year agreement expired two years ago, but Office for Mac still exists for two reasons: Microsoft isn't stupid enough to cut off a source of revenue, and it provides a nice fig leaf to show the Department of Justice: "See! We play nice with others! What, us? Strangle a competitor? Perish the thought!"

Re:Got some bad news for you Mr. Dell...

[Jesus_666]

mac has always been about people who dont care enough about computers to want to swap around parts, or learn how they work.

I do. I would never buy an Intel box because I prefer building it from the parts myself. But I like Macs. Not only do they have style (which by itself is not a reason to buy them), they also come with an extremely great operating system. On the desktop I'd probably pick the Intel box, simply because of the computer's easy upgradability, but I'd never buy an Intel notebook. Most of them are heavy, loud, huge and ugly - not to forget the lousy *nix compatibility. The ones that aren't are expensive. iBooks are pretty cheap and come with a Unix with a great window manager. And it's as modifiable as many Intel notebooks - hardly.

Re:Profit margins? Hang on

[justaj]

Actually Apple isnt propped up by Microsoft. As someone mentioned Apple was given 150 million by microsoft almost ten years ago. Since then they have been running on their own two feet. In terms of actual numbers: 840 million (6% of 14 billion) vs 360 million (9% of 4 billion) The numbers say Dell is making a heck of a lot more money. The reality of it is Dell isn't going anywhere. They are going to make the same machines and roughly keep the same profit margin. They are trying to branch out a little but I don't think many see it helping much. The only way Dell is going to be in any sort of trouble is if a) Someone can sell a box that is cheaper and better AND have a brand that people recognize. Apple is obviously NOT trying to do that. The fact of the matter is Apple is growing their company. You can definitely see a shift in public perception from being a niche computer company to the company that makes iPods and sells music. I'm fairly certain this is by design. You are 5-10 times more likely to see an iPod commercial vs an iMac commercial. But the fact of the matter is Apple still makes most of their money off of computer hardware. (the margin is shrinking however) They know that if they want to get to that 840 million its not going to be on the strength of the iPod alone. I see a HUGE push of their machines coming once the Intel Macs role out. They are going to cost less to make and won't go through the supply/demand hell they were in with IBM. I actually think next year is going to be a huge year for Apple either in terms of taking a step forward or a step backward in being the next big computer maker.

Re:Got some bad news for you Mr. Dell...

[Jesus_666]

Yup, there are some new ones that are silent, small and/or light - and I've seen an Intel book that looked like the iBook's little brother, downright sexy. There are some good ones, but sadly they tend to be too expensive for a poor CS student and most of the Intels I see are of the huge/noisy/ugly type, probably because most people around me are poor CS students themselves. Point in case: I know a couple of guys with iBooks but only one PowerBook owner.

At least I haven't been modded Insightful.

Re:What Self Expression?!?!

[i41Overlord]

Yeah, sort of like the ultra-opinionated youth that tries so hard to think out outside the box and be original that he ends up looking like everyone else.

I beg to differ, really....

[King_TJ]

One big problem with Dell is, they don't really give as high a "value" as the initial price tag makes it seem. As another person posted, their tech. support is decidely "low value" when you consider all the time you wait on hold or waste talking to a foreigner who is tough to understand, and who makes you go through 30 minutes of useless "troubleshooting" including "make sure the power cord is firmly attached to the back of your monitor" and "please shut down and restart Windows" to get a faulty video card or display replaced, or worse yet - may not let you get a defective memory DIMM replaced until you humor them by letting them swap out the CPU, motherboard and who knows what else first, over multiple support calls.

Is Apple "perfect" by comparison? Hell no... But they do a lot of things right in this area. For one, you usually do get native English speaking support reps when you call the toll-free support number in the U.S. - and my hold time has been 5 minutes or less. On the iMacs, they have a self-service system over the web, so you can order your own warranty replacement parts without getting permission first from some support rep. over the phone. They're also pretty good about eventually extending warranties to cover products with known major flaws - instead of just screwing over everyone who bought one with only a standard 1 year warranty. (By contrast, I was burnt on 2 Dell Latitude CPi series laptops now, because of design flaws and poor construction that Dell never officially admitted to.)

I don't think it's really possible to achieve "trendiness" with a shoddy/substandard product. There's simply not anything "cool" about some product that was inexpensive up-front, but most users end up underwhelmed or just "so-so" about over the long haul.

Re:The benefits of hindsight

[ablair]

"Apple is a boutique company that will always have fatter margins because it'll offer exclusive products. But it depends too much on fickle consumers that can change brands as easily in electronics as in shirts."

Apple has one of the most loyal customer bases in the history of the computer industry, one that most other companies can only wish for. This same base is the reason for the company's survival even in the darkest days for the company in the 1990s, when it could seemingly do nothing right. In contrast, I doubt that Dell's customers would bat an eyelash before changing to a cheaper alternative when - not if - one comes along.

Wow, really?

[FredFnord]

I'm actually surprised. I mean, I'm not a big Dell fan, and our failure rate on their laptops at my company approaches 100% per year. (60 laptops, nearly 60 failures per year, though of course not every single one fails... some fail several times.) But as for my (14) rack-mount servers, mostly Dells, I have had only two problems in the last two years: one was on a Dell which had one drive, which I bought myself, fail (fortunately it was in a RAID), and one was on an xServe that had its memory (which I had also bought, from Crucial) die spectacularly. Aside from that, everything has been rock-solid, and I've never even had to use that 8-hour-response-time service contract I got from Dell.

What do you see failing? What are the worst models?

-fred