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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%."
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?).
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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.
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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?"
Sometimes it's best to just let stupid people be stupid.
With Dell's recent quarters slipping and Apple's recent quarters showing growth there can only be one conclusion:
Apple is dying!
{ - Generic Guy - }
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.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
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.
/;the company looks like it's doing badly," we'd never have half the innovations or companies of the world.
etc etc.
If "lucid advice" just means
-Daniel
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
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.
Two wrongs don't make a right, but three lefts do.
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.
I don't care if it's 90,000 hectares. That lake was not my doing.
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.
"It is our blasphemy which has made us great, and will sustain us, and which the gods secretly admire in us." - Zelazny
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.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
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.
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?
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.If you reply, do so only to what I explicitly wrote. If I didn't write it, don't assume or infer it.
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.
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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.
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.