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.

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.

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: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.

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