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Apple Surpasses Dell's Market Value
Posted by
Zonk
on Sat Jan 14, 2006 09:07 AM
from the the-words-you're-looking-for-are-ha-and-ha dept.
from the the-words-you're-looking-for-are-ha-and-ha dept.
bonch writes "Nine years after Michael Dell said he'd shut down Apple and give the money to the shareholders, Apple has passed Dell in market value, at $72,132,428,843 compared to Dell's $71,970,702,760. Analysts expect Apple to continue to outperform competitors, citing 2006 as 'poised to be the year of both iPod growth and, more importantly, Mac market share gains,' with earnings growing more than 35%. I should have bought stock two years ago!" We talked about the approach of this moment back in November of last year.
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New Ad (Score:5, Funny)
Price Earning Ratio is What Really Matters (Score:5, Interesting)
Apple 54.87
Dell 23.71
The run up in the price at Apple while, commendable is predicated on the hype around iPod and the assumption that will translate into sales of desktop machines.
Tons of reasons to have concern.
Re:Price Earning Ratio is What Really Matters (Score:5, Insightful)
Looking at the fundamentals like you say is the important thing. Dell is a much bigger company and has almost 50% of the world market. That's more profit in one quarter than apple's entire value.
The share market is a funny thing.
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Re:Price Earning Ratio is What Really Matters (Score:5, Insightful)
Try to buy Coca-Cola. The buildings are not worth whatever they would ask for the company. Its just those two words in their name.
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Some corrections (Score:5, Informative)
Then, you have the $5.7 bn revenue last quarter (not 5), including $1 bn in Apple Retail revenue, and the fact that revenues, profits, and unit sales are consistently increasing quarter over quarter, year over year:
Total revenues [and profits] for fiscal year, in millions:
2001 - 5,363 [(25)]
2002 - 5,742 [65]
2003 - 6,207 [69]
2004 - 8,279 [276]
2005 - 13,931 [2335]
Not to mention record (and increasing) sales of all of Apple's products, from iPod, to iTunes Music Store, to the Mac platform, including servers and enterprise.
You're also really wrong about Dell having "more profit in one quarter than apple's entire value":
Total revenues [and profits] for fiscal year, in millions:
2003 - 35,404 [2844]
2004 - 41,444 [3544]
2005 - 49,205 [4254]
Yes, Dell is a bigger company (surprise?) and has higher revenues and sales. But over the last two years, Apple is growing at a faster rate. Much faster. Also, when you say "market share" you'd do good to include the market share of all of a company's money-making products, not just the figure you like. It's funny when people keep going around saying things like "Apple, with 1.5% of the market" seem to forget that Apple has over 80% of another huge "market". Does that market not count?
Now we've got a transition to a commodity hardware architecture and platform, with the industry abuzz with what this could mean for Apple in the enterprise for a variety of reasons.
It's funny that you state exactly what is wrong with a lot of people in the financial sector: not being able to look past next year, or even next quarter, for what something is "worth".
Source for financial data: Apple [corporate-ir.net] Dell [yahoo.com]
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Re:Price Earning Ratio is What Really Matters (Score:5, Informative)
It doesn't hurt to point out that part of the excitement was about iPod sales, I think the predictions were 9 to 11 million units last quarter and Apple announced they soundly beat those predictions by selling 14 million.
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Re:Price Earning Ratio is What Really Matters (Score:5, Insightful)
No, you seem to have misinterpreted the "which market" question. To illuminate this a bit, let's try it with a different industry: imagine if an analyst published an article saying about BMW, saying "their outlook is dire; they control only a tiny fraction of the automobile market, and are taking few steps to expand their market share". You'd look at that analyst like he was crazy, because you'd realize immediately that BMW's target market is a restricted subset of automobile owners -- they market themselves to affluent customers who want something that's perceived to be a superior product and who are willing to pay a premium to get it.
Apple occupies an analogous place in the computer market; they're sort of a "luxury computer manufacturer", and their advertising is similar to that of luxury-car companies, focusing on design, amenities and uniqueness rather than on price point. So it makes little sense to talk about Apple's market share in terms of the total PC market; instead, any measure of their success or failure must be taken in the premium niche they vie for.
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Innovation v commodity (Score:5, Insightful)
Dell's aim is to have the best supply chain and produce computers cheaper than anyone else, this means they don't really do any innovation its more of a Wallmart sort of play. Now you can get very big being a Wallmart type of business but the challenge is that Dell are in a field where competition has almost always been around innovation. From a margin perspective the aim of Dell is to operate at low margin but sell in bulk, Apple are aiming at high margin and selling decent volumes. The reason people pay more for Apple's stuff is the innovation and design, the reason more people buy Dell machines than Apple's is because of the cost.
Two different models, its not comparing two similar businesses.
An even better quote from Michael Dell on Apple.. (Score:5, Interesting)
Q: That bad?
A: Maybe it's a little bit different. But if you look at proprietary computer companies, whether it's Digital or Silicon Graphics (SGI ) or Apple (AAPL ), I think the fates are all relatively similar. We know how the movie ends. It's just a question of what happens in the middle. Apple has a very little customer base. If you look at the economics, it has been extremely hard for Apple to get a return on its R&D with a shrinking volume base. It's not to say that Apple's products aren't innovative or cool, but the economic factors here are so overwhelming, it's very hard for them to swim against that tide.
Q: If you were running Apple, is there anything you could do to change that?
A: I would never take that job.
http://www.businessweek.com/magazine/content/01_1
Re:An even better quote from Michael Dell on Apple (Score:5, Insightful)
I mean look at KMart and Sears. Very good store with very good prices. Both added some value to through the product initially, through selection and location, but failed to continue to push that value. Walmart can in and they were toast. Dell is the same thing, but worse. Dell has the added cost of repackaging, but limited flexibility in terms of managing costs. OTOH, Apple has shown that will act aggressively to manage hardware cost, and is able to make changes to the OS to so do.
Dell is succesful becuase they are able supply large number of cheap computers to large firms. As long as they can win contracts, they will survive. However growth is out of their hands. Growth depends on MS maintaining a release schedule that encourages fast upgrade schedules, which they have not done. Growth depends on firms growing enough to add machines, which has happened. Growth depends Windows providing enough value so that large firms double license at least some machines. Growth depends on new machine running Windows, and not *nix, unless of course Dell is so cheap that even with the MS license the machine is a good value.
That is to say Dell has little control over it's future. It may decide to risk the MS gravy train and set out on it's own, but no one at Dell sounds that creative. At some point someone else will do MS Windows machines better, perhaps MS, or the desktop PC may become a thing of the past, and we will see how Dell does on low margins and low volumes. I mean, is anyone actually going to buy Dell at even a 10% markup?
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Shutting down apple (Score:5, Informative)
We've got dozens of dell servers (hundreds of servers total) where I work, and the dell servers have a 100% failure rate. That is, each and every dell server experienced a hardware problem that required replacing something. Although usually non-critical, no other vender even comes close. They may make passable desktops and laptops, but their servers are from hell.
Re:Formula For Success? (Score:5, Informative)
Dell Inspiron 9400 $3,302
MacBook Pro $3,248
Now to be fare the Dell Inspiron did have a 17" display while the MacBook Pro was only 15. So I added the cost of the apple care program which is about the same as a size upgrade, when comparing older powerbooks of equal specs at different sizes.
Granted that with Dells and other PC you have a wider selection of options that allow you to customize them more closely to your budget. Vs. Apples one size fits group of people. But the Price of Apple Systems are about the same with as its equally match PC brethren.
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Re:Formula For Success? (Score:5, Insightful)
For example, the PowerMac is competitive price wise with any 4-core system you can configure from the major PC manufacturers.
And now the MacBook Pro is similarly competitive, price wise. The parent poster did rightly point out that you have many more options on the PC side however.
You can either save money on the PC side by going with a lesser manufacturer, building it yourself, or making use of a wider range of customisable options. For example, Acer's Core Duo laptop is supposed to be significantly cheaper than the MacBook Pro. OTOH IBM's ThinkPads are roughly on par.
Also don't forget that many people are fed up to the eyeballs with Windows XP, and hell, that Mac OS X keeps getting recommended, and there's all those applications, and my iPod is easy to use, hmm, maybe it is worth a couple of hundred dollars on its own to not get the XP stress.
It does show how overpriced previous PowerBooks were. I wouldn't have liked to buy one in the past few months just to have this come out.
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Re:Times Change (Score:5, Interesting)
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Re:Times Change (Score:5, Insightful)
Besides if Dell had brought an iPod to market first they'd have called it the MJS P440 or the Musicon 5500.
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Re:Current Snapshot (Score:5, Informative)
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Re:Current Snapshot (Score:5, Interesting)
Dell under pressure specially in the serverspace because they do not use AMD processors.. and Apple because the switched to Intel..
Ofcourse the reasons go much deeper than that, including increased competition from even cheaper manufacturers from Asia for Dell and iPods for Apple and many other things.. But just wanted to reflect on the irony of Intel being a problem for one and good thing for other...
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Re:The secret (Score:5, Insightful)
With portable systems they tend to be accessories with your cloths that are functional, much like watches, you could ware an ugly plastic digital watch, or a shiny metal analog watch, they both do the same thing but one looks better. The same with portable systems, if you have to go to school with a laptop and you pull out some 3rd party Laptop which may be powerful but looks like a brick. Or you pull out a clean new Powerbook err um MacBook Pro, or some other stylish laptop such as a Sony Vio, even if the specs are not as good, you still look better to your class and other people. I am sure a lot of slashdotters don't care (or say they dont) about impressions to other people, but most people do, and they are the ones buying most of the computers now. Apple tends to understand the need for style. Secondly with portable gear you need to have what you really need integrated with the laptop and placed in a spot where you would use it. Things like needing to add Ethernet Dongles, or having to switch between Ethernet and Wireless cards, Easily accessible USB ports for Flash sticks, and things like Apples new magnetic Power Cord because you may be plugged in on a high traffic area. All these add up and are important to portable users. While the OS has some to do with apples success. I find that OS X is the best platform for Laptops, It detects new wireless hotspots easily, It changes networks without much of a hiccup, It works well on Windows, and Unix networks. But that is why it is doing so strongly lately. First people get the iPods because it is cool. Then while they are at the store they see the other cool things apple has and they realized how good much of their products are.
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Re:The secret (Score:5, Funny)
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Re:The secret (Score:5, Informative)
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Re:The secret (Score:5, Insightful)
Apple has created a brand experience that most marketing people try to copy harder than eCommerce sites copy Amazon and eBay. Everything about an Apple product lets you know your dealing with a company that puts the user experience first. That's Apples brand niche.
When I bought my first mac some 8 years ago... I was awe struck by the packaging - not of the computer - the card board box it came in was user friendly. It was perfectly clear what was in each box. It was intuitive which piece needed to come out next - the foam that was around the monitor was easy to hold on to and take out. Nothing about unpacking the computer was frustrating.
When Apple retail stores hit the scene, did anyone note that the UI on the electronic signature box matched that of Aqua? Did anyone notice that your receipt font matches the fonts on the box / os x / sales literature etc?
I bought a G4 tower a few years ago and the little details that go into engineering the case and hardware are what diferentiates Apple from any other manufacture I know. I lift a little handle on the side of my case and the whole thing flops open and I have access to clean the entire machine. Additionally, all of the edges of the stamped steel were de-burred so I didn't cut any of my knuckles open as I poked around inside the case. I understand most non-slashdot-reading users will not ever open their case, but much like a Mercedes-Benz, when you look under the hood or at any small corner of the car, you know no expense was spared to ensure whatever level you interface with the product it is solid, reliable and nice.
Even the iPod I bough 3 years ago came in a package that was clearly labeled. It was clear that designers had thought about the process of opening the package, puting the iPod on the left (since we're a left to right society here in the US) where we would look first when orienting ourselves to the two halves of the box.
I expect Jobs and the rest of the crew at Apple to continue making an experience that is every bit as robust and consistent with their products as my last few years of experience with the company has been.
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Michael Dell said he'd shut down Apple... (Score:5, Funny)
Market cap or Equity Market cap, does it matter? I bet Michael Dell really hates it every time somebody brings that quote up in conversation and every body starts laughing. It must be the first thing every new employee at Dell HQ learns:"OK, iPods, PowerBooks and anything else with an Apple logo is off limits and whatever you do, don't crack that Apple shutdown joke when Mr. Dell is within earshot, the last time that happened he punched the guy who told it and cancelled our christmass bonuses!"
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Re:Market Cap: No. Equity Market Cap: Yes (Score:5, Informative)
The calculation you describe is grasping at a concept called "Enterprise value" which is total capitalization minus cash. Think about it. If you are going to add on the debt that company has to the total amount someone would need to pay to buy the company, because they would be assuming the debt, you should also subtract the amount of cash on hand. Finance 101, dude.
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Re:Time to Short Apple's Stock (Score:5, Insightful)
So why haven't they done it yet? I mean, it's not for lack of trying. They've released 'ipod killer' after 'ipod killer' and Apple has gone from strength to strength. The reason that nothing has 'killed' the iPod is because it is a cool gadget. People want an iPod, not an MP3 player, and thats the main reason why Sony and Creative probably won't be able to 'kill' it for a long time.
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Re:Time to Short Apple's Stock (Score:5, Interesting)
The cat is already out of the bag, and yeah, sony was well aware of mp3 players, and had the hardware and engineering guys who could have designed an efficient one. they were banking on the mp3 format to 'just go away' so their record label could make more money selling CDs. or something like that.
Besides sony was focusing it's effort at dominating the video game sector, they've done an awesome job at it, and they've managed to 'launch' the psp (against nintendo's iron grip on the handheld market) in every major country except the UK. And all this for a system that won't have a respectable* game title for another year, and has no back catalog of compatable games.
I know people who are very happy with their PSPs but most of them have hacked the firmware and are playing ROMs on emulators... frankly I'd rather buy a flash linker and play them on a cheap GBA SP, since DS linkers are still immature, and GBA linkers work with more systems than DS ones. http://www.gameboy-advance.net/nintendo_ds/neo-fl
for $300(or less) i can get a very nice car/portable dvd player with detachable screen(s). and i don't need to buy movies that only play on a psp, plus i can play dvd+-r's i've burned, or movies i've rented from netflix. so the movie playback capabilites don't impress me.
the NDS however has several games i love, and several i wouldn't mind owning.. plus works with my old gba titles, which i have about 20 of or so. I am still worried about nintendo's long term strategy, but they've beaten everyone else out of the portable market, so if they keep on making awesome systems with awesome games, then sony will remain the 'other' portable gaming device.
*= IMNSHO psps launch titles suck, a look at gamefaqs doesn't show much promise til you look at games with no us release dates, or release dates a year or more from now.
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