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Apple Should Get Out of Hardware?

Posted by ryuzaki0 on from the because-there's-no-market-there-of-course dept.

SQLGuru writes to mention an analyst recommendation being reported on ZDNet. Despite a BusinessWeek article about Apple's record breaking hardware sales, the folks at Gartner think Apple should get out of the hardware business. Calling for the company to license its hardware to Dell, the analyst company says that gains in Apple's hardware sales are simply not sustainable. From the article: "Apple's margins for its Mac business, currently around 40 percent, are only sustainable because component makers such as Intel choose to prop up the business, Gartner claimed. Given that HP has forced Intel to offer it comparable pricing to Dell, Intel is unlikely to continue to subsidise Apple, the analyst argues. 'As a result of permanently changed market conditions, Intel has been forced to restructure and, in our opinion, cannot go on supporting Apple (or any other customer) indefinitely.'"

3 of 730 comments (clear)

  1. Re:For the record... by eln · · Score: 5, Informative

    Dell sells about as many computers as Apple does, annually

    That's just rubbish. Dell sold 37.3 million PCs last year, while Apple broke a record by selling 1.61 million Macs last quarter. Dell sells far more computers than Apple does.

  2. Let's Compare Dell vs. Apple Financials by Cr0w+T.+Trollbot · · Score: 5, Informative
    Let's look at the cold, hard (cash) facts, shall we? First Dell, from their most recent (Q2FY07) results:

    (in millions, except per-share)
    Q2, FY'07 Q2, FY'06 Change
    Revenue $14,094 $13,428 5%
    Operating Income $605 $1,173 (48%)
    Net Income $502 $1,020 (51%)
    Earnings/Share $0.22 $0.41 (46% )

    Now let's look at Apple from their most recent announced results (in their case it's Q4 FY06 vs. Q4 FY05):

    Q4 FY06 Q4 FY05
    Revenue $4.84b $3.68B
    Net Income $546m $430M
    Earnings/Share: $.62 $.50

    (Slashdot keeps taking out the spaces, which is why this looks funky.) So, even though Dell has a little more than 3x Apple's gross sales, Apple is the more profitable company. Dell's profits dropped by 51% between Q2FY06 and Q2FY07, while Apple's profits reached new records. Moreover, Apple's profitability and market share are both increasing, while Dell's is decreasing.

    And Apple would want to outsource manufacturing to a much less profitable and quality-conscious company why?

    Crow T. Trollbot

  3. Re:For the record... by 99BottlesOfBeerInMyF · · Score: 5, Informative

    If you compare prices on similar Apple and Dell systems, you will usually find that the prices are higher on the Apple side, but only 10-20%, and that in the high end the margin disappears and your most powerful systems cost about the same either way.

    Actually, you're out of date. Last year Apple systems were priced at approximately 14% higher than equivalent PCs, not Dells in general. This year, they are actually cheaper by about 5% to equivalent machines. You'll note, I don't say Dells, I say equivalent machines. That is because people conducting real market research soon discover it is hard to find an equivalent machine from Dell.

    Apple's customer support is legendarily bad when they think they can get away with it.

    Yeah, um, unlike all the other companies out there? Take a look at Consumer Reports for the last 5 years. Apple is one of the best for support, not the worst. You actually have to compare them to what else is out there. Sure, Apple support can really suck an egg, which makes it about twice as good as Dell's customer support that sucks two eggs.