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Apple Should Get Out of Hardware?
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.'"
is hardware!
Garner should get out of the clue business. The industry trade press props them up and everybody knows they haven't made a decent clue for years.
If you mod me down, I shall become more powerful than you could possibly imagine.
1997 called, they want their Apple doomsaying back!
This used to be the standard advice given when Apple was ailing in the 90's. Back then it was slightly different, as they were suggesting that Apple license out their OS and let others handle the hardware side.
But controlling the hardware is good for Apple. When none of the PC manufacturers jumped onto USB, Apple did. The same with Firewire.
This is why hardware is good for Apple. Because they can innovate like that with the least amount of Red Tape.
Without hardware, they would not have had their successes no matter how awesome Mac OS X - iPod, iMac, their notebooks in general.
Hell, I think they should produce more hardware - like a Newton successor, preferably something small and that can slide into a PCMIA slot to do the syncing and charging.
Anybody who suggests Apple gets out of hardware is smoking something. And it's not the good stuff either.
Seems they tried that before and Apple was in such dire straits Jobs returned to salvage the company and close down the external Mac builders. Let's face it, Apple has survived because the dictatorial nature of product development at Apple means they can establish the trends and bail on those that don't do well, without worrying about maintaining a library of drivers even an orangitan couldn't keep up with (Ook) The PC/Windows path has Microsoft trying to keep an overweight operating system working on a staggering array of hardware combinations. Small wonder very few actually know what the heck is going on with things and most problems are countered with "did you try updating the drivers" or "Have you tried disconecting things until it works" or "You need to do a full re-install"
I wouldn't agree with having Dell make the machines, either. Their quality isn't a shade of what it once was. Dell made their name with competitively priced hardware which was built almost as solidy as IBMs. Now it's all cranked out in China and is as good as anything else cranked out in China, so there's no real advantage over competitors.
A feeling of having made the same mistake before: Deja Foobar
Is he saying Apple's core business was seeded by Intel. And that without Intel rooting for them, it'll be the pits, so Apple should branch out into other areas?
Actually, Apple has a good name, with solid products like the Macbook, iPod, and OS X. I don't think Apple will have that mcuh of a problem. People don't run to Apple because of price, they run to them because they make decent, user-friendly hardware. Comparable devices are copies of them, and usually more expensive. If prices rise, Apple will go up a bit more, but will that actually drive people away?
Have you read my journal today?
...they want thier stupid apple-should-get-out-of-harware story back.
And why not, have you seen the earning reports? Apple is on the ropes. Record losses, losing market share, constant layoffs, etc. They clearly cannot support their current business model, hell at this rate they will be bankrupt in a year or two.
I would go even further, obviously they are losing money hand over fist on hardware, but I don't think that OSX thing is doing them any good either. And lets face it, the iPod does not have wireless and is pretty lame. Chuck it all and go with the business that has a REAL future. I of course speak of iTunes music store. Look at Napster, they are racking the money faster than they can handle with just an online music store. That is the wave of the future my friends. I only hope Apple has the good sense to listen to reason on this one, and not delude themselves that they are a successful company. The numbers clearly show otherwise.
Finkployd
Apple... going out of business since 1976.
Maryland State Motto: If you can dream it, we can tax it.
Good thing Gartner is responsible for such great machines that they can... oh wait, they don't make anything but over-priced analysis.
I've had some decently-made PCs out of the 10 or 12 I've owned, but nothing like the quality of my Macs. I switched for home use a couple of years ago with a PowerBook. I added a MacMini last spring and a quad MacPro recently, and they are absolutely some of the nicest machines I've ever seen since I started as a tech in '79.
Apple would be completely stupid to give up that control and differentiation from everyone else.
The revolution will NOT be televised.
Can we PLEASE stop spelling "fanboy" as "fanboi"? It is stupid.
The masses are the crack whores of religion.
A few counterpoints: 1. Apple is a hardware company. They make their revenue from hardware sales, not from software sales. 2. Apple makes superior hardware. Have you seen the inside of the Mac Pro? I have one, and I'm very impressed. The only internal cable is for the IDE optical drive. Everything else is modular. 3. Apple doesn't actually make their own hardware. They design it and have it manufactured to specifications. The motherboard of the Mac Pro was designed by Intel and Apple, but is manufactured by Intel. So, if one would agree with me that their hardware is superior, and one understands that Apple does not manufacture the hardware, how would Apple be limited in manufacturing ability, and how would it help Apple in any way to completely commoditize (if that is a word...) the production of hardware to support their OS? When Apple needs to ramp up production, they can choose an additional manufacturer to support their needs. In addition, since Apple makes a majority of their money from hardware, they would need to redesign their business model to become profitable in the software market. And by the way, is Intel really here to "prop up the market" or are they here to make money? I can't imagine Intel is making deals like those with Apple and intentionally losing money.
Never ask for directions from a two-headed tourist! -Big Bird
is that Gartner should go out of business permanently. This is just yet another load of BS from them, just like "50% of tech jobs will be outsourced in the next 5 years, and as it JUST so happens we have an offshore consultancy agency. Imagine that!"
Nothing but crap comes out of Gartner, how they are still in business is beyond me.
Monstar L
Because everyone can offer Windows XP, but only Apple can offer OSX?
The major components like CPU, memory, and HD are the same but it is a simplification to say that it's all the same hardware. Especially when it comes to laptops. Except for BIY PCs, PCs are not all that interchangeable when you buy from the major manufacturers. You cannot replace a Dell MB with a HP MB and expect it to work perfectly. If you've done actually pricing between a Dell and an Apple feature for feature, the Apple is cheaper. Dell's target customer are those willing to pay the lowest price, period. Apple is not interested in that customer so their design is different than Dell's.
Some would argure one of the reason that OS X works so well it that it does not have to support the plethora of hardware that XP or Linux supports. Apple controls their own destiny when they control their own hardware. Again, Apple isn't looking to court the BIY customer.
Well, there's spam egg sausage and spam, that's not got much spam in it.
Gee with increasing volumes large margins are not sustainable because Apple won't get as good of deals from Intel? Yeah that makes sense.. err wait no it doesn't! As volume goes up, Apple will get better deals from component manufacturers, in general, not worse. Maybe Intel will not cut them as nice of deals, but with increasing volumes, Apple does not need to maintain margins. Most of their costs are fixed. OS development, marketing, industrial design, etc. make up most of their costs, but remain fixed no matter how many units they ship. If they ship twice as many, they can cut their margins in half without being affected.
Either the Gartner people are looking to the very short term or they're out of their minds. The only way to free yourself from the influence of a monopoly is to maintain a complete vertical chain of components, including the one they have monopolized, but separate from their market. Apple doesn't sell their OS to Dell for two reasons. One, it would seriously cut into their hardware sales as people went to what they perceive as cheaper machines and were unable to compete with Dell's market outlets. Two, MS will kill Dell if they tried shipping OS X pre-installed. As soon as Dell had to re-negotiate their OEM licenses for Windows, MS would offer them the choice of being the largest supplier of computers in the US, with the cheapest rate for Windows, or being the most expensive supplier of PCs in the US. Assuming Gartner is 100% correct and Dell took all of that market, they'd still only be selling 13% of the machines in the US and they'd lose almost all of their existing 32% of the PC market selling Windows machines. Oh Dell would love that bargaining chip, but it just might kill Apple.
No, now is not the time for such a move. Everyone who has tried to compete in that market has been killed by MS's lock-ins, even though several had superior offerings at the time. Apple needs to maintain their segregation until either the courts actually stop MS's antitrust actions or until they or Linux has grabbed a bigger chunk of the pie.
They design them.
Correct me if I'm wrong, but aren't ALL Apple products built under contract by factories in Asia?
What could they possibly gain by turning their manufacturing over to Dell?
This is not a slam at Apple. I own macs and ipods and I think they design great products. I just don't think there's an "Apple" factory out there churning out the gizmos. Why would they turn to Dell -- a company with a horrible, horrible track record for quality and reliability -- to make their products, when their current business arrangements seem to be working just fine?
$10B in the bank, no debt, 12 profitable quarters in a row, growing marketshare...this needs fixing how, exactly?
The Gartner guys must have mixed vodka with their Red Bull again.
Is it just me or has Gartner become a shill for certain companies that would like to see Apple and Linux fail?
Become? The US middle east intelligence folks have a better track record than Gartner for crying out loud.
Finkployd
My last laptop was a Dell Inspiron 1100. Within two months of getting the MacBook, the Dell laptop was in the closet. If you were to compare the MacBook with a Dell D620, the MacBook is a wonderfully engineered machine. While big corporations buy tons of Dell every year, corporate buyers care only about the price and not the user experience.
Yes, they sell a lot. And it's not top quality. From what I've seen there's about a 20% failure rate on machines. (I.e. needs a part replaced fairly soon. Usually the HDs).
Keep in mind that huge corps also base their software on Windows, and that doesn't make that inherently better either. Huge corporations go with the flow - nothing to upset the cart, because that can get you fired. If you're old enough, you'll remember the "Nobody ever got fired for buying IBM" slogan. *That* is why Windows and Dell are prevalent.
What Gartner fails to understand is that the winds of change say more about Intel then it does about Apple. Intel can't afford not to subsidize Apple or HP or Dell or anyone else. Intel is realizing that consumers, particularly Apple's consumers, don't really care what's on the inside. It could be Intel, AMD, PowerPC or SPARC and as long as the system is still running.br>
The fact is, the processor has become a commodity. The "experience" and end-to-end design that Apple sells is not a commodity. Who has lost their completitive advantage? It sure isn't Apple, and they know that.
But Apple can only be in the software business if they control the hardware, and prevent tweaking, because a great deal of their stability, not to mention their software team size, depends on that hardware control. Just because the hardware is not more powerful than say, an AMD64, it can still be a difference, if say, you get to test your code on it six months in advance. You can't test a DIY six months in advance.
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.
Trusting Gartner's eval is a bit like listening to the white house or congress speak about Iraq; You just know that they have their own agenda and worse, the ones behind it, have zip experience or education.
I prefer the "u" in honour as it seems to be missing these days.
So, let me get this straight,
Dell strikes a sweet deal with Intel after opening up it's systems to the AMD line...
HP muscles in and says it will go to AMD (I assume) unless it gets the same deal as Dell.
Dell and HP are in a deathgrip to maintain market share for the corporate and household WinTel platform, and are being nipped at by Lenovo, BestBuy, Walmart, etc, for market share, house branding, and margins
Apple, which has the luxury of owning premium software that can run on multiple platforms, let alone on an x86 platform, and is probably already paying slightly more (due to volumes) than Dell or HP, Apple is the EVIL one here, and should be punished by Intel asking for a higher per unit cost for components, because Apple is more profitable?
I see this as ludicrous as Goodyear asking for Honda to pay [even] more for the same tire as GM and Ford, because Honda can afford to pay it... x86 is a freakin' commodity, like pork bellies, and batteries (SONY, pay attention!!!). It's an important commodity, but fundamentally, a chip is a chip, and it's just that.
Intel is not subsidizing Apple... Intel is subsidizing the big boy PC maker market in order to stave off AMD and maintain market their share. This article infers that Intel will soon ask Apple to help subsidize this partnership, and apple will be in no position to fight back....
I hope Apple says either "AMD called yesterday and built a proto system on the PLUON chip... It ran OSX without mods... doesn't need another Universal Binary... just plug and play" or "You know, you should come over sometime... the boys in the labs, They built a sweet OS X system that uses a CELL chip from IBM.... Obtw, here's our order for 6million Core 2 Duo and Quad CPUs... volume pricing hasn't changed... correct?"
Strongly disagree. 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. Of course, a clone is always cheaper, regardless of what market you're talking about, and to me that's the bottom line and the reason I don't buy Apple. Actually, there is another reason, which is that Apple does their best to bury their mistakes to help the iFanboys forget that they ever made them. I got rid of it long ago, but I had a First Generation B&W G3 that had the UDMA data corruption problem. Apple's official recommendation was to buy FWB toolkit to reduce the drive down to PIO mode which is slower and makes the IDE chip consume TONS more CPU, which IDE is bad about already; or to buy an IDE ATA card and move your drive to that. A clear Apple fuckup, which they even admitted, and they STILL didn't offer a logic board replacement to the Rev.2, where they didn't make the same mistake. This is a chip used in TONS of other hardware including UltraSparc systems (like the Ultra 1 and 2) so it's not the chip, it's Apple's inability to implement the chip.
But this isn't the part that's most upsetting - the thing that gets me is that when Apple folded their old knowledge base into the new library, they included documents both older and newer than the one I'm talking about, but that one didn't make it in. It is clearly a deliberate omission on Apple's part to try to cover up both the fact that they fucked up a computer, and that they were unresponsive to customers who purchased it. This is of course simply a further illustration of the fact that it's a very bad idea to purchase any first-generation Apple hardware, laptop desktop or otherwise, but it also explains why. Apple's customer support is legendarily bad when they think they can get away with it.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
(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
Seems like Apple is making a shitload of cash just fine without being dell.
T Money
World Domination with a plastic spoon since 1984
"That said however, I'm not gonna blow but so much money on what will essentially be an OS experiment for me."
It's all about how much your time is worth to you. $2k really is a lot of money, and I understand that it's too much for some. But like almost anything, quality costs more, and if you can afford better quality, you will spend less time maintaining it, or learning its quirks etc.
I used to be a mac hater years ago. Then I used one. learned that instead of feeling smug because i knew how smart you had to be to really get useful things done on a computer, I could just put that energy into just getting things done period. For most of us, it's not about the computer, it's about design, chemistry, architecture, whatever.
sigs are for losers (except to point out that sigs are for losers)
That meme died a long time ago. Macs, particularly the iMac and the Mac Pro (which is $1,000 less than the equivalently configured Dell workstation), give you a LOT of value for your dollar.
Apple-haters really need to find some new material.
"Sufferin' succotash."
From Wikipedia:
One early use of the term "personal computer" appeared in a November 3, 1962 New York Times article reporting John W. Mauchly's vision of future computing as detailed at a recent meeting of the American Institute of Industrial Engineers. Mauchly stated, "There is no reason to suppose the average boy or girl cannot be master of a personal computer."
The term is much older than Apple. What Apple did is popularize it. It became synonymous with IBM compatibles because of the name of the original IBM PC (PC for short).
Sometimes my arms bend back.
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.
FF Market Share will drop over the next year.
Actually it is based upon multiple methods of information gathering, including spot checking and anonymous tests.
Wait a second, you take a jab at Consumer Reports' methodology and then you make an assertion like this based upon your views of what you read in a particular forum? Is that supposed to be a joke?
You make a lot of generalizations and assumptions, but the truth is the best data to date indicates Apple's support is better than average and you have no data to refute that claim. If you objectively look at the information, the best guess is the Apple's support is better.
Have you ever considered that a lot of UNIX types know exactly what they are doing, but simply have different priorities than you do? Open source, free software is a feature of software, but considering only one feature rather than the whole package is absurd. I use OS X, Windows, Linux, and OpenBSD every day. Each has their strengths and weaknesses. I'd love to have a primary workstation that was completely open source. I'm just not willing to give up all the features of OS X or all the available library of software for Windows to do it. The sad truth is, for a lot of tasks, their is no good Linux solution. For a lot of tasks, Linux itself, regardless of the applications, is inferior. I don't have the time or money to get the features I want added to Linux and it is falling further behind on the desktop, not catching up. When Linux has functional system services I can use and a two step upgrade path to a new machine, via a firewire cable, let me know. Until then, Linus will be on servers and Linux and Windows will both be running in VMs under OS X on the desktop.
The Independent: Reverend Spooner Arrested in Friar Tuck Incident - ISIHAC, Historical Headlines
Complete, utter, and total shash..
---- Apple computers make up a tiny market share.
Apple's market share is growing, and guess what: that growth had to come from somewhere. Apple is taking share away from the other players in the market. It's also interesting to note that while Apple is #4 is market share right now (behind Gateway, but not for long), their profits for this quarter were $584 million. Gateway (.3% ahead of Apple right now in sales share) lost about $80 million last quarter, and Dell (#1) had profits of about $510 million for its last quarter. In other words, Dell and Gateway had to sell something like six times as many computers as Apple to make $160 million less than Apple did over the last quarter.
---- Dell and HP will continue to grow.
That's debatable. Dell and HP sell a lot of $300 computers at either a razor-thin profit as an actual loss-leader. A company that buys 1500 cheap desktop units for the workers will also buy a couple hundred high-end laptops for the executives.. and the laptops probably bring Dell more actual profit than the whole consignment of desktops. Thing is, Apple's growing market share is coming from the $1500-5000 price range, where Dell and HP make their real money.
Apple will be absolutely delighted to see Dell and HP ship 80% of the computers sold in the market, as long as that 80% comes from the sub-$1k, $2-profit-per-unit loss-leader segment. Meanwhile, Apple will sit happily on the 20% of unit sales that generate 25% profit on a $1500-5000 sale per machine.
---- How many small incremental features can be added to the iPod before people look the other way? Rivals are offering similar devices with more features at a lower price.
And consumers voting with their wallets don't give a shit. Those lower-priced units with similar features also offer a lousy user experience, which is just certain to get better now that Microsoft has jumped firmly astride the fence with its dual Zune-to-be-coming and Plays-for-Sure-Unless-It-Doesn't initiatives. The numbers for the past several years show that Apple holds about 75% of the global market and everyone else competes for the remaining 25%. Any competitors who want to take market share away from Apple have to do better than 'similar features (but lousy usability) at a slightly lower price'. They have to offer something that's significantly better. And since the competition is currently stuck in "which one sucks least?" territory, that isn't likely to happen any time soon.
---- Apple is sunk without a strategic alliance and a different strategy.
Apple is making money hand over fist in a market where everyone else is fighting to survive. And if you want a strategic alliance, wait 'til the cross-pollination between Apple's R&D and Intel's R&D starts to kick in. Apple is willing to push new technology into the market, where the Wintel manufacturers wait to adopt (or release) technology until a trend is established (look how long it took to get rid of parallel ports). Intel has spent years developing concept platforms that none of the Wintel OEMs have been willing to take to market. Apple wants an edge on technology, Intel wants a vendor to showcase its new tech. And now the two are working together.