Why iPod Can't Save Apple 1121
MadMirko writes "MacNN quotes an article from Money Magazine titled Why iPod can't save Apple, which says 'the buzz on the digital music player and "swank" storefronts are masking an ebbing bottom line, noting reduced CPU sales (resulting a shrinking marketshare), decreased profits (in part due to the lower-margin iPod and little-to-no profit at the iTunes Music Store), failure of the iPod to drive CPU sales, failure of the retail stores to increase marketshare, hidden retail store costs, no operational income, and little value in the stock.'"
Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Interesting)
Check out the Apple Death Knell Counter [macobserver.com] for links to many, many other articles, dating back to 1995, all of which have experts predicting that Apple is about to go bust.
Well...they do have a point.... (Score:5, Funny)
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Funny)
- Tony
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Interesting)
Well... (Score:5, Interesting)
That doesn't mean Apple should have made it Mac only, it simply means that sometimes the market does what marketing thinks it will. That is, if Apple was thinking that way in the first place, I haven't seen any official info to indicate that.
Kjella
iPod is the Apple-lifestyle-leader (Score:5, Interesting)
Apple's stated goal is to use the iPod/iTunes combination to introduce PC users to the OSX interface, and the Macintosh philosophy in general. Once they are familiarized they will hopefully purchase a Mac and fully enter the Apple lifestyle. If Windows users just purchase an iPod, Apple's profits will be negligible. There would not be 'red ink flowing like blood,' but there would not be any revenue growth, either.
Check the web, the words practically fell from Steve Job's mouth.
===---===
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Interesting)
I'm sure that Steve Jobs wallpapers his office with all of the predictions of Apple's demise. If we keep going like that, we'll give him enough to wallpaper all of Apple's offices.
Apple's stock price and earnings ratio (Score:5, Interesting)
Any idiot can tell you the stock price will come down a bit since the p/E is not supported by the present facts known. On the other hand if ipod sales continue to boom and people start flipping their old mac for new G5s (by the way the imac g4 inventory is being cleared out for the introduction of some yet to be announce product). Then their earnings will go up and the stock price should rise. This is why analysts are rating apple and hold and not a sell. the price is high and will fluctuate down but may zoom up on the next earning statement.
I think this author,probably in the pay of microsoft, is planting a story anticipating the near term price fall of apple stock to make himeslef look good and maybe stimie apples encroachment on windowns in the enterprise world.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Funny)
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Interesting)
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Informative)
Apple makes obscene profit margins on the rest of its hardware, while making traditional consumer-electronics margins on the iPod.
Remember also that Apple has all sorts of overhead. They need to keep OSX current, they develop their own software and must spend R&D money to improve their hardware... all to sell a few computers.
Contrast this to Dell. They do no R&D... they assemble.
Sun lived on Apple's business model for years, and look where it brought them. When was the last time you bought a Sun Workstation?
Dell R&D Correction (Score:4, Informative)
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Informative)
This is a great point, but it's not longer true. It was true several years ago, however. Dell now does a good deal of in house R&D. They used to buy laptops from Sager and rebadge them as Dell. Now their laptops are designed in house and a good deal of engineering goes into them. Take this [dell.com] for example.
With the Dell Axim, their Ipod clone, their line of custom cases, laptops, and even proposed standards (dell is pushing for a standard port for upgradeable graphics cards in laptops, and is developing a solution in house for it). They are way past their assembler days of yore.
Dell spends ~$118 million per quarter on R&D (Score:4, Informative)
So I checked their last 10Q statement they filed with the SEC and discovered that Dell spends around $118 million each quarter on "Research, development and engineering".
burnin
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Informative)
Try reading Sun's annual report sometime. You might come to the realization that your company is in the minority by far.
Sun's cash cow back in the day was the $10,000 pizza-box workstations that they sold to universities and companies. The market has completely vaporized expect in the minds of
Hell -- even SUN abandoned that market. Most Sun people are using Sun Ray terminals last I heard.
One of the Points (Score:5, Informative)
This is one of the points that the article is considering. Low margin means that the sale price is not much higher than the price to market, and price to market includes a lot more than the cost of manufacturing. How much do those snazzy commercials take from the budget? How many dollars disappear to get the ITunes concept going? These sunk, hidden costs are part of the equation, and they can cut profitability on a product line faster than you can say "betamax", especially since Apple was banking on Ipods driving people to buy more Macintosh computers, and it really hasn't happened.
Virg
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Insightful)
Losing market share is actually not a pretty sure sign a company is in decline. Market share is only a ratio of the number of your products sold to the total products sold in a market. You can sell 10 widgets one year and 100 the next and still lose market share if UltraCompuMegaCorp's widget sales go from 20 to 2000 in the same amount of time.
Whether a company makes a profit, however, is a pretty good indicator, and it's something Apple has been able to do for the last several years. I'll believe Apple is dying when I see a big "going out of business sale" graphic on apple.com.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Insightful)
We have no idea what they're up to.
An ordinary tech company, as soon as something goes wrong, they start firing people and puffing out their chest about strategic alliances and new products that might come out some day, maybe.
Apple, on the other hand, doesn't tell us what they're up to until they're pretty much done with it. And then when they tell us, they do so in a way that impresses the shit out of us. We don't see the broken-ass beta version for six months before the final...we only see the final (which may have some bugs, or issues, but is definitely usable). Their R&D department is one of the most locked down in any industry. They don't issue press releases or hints the second they come up with an idea. Instead, they embark on internal analysis and testing.
The economic pundits of the world look at Apple and see their tight lipped R&D as "no ideas on the horizon." Which is ludicrous. Do these people think that iTMS, the iPod, the G4, OSX, just materialized out of thin air at MacWorld? Every time somebody's predicted Apple's imminant failure "unless they do something," they did something. Anybody who still makes predictions on a company that's proven so versatile and resourceful is a goddamn moron. Apple's successes were not ACCIDENTS.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Insightful)
When someone refers to the immediacy of something by saying "Apple is about to die," they are OBVIOUSLY referring to a commonly accepted understanding of the relative immediacy of the impending collapse. To compare this to the collapse of England or the Sun going nova is just avoiding logical discussion of the topic altogether.
PC's will keep Apple alive (Score:5, Informative)
The #1 reason is that there are no virus problems on a Mac, and no major problems with spyware, malware, and general browser hijacking. Having someone like me come to their house to clean out their PC will cost them much more over all than if they had just bought a Mac in the first place.
The #2 reason is the digital hub aspect. Adult's want mostly the same things from their home computers: Music, Digital Photos, Email, Internet Access, and Instant Messaging. All things that a Mac does better or the same as a PC minus most of the security woes and difficulty of setup. Most of the stuff they want to do will work right out of the box, nothing to install or mess with.
The #3 reason is investment. After 3 years, you can sell your Mac and still get a lot of money for it. Try selling a 3 year old PC and you will get a fraction of what a Mac resells for.
So, in conclusion, I see that as Windows gets so bad that I spend 3/4's of my day cleaning out spyware, viruses, and restoring hijacked machines to a workable state, people will start to get tired of it and turn to the best alternative. And I will be there ready to give them directions to the nearest Apple store.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Funny)
I dunno about that. Some groups (IBM, The Rolling Stones, etc)have so much money and power they'll probably be around forever. Even if the universe was going to end, IBM's R&D would probably to develop a method to transport itself to an alternate dimension.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:4, Funny)
Re:At least the Rolling Stones... (Score:5, Funny)
The truly evil thing about heroin is it doesn't always kill you. Sometimes it just turns you into Keith Richards.
My own theory is that he died in 1969 and nobody told him yet. Either that or he's a vampire.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Funny)
Then Apple has nothing to worry about.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Funny)
Reminds me of an old joke from a friend's sig line: "I plan on living forever. So far, so good."
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:4, Funny)
`I plan to live forever. Or die trying.'
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:4, Informative)
Some of his better known quotes are here [amusingquotes.com].
My favorite has to be, "Ever notice how it's a penny for your thoughts, yet you put in your two-cents? Someone is making a penny on the deal!"
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Insightful)
I want to see an economically-founded argument that targeting the premium segment of a market is a Bad Thing.
Had I cash aplenty, I'd be all about one o' them sexy G4 monstuhs with a flat screen the size of a sheet of plywood.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Insightful)
If I buy a Porsche, I'm not going to whine that the addons cost more than they do for a Taurus.
Speaking of the cost of addons... (Score:5, Interesting)
They obviously planned this carefully, because I think if you are looking at iPods in the first place, then the money isn't enough of a substantial issue for a move from $300 to $500. So at very little cost and effort from Apple, they've essentially priced their products in such a way that if you're really looking to buy one, you're going to go for the gold, and shell out the additional $$$.
Is Apple dying? Quite possible, but from all indications, not anytime soon.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Informative)
That one died a long time ago - the RAM, HD, optical drive, graphics card, peripherals, plugs, cables, ethernet ports, and so on are all pretty standard.
The only difference between a tower Mac (G4 or G5) and a PC when it boils down to it is the motherboard and the CPU, but how is this different to buying a PC board that supports a P4 or an AMD chip - you usually have to replace the board if you want to up the speed of the CPU unless you stick with a compatible form factor.
The eMac and iMac aren't easily upgradable, but they're not designed to be.
The iBook and Powerbook are both fairly easy to upgrade in terms of new hard drive and optical drive - both parts are standard laptop components used in PC laptops.
It may cost more to get into the Mac platform (I agree, all new software is expensive) but once you're on it doesn't cost a huge amount more to keep up to date with the hardware compared to updating a PC. The long working life of Macs also helps here - from the entirely unscientific anecdotes of mine, I've dealt with a fair number of Macs and PCs and the Macs tend to have at least twice the useful life before needing a hardware upgrade.
When the PC needs upgrading, I can just sling FreeBSD on it and use it as a server, but it means a new machine is needed. The Macs I have just keep going - running OS X here on a battered old G3 which is ambling along nicely.
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:4, Informative)
without any extra software install, left, right and wheel do exactly what you think they would. wheel click is paste in some apps (like terminal and prolly X11) and buttons 4 and 5 can be used for expose.
with something like usb overdrive instyalled then you can map any button to a variety of functions so I have middle click as paste in all apps, button 4 as copy and button 5 as expose - all windows.
makes for a nice mousing environment
dave
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Informative)
Re:Yes, yes, yes, Apple's dying, blah blah blah (Score:5, Interesting)
Re:Apple's Lifeblood (Score:5, Informative)
The settlement had to do with other terms.
Better link to article! (Score:5, Informative)
http://money.cnn.com/2004/03/17/markets/free
-Aaron Mitti
Re:Better link to article! (Score:5, Funny)
Re:Better link to article! (Score:5, Funny)
Re:Better link to article! (Score:5, Funny)
Re:Better link to article! (Score:5, Funny)
Re:Better link to article! (Score:5, Funny)
Good. We wouldn't want impared perambulatory function or to have to miss dinner.
Apple is dying...again. (Score:5, Informative)
So, from where I am viewing the market from the perspective of an end user, Apple's market position is looking pretty good to me. This article appears to be another one in the long chain of prognosticators predicting the demise of Apple Computer, but what they always miss is the disproportionate influence the company has had on the personal computer industry. Hey, where would Microsoft get all their R&D from if not for Apple?
Re:Apple is dying...again. (Score:5, Interesting)
Of course I'm holding out on buying a new one till they come an Apple [tm] 3 button mouse.
Re:Apple is dying...again. (Score:5, Interesting)
Then you are going to be waiting a long time. MacOS, and Mac applications are designed not to need more than the single button. I bought a three button mouse for my PowerBook, and the only time I ever use that is when I'm running X11 applications. Nothing native needs it (which is not to say they don't support it. They do.)
Re:Apple is dying...again. (Score:5, Interesting)
What Part of the Market? (Score:5, Insightful)
I've seen Apple making headways into the SysAdmin space. Not as servers (though XRaid perhaps will) but as personal workstations. Just this week two die hard Sun and VMS people have decided that their next workstations should be Macs. Replacing Sun Stations.
*This* is the important bit that is getting glossed over. Apple is making inroads with the Technoarti in companies. UNIX Sysadmins at the top of the totem pole have been crying for a UNIX laptop for years and now Apple is giving it to them. One Java developer recently quoted in JDJ remarked: "I use a Mac, it's like Linux with class and QA." (or something close to)
Macs are quickly becoming the status symbols of the technical shamans in the backroom. It's not hard to imagine that from there the jump to the CIO and the board room is not far off.
This is what looking at gross marketshare misses. Apple is front-loading the desire for Macs in IT. If they can couple it at the right time (once they've penetrated into the SysAdmin/CIO segment) with inexpensive corporate-type desktops... the world could change quickly.
If Apple can appeal on the resilience to worms/viruses and bring TCO value to corporations the future is bright.
I agree! (Score:5, Insightful)
I'm sorry, but overall marketshare is not a death knell. Just because so many large manufacturing plants, call centers, and places like that have cheap Wintel doesn't mean Apple is dying. Look around... I bet most of you know people who are switching to a Mac. I don't know ANYONE that has done the opposite since OS X came out.
Re:Apple is dying...again. (Score:5, Insightful)
Yet at the same time, Google has reported an increase in the percentage of Mac users using Google.
That would make sense, since the default web browser on MacOSX puts a Google-specific search textfield on every window.
Re:Apple is dying...again. (Score:5, Funny)
Ahhhh, spoken like a true Linux user: Wanting someone to give you something for nothing eh?
Re:Oh this is silly (Score:5, Informative)
* HyperTransport [hypertransport.org]
* PCI-X / AGP
* DDR SDRAM
* S-ATA [serialata.org]
* Gigabit Ethernet [ieee802.org]
* IEEE [ieee.org] 1394b a.k.a. Firewire 800
* USB [usb.org] 2.0 [usb.org]
So, tell me, which of these, which will be the only interfaces that you can sanely use, is proprietary?
In the PC world, anything other than an Opteron machine can compare in specs.
Re:Oh this is silly (Score:5, Insightful)
Excluding the motherboard (and even this is debateable. Go try and get a programming manual for your VIA chip), what exactly is proprietary about the Mac that isn't about your Athlon 64? I look inside mine and see a standard AGP video card, PCI SCSI adapter, IDE hard drive and DVD drive, everyday ordinary USB ports, standard audio jacks, regular ordinary ethernet, the same memory that PCs use... I look up on my shelf and I see programming manuals for all the parts inside the machine I care about. The instruction sets of the processors are different, but everything else isn't any less standard than your machine.
Someday you'll grow up, get a job, and have way less free time to "get your hands" dirty. Your time budget will shrink and your financial budget will grow. Then perhaps you'll appreciate that you can spend a few hundred extra dollars to get a machine like a mac.
Apple... (Score:5, Funny)
Re:Apple... (Score:4, Insightful)
I love that!!!
Only on Slashdot :) (Score:5, Insightful)
- Apple putting out a mind-blowing GUI on top of a UNIX-like system (Slashdotters claim not to like it yet rip-off the Aqua theme endlessly for KDE)
- Apple having massive sales of iPod/iPod Minis
- Apple vanquishing all debt
- Apple executive announcing plan to increase billions of dollars for company
- Apple innovating with Expose, OpenGL rendering backend for 2D GUI, Apple actually INCREASING performance with each OS X update
Sheesh. "The Sky Is Falling" (Score:5, Insightful)
How many tech companies (which were media darlings) imploded during the Dot-Bomb? Apple wasn't among them and they've been "Dying Since 1976". Hell, even one of the latest tech poster-children ( Segway [segway.com]) is sucking rocks. Apple has a core (no pun intended) market and a loyal customer base.
These analysts have an intangible they can't convert to numbers on the spreadsheet: customer loyalty. No user I've ever met has the same passion for Dell, Compaq or Microsoft.
disclaimer: I'm an Apple fanboy; bought a ][+ in 1981 (which still works!) and a variety of Macs along the way.
Apple has to make a decision (Score:5, Insightful)
Well, yes and no.
There are a lot of longtime Apple customers, but as much as we nix people like OSX for its BSD base, OSX alientated a LOT of longtime Mac users that wanted nothing to do with Unix or command lines. A prime complaint was that the Mac interface was changed too radically, and that it looks nothing like the beloved old 9X-and-lower line. I've also heard some of these people complain that OSX is too slow, especially on G3 hardware. Personally, I know more Linux people that love OSX than longtime Mac people that love it.
And now Apple has a quandry. Rather than trying for mass-market appeal but making prices competitive with PC products, Apple has tried to maintain the "join-our-exclusive-club" approach, which requires a premium in price for customers. Yes, I know you guys are going "but Macs are so much better, and you get what you pay for, and Macs are a bargain even at these prices". Well, Joe Schmo customer doesn't agree. He's out at BestBuy or CompUSA looking for a new computer, and all he sees is that Macs 1- cost a lot more, and 2- can't run the games and software that PCs can. Plus, if Joe Schmo's expierience is anything like mine, when he tries out these newer Macs at the store, he's not going to be real impressed with the quality and feel of the Apple hardware (sorry, I think the keyboards and mice have a cheap feel to them now. They generally seem more shoddy than past Macs to me). He's going to be saying "So why should I pay 900 bucks for an Emac that's slow (with it's stock 128 or 256 mb of ram) when I can get this HP for 600, or this Emachines for 400?".
Apple has to decide if it's going to stay the exclusive-club route, or try to get more converts. If they do the latter, they're going to have to price Macs more competitivly. The club route doesn't seem to be working as well. Those old Mac fans I know? Some of them are trying their best to extend the life of their beloved old Macs through upgrades, and they're using 9X for as long as they can get away with it. So Apple either has to get them back, or hope that lots more Linux users convert.
And for Segway sucking, well come on, did anyone REALLY think people were going to adopt them en-mass? The Segway was always a niche market at best.
Re:Apple has to make a decision (Score:5, Interesting)
So what are they going to do? Ship windows on the machine? Even if they cut prices to be "competitive" Joe Customer is still going opt for the PC because he can run his games and software on it. So in your senario Joe Customer would still buy the PC because it still has an advantage over his Mac unless the Mac was priced much lower than the PC to make up for its "crippled" status. Or maybe there's other reasons why folks buy Macs other than price and software availability.
See everyone's a freakin' expert on this, you don't think that Apple has a strategic financial think tank? You don't think that they're plotting the course best for them? Why is it that Apple critics think that becomming Dell is ONLY viable option for Apple?
I think Apple likes where they are. They're not the dominant strip n' ship shop, but they're cutting a profit and they're making innovative designs. Guess what? They're happy with that! Not every company needs to aspire to be Microsoft or Dell.
They already decided (Score:5, Interesting)
I saw this quote a while ago: "I don't think BMW is complaining about their 2% marketshare. Neither is Apple."
Let's see your Dell zealots (Score:5, Informative)
When you can show me a public display like the Longest Line [mac.com] then I might agree. (Be warned, it's a video clip.)
OSX (Score:5, Interesting)
I still think OS X is going to save Apple. It may be a slower propegation than this narrow analysis on the iPod and iTunes, but from what I have seen it has been creating more and more demand for Apple products.
Just locally, I have been spreading a "Mac Fever" to many of my collegues. A friend of mine turned me Mac this past summer after leaving an iMac with Panther on it up in our office all summer. He was working out of town for several weeks, and I used it regularily. I would have never wanted a Mac running OS 9, but now that I've used Panther...
After he got back I had to return to my Winblowz box (as I cannot use StuidoMX or Photoshop on Linux =[ ). After that I was fevering for a Mac hardcore. I finally was able to pick up a new G5 around Christmas time.
Ever since, I have been estatic about its performance, beauty, and stability. This has lead to antoher PowerMAC for the office, and two iBooks between my friend and I. The other people we work with are seeing how well our Macs help us get our work done, and are now looking to buy Macs of their own.
At other places I have worked I see the same thing happening. Someone gets a Mac, and six months later four or five other people have gotten not just one, but usually two, for office and home.
Of course, a computer is more expensive than an iPod, so this growth will be slower, but I see it occuring in force all around me.
Re:OSX (Score:5, Interesting)
As if Apple needed "saving"
The company could use a healthy dose of growth but they are certinly not it need of "saving".
Re:OSX (Score:5, Interesting)
She spends 98% of her tech support time with the windoze folks.
Every time another virus runs amok, she adds another Mac person.. Last time, she got all of the professors in one room and had the ones with the virus raise their hands. Then all of the Mac people raise theirs.. Her Quote. "You are smart people. There is a lesson to be learned here."
For me, the only only time I boot windows is in VirtPC to play poker. Otherwise, I don't even give it a thought
Like she says.. Mac OS X has none of the stability and security that you associate with Windows...
Re:OSX (Score:5, Insightful)
Every time another virus runs amok, she adds another Mac person..
Without meaning to sound patronising, perhaps she should do some work to secure the windows boxes instead of letting viruses "run amok". I work in a 100% Microsoft shop (well, ok, we have Solaris boxes, IBM mainframes and a few linux machines dotted around) and in all the years I've been here we haven't been hit by one single virus. Our network is plenty secure, thanks, and while I'd rather we didn't use so many Microsoft products, viruses/worms come last on the list of my reasons to change.
Frankly I'm getting sick and tired of paper MCSEs who know about as much about properly securing a network as I know about how financial markets work.
Rant over. :) That wasn't particularly directed at your wife - your story was merely the catalyst.
iPod tried to save Apple... (Score:4, Funny)
Welcome to last year... (Score:5, Funny)
And the year before that year...
And the year before that year...
Welcome to every point in the past 10 years except NOW.
Earnings (Score:5, Insightful)
This is only focusing on the iPod and ignoring all other products in Apple's inventory announced and unannounced which are having large influences in their respective markets.
Facts (Score:5, Insightful)
This is a strange statement. If the hundreds of people were waiting to buy an iPod, how would they have already had the iPod experience that would push them to purchase an Apple computer? Chicken before the egg here? As with most of the 'Apple is dying' articles we've seen over the last 15 years, this one mixes numbers without context and some strange subjective observations.
Oh yeah, BSD is dying too. And Bluetooth... =)
part of the comments are probably true (Score:5, Interesting)
Tom, happy owner of a 2x1Ghz PowerMac
Re:part of the comments are probably true (Score:4, Insightful)
People buying low-end computers who are not computer-savvy would love to get the pretty Mac that they see at CompUSA, but they see an eMachines box for 1/3rd the price and don't understand why the Mac might be worth it. The masses don't understand the benefits of a G5, OS X, or any of that. They are looking at price tags.
I would be interested in knowing what Apple's share of the low-end laptop market is. The iBook is actually very price-competitive. If they didn't purposely hobble it I would buy one.
iTunes may save them... (Score:5, Interesting)
And I may just have to go buy an iPod now to hook up to my iTunes service.
Kudos, Apple... you have got a hard-core Mac hater to use your products. I would call that an amazing success.
Another "Beleaguered Company" Story (Score:5, Interesting)
iPod won't save Apple? Controlling most of the mp3 player market isn't good? And this helping iTunes Music Service start up...the FIRST one that all the major labels thought was worth trying and has 50 million downloads? I'd say the iPod did a good job (especially with it's high profit margin).
Oh yeah...I guess the deal with HP doesn't amount to anything either. I'm sure all the top brass at HP was thinking "hm...how can we get more money? Hey, let's go with a product that nobody knows and that won't bring in any money...not for the company that invented it and certainly not for us".
C'mon people...get with the times. The iPod is just one thing. And a damn good thing. It's bringing a lot of money and recognition to Apple. Now add a supercomputer built from G5s at VA Tech, major enterprise software apps being ported over to Mac...um...hello...
Oh, come on (Score:5, Insightful)
What they're basically saying is... (Score:5, Interesting)
To which I say, where's the companion article about Microsoft's dire financial situation? I mean, if they didn't have Windows and Office income subsidizing all their money-losing products (which is almost everything else they make), they'd be hemmorhaging money in a way that would shame the Pentagon.
By the way, Apple's computer sales are down because the models are stale and a refresh is due (or overdue, in the case of the G5). I've got several thousand dollars sitting in the bank, just waiting for the new G5s to be announced, and I am far from alone. And the iMac and eMac lines were very recently EOL'd and should get updated soon as well.
~Philly
With 4 billion in cash and no debt ?? (Score:5, Informative)
Little value in stock? (Score:5, Insightful)
I'd say there's quite a bit of value in APPL.
Re:Little value in stock? (Score:5, Funny)
What does Appell Petroleum Corporation (APPL.PK) have to do with Apple Computer?
You must mean AAPL.
Apple seems to be coming back (Score:5, Interesting)
Re:Apple seems to be coming back (Score:5, Informative)
That's probably because Apple laptops are price-competitve with Wintel. Wintel desktops are cheaper than Apple because of economies of scale which don't really apply in laptops -- all laptops are basically proprietary designs. So if you buy a Powerbook or iBook, you get a quality laptop at about the same price as a Wintel laptop, plus desirable features like OSX and much longer battery life. Not surprising, then, that Apple laptops are popular even while the desktops are kind of a niche market.
Blame Games (Score:4, Insightful)
I do love Macs... (Score:4, Interesting)
Does Apple really need to be saved? (Score:5, Insightful)
Market share does matter only if you're from Redmond and/or your plotting to rule the world, "normal" corporation are just after money, and money is just what Apple is making.
Could the Walkman have Saved Sony? (Score:5, Insightful)
I wonder if the iPod could actually save Apple. It's not that I think Apple needs saving, but more so, question whether or not a $300 mp3 player could revitalize a company. Did Sony need saving when they released their Walkman? Did Nintendo need the Gameboy the rescue them form extinction? Nope. These companies used these products to become even more powerful than they already were.
Re:Could the Walkman have Saved Sony? (Score:5, Interesting)
Frankly, Nintendo probably would have disappeared a few years ago without the GameBoy. And there's no doubt that Nintendo is only a fraction as powerful as it was when the GameBoy was released - back then, the NES was the top selling games system in the world.
To get back on-topic, I hope Apple isn't betting the company on the iPod, because I don't see a long-term future in standalone music players. I'm in the market for a new cellphone and find that even on the cheapest contract deals I can get a free phone with a built-in MP3/AAC player. Some even include video players. OK so most have limited flash memory for now, but it can't be long until they start integrating gigabyte drives. I'd also be willing to bet that phone companies will soon create music stores that will allow people to download tracks to their phone direct without having to go through a PC. When that happens, then unless Apple has an iPhone up its sleeve and a deal extend iTunes to become a mobile service, it can kiss its music business byebyes.
Why iPod Can't Save Apple? (Score:4, Insightful)
Cheers,
Ian
Raises concerns, but panics a bit too (Score:5, Informative)
The market share numbers aren't terribly convincing (since there's about a dozen different ways to measure market share, and one can always pick one that fits what you're trying to say). Without more info, it's hard to judge. Though Apple would obviously rather hear others saying their numbers are going. I've heard that the iPod is the #1 digital music player today and Apple has something like 75% market share for online music, so there's an upward trend. It would be interesting to see Apple's own tracking of unit shipments compared to these numbers. (I'm ignoring comments from someone suing Apple are never convincing until the case is over. There's too much incentive for the plaintiff to basically try to blackmail the defending company into settling).
However, the author is suggesting that Apple's cash flow from operations is negative, while its cash flow from investments is positive. I presume Apple's cash flow from financing is 0 since they've retired their debt. That's not a good pattern for a mature company, and after 20 years, Apple sure is.
Apple has been remaking itself as of late, and one would expect that its cash flow profile would match that of a growing company. And since Apple has a lot of cash, it wouldn't have positive cash flow from financing (meaning its getting its money from VC funding or by borrowing), but positive cash flow from its own investments to finance its remake of its operations.
As an investor, I would argue that I would rather have Apple financing its changing operations from investments rather than from financing. That's because financing from investments is better for shareholders since it doesn't dilute shareholder equity the way issuing more shares or even borrowing from a bank does.
So is it okay for Apple to have negative cash flow from operations at this time? I think so. They've changed their business quite a bit since 1996, and those changes will affect operational income in the short run. For example, Apple has opened some 80 stores, and that's a tremendous operational expense since they've incurred a lot of fixed costs. I believe that their retail story makes sense, since they're the direct opposite of most computer stores. In a way, the Apple Stores are like Target to Best Buy, CompUSA, and the others' Walmart.
Since the stock market currently values Apple at nearly the price to earnings of Dell, it means that the market believes that what Apple is doing will pay off in the long term. And it probably will. I believe Mac OS X and Apple's incredible industrial design are the foundations of its future success. The iPod is positioning itself as the next Walkman, and Apple's in a great position regarding digital music. Their recent deal with HP further solidifies this. As for iPods driving Mac sales, anecdotal evidence is often misleading, but I've met a number of people who have recently bought new Macintoshes after being Windows users for years, and the iPod has helped drive that. There's always room for Apple to pull another Cube and screw things up, but Apple's track record has been respectable in the past couple of years, so people are giving them the benefit of the doubt in that place.
Re:Raises concerns, but panics a bit too (Score:4, Informative)
> money on operations, wouldn't it make more sense to cease
> operations, wind up the business, and just make money on
> the investments? Is there some major financial concept I am
> missing here?
Tha's a good question. Companies that are growing (or changing significantly) can finance their growth in two ways: cash from financing or cash from investments.
1. Cash flow from financing is the typical way to do it. You can get money from a venture capitalist fund (in exchange for a lot of issued stock and partial loss of control). You also can get money from banks by taking on long-term debt. The way this works out is this dilutes shareholder equity indirectly since in the event the company goes out of business, the bank gets in line for assets before any of the shareholders. Although technically this should have zero impact on a company's balance sheet, it does tend to make investors pissy.
2. Cash flow from investments gets money into the company without diluting shareholder equity. That's why shareholders prefer this method, but few companies are in a position to do this.
This incoming cash flow is then invested into operations to expand the business, and thus cash flow from operations is negative. Eventually, the company wants to have positive cash flow from operations and use that to sustain the business. So, yes, the end game is for the company to have positive cash flow from operations and to a lesser extent positive cash flow from investments, and 0 cash flow from financing (unless the company is taking advantage of debt leverage, then there will be a positive cash flow from financing).
So why do they need this cash? Because one way to become cash flow positive from operations is to increase the company's operating leverage. Think of a graph of costs as a function of sales volume. The slope of the line is the variable cost, and the y-intercept are the fixed costs. Generally, for cost structures, the larger the y-intercept for the line, the smaller the slope of the line. So the idea is to get the y-intercept of the line up and the slope approaching 0.
The way to do this is to adjust the cost structure such that the variable costs are as low as possible. The way to do this is to increase the fixed costs such that at the targeted sales volume, the variable costs are significantly lower than the competition.
So in the short term, Apple is increasing their operating leverage using financing from their investments. It's a good strategy assuming that they can succeed. And as I said in my grandparent post, I don't think there's reason to doubt Apple won't.
Counterpoint (Score:4, Insightful)
My story, I guess. (Score:5, Interesting)
This year when it was time to upgrade to another computer, did I get a bitchin' dual processor rig with gobs of ram, all bone crushing speed and input jacks galore?
No. I got a (nice, used) Quicksilver 867 with a Superdrive and an iBook to take with me on vacation. I can develop software, scripts and all sorts of goodies in the shell or just jump and start up a nice game of Q3A, or UT2004, or whatever. These pieces of hardware to the job that couldn't be done by others for ideological, historical, or monetary reasons and I'm glad that someone put unix on the desktop in a fashion that is easy to use and has plenty of future still in it.
Unix has made it to the desktop, ladies and gentlemen. Thanks for an excellent job, Apple.
I'll be back to buy more sooner than later.
I don't see it (Score:5, Interesting)
I attend both astronomy and computing conferences regularly. In the last year or two (since Mac OS X and the new line of PowerBooks really started catching on) I have seen a dramatic change in the laptops being used at these conferences. A couple years ago, there would have been a handful of Dells, a few IBMs, some Sonys, and maybe, just maybe, an Apple or two out of fifty laptops. This has changed to point where 30%-40% of all laptops I see at these conferences are now Apple PowerBooks or iBooks running OS X.
I've never been a huge fan of Apple, but have always grudgingly admitted that their OS has always been better designed from a useability point-of-view than Windows (and, sadly, Linux desktops), and that their aesthetics in hardware and software design are way better than any other company's. And, despite what a few earlier commentors have posted, Apple's hardware is usually quite good (with the exception -- up until the introduction of the G5 -- of their processors which have largely sucked. Thanks Motorola!).
I'm a Linux user at work and at home and will likely be replacing my home computer sometime soon. I had been thinking that I would just build a PC (Windows free) and install linux, and helping my wife and son with the transition. I now think that my next computer will be a Mac. I still don't consider myself a huge Apple fan, but what they offer is way better designed than anything else out there at this time.
I really think that Apple has driven the thin edge of the wedge between some traditionally non-Apple users and the usual Windoze OS/hardware that they would normally buy. Apple has re-invented itself in the past and, I think, innovated way more than many other companies. I think that they just might succeed in driving that wedge in further.
Can't help but think.. (Score:4, Interesting)
This being the case, Apple is either really dying and has just been narrowly escaping death for almost 30 years, or the "Apple is dying" article is just something the tech reporters polish off every once in a while when its a slow news day and they want to stir up some interest. Think about it, if there's nothing big and / or interesting to write about this week, why not publish the "Apple is Dying" report again to stir up the Mac fans. It definitly gets the attention of some folks while not having to produce any real news. It's a cash-cow article.
Clouds on the horizon, though (Score:4, Interesting)
About the time Apple needs to launch the PB G5, there will be a lot of competition in the 64 bit market. OK, Apple will probably survive, but the important market share in high end laptops may be severely threatened.
And yes, I know the AMD64 is a kludge (it's like a Tomcat with a piston prop on the front), but it's a hellishly compatible kludge. I like elegant processor architectures, but this one works and works well.
I'm a "glass half full" kind of guy (Score:5, Interesting)
And on a more mundane level, Apple is also more profitable than almost any other personal computer company (most are losing money, Apple is profitable). Apple has figured out how to make a retail store chain work (unlike Gateway). Apple has the best brand in the computer business, the best customer loyalty, and highest customer satisfaction. Apple completely dominates the new, rapidly growing digital music sales market. And their platform is the basis for the best price/performance supercomputer on the planet. That's all got to be worth something!
PowerPC is going to help here (Score:5, Informative)
But IBM is on track to hit 3GHz this summer and cut power consumption by ~50% at the same time. The roadmap goes out to much higher clock rates, and includes multiple cores on one chip. If this happens, and in a few years we're looking at dual core 4GHz PPCs that use less power than single-core Intel/AMD CPUs, then that's a big deal.
Apple as an investment (Score:5, Interesting)
and little value in the stock.
Independent of whether Apple continues to operate as a company, keep in mind that from investment point of view, Apple hasn't been all that great a thing. Even when taking a long-term view (like this [yahoo.com], comparing AAPL with dow jones since Apple's listing) main reason to own Apple shares would be to show your loyalty to company, not to make money. On medium term; over past 10 years, investing in Apple would have been even worse, and had brought you only 50% growth (and dividends are almost neglibly small). That's much lower than what is traditionally expected (somewhere slightly above 10% annual ROI).
So what does this matter? Just that from investment POV (it was written by Money mag) Apple has been a dog, and they are trying to explain why they think it remains such, even though it has good brand, got the spotlight, positive "mindshare". You may disagree, but that's their background.
Apple Demise Predicted Again (Score:4, Interesting)
I think it's interesting though how Apple is now straddling a tightrope - I see posts scattered here about how tech savvy users have flocked to OS X and even I, in my traveling service partner gig, have sold some folks on OS X after they see me work with my powerbook (whether it be plugged into a projector and teaching classes or just using it for contract *nix work and having folks see what a joy it is compared to Windows boxes...). However, I think Apple has lost some of the old OS 9 customer base that were not so enamored with OS X. Sad, because those folks will now venture back into a world teeming with viruses, worms, spam and clunkier multimedia software.
But I think the increased usage by so referred to technorati has future blessings for Mac users or non Windows users in general. More developers flocking to the platform, even if for curiosity sakes, means more software for Mac users or more cross platform offings.
Again, the best of both worlds - a state of the art desktop GUI (yes, it has some warts still) coupled with all the *nix tools. I used to run Linux on my home desktop - it worked fine for a lot of stuff but I had difficulties with USB devices hooking in, wireless setup and tasks like CD burning - not that these were because of Linux, but still these issues had to be dealt with. OS X just works yet I get the added bonus of superior display aesthetics (and for someone like me with poor eyesight is essential) and all the *nix goodies.
* Comes with all the development tools and IDE to do Cocoa programming or cross platform Java, perl or python.
* Apache server plus PHP built in and easy to add whatever server platform add-on.
* Pretty colors and easy on the eyes fonts for all those ssh sessions needed for work and for home server handling.
* X11 and ability to run the Gimp and the whole gauntlent of free software.
When it's time for a new desktop, I'm going to get another Mac and replace the AMD box that currently sits there...
Irresponsible journalism? (Score:4, Insightful)
I realize Apple stock holders probably aren't going to sell off everything in Apl b/c of this, but could it not happen some smaller company and start a chain reaction in the market?
I'll admit I'm no economics major, but with the way the markets are up/down these days this seems like a way to create havoc.
Yet another fact-distorting article (Score:5, Insightful)
- "Even when you factor in Apple's $13 a share in cash and almost no debt, the company's stock, at a recent $23, trades at 20 times estimated 2004 earnings. Dell's shares, on the other hand, go for 26 times projected 2004 earnings -- but its business is three times as profitable as Apple's."
First they state that the shares are $13 per, then comment thta when it was $23 shares it was trading at a high P/E ratio, as though it's bad, but then shows how Dell has a higher ratio. And to boot, he compares earning on a fiscal year that's not even closed yet. And on top of it, Dell isn't debt free. In fact, FEW companies are debt free, but apple is. that alone makes it a great stock buy.- "Tom Santos, one of the plaintiffs, estimates that Apple's stores would have lost as much as $80 million in 2003 had they been paying the same prices for inventory as the resellers paid."
Ok sir, tell you what, we'll have Apple charge you HIGHER prices so you don't have to complain about not going out of business.- "And Apple's earnings would have been worse had it not been for $4.8 billion the company has in cash and short-term securities. In fact, the cash hoard made more money last year than Apple's operations -- which lost $1 million while the computer maker booked a $69 million gain on interest income."
Which is far more than any Microsoft division made last year, excluding Office and Operating Systems.- "Out of the hundreds of people who were waiting outside Apple's SoHo store in the cold to buy an iPod, I could find only one whose positive experience with the music player led him to buy an Apple computer."
Ok, so they polled people for their experiences of devices they haven't bought yet. That's a great poll. I'd like to see a poll of people who bought Sony CD or MP3 players, to ask them if it made them buy a Sony Vaio. Or if HP's new iPod clone will make them buy an HP. That's a bogus comparison.- "While Apple's sales of $6.2 billion last fiscal year were nearly unchanged from 1999, profits plummeted 90 percent to $69 million, from $601 million four years ago...Jobs' mass-appeal strategy has crimped the company's historically high profit margins. Apple's net profit margin is just 1 percent. That's down from 10 percent four years ago."
The margins for PC makers has been razor thin for years, it just finally caught up with Apple. I got out of selling boxes years ago due to shrinking margins. The fact that you can get multi-GHz PCs for $500 while a 1Ghz apple is more than grand doesn't help either. So let's not blame Jobs for the shrinking margins, let's blame market factors. As for shrinking profits, that's due to hardware that's overpriced.Ok, let's not compare this last year's performance to the year before, or any other year Jobs wa there, let's comapre it to before he arrived. Well, fine then, let's compare the other years since 1996 when Steve managed to maneuver Apple into selling far more PCs than in 1996. Let's compare how this year's sales are disappointing to last year's, to be fair. And let's factor in the lack of new product development in that part of the company's line up. They've been focusing on the consumer device market, like with the iPod mini (a smash seller). Gateway has been pushing plasma TVs and digital cameras FAR harder than PCs. Companies can only do so much at a time. Even Microsoft, arguably the world's biggest software company, can only manage an OS upgrade every 3-4 years now, and their project dates always slip every further.
I'm not Apple fanboy. I can't stand the Mac OS UI, I don't like the hand holding, I don't like the over priced hardware, I don't like the platform lock in, etc. But, let's at LEAST be fair about an examination of the company.
Market share figures are misleading (Score:5, Interesting)
We REPLACE PCs every 4 years or less on average. When we buy new PCs we are usually surplussing the old hardware. When we buy Macs we are generally ADDING TO our inventory.
So if you just look at our "market share" it would appear that PCs have 2-3 times the market share. In reality, they only have a small fraction.
My PC using friends are constantly upgrading/replacing their PCs (which they can, because the hardware is cheap and ubiquitous). To the bean-counting dweebs, each new purchase counts as "new market share" when in reality, they don't have ANOTHER PC they've replaced their original one.
I'm not saying that there aren't many more PC's in use than Macs, what I am saying is that Macs tend to be used for far longer (than I think they should be) so the stats appear skewed. One of my personal clients is still using an LCIII for cryin' out loud! Last week we actually had a color-classic in for repair. I wonder how many 286's are still in daily use today?
Remember, there are lies, damn lies, and then statistics!
Slashdot says Apple's not dying... (Score:5, Insightful)
That say to me that, even though there is a fair amount of trolling, that there is an enormous amount of interest in the company and its products. And given that the pro Apple comments are usually modded up, I suspect that:
a). There is a large portion of slashdot readers who use a Mac and OSX.
b). That interest translates into the real world in buying terms, and
c). That even the MS fanboys and die hard "it's too expensive" or "port it to x86" morons would use a Mac and OSX if they could.
In summary, I think Apple is doing so well with the G5, Powerbooks, OSX and the iPod that they are THE act to follow in the IT world.
zealots (Score:5, Insightful)
I've often marvelled at statements like that. And let me preface this by declaring that I own a powerbook - but I have *never* met a PC zealot. PC users rarely care that muchabout the branding of their box. Most PC users care about the games on their box, or the GHz it has compared to the PC down the block. But mostly, they don't care about apple. It's always the "little guy" who has the chip on his shoulder, who is always making comparisons to the "big guy" (at least in terms of marketshare here).
These discussions aren't so much PC zealots vs. Mac zealots - it's usually mac zealots vs. the PC users who push their (our?) buttons for fun.