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Apple - What A Difference Eight Years Can Make 580

Posted by Zonk
from the company-with-a-tight-turning-radius dept.
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%."
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Apple - What A Difference Eight Years Can Make

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  • by erick99 (743982) <homerun@gmail.com> on Friday November 04, 2005 @03:59PM (#13952540)
    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?).
    • by TimmyDee (713324) on Friday November 04, 2005 @04:07PM (#13952612) Homepage Journal
      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.
      • by TGK (262438) <Killfile AT Nephandus DOT Com> on Friday November 04, 2005 @04:37PM (#13952900) Homepage Journal
        I think you're using the term "Commoditization" in a different way than I would.

        While I ponder what you mean by the word, let me interject my views here. Yes, Apple has turned down a path of trying to sell innovation... but only sort of. Apple is more in the buisness of selling "little and cute."

        I don't mean that in a derogitory fassion. Little and Cute seems to be making them buckets of money. I think that Apple's revenue stream comes from a fundamentally different viewpoint on the same basic idea. Apple sells brand name consumer electronics. They have a look and feel to them that says "I'm an Apple." Like many consumer electronics, they do exactly what they're billed as doing and little else. In the case of the iPod line is this restrictive, but appropriate.

        In the case of the G4 line, this is less restrictive (though still somewhat limiting for those who don't fall into the Unix poweruser category). Fundamentally though, I think that Apple's success stems more from their successfull attempts to brand their systems as more of a appliance than a tool. There is a fine line that they are walking with the desktop/laptop products they make, but even in that case, there is definately a feel to them as being less generalized than a pc.

        Apple has definately hit on something here, but they have to keep running. The question for the next eight years will be this. Can Apple summon the willpower to keep running?
      • by MECC (8478) * on Friday November 04, 2005 @04:40PM (#13952928)
        "cutting costs comes at the expense of things like customer service, R&D"

        Dell does R&D? To them it must mean 'ruin and destroy'. We haven't had a dell server that hasen't had some kind of hardware problem - out of dozens. Our Apple servers haven't had any problem at all.

        I guess by 'shut it down', he meant what would happen if he ran a company that had to make good hardware to stay afloat....

        • by jcr (53032)
          Dell does R&D?

          They do, but it tends to go to researching ways to reduce production costs.

          -jcr
        • Wow, really? (Score:3, Informative)

          by FredFnord (635797)
          I'm actually surprised. I mean, I'm not a big Dell fan, and our failure rate on their laptops at my company approaches 100% per year. (60 laptops, nearly 60 failures per year, though of course not every single one fails... some fail several times.) But as for my (14) rack-mount servers, mostly Dells, I have had only two problems in the last two years: one was on a Dell which had one drive, which I bought myself, fail (fortunately it was in a RAID), and one was on an xServe that had its memory (which I had
      • Re:Apples to Apples (Score:5, Informative)

        by SydShamino (547793) on Friday November 04, 2005 @04:49PM (#13953012)
        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.

        Pretty soon? R&D is the first thing they cut when things go bad. Heck, I even watched a television show about Dell that explained precisely this as their corporate strategy.

        I was offered an R&D job at Dell when I graduated from college years back. I am so glad I didn't take it; I would have been layed off in less than a year when the 2001 recession took effect. Instead I work for a company that invested in R&D through the recession and is now reaping those benefits.
      • R&D??? (Score:5, Interesting)

        by LWATCDR (28044) on Friday November 04, 2005 @04:52PM (#13953053) Homepage Journal
        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.
        • Re:R&D??? (Score:3, Informative)

          In terms of actual $$, Dell does R&D than Apple, at least last time I checked. Of course Dell is supporting a huge line of hardware, while Apple only has about 6 models.

          The theory is that by going with Intel, Apple can offer a broader range of models without spending additional money on R&D.
      • Re:Apples to Apples (Score:4, Interesting)

        by Mr. Underbridge (666784) on Friday November 04, 2005 @05:52PM (#13953593)
        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.

        Yeah, that's working out terrible for both Dell and Walmart. There will always be a market for the cheapest major vendor for any product. Always has been.

        In general, I'd say Dell's future is at least more stable because the market for computers is stable and certain. Apple's fortunes are completely tied to the iPod right now, and that's a market that's less certain. For Apple to maintain their fortunes, they need to either hit another home run, and/or keep up their 75% market share in the portable player market. Both are tough, though not impossible.

        • by fermion (181285)
          Companies whose primary innovations is low price are not stable firms. Look at how easily Walmart took out Kmart. Cheaper prices, less ghetto, more customers. Walmart did much good in lower prices through a better supply chain, just like Dell, then continued by cutting off any supplier that did not provide deep disccounts, or, even better, just contract the factory. Now, in desperation, walmart is resorting to illegal employee pracitices, like illegal aliens, withholding wages, and the like. At some p
      • Re:Apples to Apples (Score:5, Informative)

        by Wellspring (111524) on Friday November 04, 2005 @05:58PM (#13953648)
        Dell moved in the direction of building a commodity product-- that is, he wanted what economists call "perfect competition" where products are interchangable and people are cost-sensitive. Then his excellent supply chain let him undercut everyone on price and still make a tidy profit.

        In a perfect competition game, low costs are EVERYTHING. You stick to open standards and off the shelf components. With high volume from having the best price, you get the volume you need to improve your costs even further through economies of scale. Not alot of profit per box, but LOTS of boxes.

        Apple's strategy has been what economists call "monopolistic competition", where products are imperfect substitutes for one another, and buyers are willing to pay a premium to buy a product that better suits their needs. Apple's high quality, feature-rich, very fashionable product is a luxury item.

        Apple's costs are high, but their prices are even higher-- giving them those very nice profit margins. In a luxury item game, your only challenge is when others try to imitate you at the top end of the market-- something that Apple's proprietary software helps protect them from. You don't need alot of market share to win at that game.

        I'm a big fan of Gil Amelio-- his reforms helped get apple back on track, and I think Jobs took much of the credit because he was around when Amelio's reforms started to pay off. But Jobs and Jobs alone deserves credit for building the boutique business that took Apple from "no longer in danger of collapse" to "no longer in danger of mediocrity".
    • You're right, percentages don't matter much until you know the initial totals. So 6% of 14 billion is obviously way, way more than %9 of 4 billion. But that's only revenue, not profit.

      So how much of Dell's 14 and Apple's 4 billion is profit? How much goes to operating expenses? It is widely known that one of Apple's biggest profit generators is the iPod product line (and not iTunes Music Store). Given that they're selling million and millions of these things, this suggests Apple's profits (not revenues
    • At the time, Michael Dell was right on - Apple was an uninspiring company that lacked an innovative and compelling product. But now the tables have turned and Dell is the company that now sells these uninspiring products. Sure, Dell is still profitable, but everyone knows [yahoo.com] that one can't rest on their laurels in a market like this - there needs to be continuous innovation.

      What's to keep Dell from "pulling an Apple" and investing their own cash into a Unix-based operating system and otherwise innovative pro
    • Dell was right. (Score:5, Insightful)

      by hey! (33014) on Friday November 04, 2005 @05:04PM (#13953178) Homepage Journal
      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.
  • Apple then vs. Apple now, the difference is night and day.
    • by drhamad (868567) on Friday November 04, 2005 @04:08PM (#13952620)
      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.
  • R&D (Score:5, Insightful)

    by BWJones (18351) * on Friday November 04, 2005 @04:00PM (#13952548) Homepage Journal
    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.

    • Re:R&D (Score:2, Insightful)

      Why does there always have to be innovation? Dell is Walmart - stack it high, sell it cheap and make profits in the process, wheres the need for innovation in that? Let others spend the money to do that, when theyve perfected what the market wants, you step it and do it a billion times with better margins.
    • Re:R&D (Score:5, Interesting)

      by brkello (642429) on Friday November 04, 2005 @04:22PM (#13952763)
      You know, there are different types of innovation. I just attended MILCOM and one of the guest speakers was talking about innovation and they listed both Apple and Dell. What did Dell do? They innovated the process of purchasing and distributing a PC. They are able to offer lower prices and make PCs accessible to a greater number of people. You may not think that type of innovation is as important as Apple's...but really, Apple didn't do anything technically innovative. They are innovative in design and user interfaces that appeal to the masses.

      Comparing Apple to Dell is comparing apples to oranges. Saying one company is more innovative than another is just plain silly. They have totally different business models. Then trying to back up your opinion by saying your organization is buying more Apples than Dells is totally irrelevant. Who cares? I really don't get the emotional attachment to tools. Apple systems are a tool. PCs are a tool. Just like any tool, there is a right tool for the job.
      • Re:R&D (Score:5, Insightful)

        by rsborg (111459) on Friday November 04, 2005 @06:20PM (#13953854) Homepage
        I just attended MILCOM and one of the guest speakers was talking about innovation and they listed both Apple and Dell. What did Dell do? They innovated the process of purchasing and distributing a PC.

        Problem is, Dell's innovation wasn't something they could patent and protect, whereas, with Apple, some of their innovation is very protected (OSX UI, iPod interface, iTunes, iTMS exclusive contracts, etc).

        Taking a look at Apple's supply times and online ordering capabilities, they have not only copied Dell's direct-to-customer innovation, but even gotten some of Dell's efficiencies of scale in effect. Problem is, Dell relied on:

        • Microsoft to push the (software) innovation angle
        • Intel to push the hardware innovation

        Leaving them to really innovate in the supply chain area...

        However, now that both MS and Intel are no longer the innovation leaders, and they have their own troubles to deal with, Dell is stuck without any way to push those companies to do that innovation. It remains to be seen whether this will mark a slow decline in Dell's fortunes, or they make a bold move to re-establish themselves as not only a market leader, but innovative and interesting.

    • Re:R&D (Score:3, Insightful)

      by anaesthetica (596507)
      ...Dell has simply operated as a reseller and box builder. Where is the innovation coming out of Dell?

      That is exactly where Dell's innovation lies: in being able to produce on the fly boxes in large or small volumes customized to the user's designs at a very low cost. Their innovation is in logistics and supply chain, not necessarily computing technology. Still, it is a genuine innovation, and one that has made them piles of cash.

    • Re:R&D (Score:3, Interesting)

      by nathanh (1214)

      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?

      Huh? Enough is enough with the Apple fantasy. The iPod was a concept introduced to Apple by Tony Fadell. The iTunes software was called SoundJam and it was bought; it did not spring forth from the forehead of Steve Jobs. The Mac was Raskin's idea w

  • by Reality Master 101 (179095) <RealityMaster101&gmail,com> on Friday November 04, 2005 @04:01PM (#13952556) Homepage Journal
    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?"

    • by King_TJ (85913)
      I might actually say not.... The slice of watermelon requires a lot more work to eat. All those seeds to remove, and a messy outer skin you're left with afterwards too. The grape = instant enjoyment.

      So too, it is with Apple. They might always just be a "niche company" compared to the PC/Windows market, but millions in profit is still millions in profit - and heading up a company you can truly be proud of can mean a LOT more than even more millions in profit on your ledger sheet.

      As it was recently point
      • This is exactly where Nintendo is sitting. Nintendo will always turn a profit, and in turn, make cool products that people like. Sure sony and MS might outsell them, and make more money, but some companies are just happy knowing that they are making a good product that people enjoy, and being creative in the process. A company doesn't have to make the most profit, or sell the most units to actually be the best company.
  • by Generic Guy (678542) on Friday November 04, 2005 @04:02PM (#13952561)

    With Dell's recent quarters slipping and Apple's recent quarters showing growth there can only be one conclusion:

    Apple is dying!

  • by tkrotchko (124118) * on Friday November 04, 2005 @04:03PM (#13952567) Homepage
    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.
    • by DarkBlackFox (643814) on Friday November 04, 2005 @04:54PM (#13953086)
      ..And as a result of all it's cost cutting and cut-throat business tactics, Dell may eventually implode under itself. I'm not saying it will happen overnight, but like many here on Slashdot, I work "in the industry." I work for a small computer sales/service retailer, and over the past 2-3 years I've experienced a sharp increase in the number of Dell computers coming in for service, relative to the number of other brands. Granted, many were for virus/spyware infections, and the large number may be more because of larger market share. Beyond viruses though, I have seen more than enough Dell components fail, particularly the lower end/bargain models, both Desktops and Laptops. Ordinarily that wouldn't bother me, but I've heard from customers how bad Dell support is now, with the call centers moved offshore. I've had to fix Dell computers still covered under warranty because the owners got so fed up with trying to get help from the support lines.

      A number of years ago, Dell built it's business up on quality parts and service- winning numerous awards for customer service, and were recommended all around. The beige box Dells in particular, which went for over $1500, were pretty solid machines. Back when profit margins were high enough to cover the costs of quality support. Now the conditions of the market have changed, and Dell has to trim the fat off what's already become an anorexic business model to stay competative. People who once came in to my shop swearing by Dell now swear AT Dell, and promise to never buy anything Dell again, after their 6 month old Inspiron 1150's LCD inverter burnt out, and Dell refused to replace it, even though it had a year warranty. Despite numerous calls, all the call center would say is insert the recovery CD and reinstall the operating system.

      Bottom line- Dell became the bohemoth it is now based on reputation of quality machines. Take the quality out, and they are just another retailer. They still enjoy brand recognition, and the higher end systems aren't too bad. But they grow marketshare by offering $299 PCs, and $699 laptops to anyone who thinks any Dell is a good Dell, even if on the cheap (without understanding that You Get What You Pay For). As a result, it's userbase will slowly erode away.
      • by jsight (8987)
        I can't agree... I've dealt with their support online through the chat system and it was absolutely phenomenal. I actually had a rather cheap Dell laptop with some major overheating issues (design issue, many of the same model had) and they absolutely made the situation right, even out of warranty!
  • Although I've never owned an Apple Computer myself (just an iPod), I remember playing on a friend's Mac when I was younger and felt sad to see the company in trouble. It's nice to see a company turn around and become profitable again. Probably human nature to root for the underdog, but anything that stimulates competition and consumer choice can't be all bad either.
    • It is nice to see a comment like this from a non-Mac user. I can't help but think that more choices are better and that's why I've always been so baffled by folks who root for Apple to go out of business.

      I only use Macs, and I was sorry to see the Amiga come to a bad end. I was sorry that Be didn't make it. I applaud when Linux makes gains. I don't wish for Windows to disappear.
  • "Byte of the Apple" - That's so clever! I never would have thought of replacing bite with the homonym byte when talking about computer-related things. It must be what, 1994 now?
    /sarcasm

    But seriously, when about 50% of each iPod is profit, and they sell more of those than anything else, is it surprising? Dell is competing towards the bottom, it seems, with their mostly cut-rate PCs (XPS excluded) whereas Apple seems to be competing towards the top where the premium prices - and profits - are. Didn't they w
  • Apple just finished its fiscal 2005 with a profit margin just shy of 9.6%.

    A knowledgeable personal acquaintance (a mutual-fund manager) once told me never to pick a stock on the basis of its CEO, because the guy's (/gal's) potential is always factored into the share-price. I guess that rule still makes sense, but, for those seeking exceptions, Steve Jobs does seem a good place to start...

  • by Jerry Coffin (824726) on Friday November 04, 2005 @04:07PM (#13952619)
    It may sound arrogant, but it's entirely possible that Mr. Dell really had it right -- Apple's making 9.6% profit margins today, but certainly hasn't for that entire eight years. The real question isn't "how well is Apple doing right now?", but "would the stockholders be better off if they'd invested elsewhere?"

    At the same time, the fact is that most stockholders are reasonably intelligent adults, and (IMO) it's perfectly fine that it's been left up to them to decide to keep their money there instead of investing elsewhere. If the investors had all agreed with Michael Dell, Apple would simply be gone -- or perhaps, like SGI, being de-listed for having too low of a stock price.

    --
    The universe is a figment of its own imagination.

  • Apple is moving more quickly towards a more diversified product line and has done so by bringing out some interesting and exciting products, but before anyone gets too excited, the bulk of their super profits over the last year has been largely due to the iPod. If they follow-up with another great product, they'll have a pretty secure future. However, if they can't follow iPods act with something just as (or close to) exciting, it's a short slide back. Dell's efforts to diversify into TVs and the like, has
  • by acvh (120205)
    How many PC clone manufacturers have come and gone in the time that Apple has been making computers? Hell, even IBM and Compaq are gone. Dell is trying desperately to become more than a PC clone maker - selling TVs and home theater equipment now, but I have serious doubts on the long term viability of that strategy. Not that Dell hasn't been a great story - it has been - but as far as innovation, creativity, adapting to and creating new markets, Apple wins hands down.

  • by imag0 (605684) on Friday November 04, 2005 @04:10PM (#13952648) Homepage
    If you think about it, the stock market does not award companies for doing well, maintaining a good fiscal outlook and treating it's employees good, it awards companies that grow. What happens whenever a company has utterly grown itself so large that there's really no room to go anywhere (ala Microsoft)?

    Sure, it's a treadmill that everyone wants to get on, but it wears down and kills all but the strongest. Not to be outdone, it drives competing companies against one another to the point that now, a little over a hundred years later, companies are little more than rabid beasts. Clawing and looking for any way to get a little larger piece of the pie. If they slip in the slightest they are injured. If they slip a few more times they can be ripped apart by other competing companies- broken apart by others more ruthless.

    Anyone wonder why the laws and regulations are changing so much in favor of the big corporations?

    They might not be able to get off the treadmill, but it doesn't stop them from coercing others to come to their aid.

    Does that make sense?
  • OS X is Apple's real core product yet, they are becoming more and more, instead of the Apple Computer Company, rather the iPod company. I know I may get modded troll, but I'd much rather see Apple making its sales off of OS X instead of on the iPod which is a relatively mediocre product in a sea of other mediocre products. Sure, the interface is great, the scroll wheel brilliant, but in the end it only does one thing -- play music (and videos now -- poorly).

    The cost of entry to use a *nice* Apple is just to
    • Financial data [apple.com]

      Apple has made $1.6b from it's computers and $1.2b from it's iPods. Maybe this next quarter won't see the same relationship; but we may be surprised yet again!
    • by tm2b (42473) on Friday November 04, 2005 @04:51PM (#13953050) Journal
      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.
    • by nine-times (778537) <nine.times@gmail.com> on Friday November 04, 2005 @04:56PM (#13953103) Homepage
      Why is this insightful?

      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.

    • The cost of entry to use a *nice* Apple is just too damned high -- and this coming from an Apple FAN!

      How do you figure this? I purchased a 12" iBook this summer. It cost about the same as my last Windows laptop. The iBook feels as fast, or faster; it came with more memory, wireless, bluetooth, firewire, larger hard drive, and a far better OS. And it looks to me that a Mac mini is about price-equivalent to low-end Windows boxen.

      I'm not exactly seeing the "too damned high" here. Perhaps 10% higher price,
    • by pauljlucas (529435) on Friday November 04, 2005 @05:03PM (#13953164) Homepage Journal
      The day Apple decides to put OS X onto a DVD and let you install it on your whitebox built computer...
      For the millionth time, this will never happen. Aside from the fact that Apple is a hardware company and the $99 price of OS X is enormously subsidized by the sales of hardware, OS X isn't (and never will be) developed for and tested on the myriad of PC boxes having various motherboards, video cards, sound cards, etc.

      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?

      The cost of entry to use a *nice* Apple is just too damned high
      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.
  • by Cr0w T. Trollbot (848674) on Friday November 04, 2005 @04:11PM (#13952652)
    Here's a comparison of Apple's stock vs. Dell's stock over the past five years. [cnn.com]

    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

  • No ipods in this story [yahoo.com].

  • by G4from128k (686170) on Friday November 04, 2005 @04:13PM (#13952677)
    Dell does NOT maximize profits -- I've heard several Dell executives speak (including Micheal Dell) and their pricing strategy is more subtle that just maximizing the short-term revenue minus costs bottom line. In fact, they said that they will actually penalize sales divisions that create too high a profit margin.

    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.

    • by coult (200316) on Friday November 04, 2005 @04:37PM (#13952895)
      Of course they are maximizing profits...what about your description is not maximizing profits? They are simply choosing to use different model for their profit than just "next quarter" or "next year," and choosing to maximize total profit rather than profit margin as a percentage of cost. You seem to think that maximizing profit means maximizing profit margin as a percentage, which of course it does not.
  • by digitaldc (879047) on Friday November 04, 2005 @04:15PM (#13952691)
    Dell shut down Dell's good reputation for service (probably its only strongpoint beside price) when it offshored its support services to foreign countries. I have heard numerous complaints about their new support being not very helpful. Apple, on the other hand, has produced new, highly popular products that many people seem to enjoy and actually use. People get excited about new products that are fun and well-designed. Dell seems to think that people only care about cheap PCs.
    In a race to the bottom, Dell's stock has suffered. It is now just another PC Maker, with little or no excitement or fun. Yes they are cheap, but they are not very innovative.
    Read this article, it talks a bit about Dell:
    http://edition.cnn.com/2005/BUSINESS/11/01/dell.ma in.reut/ [cnn.com]
    On a personal note: NEVER buy a DELL printer, unless you enjoy a beeping misfit that jams intermittently during times it is needed most.
  • Or at least if his version of "customer support" gives any hint, he's probably brainless.

    Here's what's happened recently concerning my experience with Dell and a laptop I found on the side of the road. [slashdot.org] I hope this doesn't come as a surprise to anyone.
  • It's nice to see Apple turned around. May be it is just me, but knowing their major portion of the revenue comes from a MP3 player is just plain scary. If they are smart enough to hopping from one train to another (e.g. media distribution/iTune?), good for them, but I'm not holding this stock.
  • Well, in eight years from now, it could seem that now was the time to close Apple and give the money back to the shareholders. Who's to know that? Apple is depending too much in the iPod for its success. When the iPod frenzy abates it'll have to find some other hit to keep on sailing. That's not so easy. That said, it'll probably always have a niche in the computer field, and perhaps it can reinvent itself as a consumer-electronics company, but that's far from sure.

    There is one clear difference between Dell
    • "Apple is a boutique company that will always have fatter margins because it'll offer exclusive products. But it depends too much on fickle consumers that can change brands as easily in electronics as in shirts."

      Apple has one of the most loyal customer bases in the history of the computer industry, one that most other companies can only wish for. This same base is the reason for the company's survival even in the darkest days for the company in the 1990s, when it could seemingly do nothing right. In contr

  • 6.5% isn't bad. (Score:2, Insightful)

    by autopr0n (534291)
    As I remember it, apple was losing $700 million dollars a quarter. A 6.5% profit margin isn't very bad.
  • by Winterblink (575267) on Friday November 04, 2005 @04:19PM (#13952732) Homepage
    ... we can also focused on what hasn't changed: Michael Dell is still an asshole.
  • by hellfire (86129) <deviladv@@@gmail...com> on Friday November 04, 2005 @04:41PM (#13952937) Homepage
    As many threads have already noted, the percentages are misleading because Dell's total amount of profit is larger than Apples total profit. Dell's 4th quarter profit for 2005 was 667 million while Apple's was 430 Million.

    Okay, Dell's revenue is higher, but it's not that much higher. Also, Dell's profitability is falling while Apple's is rising. Del's profit was 749 million last year. I think it's premature to rub anything in Dell's face but I do think that even thought they are percentages, they are significant. The percentage is even more significant since Dell's revenue and expenses over all are higher than Apple's. This means that they are more severely effected by slimming margins.

    The article might be premature, and it's most likely hype, but there is a valid point here, and that is 8 years ago Dell wrote off Apple, and now Apple is trending up, while Dell is trending down.

    Making all the "do you want a whole grape or a slick of a watermelon" analogies you want, but If the watermelon slice is dried out and sour, and the grape is perfectly ripe, I'll take the grape. (see I can make analogies too!)
  • by Quattro Vezina (714892) on Friday November 04, 2005 @04:46PM (#13952983) Journal
    Anyone still remember all the "to hell with Dell" banners and stuff eight years ago, when Michael Dell first made those comments?
  • Corporate Market? (Score:3, Informative)

    by SpasticThinker (892651) on Friday November 04, 2005 @04:49PM (#13953010)
    Apple may be doing well in the home computer market. But if you're going to compare the two of these companies, consider the corporate market as well.

    Dell can afford to sell its home computer stuff so cheap because it's making more money on the high-end stuff. Don't forget, Dell produces (or at least brands) backup systems, storage solutions, servers, racks, etc. You name it, Dell makes it for your business. They have captured a ton of that market, and their sales structure for businesses of all sizes makes it easier to buy there again.

    So I think financially, Dell is doing very well...when you consider that solid corporate market.
  • Dell? Dell? (Score:3, Funny)

    by Darius Jedburgh (920018) on Friday November 04, 2005 @04:54PM (#13953082)
    Remind me. Try as I might I can't think of an interesting product from a company called "Dell". Can someone jog my memory.

It is wrong always, everywhere and for everyone to believe anything upon insufficient evidence. - W. K. Clifford, British philosopher, circa 1876

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