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Apple - What A Difference Eight Years Can Make 580

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 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 RandoX ( 828285 ) on Friday November 04, 2005 @04:05PM (#13952595)
    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.
  • by moviepig.com ( 745183 ) on Friday November 04, 2005 @04:07PM (#13952618) Homepage
    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 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?
  • 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:Apples to Apples (Score:2, Interesting)

    by Golias ( 176380 ) on Friday November 04, 2005 @04:24PM (#13952780)
    I'd previously been an advocate of this since it is my current opinion that I will never buy Apple's overpriced, proprietary hardware BUT... ... you will buy overpriced, proprietary hardware if it says "DELL" on the front with that slanty "E"?

    The more I use my Dell Latitude in the office, the more I appreciate how much my iBook is worth every penny I spent on it. YMMV, obviously.
  • Re:Apples to Apples (Score:2, Interesting)

    by SquadBoy ( 167263 ) on Friday November 04, 2005 @04:24PM (#13952781) Homepage Journal
    In what sense is Apple hardware proprietary? Or overpriced for that matter. Specific examples, please.

    I'm looking at my iBook and with the exception of the airport not seeing a single component that is proprietary. I can put at least two OSS OSen on it. OpenBSD will work without flaw. Linux can drive everything but the airport but that's not due to not having specs.

    Overpriced is another question but I'm not going to go there since so many IT types seem to not understand that great tools are well worth paying for.
  • by Ikn ( 712788 ) <rsmith29@nOSpAm.alumni.nd.edu> on Friday November 04, 2005 @04:32PM (#13952846) Homepage
    You're not looking at it in the right way; the machines compared to each other may not be unique, but choosing a Mac in and of itself, is the expression. And self-expression doesn't always mean sticking it to the man...but, in this case you are. The man is Microsoft.
  • by CastrTroy ( 595695 ) on Friday November 04, 2005 @04:33PM (#13952851) Homepage
    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 R2.0 ( 532027 ) on Friday November 04, 2005 @04:43PM (#13952949)
    "...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)."

    So your definition of a great product is one that does many things as opposed to just one thing. Others have a different aesthetic - I would rather have a device that does 1 thing REALLY well versus doing many things.

    For instance, I carry a great pocketknife. You would tell me that it's a mediocre pocketknife because it's not a Leatherman. But I'm not looking to carry a Leatherman - I want a pocketknife.
  • by happyemoticon ( 543015 ) on Friday November 04, 2005 @04:44PM (#13952956) Homepage
    Well, I'm pretty sure he's actually right there. Properly speaking, administrate is an erroneous back-formation. However, it's used so often that it's gaining acceptance.

    See here:

    noun : verb
    calucation : calculate
    articulation : articulate
    demonstration : demonstrate

    even the hideous

    is technically correct.

    However, this stuff isn't:

    administration : administrate - wrong, administer
    amplification : amplificate - wrong, amplify
    multiplication : multiplicate - wrong, multiply
    indemnification : indemnificate - wrong, indemnify

    The only difference is that words like "multiplicate" are totally hilarious, whereas most people think of administrate as a an accepted part of the language. I wouldn't get out my red pen if I saw administrate, personally, though I to avoid using it in official materials.
  • by Anonymous Coward on Friday November 04, 2005 @04:47PM (#13952994)
  • 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.
  • 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 Jesus_666 ( 702802 ) on Friday November 04, 2005 @05:12PM (#13953256)
    mac has always been about people who dont care enough about computers to want to swap around parts, or learn how they work.

    I do. I would never buy an Intel box because I prefer building it from the parts myself. But I like Macs. Not only do they have style (which by itself is not a reason to buy them), they also come with an extremely great operating system. On the desktop I'd probably pick the Intel box, simply because of the computer's easy upgradability, but I'd never buy an Intel notebook. Most of them are heavy, loud, huge and ugly - not to forget the lousy *nix compatibility. The ones that aren't are expensive. iBooks are pretty cheap and come with a Unix with a great window manager. And it's as modifiable as many Intel notebooks - hardly.
  • by sedyn ( 880034 ) on Friday November 04, 2005 @05:25PM (#13953369)
    Claiming higher moral ground is one of the hardest things a person can do. It's near impossible for a company.

    Why? Because every company wants money. To get money they have to have some appealing quality.

    Dell, creates cheap computers, sells a lot of cheap computers, and when many customers* get what they pay for they call tech support [businessweek.com] which, due to the cost of computers, does not have the funding [ihatedell.net] to properly support the number of incoming calls. Have you ever had to tell someone that their brand new laptop needs to be replaced? I can tell you that it's not pretty.

    Apple* on the other hand is no saint either, they will justify any action in the name of high quality. To better service [wikipedia.org] their customers, they'll open up an apple store, shutting the local apple store out of business.

    *I own both products from both companies (this is being typed on an iBook, for instance), and have worked tech support for dells.

  • by walterbyrd ( 182728 ) on Friday November 04, 2005 @05:29PM (#13953401)
    Glad to learn that Apple is doing well. But is this a flash in the pan? Or a long term thing?

    I think there is something of a trendy, faddish, element involved with ipod sales. What happens when ipods become passe?

    I doubt anybody would admit to it now, but eight years ago, I bet a lot of people felt the same as Dell. And why not? Apple was dipping below it's cash value.

  • 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.

  • Re:R&D??? (Score:3, Interesting)

    by akac ( 571059 ) on Friday November 04, 2005 @06:08PM (#13953735) Homepage
    No, but they did a lot of it. Apple helped Motorola and IBM on the chips. Not only that, but who do you think designed all the bridge and controller chips? Apple.
  • by justaj ( 915459 ) on Friday November 04, 2005 @06:33PM (#13953964) Homepage
    Actually Apple isnt propped up by Microsoft. As someone mentioned Apple was given 150 million by microsoft almost ten years ago. Since then they have been running on their own two feet. In terms of actual numbers: 840 million (6% of 14 billion) vs 360 million (9% of 4 billion) The numbers say Dell is making a heck of a lot more money. The reality of it is Dell isn't going anywhere. They are going to make the same machines and roughly keep the same profit margin. They are trying to branch out a little but I don't think many see it helping much. The only way Dell is going to be in any sort of trouble is if a) Someone can sell a box that is cheaper and better AND have a brand that people recognize. Apple is obviously NOT trying to do that. The fact of the matter is Apple is growing their company. You can definitely see a shift in public perception from being a niche computer company to the company that makes iPods and sells music. I'm fairly certain this is by design. You are 5-10 times more likely to see an iPod commercial vs an iMac commercial. But the fact of the matter is Apple still makes most of their money off of computer hardware. (the margin is shrinking however) They know that if they want to get to that 840 million its not going to be on the strength of the iPod alone. I see a HUGE push of their machines coming once the Intel Macs role out. They are going to cost less to make and won't go through the supply/demand hell they were in with IBM. I actually think next year is going to be a huge year for Apple either in terms of taking a step forward or a step backward in being the next big computer maker.
  • Re:R&D??? (Score:3, Interesting)

    by LWATCDR ( 28044 ) on Friday November 04, 2005 @07:23PM (#13954343) Homepage Journal
    Yes Apple does currently but Jobs said that one of the reasons for the move to Intel was that they offered complete solutions. The X86 OS/X boxes that Apple is currently shipping uses an Intel Motherboard with an Intel chipset. I wasn't bashing Apple. They really do RnD unlike Dell. They are just going to do less PC/Hardware RnD in the future and I hope more software RnD.
  • Re:R&D (Score:3, Interesting)

    by nathanh ( 1214 ) on Friday November 04, 2005 @07:40PM (#13954451) Homepage
    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 which he came up with while at university and he had to fight Apple to convince them it was worth pursuing as a product (or more accurately, he had to wait until Steve Jobs believed it was Steve Jobs' idea). The MacOS itself was an entirely unimpressive operating system - quite retarded in many ways - the only interesting thing was the GUI, which was a decades old R&D field even in the early 80s, and even then was mostly a slick implementation of ideas developed at Stanford and PARC.

    Apple is not an R&D company any moreso than Microsoft or Sun or (god forgive me) Dell. They all invest in R&D to some piddling extent but even that is mostly for PR. The real R&D powerhouses are the universities. If you want to see where computing will be in 10 years, you don't look to the Apple website, you go and speak to the postgrads at MIT or UCB.

    Apple is primarily an integration company. That's what they're good at and that's why their products are slick. They take ideas which have been figured out by university postgrads, they integrate them into an existing product line, and they apply a whole lot of polish and elbow grease. Apple takes ideas that others have developed, they file off all the sharp edges, they wrap it in glitter and they put it in a box that the great unwashed (you and me) can purchase. Is that innovation? Only if you devalue the word until it has no meaning.

    More than this, your attitude of dissing Dell really pisses me off. Anybody who thinks Dell isn't as interesting a company as Apple has their head stuck so far up their arse they can see daylight. While Apple has focussed on integration to please the end-user, Dell has done an incredible job of integration to please the PURCHASER. Dell can deliver high volume at a low price with reasonable quality. They also have tight integration between sales, factory and shipping. They have after-sales support that is truly excellent; next-day hardware replacement, no questions asked. In my corporate dealings, I'm always pleasantly surprised with Dell's business acumen, even though with my techie hat on I'm always slightly disgusted with the hardware.

    Contrast that with Apple who after more than 20 years still couldn't sell their way out of a second hand car yard. I've owned 6 Apple computers over the past 10 years and although I'm usually pleased with the hardware/software, I'm constantly pissed off with the rest of their business. Everything from the initial sale to the after-sales support and service is just atrocious. I would love nothing more than to recommend Apple desktops to corporate buyers, but in the few occasions where I've seen it attempted the after-sales support from the Applecentre has been so abyssmal that the customer has sworn off Apple and returned to (you guessed it) Dell and Microsoft.

  • by DECS ( 891519 ) on Friday November 04, 2005 @07:43PM (#13954471) Homepage Journal
    No it tells the same tale:

    Dell's performance has passed - five years back.

    Dell is now in the position of trying to find new markets for the same old PCs. They rely upon Microsoft to for OS software innovation, and have no real software development efforts that will spur new hardware sales. They rely on MS' WMA to run their mobile music products, and WMA has failed dramatically. PocketPC has also done poorly, as have tablet PCs and everything else MS has offered its licensees lately.

    If MS scores big with the XBox, it may turn into strong competition for gamer PCs, which comprise a significant chunk of Dell's high end PC sales. Dell can't be happy to have MS competing with its bread and butter while they rely on MS for their OS.

    Apple grew PC sales of ~43% vs Dells ~17% this last quarter, and made higher margins on each sale. Plus, Apple's hardware sells new copies of OS X, and Apple software: low end iLife, and pro apps ($500-$1000 apps) like Logic, FCP, Soundtrack Pro and Aperture, which in turn sell 30" displays. iPods sell Macs, Macs sell iPods. iPods sell iTMS music tracks. Macs sell .Mac subscriptions.

    All of Apple's software/services add profits that Dell will never see, because Dell sells no software. And that software buys customer loyalty.

    Dell is in a huge pinch because anyone who buys a Dell does so because the price is OK. If HP or CompUSA offers a cheaper PC 3 years down the road, that customer has no reason to stick with Dell.

    Apple customers, three years down the road, would have to find replacements for all their software in order to buy a PC from another vendor. Plus their stuff wouldn't work swimmingly together as it does now. Dell customers have loyalty as long as Dell is cheap.

    Dell's drive into new markets has involved disposable printers with proprietary toner carts, and home theater. But who wants a Dell home theater? They have massive competition in the TV space, and its difficult to differentiate in that market. Dell is competing in price with Apple in the large flat panel display space, but there's nothing but TV to drive PC sales of 22 to 30" displays. Apple has an entire new wing of Pro apps that take advantage of dual 30" displays.

    no obvious growth markets
    beholden to Microsoft to supply its vision and leadership into new markets
    competing with major PC vendors and retail outlets selling commodity PCs, and home built parts PCs
    competing with cutthroat TV / home theater makers
    competing with cutthroat printer makers

    obvious growth markets:
      - owns 75% of music downloads, music players, owns podcasts, and poised to take over portable video
      - owns UNIX on the desktop (promising markets in higher ed, biotech, super computing servers, film)
    controls its own vision and leadership in developing new markets
    isolated from competition
      - owns its own PC designs, its own OS, its own web development and software dev)
      - mostly sells premium hardware (powermacs, powerbooks, xserves)
      - popular hardware for Linux users
      - great reputation for quality and reliability, good service
    owns its own growing fleet of high fashion retail stores
    owns the youth market with the iPod, and sells them the popular iMac / iBooks / Mac minis

    So yes, you're right. The story is that the tables have turned: Dell was selling lots of PCs while they took over the market, but now Dell is in trouble and Apple is just getting started.
  • by jsight ( 8987 ) on Friday November 04, 2005 @08:08PM (#13954642) Homepage
    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!
  • by King_TJ ( 85913 ) on Friday November 04, 2005 @10:51PM (#13955500) Journal
    One big problem with Dell is, they don't really give as high a "value" as the initial price tag makes it seem. As another person posted, their tech. support is decidely "low value" when you consider all the time you wait on hold or waste talking to a foreigner who is tough to understand, and who makes you go through 30 minutes of useless "troubleshooting" including "make sure the power cord is firmly attached to the back of your monitor" and "please shut down and restart Windows" to get a faulty video card or display replaced, or worse yet - may not let you get a defective memory DIMM replaced until you humor them by letting them swap out the CPU, motherboard and who knows what else first, over multiple support calls.

    Is Apple "perfect" by comparison? Hell no... But they do a lot of things right in this area. For one, you usually do get native English speaking support reps when you call the toll-free support number in the U.S. - and my hold time has been 5 minutes or less. On the iMacs, they have a self-service system over the web, so you can order your own warranty replacement parts without getting permission first from some support rep. over the phone. They're also pretty good about eventually extending warranties to cover products with known major flaws - instead of just screwing over everyone who bought one with only a standard 1 year warranty. (By contrast, I was burnt on 2 Dell Latitude CPi series laptops now, because of design flaws and poor construction that Dell never officially admitted to.)

    I don't think it's really possible to achieve "trendiness" with a shoddy/substandard product. There's simply not anything "cool" about some product that was inexpensive up-front, but most users end up underwhelmed or just "so-so" about over the long haul.

Civilization, as we know it, will end sometime this evening. See SYSNOTE tomorrow for more information.