Mike Dell :"Confirmed: Apple is Outta Buisness" [Archive]

GardenOfEarthlyDelights

01-19-2002, 08:59 AM

[quote]Originally posted by Nonsuch:
Steve Jobs ought to point out that Dell can't keep slashing their margins without eventually putting themselves out of business, to say nothing of quite a few of their rivals. Sheesh, at least when Apple sells a desktop, they make a profit on it.<hr></blockquote>

Personally, I think Dell is an idiot. However, business-wise, he's an evil genius, much like that Bill guy in Redmond.

Remember their previous strategy? They were reducing their prices to force Compaq, HP, et.al. to follow suit. Dell increased their market share, made money, and hurt the competition all at once (we'll ignore the future ramifications of this practice for another time).

It's not always about who has the best computers. It's who can sell the most. And right now, Dell is <a href="http://apnews.excite.com/article/20020118/D7H4AF6O1.html" target="_blank">winning.</a> They're making money, and increasing market share. That's business.

Dell doesn't have to be the best. Is Microsoft the best? Exactly. Dell just has maintain their business model, and in the end, they'll win. Does anyone see Walmart folding up anytime soon?

Apple's biggest advantage is keeping their R&D cost high, so they can keep innovating. That gives them a market advantage. However, they still have to manage their business accordingly.

In any case, ignore Dell, or next year he's going to proclaim how he invented a computer with a screen on a stick.

bunge

01-19-2002, 09:09 AM

Apple's out of business? Damn, that sucks.

JLL

01-19-2002, 09:22 AM

[quote]Originally posted by Belle:
Well, ignoring the rather inflamatory title of this thread, I agree with Michael Dell's comments entirely, and it's quite obvious Apple does too.

Look at the two companies' last annual reports -

Apple
Net Revenue - $5363 million
R&D costs - $430 million
% of Net Rev. - 8%

Dell
Net Revenue - $31888 million
R&D costs - $482 million
% of Net Rev. - 1.5%

Apple spends a frightening amount on R&D. Why do you think its pushing into bricks and mortar retail sales so hard, and constantly banging the "5 down, 95 to go" drum?<hr></blockquote>

Since Apple have $4.4 billion in cash they could finance 10 years of R&D without making a dime.

Dell lives on other companies R&D and they can't live without it.

BTW what does Apple plan to use the money on? They have been saving up for years now.

[ 01-19-2002: Message edited by: JLL ]

koffedrnkr

01-19-2002, 10:02 AM

[quote]Originally posted by Belle:

Apple
Net Revenue - $5363 million
R&D costs - $430 million
% of Net Rev. - 8%

Dell
Net Revenue - $31888 million
R&D costs - $482 million
% of Net Rev. - 1.5%

Apple spends a frightening amount on R&D. Why do you think its pushing into bricks and mortar retail sales so hard, and constantly banging the "5 down, 95 to go" drum?<hr></blockquote>

i think the point you're missing is that dell and apple are entirely different types of companies. dell's R&D expenditures are low because as a company they really don't create anything. they stuff standardized cases with outsourced parts. period. their whole operation is geared building computers cheaply and then making a small profit on a vast number of machines. they need massive volume to sustain their model.

apple, however, actually designs products which require an R&D budget. their model is based on uniqueness...on getting people to recognize and pay for differences in design. since they don't sell billions of computers, apple needs to get good margins from every product it sells. hence the higher price.

if i were dell (and thank god i'm not) i'd be worried about apple gaining marketshare. if apple gains marketshare they can command better pricing on component parts. the money saved can then help them lower prices without reducing margin. dell may be a slimy weasel, but he's not stupid. nobody wants to compete against a superior product that's competitively priced, and that carries a larger profit when sold. dell's only advantage is "would ya' like a CDRW upgrade for only $30?". if apple can find a way around that, dell is going to feel it. the ibook is a great example of a superior product that is close enough to compete on merits and not just on price. no wonder he's spreading FUD. if dell's weren't cheap, why would anyone buy one?

satchmo

01-19-2002, 10:09 AM

I agree Dell, is speaking only through fear and knowledge that Apple has something good going on.

However, the question is, how much of the general public actually notices innovation?

Unfortunately, the average consumer fits the typical Dell profile: price conscious, settles for mediocrity, understands little about Apple, is a follower.

The Apple retail stores go a long way in changing this but we need even more exposure. More commercials that show the innovative features of Macs with side by side comparisons against Wintel boxes.
(those first iMac commercials about connecting to the internet were great)

Masker

01-19-2002, 10:36 AM

Dell's R& D expense of 482 million really took me back.

What/Where /How did they spend this money?

I don't see how they could have spent much more than $75 million.

Maybe R& D includes buying off politicians and paying for industrial spies?

MSKR

Belle

01-19-2002, 10:40 AM

[quote]Originally posted by koffedrnkr:
i think the point you're missing is that dell and apple are entirely different types of companies. dell's R&D expenditures are low because as a company they really don't create anything. they stuff standardized cases with outsourced parts. period. their whole operation is geared building computers cheaply and then making a small profit on a vast number of machines. they need massive volume to sustain their model.

[Stuff deleted]<hr></blockquote>
Dell and Apple are very different companies, and the points you make are absolutely valid, but entirely irrelevant.

The only way for Apple to make a profit with the kind of R&D budget is to increase its market share - exactly the point Michael Dell makes.

The reason I posted the figures above is to show how much Apple spends on R&D compared to Dell - competitors in the same market.
[quote]Originally posted by JLL:
Since Apple have $4.4 billion in cash they could finance 10 years of R&D without making a dime.<hr></blockquote>
No matter how much the sun shines out of Jobs' ass, shareholders will not sit back and watch Apple's cash reserves finance its operations for the next ten years.

And if Apple keeps posting the kind of returns it has been of late for much longer, you wouldn't believe how quickly that $4.4 billion could disappear.
[quote]Originally posted by Junkyard Dawg:
Clearly Dell feels threatened by Apple, otherwise he wouldn't say such things.<hr></blockquote>
Nonsense. Dell isn't in the least bit worried about Apple, and he has no need to be. Even if Apple doubles its market share in the next five years, it won't make a dent in Dell's share which will increase as its Windows-based hardware competitors disappear.

Dell is just pissy because he - quite frighteningly even more than Larry Ellison - wants to be Steve Jobs.

NeXuS

01-19-2002, 11:45 AM

I can't believe that a$$hole. And I can't believe that Apple just sits back and lets the $#!t slide. I'd be suing those mutherf**kers for slander.

Sleazy as Dell

JLL

01-19-2002, 12:28 PM

[quote]Originally posted by Belle:

Nonsense. Dell isn't in the least bit worried about Apple, and he has no need to be.<hr></blockquote>

Education? Dell does worry about Apple - remember last fall?

JLL

01-19-2002, 12:30 PM

[quote]Originally posted by Belle:
No matter how much the sun shines out of Jobs' ass, shareholders will not sit back and watch Apple's cash reserves finance its operations for the next ten years.<hr></blockquote>

It was a worst case scenario - Apple still makes a profit and they didn't lay off 10% of their work force as many other manufacturers did.

Amorph

01-19-2002, 12:42 PM

[quote]Originally posted by JLL:
BTW what does Apple plan to use the money on? They have been saving up for years now.<hr></blockquote>

You know the old saying, "it takes money to make money?"

That's what they're using it for. That's what Fred Anderson meant when he said that "Apple is a cash machine." It's investment that yields tens of millions of dollars in returns per quarter, and acts as collateral for debt so that Apple can borrow on favorable terms.

It's also insurance. Innovation implies risk, and if you're going to take risks you'd better have a big cushion underneath you. Especially if you're risking investors' money.

Fluffy

01-19-2002, 12:47 PM

[quote]Originally posted by Belle:

The only way for Apple to make a profit with the kind of R&D budget is to increase its market share - exactly the point Michael Dell makes.
<hr></blockquote>

Correct me if I am wrong, but aren't they already making a profit with this kind of R&D? If Apple were truly in a price war with Dell and the other box makers then Mike's comments would be perfectly valid. But they're not. Apple competes with the PC makers on a completely different level. I would argue that the reason Apple is still around is because of their R&D spending, not in spite of it. As long as Apple maintains its current marketshare it can continue to spend 8 - 10% on R&D without feeling any undue pressure on the bottom line. Apple's margins are close to, if not the highest in the industry, and their business model is designed around that necessity. That's the price for the R&D.

Mike Dell is looking at Apple through a very narrow lens, assuming that since his chosen business model worked for his company, no other strategy could possibly succeed. The fact that Apple is profitable, even in a recession and despite their R&D budget shows Mike's perception to be flawed.

erbium

01-19-2002, 01:37 PM

Who the heck names their company DELL anyway?

Belle

01-19-2002, 01:43 PM

[quote]Originally posted by Fluffy:
Correct me if I am wrong, but aren't they already making a profit with this kind of R&D?<hr></blockquote>
They posted a profit of $38 million for the first fiscal quarter of 2002, but this comes on the back of a net loss for the 2001 fiscal year. The quarter also saw a nasty drop in revenue, and despite impressive expectations for the coming year, the cost of getting the new iMac into production, and expense of new components (e.g. the iMac's LCD) result in an increased bottom line for the coming months.
[quote]If Apple were truly in a price war with Dell and the other box makers then Mike's comments would be perfectly valid. But they're not. Apple competes with the PC makers on a completely different level. I would argue that the reason Apple is still around is because of their R&D spending, not in spite of it.<hr></blockquote>
You're making the same point as koffedrnkr, and it's irrelevant. Read the quote from Michael Dell in the first post of this thread - you know, the one we're discussing?

Whether Apple is in a price war with Dell or not (Which it isn't), Michael Dell can make any comment he likes, and his comment above is absolutely correct, and not at all derogatory to Apple. So why are people calling for Dell's head on a plate?
[quote]As long as Apple maintains its current marketshare it can continue to spend 8 - 10% on R&D without feeling any undue pressure on the bottom line. Apple's margins are close to, if not the highest in the industry, and their business model is designed around that necessity. That's the price for the R&D.<hr></blockquote>
See above. Apple's bottom line is about to see some pressure, and if it's listening to the people here baying for faster RAM, faster buses, better graphics chips, etc. then it's going to see undue pressure.

You are right, Apple's margins are the highest in the industry, and this is intended to pay for its R&D. Unfortunately, this isn't currently the case. Apple needs to increase market share. Dell is right.
[quote]Mike Dell is looking at Apple through a very narrow lens, assuming that since his chosen business model worked for his company, no other strategy could possibly succeed. The fact that Apple is profitable, even in a recession and despite their R&D budget shows Mike's perception to be flawed.<hr></blockquote>
A quarter with a modest profit does not make Apple a profitable company. A loss for the last financial year, a serious loss of revenue in recent months, and a worry about increasing revenue over the coming months and the profit made therein paints a much more accurate picture of a company that badly needs a larger share of the market.

The bricks and mortar stores are a desperate measure.

It's not all doom and gloom. I don't think Apple are going to disappear. But in the context of this thread, insulting Michael Dell for making a very astute observation makes people here look less than informed.

Belle

01-19-2002, 01:50 PM

[quote]Originally posted by JLL:
Apple still makes a profit and they didn't lay off 10% of their work force as many other manufacturers did.<hr></blockquote>
See my post above. Apple made a modest profit for the first quarter of 2002, on top of reduced revenue. They made a net loss for 2001.

And just because you didn't see any headlines, don't assume that Apple didn't lay off a large number of its workforce. Read <a href="http://www.siliconvalley.com/docs/opinion/wiretap/pd110901.htm" target="_blank">this</a> and <a href="http://www.thinksecret.com/features/headcount2.html" target="_blank">this</a>.
[quote]Education? Dell does worry about Apple - remember last fall?<hr></blockquote>
Dell was just looking to protect a valuable market. If the company lost its entire education customer base, it would survive just fine, albeit with much reduced revenues. I doubt Apple would.

[ 01-19-2002: Message edited by: Belle ]

JLL

01-19-2002, 02:17 PM

[quote]Originally posted by Belle:

See my post above. Apple made a modest profit for the first quarter of 2002, on top of reduced revenue.<hr></blockquote>

It was a 37% increase compared to the same quarter last year.

[quote]Originally posted by Belle:

And just because you didn't see any headlines, don't assume that Apple didn't lay off a large number of its workforce. Read this and this.

<hr></blockquote>

Rumors are just that - rumors.

Fluffy

01-19-2002, 02:22 PM

Belle, I think we are arguing different sides of the same coin, or perhaps we aren't even in disagreement at all. You obviously understand the need for Apple to innovate... they couldn't survive otherwise. The question is what marketshare are you referring to? if you mean that Apple needs to expand their share over this last quarter, then I agree. Last quarter was terrible, due in no small part to the stagnation of the desktop lines. But as long as Apple can maintain their average over the last few years of 4-5% I don't see them being in any real trouble. However, I don't think that this is what Dell is talking about. He seems to be saying that Apple needs to expand to > 6% to continue doing what they are currently doing, and I disagree with that sentiment.

There is a bit of concern over the next few quarters, but that concern is that Apple will lose sales, and lower its marketshare despite the R&D spending. This is a very real possibility, but it has nothing to do with Mike's statement. As long as Apple maintains both its marketshare and its margins, they will be able to continue creating new hardware designs. Every scenario to the contrary is based on lowering Apple's share or reducing margins.

blabla

01-19-2002, 02:37 PM

I dont think Apple have ever sold more than 4 million macs/year under SJ, and the PC market have grown from around 100 million units to 130 million units or so.

Thats somewhat less than 3.5 % marketshare. Apple is not growing revenue, Apple is not growing unit sales. G5 better be here this year, or Apple might start bleeding red again. After all, OS X is not that great.

Fluffy

01-19-2002, 02:57 PM

[quote]Originally posted by blabla:
I dont think Apple have ever sold more than 4 million macs/year under SJ,

* snip *

Apple is not growing revenue, Apple is not growing unit sales.
<hr></blockquote>

Apple was growing revenue, Apple was growing unit sales. It is only this last year that they fell on their faces.

Apples unit sales and revenue for the past few fiscal years (since Jobs' return) are as follows:

1998: 2.763 million cpus, $5.941 billion
1999: 3.448 million cpus, $6.134 billion
2000: 4.558 million cpus, $7.983 billion
2001: 3.087 million cpus, $5.363 billion

Apple's last year was not good primarily, in my opinion, due to the abysmal desktop line. The iMac was obsolete, the Powermac is obsolete. This last year iBook sales were up a little, powerbook sales were down slightly, but iMac and PowerMac sales were off by about 40%, which is primarily where the 2001 drop is seen. I agree that we need the G5 by MWNY to invigorate PowerMac sales, but the new iMac will do wonders for the FY02 numbers.

Crusader

01-19-2002, 03:16 PM

Apple was profitable this first quarter dispite the economy, Sept. 11, and PC makers slicing each other's throats. I think apple is the first computer company that feels a recession or up turn, and you can bet with a G5 and the new iMac Apple's marketshare will increase buy a percent.

Belle

01-19-2002, 04:13 PM

[quote]Originally posted by Fluffy:
Belle, I think we are arguing different sides of the same coin, or perhaps we aren't even in disagreement at all.<hr></blockquote>
I think we are in agreement for the most part. :)
[quote]if you mean that Apple needs to expand their share over this last quarter, then I agree. Last quarter was terrible, due in no small part to the stagnation of the desktop lines. But as long as Apple can maintain their average over the last few years of 4-5% I don't see them being in any real trouble.<hr></blockquote>
No, I think Apple needs to increase its market share above the 4-5% it holds now, and as I said before, clearly Apple agrees.

The problem lies in Apple's recent history. When Jobs returned in 1997, he chopped away a hell of a lot of dead wood, and a whole chunk of living, leaf-bearing wood while he was at it, in an attempt to save the company.

Apple dropped unprofitable lines, disposed of warehouses full of Macs, lost a decent bit of its workforce, bought back stock, offered stock to employees, and took a variety of steps to keep a dying company afloat.

Whilst taking these steps to stabilize the company, it also took steps to advance its position, most notably by creating the iMac and iBook projects, and proceeding with Mac OS X. From the summer of 1998, the steps started bringing Apple back into financial stability, and then profit, and held Apple's market share.

But it's now 2002, and despite many further steps (The release of OS X, consumer apps like iTunes, technical introductions like FireWire and SuperDrive, the iPod, LCD displays) there is no sign of that market share increasing.

So what we've got is a company without prospect for growth, and this is the main reason market analysts have been so wary, and why Apple has taken the drastic step of opening stores.

While it doesn't necessarily mean Apple will go out of business tomorrow, or even this year or next, it's a nasty hole that Apple has to climb out of. What is very worrying is that the economy problems of last year saw some of Apple's competitors bite the dust, and even so early in 2002 it looks like some more are going to disappear, but there's no indication Apple is picking up the customers.

A company with no growth and no obvious potential for growth will eventually suffer horrendously as the value of its stock drops.
[quote]However, I don't think that this is what Dell is talking about. He seems to be saying that Apple needs to expand to > 6% to continue doing what they are currently doing, and I disagree with that sentiment.<hr></blockquote>
This is the point we disagree on. :) He's right. Apple must increase its customer base. It's been almost five years since Jobs started picking up the pieces of a broken Apple, and he (and his team) have done a remarkable job of returning it to a sound financial position, but in that time the company has not grown.
[quote]There is a bit of concern over the next few quarters, but that concern is that Apple will lose sales, and lower its marketshare despite the R&D spending. This is a very real possibility, but it has nothing to do with Mike's statement. As long as Apple maintains both its marketshare and its margins, they will be able to continue creating new hardware designs. Every scenario to the contrary is based on lowering Apple's share or reducing margins.<hr></blockquote>
To keep up, Apple is going to have to maintain its margins, and increase its R&D budget and bottom line costs. To do this and stay profitable, you have to increase your revenue, and the only way to do that without increasing margins (At 30%, this wouldn't be terribly popular) is to increase sales.

Apple can't sit back and just maintain current market share.
[quote]Originally posted by JLL:
It was a 37% increase compared to the same quarter last year.<hr></blockquote>
Yikes, don't use the first quarter of 2001 as a comparison. That was one of the darkest times since 1997.
[quote]Rumors are just that - rumors.<hr></blockquote>
Not rumors. Apple has been cutting jobs since the 50 that went last summer. There were stories in the local press before Christmas, and interviews with former employees. And Apple's CFO said there'd be further reductions during the conference call earlier this week.

AirSluf

01-19-2002, 04:16 PM

JLL

01-19-2002, 04:24 PM

[quote]Originally posted by Belle:
So what we've got is a company without prospect for growth, and this is the main reason market analysts have been so wary, and why Apple has taken the drastic step of opening stores.

While it doesn't necessarily mean Apple will go out of business tomorrow, or even this year or next, it's a nasty hole that Apple has to climb out of. What is very worrying is that the economy problems of last year saw some of Apple's competitors bite the dust, and even so early in 2002 it looks like some more are going to disappear, but there's no indication Apple is picking up the customers.

A company with no growth and no obvious potential for growth will eventually suffer horrendously as the value of its stock drops.<hr></blockquote>

Apple is growing, just not as fast as the Wintel segment.

You can't look at market share alone - the number of Mac users is just as important.

[quote]Originally posted by Belle:
Yikes, don't use the first quarter of 2001 as a comparison. That was one of the darkest times since 1997.<hr></blockquote>

I compare Q1 to Q1 - that's how it's done. But comparing to other quarters it was still an increase.

[quote]Originally posted by Belle:
Not rumors. Apple has been cutting jobs since the 50 that went last summer. There were stories in the local press before Christmas, and interviews with former employees. And Apple's CFO said there'd be further reductions during the conference call earlier this week.
<hr></blockquote>

You're comparing a company that lays off 5-10% of their work force to Apple that lays off <.1% ?

[ 01-19-2002: Message edited by: JLL ]

Falcon

01-19-2002, 04:29 PM

[quote]Not rumors. Apple has been cutting jobs since the 50 that went last summer. There were stories in the local press before Christmas, and interviews with former employees. And Apple's CFO said there'd be further reductions during the conference call earlier this week.<hr></blockquote>

True, Apple has been firing some employees, but for a company as large as Apple is having 50 people go in a summer is not unushual. Companies are always trying to trim their workforces of people who are underperforming. Whether these firing's are just the standard adjustment of the workforce, or serious cuts aimed at keeping profits high is unknown, at least to me. But I would suspect it's mearly the standard workforce adjustment. I doubt that firing 50+ people would have any sizeable effect on Apples finnacials. Purhaps Apple has become a little more thorough in their trimming becuase of the global economy, but its certainly not full on layoffs.

[ 01-19-2002: Message edited by: Falcon ]

cowerd

01-19-2002, 04:31 PM

[quote]Porsche has a very small market share and spends a ton on money on R&D, they are in an even smaller niche of the auto market than Apple is in the computer market. But they are an exceptionally successful company right now. They succeed because there is a large enough absolute number of people who want their machines. Over time their market share has fallen (because the total market size has grown substantially--mostly at the lower end), but the current total customer base is slightly larger than historical highs. Sound roughly familiar? Boxster/iMac? Etc???<hr></blockquote>
Problem with the car analogy is that none of the car mfg's, no matter the market share really has to worry about infrastructure--all the stuff that makes owning a car work. Its all there subsidized by govt's or in place because there are no "platform" issues [okay, I'm not talking about car tweakers and those specialties]. For Apple to move beyond its "holding" pattern they have to get more marketshare--so that infrastructure like apps, drivers, peripherals and the like start appearing with greater speed and regularity.

They are in a position to so that with OSX, the rumored G5, and other iPod-like products. Though it always seems like a tough and long slog waiting for Apple to deliver.

AirSluf

01-19-2002, 07:32 PM

BuonRotto

01-19-2002, 08:44 PM

First (and ultimately only) rule of microeconomics: a buck is a buck.

Most people look at a dollar relative to the total price of the item. So they see saving a buck on their computer as insignificant, but see a dollar off of a supermarket chicken and it's a deal. It's the same amount of money, period. In other words, percentages don't tell the whole truth. If Apple is increasing its customer base, but the marketshare is down because the overall customer base is growing faster, then Apple is still growing its customer base. That's why Porsche can do what it does. Customers are customers. They equate to money. More customers, more money no matter what the rest of the world is doing.

Obviously, market share is relavant. It measures the first derivative of income: growth. Apple's sales aren't growing as fast as the total sales of computers. You can argue how the total number of computer sales is computed, but that much is true I'm sure. It' does NOT necessarily mean that Apple's sales are shrinking. There's missed opportunities to be sure. and it will affect the bottom line, mostly in terms of perception than in real money terms: a buck is a buck.

Shawn

01-19-2002, 08:56 PM

How the hell does this topic belong in Future Hardware? Other than the lame excuse that Apple's demise as a company means no new hardware. <img src="graemlins/bugeye.gif" border="0" alt="[Skeptical]" />

RyanTheGreat

01-19-2002, 09:16 PM

hope nobody said it yet...

" DUDE! YER GETTIN A DELL!" ;)

Macintosh

01-20-2002, 10:36 AM

[quote]Originally posted by RyanTheGreat:
hope nobody said it yet...

" DUDE! YER GETTIN A DELL!" ;) <hr></blockquote>

SHUT UP! ;)

rbald

01-20-2002, 11:40 AM

[quote]Originally posted by koffedrnkr:
steve said it best...apple competes through innovation. dell competes by being wal-mart.

dell may have marketshare, but they'll never have style. as long as mike is CEO, they'll never have class either.<hr></blockquote>
2.9% market share! Some innovation!!!
<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" />

rbald

01-20-2002, 11:54 AM

[quote]Originally posted by dstranathan:
Have you seen the Buisness Week article yet?

"Apple cant make killer new hardware for much longer, and sucking away R&D funds if they dont expand maeket share"

Somebody put a bullet in Mike's head. Please.<hr></blockquote>Why shoot the messenger? He's right! Hey Mike Dell built and runs the largest PC company in the world! Unlike you i think you could say that he knows what he's talking about!!!

<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" /> <img src="graemlins/smokin.gif" border="0" alt="[Chilling]" />

rbald

01-20-2002, 12:03 PM

The cube the cube! This is the computer that sent Apple into a tailspin! Take away the cube dabacle and Apple isn't in the percipitus position it is in today! Talk about a waste of R&D! When you have a company that's always on the brink, a disaster like the cube is enough to kill it! <img src="graemlins/smokin.gif" border="0" alt="[Chilling]" /> <img src="graemlins/smokin.gif" border="0" alt="[Chilling]" />

[ 01-20-2002: Message edited by: rbald ]

Macintosh

01-20-2002, 12:18 PM

I think the Cube was a great lesson for Apple, I am glad they made the Cube. I am glad I own one too. :p

JLL

01-20-2002, 02:08 PM

[quote]Originally posted by rbald:
The cube the cube! This is the computer that sent Apple into a tailspin<hr></blockquote>

No, the economy did, and Apple has done far better than most of the other computer manufacturers.

Bogie

01-20-2002, 02:27 PM

Anyone have the link to the article we are discussing? Cause until a couple more of us read it I don't expect this discussion to get much farther.

Addison

01-20-2002, 02:30 PM

There would be a few smiling faces on these boards if Dell were the next Enron.

Addison

01-20-2002, 02:32 PM

[ 01-20-2002: Message edited by: JW Pepper ]

iChmul

01-20-2002, 03:20 PM

Michael Dell is da man!

koffedrnkr

01-20-2002, 03:45 PM

[quote]Originally posted by rbald:

2.9% market share! Some innovation!!!
<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" /> <hr></blockquote>

i share your frustration, but 2.9% of the global marketplace is hardly insignificant. innovation in and of itself doesn't guarantee marketshare. if it did, everyone would be driving a volvo instead of a ford.

the fact is that for most people, cost is really the only determining factor. for these people, dell is great. they have no stores, no overhead, they're cheap and they even deliver.

traditionally, apple has courted the extreme opposite end of the spectrum...those who value innovation first and consider price as a secondary factor. these people comprise the existing user base and yes, their numbers are small when weighed against the total.

however, when you look at apple recent strategy, it's aggressively aimed not at the high end, but at the majority of consumers in the middle...those who would potentially spend a bit more if given a compelling reason to spend more. look at their recent strategy: the new apple stores, the free suite of iapps, the focus on connectivity and standardization, it's all in an effort to reach consumers in the middle and that's where apple has room to grow.

the original imac sold 6,000,000 units worldwide in just 3 years. honda motor company has sold 7.7 million accords in the united states since 1976. think about that. in 3 years apple has sold nearly as many imac globally as honda has sold accords in the united states for the last 26 years.

2.9% of the global market may not sound like much, but it's still a lot more than you seem to think it is. apple's doing just fine. they're making money, there is demand for their products, and now more than ever, those people in the middle are being given more reasons to consider a mac over a PC.

[ 01-20-2002: Message edited by: koffedrnkr ]

[ 01-20-2002: Message edited by: koffedrnkr ]

Macintosh

01-20-2002, 03:53 PM

[quote]Originally posted by koffedrnkr:


i share your frustration, but 2.9% of the global marketplace is hardly insignificant. innovation in and of itself doesn't guarantee marketshare. if it did, everyone would be driving a volvo instead of a ford.

the fact is that for most people, cost is really the only determining factor. for these people, dell is great. they have no stores, no overhead, they're cheap and they even deliver.

traditionally, apple has courted the extreme opposite end of the spectrum...those who value innovation first and consider price as a secondary factor. these people comprise the existing user base and yes, their numbers are small when weighed against the total.

however, when you look at apple recent strategy, it's aggressively aimed not at the high end, but at the majority of consumers in the middle...those who would potentially spend a bit more if given a compelling reason to spend more. look at their recent strategy: the new apple stores, the free suite of iapps, the focus on connectivity and standardization, it's all in an effort to reach consumers in the middle and that's where apple has room to grow.

the original imac sold 6,000,000 units worldwide in just 3 years. honda motor company has sold 7.7 million accords in the united states since 1976. think about that. in 3 years apple has sold nearly as many imac globally as honda has sold accords in the united states for the last 26 years.

2.9% of the global market may not sound like much, but it's still a lot more than you seem to think it is. apple's doing just fine. they're making money, there is demand for their products, and now more than ever, those people in the middle are being given more reasons to consider a mac over a PC.

[ 01-20-2002: Message edited by: koffedrnkr ]

[ 01-20-2002: Message edited by: koffedrnkr ]<hr></blockquote>

And the great thing is, more people are coming to the Mac right now more than ever before.

Derrick 61

01-20-2002, 04:06 PM

[quote]Originally posted by RyanTheGreat:
hope nobody said it yet...

" DUDE! YER GETTIN A DELL!" ;) <hr></blockquote>

nope......

DUDE! I'm gettin' a G5!

Belle

01-20-2002, 04:22 PM

[quote]Originally posted by Derrick 61:
DUDE! I'm gettin' a G5!<hr></blockquote>
Dude, sometime in the summer or fall. You could get a Dell today. :)

MacGregor

01-20-2002, 07:58 PM

Just some thoughts...

I disagree with Belle (and Mr Dell) that 8% involved in R&D is not outlandish for any technology company. It is pretty normal and has not prevented Apple from making lots of money and having $4billion sitting in the bank.

The comparison of Dell to MacDonald's is somewhat relevant in that the American public and now the Americanized rest of the world tend to buy whoever is #1 not who is the best. A profound flaw with the way our free market works...it works with a basically unsophisticated market.

And since American corporate culture is a reflection of the unsophisticated consumer culture, CEO's and business mags give into the belief that numbers are more important than quality. Thus Dell's words even affect the corporate elite as much as the unwashed masses and that is particularly sad part of corporate America. The corporate elite of many other countries at least admit to the b.s. they spew.

Still Apple needs to increase market share, not to prevent bankruptcy, but give them enough money in R&D to sustain that 8% and do even more with it. A more diverse product line with iPods and others, will require more R&D funds.

Derrick 61

01-20-2002, 08:19 PM

[quote]Originally posted by Belle:

Dude, sometime in the summer or fall. You could get a Dell today. :) <hr></blockquote>

Yes I could, but I think the G5 will be worth the wait! Besides, if I wanted a Dell, I wouldn't have bought a Mac in the first place!

[ 01-20-2002: Message edited by: Derrick 61 ]

Junkyard Dawg

01-20-2002, 09:01 PM

[quote] So what we've got is a company without prospect for growth, and this is the main reason market analysts have been so wary, and why Apple has taken the drastic step of opening stores.
<hr></blockquote>

Sorry, but I must disagree. Apple has excellent prospects and great potential. The company is in the best position for gaining market share since over a decade ago. OS X, the new iMac, the laptop line, all of these are strong products that may help in growing marketshare.

OS X is drawing developers, and hopefully this will translate into consumers in a few years.

The only dent in Apple's armor right now are their CPUs. With the G5 on the horizon, this is something that will improve in the near future. Sometime this year, hopefully.

A recession is no time for Apple to grow, but they are putting all the pieces in place for a shotgun start into an expanding economy. One thing that many analysts aren't good at is thinking about business over the long-term. Most of these idiots who analyze stocks and businesses for a living aren't looking more than a few quarters into the future. For these sorts, Apple is a nightmare, because marketshare doesn't increase that fast. But over the next 5 years or so, it's very probably that Apple will gain marketshare.

It sad but true, I think, that Apple might already have gained a point or two of marketshare, if it weren't for their CPU supplier. Motorola has been a relentless ball and chain for Apple, and unless Moto can deliver on the G5 soon, and at competitive clockspeeds, then Apple's future is going to remain outside of Jobs' control.

Also, OS X's effect is going to take years. Consumers aren't going to believe Apple's word on OS X, they go by reputation, and OS X must earn a reputation before anyone will flock to it. X is garnering many positive but guarded reviews, but after a few more point updates, and increased usage by Unix geeks, X will hopefully generate a street buzz that will filter into the mainstream. When this finally happens, the flocking will begin.

Macintosh

01-20-2002, 09:34 PM

The flocking will begin! :p :)

VVVince

01-21-2002, 03:12 AM

BTW, what is in a marketshare ?
Apple is not present in business sales (small and large ones), no server sales, no budget PC sales (sub 800$)...
But Apple has a significant share of education sales, creative workstations, some sci-tech, and quite something of consumer sales.

And I'm not sure also that each and every sale is taken into account.

[ 01-21-2002: Message edited by: VVVince ]

[ 01-21-2002: Message edited by: VVVince ]

KidRed

01-21-2002, 03:25 AM

[quote]Originally posted by VVVince:
BTW, what is in a marketshare ?
Apple is not present in bussiness sales (small and large ones), no server sales, no budget PC sales (sub 800$)...
But Apple has a significant share of education sales, creative workstations, some ci-tech, and quite something of consumer sales.

And I'm not sure that each and every sale is taken into account.<hr></blockquote>

Don't forget the cash registers (restaurants, etc), I read they are counted into the pc total.

Robertp

01-21-2002, 08:48 AM

Robertp

01-21-2002, 08:53 AM

[quote]Originally posted by Belle:
Well, ignoring the rather inflamatory title of this thread, I agree with Michael Dell's comments entirely, and it's quite obvious Apple does too.

Look at the two companies' last annual reports -

Apple
Net Revenue - $5363 million
R&D costs - $430 million
% of Net Rev. - 8%

Dell
Net Revenue - $31888 million
R&D costs - $482 million
% of Net Rev. - 1.5%

Apple spends a frightening amount on R&D. Why do you think its pushing into bricks and mortar retail sales so hard, and constantly banging the "5 down, 95 to go" drum?<hr></blockquote>

Just curious as to what exactly Dell spends r&d money on? They are a primary assembler oc pc's that are comprised of off the shelf hardware..none of which they build or design..also they farm out the manufacturing of there cases..so where are they spending all this r&d money? Apple designd and makes the os, the computer hardware (which comes from there r&d department and budget) and all aspects of design. So in this case Apple or anyone who is manufacturing a "turn key" item will have a higher r&d budget than someone who just assembles a buch of third party pieces and sells it as a system. Anyone agree here?

Bogie

01-21-2002, 09:20 AM

Call me silly but I still just want a link to the article.

Anyone got it?

blabla

01-21-2002, 10:25 AM

Dell probably pay some of the cost of developing standard specification.

Majuki

01-21-2002, 10:58 AM

[quote]Originally posted by AirSluf:
Market share is not a necessity to make money.

Porsche has a very small market share and spends a ton on money on R&D, they are in an even smaller niche of the auto market than Apple is in the computer market. But they are an exceptionally successful company right now. They succeed because there is a large enough absolute number of people who want their machines. Over time their market share has fallen (because the total market size has grown substantially--mostly at the lower end), but the current total customer base is slightly larger than historical highs. Sound roughly familiar? Boxster/iMac? Etc???<hr></blockquote>

The car analogy is Apple's marketing bs. It would be equivalent if a Porsche were a car that could only drive on about 5% of the same roads as regular cars.

PBG4 Dude

01-21-2002, 11:22 AM

FYI

For the last 3 years, Dell has been expanding into large servers and NAS (network attached storage). This is where their R&D $$'s are being spent.

Fluffy

01-21-2002, 12:20 PM

[quote]Originally posted by Majuki:

The car analogy is Apple's marketing bs. It would be equivalent if a Porsche were a car that could only drive on about 5% of the same roads as regular cars.<hr></blockquote>

A better analogy is that the PC is a Jeep and the Mac is a Porsche. The Jeep can go on all of those windy dirt roads to nowhere (crappy PC apps that nobody really uses) while both can cruise the paved roads (most mainstream apps). Like all analogies it breaks down in a few places, but saying without caveat that the Mac can only run 5% of all software includes the implicit assumption that all software is equally worthy of being used.

[ 01-21-2002: Message edited by: Fluffy ]

Belle

01-21-2002, 12:33 PM

[quote]Originally posted by MacGregor:
Just some thoughts...

I disagree with Belle (and Mr Dell) that 8% involved in R&D is not outlandish for any technology company. It is pretty normal and has not prevented Apple from making lots of money and having $4billion sitting in the bank.<hr></blockquote>
Neither Mr. Dell nor I said that 8% is too much. The point is that it is eight times as much as the leader in the field (Mr. Dell's company), and if Apple keeps producing machines like the new iMac every couple of years that require huge investments in both R&D and expensive components, then its going to have to increase revenues. It can't increase its margins (Already around 30%), so the only steps it can take is reducing costs (A step Fred Anderson said Apple is already taking - reducing overheads) and most importantly increasing its customer base.
[quote]Still Apple needs to increase market share, not to prevent bankruptcy, but give them enough money in R&D to sustain that 8% and do even more with it. A more diverse product line with iPods and others, will require more R&D funds.<hr></blockquote>
Boing! Exactly what Michael Dell says in the quote in the original post.

cowerd

01-21-2002, 01:05 PM

[quote]A better analogy is that the PC is a Jeep and the Mac is a Porsche. The Jeep can go on all of those windy dirt roads to nowhere (crappy PC apps that nobody really uses) while both can cruise the paved roads (most mainstream apps). Like all analogies it breaks down in a few places, but saying without caveat that the Mac can only run 5% of all software includes the implicit assumption that all software is equally worthy of being used.<hr></blockquote>
Its not just software. A paltry 5% market share also means that drivers for hardware don't get delivered, or come very late, as those of you who are trying to shift over to OSX should be very aware of.

There is also the issue of the internet. Music delivery systems and streaming video don't appear to a 5% market as returns don't justify the investment [Real for OSX, Pressplay?--just the tip of the iceberg for content delivery folks]. And as MS controls the browser market and the dominant browser is IE5.5/IE6 which has MS specific tags and javascript implementation that IE5 can't match [jscript access to plugins--a big deal for SVG and Shockwave/Flash].

It ain't just software.

concentricity

01-21-2002, 01:10 PM

[quote]Originally posted by Majuki:


The car analogy is Apple's marketing bs. It would be equivalent if a Porsche were a car that could only drive on about 5% of the same roads as regular cars.<hr></blockquote>

umm, yeah, ok...

how about you pull your ford festiva over and read this...

<a href="http://www.apple.com/myths/" target="_blank">http://www.apple.com/myths/</a>

in particular, myth #2.
say what you want about RDF, and propaganda, but the cold truth is that 99% of all 'incompatibility' problems come from Windows being incapable, not MacOS.

Fluffy

01-21-2002, 01:17 PM

[quote]Originally posted by cowerd:

It ain't just software.<hr></blockquote>

Like I said, it breaks down in a few areas, but come on, the internet? Are you serious? I have never in my life tried to access a page or content that I could not simply because I use a Mac. Never. I'm sure there are examples, but they are obviously rare enough that I have never encountered them. Realplayer currently works fine in classic, and the OS X version is coming.

[ 01-21-2002: Message edited by: Fluffy ]

cowerd

01-21-2002, 01:33 PM

[quote]Like I said, it breaks down in a few areas, but come on, the internet? Are you serious? I have never in my life tried to access a page or content that I could not simply because I use a Mac.<hr></blockquote>
The internet != browsing websites.
On-line banking, stock/portfolio management, financial services, etc. There's much more in store as broadband becomes more widespread. Apple [and many of their users] seem to equate the internet with web browsing and e-mail.

Gustav

01-21-2002, 01:40 PM

[quote]Originally posted by cowerd:

The internet != browsing websites.
On-line banking, stock/portfolio management, financial services, etc. There's much more in store as broadband becomes more widespread. Apple [and many of their users] seem to equate the internet with web browsing and e-mail.<hr></blockquote>

Yeah, whatever. Internet banking and stock/portfolio management work fine for me in OS X. Just a because a few companies went out of there way to make Macs not compatible, does not mean you can't take your business elsewhere.

Fluffy

01-21-2002, 01:40 PM

[quote]Originally posted by cowerd:

The internet != browsing websites.
On-line banking, stock/portfolio management, financial services, etc. There's much more in store as broadband becomes more widespread. Apple [and many of their users] seem to equate the internet with web browsing and e-mail.<hr></blockquote>

I bank online, manage my portfolio and trade online, pay all of my bills, etc. online. I suppose I just got lucky, but my banks and broker are all completely platform neutral.

AirSluf

01-21-2002, 01:45 PM

jimmac

01-21-2002, 01:51 PM

One thing MD hasn't figured out yet is that as long as the current customers keep buying Macs that % of customers that use Macs still won't buy a Dell. The danger is if Apple doesn't do anything about their slow hardware that will eventually change.

cowerd

01-21-2002, 02:28 PM

[quote]Just a because a few companies went out of there way to make Macs not compatible, does not mean you can't take your business elsewhere.<hr></blockquote>
When your browser market share is so low companies don't have to go out of there way to make macs incompatible, they just don't bother checking. That's the issue, and it carries into drivers and some pieces of software [Adobe latest Win only features]--companies just can't be bothered.

Ventral

01-21-2002, 03:13 PM

I think you guys (and gal) are missing the point that Michael Dell was clumsily NOT trying to make, but did, which is

1: Apple is making "KILLER HARDWARE". (iMac)

2: By implying that they can not afford it for long, at their current market share, he is saying that it is COMPETITIVELY PRICED. (iMac)

Basically he is unwittingly telling us to buy Macs. To bad most of his customers are as dumb and transparent as he is. They won't get it.

Belle

01-21-2002, 03:23 PM

[quote]Originally posted by Ventral:
I think you guys (and gal) are missing the point that Michael Dell was clumsily NOT trying to make, but did, which is[...]<hr></blockquote>
No. He wasn't clumsy, and that's the exact point he was trying to make, and why I don't understand the vitriolic reaction of some people in this thread.

It was supposed to be complementary, and honest - he was pointing out that producing fantastic products like the new iBook and LCD iMac is a very expensive business, and that Apple is going to have to increase its revenues if it intends to keep up with its own high standards.

satchmo

01-21-2002, 03:44 PM

[quote]Originally posted by Belle:
It was supposed to be complementary, and honest - he was pointing out that producing fantastic products like the new iBook and LCD iMac is a very expensive business, and that Apple is going to have to increase its revenues if it intends to keep up with its own high standards.<hr></blockquote>

Do you really believe he would pay Apple a compliment?
While it may seem to be a compliment, I tend to believe it was more of a subtle jab to say, even though Apple makes cool hardware, they may not be around in a few years, so don't risk spending your money buying a Mac.

But these jabs only reaffirm my belief that as Ventral stated, he's scared sh*tless of Apple
s new iMac.

Belle

01-21-2002, 03:58 PM

[quote]Originally posted by satchmo:
Do you really believe he would pay Apple a compliment?
While it may seem to be a compliment, I tend to believe it was more of a subtle jab to say, even though Apple makes cool hardware, they may not be around in a few years, so don't risk spending your money buying a Mac.

But these jabs only reaffirm my belief that as Ventral stated, he's scared sh*tless of Apple
s new iMac.<hr></blockquote>
Michael Dell doesn't need to make jabs at Apple, his company is doing just fine - making a profit and showing some growth (Although slowed presumably by the economic situation last year).

The new iMac isn't going to make any major inroads into education market share - it's too expensive. It may grab a few "consumers with money", but not enough to worry Dell.

Do you really believe the new iMac will seriously threaten sales of Dell computers to educational facilities and consumers? Really, truly, honestly?

If Dell ever seems pissy it's because he wants the kind of legendary status Jobs has.

Be realistic - the new iMac proves Dell's point. Apple cannot increase its margins, they're already at 30% - the highest in the industry. Apple's bottom line is going to be higher because of the expense of components in the new design, particularly the LCD and custom parts like the neck. It has also priced the new line very competitively. To avoid taking a serious hit in profit on the iMac line in the coming year, it must increase sales. Apple has to increase its customer base.

JLL

01-21-2002, 04:07 PM

[quote]Originally posted by Belle:

Michael Dell doesn't need to make jabs at Apple, his company is doing just fine - making a profit and showing some growth (Although slowed presumably by the economic situation last year).<hr></blockquote>

And yet he does it over and over again, but that could have something to do with the ego thing you mentioned.

[quote]Originally posted by Belle:
Apple has to increase its customer base.<hr></blockquote>

And Apple is increasing its customer base, but Apple's customer base doesn't increase with the same speed as the rest of the industry, which is why the market share doesn't get higher.

Belle

01-21-2002, 04:18 PM

[quote]Originally posted by JLL:
And Apple is increasing its customer base, but Apple's customer base doesn't increase with the same speed as the rest of the industry, which is why the market share doesn't get higher.<hr></blockquote>
Which is the problem. Is my take on the financial issues surrounding the new iMac wrong? Apple needs to sell more iMacs to people who have never bought a Mac before. More than the original iMac, because the income generated by each of the new models is going to be less than the original design. I suspect education sales will be a lot less than the original iMac until the price lowers a little.

It'll be interesting to see Apple's second quarter financial report, see how much revenue and how much profit the new iMac is bringing in. I bet the margin on it is down from 30% too.

AirSluf

01-21-2002, 04:21 PM

MacGregor

01-21-2002, 05:12 PM

I bet the new iMac isn't making 30% margin, but I don't think it has to.

The problem I see with Dell's assessment is that if Apple uses 8% for R&D and it averages around 30% margin, it will be no better or worse off than it is now. It will not go bankrupt, it will be able to innovate fine for the 5% (and growing numbers) of Apple customers and the Apple employees will be making the same kind of money they are now and interestingly enough, be able to weather some of the cyclical storms that mere box makers cannot.

So my point is that Apple's current business model is SUSTAINABLE. I would not have thought so 2 years ago when we all predicted that the then new iMac would get Apple up to 10% market and start to attract more software titles. Back then if we would have known Apple would still be at 5% or less, we would have thought it was the end of Apple. My own observations are that it isn't the end of Apple as much as Dell would like to claim it so.

Against all odds, Apple is making the 5% work sustainably.

Now to extend beyond the 5% requires perhaps more R&D than is even currently being used by Apple, lets say 10%. This might mean a lower margin 25% and less cash in the bank in a year or two, maybe 2billion and then Apple might make it to 8% market. (The biggest share going to international if Apple could afford the marketing and extra R&D for that. I was in India last year and no one had Macs, but even people who had never seen a Mac, knew about them and thought they were great for graphics.)

So if 5% wasn't fatal 2 or 3 years ago (with 8% in R&D), what about today makes it fatal? My answer is that I don't think it is a problem.

On the upside, we haven't even seen the tip of the unix iceberg and THAT whole percentage of R&D and marketing....

Belle

01-21-2002, 05:27 PM

Firstly, do you dispute that Apple's below the line costs are increased due to the cost of components for the new iMac? If this is the case, the model is not sustainable, even maintaining margins at 30%. Apple is making a minimal profit so far in 2002, and made a loss in 2001. It needs to make more money, and the only way to do that is ship more units.

It's much too early to predict how well the new iMac will sell, but the initial preorder numbers are around half that of the original iMac, and the income from each machine will likely be less than the original.

MacGregor

01-21-2002, 06:17 PM

I have to say that I don't know what "below the line costs" refers to, but I would wager that a fair amount of the work put into development of components for the Cube were transferable to the lcd iMac - miniaturization, innovative mobo design development tools, etc.

(I wish they would have called it the iMac2 or something easy to type.)

I doubt the costs of developing the plastics, for instance, of the new iMac are more than for the old iMac. The old iMac used lots of plastic in very new ways, that required a tremendous investment in technique and equipmsnt. This new iMac isn't nearly as revolutionary as the old one ...and they saved alot on pigment costs... ;)

As for orders being half that of the original iMac, I don't know, but obviously the market is quite abit different now ... and the tide lowers all boats now ...even Dell's.

Dell would be a more relevant company comparison if Apple liscenced clones...but it doesn't.

It would be interesting to see if Apple is taking a loss on the new iMac in the way that MS is taking a loss on each X-Box. Just as will MS, alot of Apple's profits come after the box is purchased. If Apple is taking a loss now, I would bet that it is not much more of a loss than the original iMac.

I think Apple should be concerned more with the market that Dell is leading in ... the business market. There, profits are low and volume needs to be high, the levels that Dell is used to. It isn't Apple's forte, but it needs to be at some point to get anywhere near 30% market share...if that is even being planned. However I don't think Mike Dell has alot of feel for anything that is NOT low profit, high volume, so his comments are not as relevant as one might think.

Again, my point is not that Apple should or shouldn't increase it's market share. It should. But does it NEED to? That is the question that we don't know yet. I thought years ago it needed to to even just maintain it's innovation, but it has proved me wrong. It doesn't NEED to increase market share to innovate, it just needs to turn a profit. And it does.

AirSluf

01-21-2002, 06:24 PM

AirSluf

01-21-2002, 06:28 PM

Belle

01-21-2002, 06:39 PM

[quote]Originally posted by MacGregor:
I have to say that I don't know what "below the line costs" refers to, but I would wager that a fair amount of the work put into development of components for the Cube were transferable to the lcd iMac - miniaturization, innovative mobo design development tools, etc.<hr></blockquote>
It just means that the cost of creating each completed iMac. The factors you mention in development of the Cube don't count - that's included in R&D. The below the line costs are the actual costs to Apple of the components required to build each iMac.

The problematic components in the new iMac are the LCD display and the SuperDrive (and possibly the neck), which even though Apple will buy in bulk, are very expensive compared to the alternatives (i.e. Apple's decision to make "killer new hardware" means it needs more expensive components than are required to make a complete unit). The 800MHz G4 is also a lot more expensive than, say, a fast G3 or 500MHz G4, but Apple chose the "killer" option. The neck is essential to the design of the new iMac, but an alternative design would have made the display support cheaper to manufacture.

AirSluf, the R&D costs are covered by the gross margin. If the margin is "thinner" than the typical 30% of most of Apple's product lines, then there is less profit on each iMac even if R&D costs remain constant.

There isn't a question of the R&D costs not being covered, just that making a profit becomes very tight with a reduced margin and increased below the line costs (see above).

My comparison of initial sales figures of the original iMac and the LCD iMac was based on pre-orders in the first week after each product announcement. I admit it's not a solid basis for making judgements, but it's the only indication we have at this stage.

cowerd

01-21-2002, 07:09 PM

[quote]I doubt the costs of developing the plastics, for instance, of the new iMac are more than for the old iMac. The old iMac used lots of plastic in very new ways, that required a tremendous investment in technique and equipmsnt. This new iMac isn't nearly as revolutionary as the old one ...and they saved alot on pigment costs...<hr></blockquote>
And the new iMac use a lot of metal in extraordinary ways. The armature for the LCD is stainless steel--not cheap, and not easy to work with as a material. The hemispherical shell that supports the arm is actually a metal shell (looks cast) covered by Apple's trademark white polycarb. Actually very impressive. Reminds me of a IIci in build quality.

MacGregor

01-21-2002, 07:24 PM

Thanks for the explanation, Belle.

The latest BusinessWeek on-line has a pretty good description (without details) about the new iMac and the editors didn't seem to worried about the iMac itself. They are of course guarded about Apple, but the iMac as a product line seems fine.

I think the casing and lcd came in at about $600 as under the line costs.

MacGregor

01-21-2002, 07:28 PM

Man, where is everyone seeing these iMacs? I haven't found one place in the state of Oregon with them!

satchmo

01-21-2002, 09:04 PM

It just seems to me that time and time again, people have predicted Apple's death.
Not only has this not happened but Apple's future seem pretty bright despite a low market share.
These days, it's profits that matter. A bigger marketshare would be great, but what good is it if you don't make any money.
However, something tells me, Apple's on a roll. The TIME magazine cover along with Apple's retail stores and generally good press about OSX, will do wonders. It wouldn't surprise me if Apple's marketshare doubled by this time next year.

Tarbash

01-22-2002, 12:01 AM

Belle, I don't think you realize how huge the new iMac is going to be. Every person I've shown it to thinks it kicks ass and they want one, and they all say how incredible the price/performance is. I've read many stories of people going into Apple stores and being blown away by this thing! Once Apple gets all the models into the channel, they are going to sell like hotcakes. Sure, the margin may not be as good, but increased unit sales will make that point moot. Apple is not going to be able to make enough of these.

Dell is just dumbfounded. He has been saying this crap for years, and Apple continues to churn out one kickass product after another and still remain profitable AND increase their marketshare, slowly, but surely. 5 years from now, I bet Dell will be saying the same thing... "Almost now, they can't hold on much longer... they're still gonna die.." and Apple will probably have around 6-7 % marketshare.

CharlieBrownGirl

01-22-2002, 12:06 AM

Macs are just more fun to use.. and they also feel more "girly" to me.. no offense guys :)

alcimedes

01-22-2002, 12:30 AM

actually belle, for once i totally disagree with you.

i think Dell is slowly killing itself, and i'm not sure what they're going to do about it. Dell is hoping to drive out all competition by undercutting their prices. people get used to low prices, or they just end up creating a cadre of tiny, no budget garage PC builders. with the internet the way it is anyone can buy components dirt cheap and build a machine for less than what Dell sells them for.

Dell's problem is that i can put together a machine at 66% of the cost of the machine from Dell any day of the week, and still make money if i sell it. and Dell is working on almost no margin.

they can't last forever doing this. unlike WalMart, you don't need to go to Dell to get those good prices, and there's no store near you where you can just walk in and pick up a machine from Dell. if i've got to wait a week anyway, might as well save the money and build a machine myself.

the other huge factor that i think you may not be counting on is that people really want to be able to make home movies on DVD's. (not just for that reason all you sick minded people)

but being able to put family movies on a medium that won't degrade, and that has tons of storage space is wonderful. i know people who would have never considered a mac before taking a look at that iMac and thinking for the first time a Mac may be worth it.

all Apple has to do is provide people with a cheaper way to get a task done that people want to do, and you'll see Apple's machines selling. that's always been what has brought them up in marketshare. Apple is now trying to move into DVD authoring, and i think that's great. it's an area where they have a shot.

he he, i went back home and visited my parents and my dad, who's always hated macs for as long as i can remember was asking me about the new iMacs. when i asked him why, he said that he and my mom wanted to be able to have family movies for when we have grandkids, and would like to be able to do the DVD's themselves, and from what he's read, a mac is the only way to go.

unlike people who already have a PC and need a reason to buy something else next time around, there is a huge market of people who are looking for machines to do something completly different than what they're used to, in which case the departure from a PC to a Mac isn't that big of a leap after all.

and hell, it's got to be more secure than XP.

while apple works on the hardware side, MS is busy scaring people off with their psycho software licenses and security holes. one two combo baby!

-alcimedes

Belle

01-22-2002, 02:13 PM

[quote]Originally posted by MacGregor:
Thanks for the explanation, Belle.

The latest BusinessWeek on-line has a pretty good description (without details) about the new iMac and the editors didn't seem to worried about the iMac itself. They are of course guarded about Apple, but the iMac as a product line seems fine.

I think the casing and lcd came in at about $600 as under the line costs.<hr></blockquote>
Thank you for the heads up about BusinessWeek. You know, $600 before you factor in other costs - hard disk, optical disk, 700/800MHz G4, motherboard, RAM, etc. is actually quite a lot. I'd bet a lot more than the old iMac case and CRT display.
[quote]Originally posted by Tarbash:
Belle, I don't think you realize how huge the new iMac is going to be.<hr></blockquote>
I'm not so sure. I won't argue the point, though, it's really too hard to make predictions. Someone save this thread, we can argue next January. :)
[quote]Originally posted by alcimedes:
actually belle, for once i totally disagree with you.<hr></blockquote>
Yikes, this is the first time you've totally disagreed with me? I should warn you that instantly lessens the value of any post you make. :)

Dell will do fine so long as the computer industry holds up. I too could build computer with the same specification as a Dell for a fraction of the price. Unfortunately, the vast majority of people I know outside the industry couldn't. Most "consumers" are happy to pay the extra to get the machine made, and some sort of come back if it goes wrong (no matter how miserable Dell's service and support may be).

Despite not having stores where you can walk in and pick up a Dell, it's still #1. A lot of consumers do get that - Amazon has brought online ordering to the masses. And those annoying TV commercials will have brought in a lot of new customers who are pissed at the experience of buying a PC in an electronics store.

As for the small profit margin on Dell's computers, that's fine. It's just a different model from Apple - buy all your components in bulk, get them dirt cheap, pay people peanuts to assemble them, sell them dirt cheap but by the truckload, and you're making good money.

Now I know there are arguments about quality involved here, but regarding DVD creation - I can get a Dell (equivalent spec to iMac but with 17in CRT) with a DVD+RW drive plus a free printer, and 1 year service and phone support for less than the $1799 iMac. It also comes with a $100 rebate - more than enough to buy Sonic's MyDVD Plus.

Majuki

01-22-2002, 02:26 PM

[quote]Originally posted by concentricity:


umm, yeah, ok...

how about you pull your ford festiva over and read this...

<a href="http://www.apple.com/myths/" target="_blank">http://www.apple.com/myths/</a>

in particular, myth #2.
say what you want about RDF, and propaganda, but the cold truth is that 99% of all 'incompatibility' problems come from Windows being incapable, not MacOS.<hr></blockquote>

And I'd assume you're the type to believe Jon Rubenstein talk about MHz Myth. So, it's true to a point. But don't tell me that the DP 800 G4 will quash a top of the line Athlon MP system. It falls drastically short. I'm aware of the '10 Myths' on Apple's page, but the car analogy as they have it is bad. I'm not saying that all of the rest of the PC only programs are all worth using or that there aren't equivalents for Mac OS. I know that most of the mainstream apps and games are ported to the Mac OS platform. With those in mind, look at all of the great software titles that are available for Windows only. Look at all of the sweet hardware that currently lack drivers for Mac OS. If things are ported, it's usually not a simultaneous release. The Jeep vs regular car analogy is a bit better.

Amorph

01-22-2002, 02:30 PM

Fred Anderson covered a lot of this ground in the conference call:

The profit margin on the new iMac for this quarter will be abnormally thin because of component costs and the sort of inefficiencies that crop up when you start assembling a product.

The profit margin on the new iMac is not expected to be as good as it was on the old iMac in the forseeable future. Apple will strive to improve it, of course, but Fred basically told the analysts to say goodbye to 30%.

Apple is intentionally trading profit margin in an attempt to gain market share. That's straight from the CFO. So it's not surprising that Apple will have to gain market share, is it? They're basing their financial model on it, after all.

I don't believe that Apple is going to try to grow market share purely in the consumer market. I see a multi-pronged strategy. But there's no question that they're pushing aggressively now, and they're making the necessary adjustments (volume vs. profit per unit) in order to do so.

I have to agree with Belle that most of the furor expressed in this thread over Dell's statement seems to come from the fact that Dell said it. All he did, essentially, was quote Fred Anderson back to the reporter. After all, imitation is what he's good at. :p

[ 01-22-2002: Message edited by: Amorph ]

spotbug

01-22-2002, 02:34 PM

[quote]Originally posted by Belle:
Firstly, do you dispute that Apple's below the line costs are increased due to the cost of components for the new iMac? If this is the case, the model is not sustainable, even maintaining margins at 30%. Apple is making a minimal profit so far in 2002, and made a loss in 2001. It needs to make more money, and the only way to do that is ship more units.<hr></blockquote>

I probably should keep my nose out of this, but:

You're right, obviously. If the profit from each new iMac is less than the profit from each old iMac, they need to sell more of the new ones to maintain the same iMac profit level. However, since you're talking year-over-year (you mentioned last year's loss), how well did the old iMacs sell last year? You can't talk about just last year for profits and then talk about the entire lifetime of the iMac for units sold. Stick to the same time frame.

Personally, I think the new iMac will sell more units this year than the old one sold last year. Could be wrong. Like I said, it all depends on how well the iMac did last year.

Super Flippy

01-22-2002, 02:49 PM

[quote]Originally posted by Belle:

Dell
Net Revenue - $31888 million
R&D costs - $482 million
<hr></blockquote>

According to unnamed marketing sources from within Dell, approximately $320 million of their R&D costs went toward determining that 67% of people in the 18-34 age group are "much more likely" to feel good about buying a Dell computer when prompted to do so by a young man named Steve wearing tight trousers. ;)

tsukurite

01-22-2002, 02:59 PM

hmmm....
Belle
Dell
Belle
Dell

Sorta interestin' don't cha think?

:)

tsukurite

Belle

01-22-2002, 03:26 PM

[quote]Originally posted by Amorph:
[Lots of stuff I deleted]<hr></blockquote>
Dagnabbit, I hate it when someone comes along and makes the point I've been trying to make (before getting distracted) much more succinctly than I could ever manage. :p

You make a very good point about Apple's plans hinging on all products, not just the iMac. I used that example because it's the product that elicited the comment from Dell.

But can Apple afford to take a risk on reduced profit across the range, with no guarantees of increasing its customer base? Especially because it would appear it doesn't currently have the necessary components to "bump" the Power Mac range in such an impressive way as it has just bumped the iMac, an act that the vast majority of posters here seem to think is vital.
[quote]Originally posted by spotbug:
I probably should keep my nose out of this, but:

You're right, obviously. If the profit from each new iMac is less than the profit from each old iMac, they need to sell more of the new ones to maintain the same iMac profit level. However, since you're talking year-over-year (you mentioned last year's loss), how well did the old iMacs sell last year? You can't talk about just last year for profits and then talk about the entire lifetime of the iMac for units sold. Stick to the same time frame.

Personally, I think the new iMac will sell more units this year than the old one sold last year. Could be wrong. Like I said, it all depends on how well the iMac did last year.<hr></blockquote>
No! Stick your nose in. It's kind of fun. :)

I did talk about last years loss, but my comparison of iMac sales was with the initial release in 1998, which brought a good increase in revenues and decent profit. If the new iMac (which I think we're all finally agreed will make a great deal less profit per unit) doesn't sell as well as the original Bondi iMac, that good increase and decent profit could well be a loss.

I do get your point that iMac sales in 2001 were pretty miserable, due to the products age and specifications as much as any economic issues, and therefore sales could not be any worse than last year. But as far as profits are concerned, you have to examine the recent launch with a comparable new product introduction, and with a time in Apple's history where it was actually making some money.
[quote]Originally posted by Super Flippy:
According to unnamed marketing sources from within Dell, approximately $320 million of their R&D costs went toward determining that 67% of people in the 18-34 age group are "much more likely" to feel good about buying a Dell computer when prompted to do so by a young man named Steve wearing tight trousers.<hr></blockquote>
Apparently there was also an unexplained $40,000 spend in Dell's financial report. Investigators found Gap receipts for jeans and black polo-necks totalling $40,000 in Michael Dell's trash. Coincidence?
[quote]Originally posted by tsukurite:
hmmm....
Belle
Dell
Belle
Dell

Sorta interestin' don't cha think?<hr></blockquote>
You got me, I work for Dell.* :p

* Untrue. I do however work for a one time "enemy" of Apple. :)

Amorph

01-22-2002, 04:13 PM

Belle wrote:

[quote]You make a very good point about Apple's plans hinging on all products, not just the iMac. I used that example because it's the product that elicited the comment from Dell.<hr></blockquote>

Actually, that's not what I meant, although I do agree with it. ;) I posted a more detailed <a href="http://www.xsorbit1.com/users/flamingo/index.cgi?board=General_Discussion&action=display&num=1011404468" target="_blank">analysis</a> over at Bad Flamingo. In a nutshell: I see signs pointing to a push into enterprise, part of which involves reconceptualizing some traditional markets as enterprise.

[quote]But can Apple afford to take a risk on reduced profit across the range, with no guarantees of increasing its customer base?<hr></blockquote>

If the result was guaranteed it wouldn't be a risk, would it? But then, since risk-taking is a longtime Apple strategy I don't see anything unusual or exceptional going on.

[quote]I do however work for a one time "enemy" of Apple.<hr></blockquote>

IBM?

Belle

01-22-2002, 05:10 PM

[quote]Originally posted by Amorph:
Actually, that's not what I meant, although I do agree with it. I posted a more detailed analysis over at Bad Flamingo. In a nutshell: I see signs pointing to a push into enterprise, part of which involves reconceptualizing some traditional markets as enterprise.<hr></blockquote>
The problem I see with this is something mentioned in your Bad Flamingo thread that wasn't really covered in any depth.

The general perception is that the "enterprise" market is full of companies running Microsoft Office on Windows PCs sitting on networks served by huge banks of Windows servers (, I know there's Sun, Linux, etc. but it comes down to the same thing).

However the truth is that most big enterprises (Insurance companies, banks, call centers, support services, etc.) run bespoke software applications. Admittedly these are generally written on top of generic databases like Oracle, but these companies have typically invested huge amounts of money in software development and maintenance, licenses, hardware, and support. If a company made the decision to switch to Mac, chances are the software developer (which also maintains the applications and offers support) doesn't develop for Mac. They're typically Windows-only outfits (and still quite often DOS!). So the code would have to be handed over to a Mac development outfit (if you can find one) and either ported or completely rewritten. Neither option is cheap.

The alternative is for Apple to just offer back office hardware - servers which are often Sun or Linux systems with a Windows network running off them. Trouble is, Microsoft have made it too easy to choose servers running Microsoft server products unless you operate an intranet or use Sun workstations (Whatever happened to thin clients?).

And if you require Intel/AMD based hardware to run Windows out in the office, Dell will make you an offer you can't refuse if you also buy its server products for the back office.
[quote]If the result was guaranteed it wouldn't be a risk, would it? But then, since risk-taking is a longtime Apple strategy I don't see anything unusual or exceptional going on.<hr></blockquote>
There certainly aren't any guarantees, and without a solid foothold in one market, it's incredibly dangerous (almost foolish) to attempt to corner another.
[quote]IBM?<hr></blockquote>
For a bonus point. :)

And we've got some serious processing power here that'll make the Athlon look like an abacus with missing beads.*

* Should be shipping sometime around 2015-2020. :)

[ 01-22-2002: Message edited by: Belle ]

rambo47

01-22-2002, 06:50 PM

CONFIRMED!!! Mike Dell is a douche-bag.

alcimedes

01-22-2002, 07:34 PM

hey belle, just off chance, which dell config did you come up with that was less than the new iMac in price w/a DVD burner?

i tried a few but didn't find any.

Leonis

01-22-2002, 07:37 PM

When Belle said he works for one time "enemy" of Apple I thought it was M$ ;)

Merlion

01-22-2002, 07:49 PM

[quote]Originally posted by Leonis:
Comic web site

My new online portfolio
<hr></blockquote>

I know this ain't the place, but dude your shit rocks! Man really nice....
:D

Amorph

01-22-2002, 08:35 PM

Belle wrote:

[quote]The general perception is that the "enterprise" market is full of companies running Microsoft Office on Windows PCs sitting on networks served by huge banks of Windows servers (, I know there's Sun, Linux, etc. but it comes down to the same thing).

However the truth is that most big enterprises (Insurance companies, banks, call centers, support services, etc.) run bespoke software applications. Admittedly these are generally written on top of generic databases like Oracle, but these companies have typically invested huge amounts of money in software development and maintenance, licenses, hardware, and support. If a company made the decision to switch to Mac, chances are the software developer (which also maintains the applications and offers support) doesn't develop for Mac. They're typically Windows-only outfits (and still quite often DOS!). So the code would have to be handed over to a Mac development outfit (if you can find one) and either ported or completely rewritten. Neither option is cheap.<hr></blockquote>

Believe me, I know about vertical market DOS apps. I'm writing a replacement for one as we speak. And that's part of what inspired my thought: At some point, the platform (or app) becomes enough of an albatross that it's worth the investment to leap over to something else. That frustration is what's buying my food right now.

Oracle has already ported most of their apps to the Mac. Basically, all that's left is the database itself, and as of 9i it can run on a cluster of workgroup servers just as well as on a hunk of big iron. So even if Apple doesn't get into the minicomputer market Mac OS X could become a sensible target platform for Oracle.

As for the rest, the best Apple can do is make it really easy to create new vertical market apps (which they have done, in spades - FileMaker, Cocoa, Python, Tcl/Tk, etc.) and be there when someone gets frustrated - whether by DOS apps or horrible responsiveness or latency from a terminal/server arrangement or fear of Microsoft. It won't sweep the enterprise world by storm, but then there's no sane way to imagine that Apple could.

[quote]The alternative is for Apple to just offer back office hardware - servers which are often Sun or Linux systems with a Windows network running off them. Trouble is, Microsoft have made it too easy to choose servers running Microsoft server products unless you operate an intranet or use Sun workstations (Whatever happened to thin clients?).<hr></blockquote>

Thin clients? Two words: "Dickless workstation."
The only people who were excited by thin clients were reps from companies like *ahem* IBM who wanted to push sales of big iron. They don't really make any sense from a user's perspective: In any distributed system, the first, no-brainer optimization is caching. That's what the memory and HD in a "heavy client" are in a networked environment. But then, if you have heavy clients, you don't need big (and wildly profitable) mainframes (like the one in Atlanta that Home Depot buried in concrete because it cost less to buy a new one then it would have to haul the giant beast out of its basement home), and you can get by with 10-Base T because network traffic is relatively low.

But I digress. :) Mac OS X can communicate with UNIX servers natively, and Windows as well, so it's attractive to corporations looking to wean themselves off the Microsoft teat. Virtual PC can take care of laggard apps.

[quote]And if you require Intel/AMD based hardware to run Windows out in the office, Dell will make you an offer you can't refuse if you also buy its server products for the back office.<hr></blockquote>

And if you don't require them... :)

[quote]There certainly aren't any guarantees, and without a solid foothold in one market, it's incredibly dangerous (almost foolish) to attempt to corner another.<hr></blockquote>

That's why Apple is building up their enterprise services in education. By the time their hardware platform goes 64 bit and OS X has had its rough spots ironed out, they should have built up some real experience handling and supporting big installations. The smart vertical-market and enterprise software vendors will take note of this. It doesn't take long at all to get up to speed in Cocoa, as you well know.

[quote]And we've got some serious processing power here that'll make the Athlon look like an abacus with missing beads.*

* Should be shipping sometime around 2015-2020.
<hr></blockquote>

Typical IBM: Compare the competition's offerings to something you'll deliver years from now. :p

BuonRotto

01-22-2002, 09:34 PM

Wasn't OpenStep/WebObjects big in financial circles? Obviously, that has slipped since the merger with Apple, but alas, financials are, after all, the slowest to move.

Amorph

01-22-2002, 10:46 PM

Yes it was, and it still is to some extent, although other solutions have caught up or surpassed it.

Nevertheless, I don't think it's going away. It's just sticking out a little oddly until Apple gets some other divisions up to speed. :)

Belle

01-23-2002, 01:24 PM

[quote]Originally posted by Amorph:
Believe me, I know about vertical market DOS apps. I'm writing a replacement for one as we speak. And that's part of what inspired my thought: At some point, the platform (or app) becomes enough of an albatross that it's worth the investment to leap over to something else. That frustration is what's buying my food right now.<hr></blockquote>
You and many, many others. :) It's a topic of conversation over many meals, usually accompanied by vicious assaults on VB.

Out of interest, what tools are you using to write this replacement? I take it it's going to Windows?
[quote]Oracle has already ported most of their apps to the Mac. Basically, all that's left is the database itself, and as of 9i it can run on a cluster of workgroup servers just as well as on a hunk of big iron. So even if Apple doesn't get into the minicomputer market Mac OS X could become a sensible target platform for Oracle.

As for the rest, the best Apple can do is make it really easy to create new vertical market apps (which they have done, in spades - FileMaker, Cocoa, Python, Tcl/Tk, etc.) and be there when someone gets frustrated - whether by DOS apps or horrible responsiveness or latency from a terminal/server arrangement or fear of Microsoft. It won't sweep the enterprise world by storm, but then there's no sane way to imagine that Apple could.
<hr></blockquote>
This may be the problem. Considering the investment required to put Apple in a position to make a viable attempt at capturing some of the enterprise market, it'll need to take it by storm. It's not so much getting the hardware and software up to spec, it's more the related support and services.

It costs a phenomenal amount to set up and maintain the kind of support and services required for the enterprise market. Sun, Microsoft, Dell et al have huge divisions taking care of this stuff.

Meanwhile, Apple announced in its financial report that it's shedding "administrative" jobs, so if this is going to happen, it'll be some time a long way off. :)
[quote]Thin clients? Two words: "Dickless workstation."
The only people who were excited by thin clients were reps from companies like *ahem* IBM who wanted to push sales of big iron. They don't really make any sense from a user's perspective: In any distributed system, the first, no-brainer optimization is caching. That's what the memory and HD in a "heavy client" are in a networked environment. But then, if you have heavy clients, you don't need big (and wildly profitable) mainframes (like the one in Atlanta that Home Depot buried in concrete because it cost less to buy a new one then it would have to haul the giant beast out of its basement home), and you can get by with 10-Base T because network traffic is relatively low.<hr></blockquote>
Hey, don't knock Big Blue. Okay, so thin clients were a passing phase (for everyone except Larry Ellison), but IBM is doing some amazing work, particularly in storage technologies, and they've got some *incredibly* smart, intelligent, and dare I say beautiful people working on new processing technologies. :D And besides, the 1GB MicroDrive in my camera kicks ass. :)
[quote]But I digress. Mac OS X can communicate with UNIX servers natively, and Windows as well, so it's attractive to corporations looking to wean themselves off the Microsoft teat. Virtual PC can take care of laggard apps.<hr></blockquote>
This is another problem. If there is even the slightest hint that less people may be sucking on Microsoft's teats (Did you have to? I have this horrible image of Bill Gates breastfeeding) it'll pull out all the stops to prevent that from happening. And it has large scope for price reductions.
[quote]And if you don't require them...<hr></blockquote>
Ah, uh, um. Can't argue with that. :)
[quote]That's why Apple is building up their enterprise services in education. By the time their hardware platform goes 64 bit and OS X has had its rough spots ironed out, they should have built up some real experience handling and supporting big installations. The smart vertical-market and enterprise software vendors will take note of this. It doesn't take long at all to get up to speed in Cocoa, as you well know.<hr></blockquote>
Hmm, I'm still sceptical about just how much impact a 64-bit platform and the G5 will make. It's going to take a heck of a lot to persuade enterprises to switch, even if Apple does have all the pieces in place. And I'm not certain Apple has the necessary capital or expertise to get the service and support in place. There's certainly no indication such a plan to enter the enterprise market is currently in progress - I suspect there'd have been some fairly high profile new additions to Apple's board and workforce.

A word of advice though - if you truly believe Apple will do this, and make some sort of success out of it, start your own Cocoa-based development company now. You'll be able to retire within a couple of years. :)
[quote]Typical IBM: Compare the competition's offerings to something you'll deliver years from now.<hr></blockquote>
Ouchie. :) Well, I made the comparison to the "competition", so I deserved that. However, as far as I'm aware, there are only three labs around the world working on this stuff, and two are universities. We have a slight advantage. And it won't matter how many GHz Intel can achieve by then. :)

caele726

01-23-2002, 01:29 PM

<apple ad>

"Dude, you're getting a lobotomy..."

</apple ad>

Belle

01-23-2002, 01:47 PM

[quote]Originally posted by alcimedes:
hey belle, just off chance, which dell config did you come up with that was less than the new iMac in price w/a DVD burner?

i tried a few but didn't find any.<hr></blockquote>
Since I checked yesterday, things have changed. No free printer now, but free shipping, and the price of the DVD+RW drive has been reduced. Here we go:

Dell Dimension 4400 Series
Dimension® 4400 Series,Pentium® 4 Processor at 1.8 GHz

Price: $1,577.00

Pentium® 4 Processor at 1.8 GHz
256MB DDR SDRAM * 256M
Dell® Enhanced Quiet Key Keyboard
17 in (15.9 in viewable,.27dp) E771 Monitor *
64MB NVIDIA GeForce2 MX 4X AGP Graphics Card with TV-Out
40GB Ultra ATA/100 Hard Drive
3.5 in Floppy Drive
Microsoft® Windows® XP Home Edition *
MS IntelliMouse®
10/100 PCI Fast Ethernet NIC
56K PCI Data Fax Modem for Windows
DVD+RW/CD-RW Combo Drive
SB Live! Digital Sound Card
Harman Kardon Speakers
Microsoft® Works Suite 2002 with Money 2002 Standard
Norton Antivirus® 2002, 90-day introductory offer
Dell Jukebox powered by MusicMatch 6.0 for XP
Image Expert®2000 for XP, Dell Edition *
1Yr Ltd. Warranty- 1Yr At-Home Service + 1Yr Phone Support
Months of DellNet® by MSN Internet Access Included
APC SURGESTATION
Standard Dell Movie Studio Bundle for Windows XP

Which leaves you $222 to spend on a better monitor and hard disk, and still have enough left over for Sonic's MyDVD and a few DVD-Rs before you reach $1799.

I notice Dell doesn't currently have a 15in LCD display available, though I suspect that'll appear quite soon.

I'd still prefer an iMac, but there are many who'll go with Dell.

Jeez, one reason not to go with Dell - it forces you to buy a surge protector for $38. I can't remove it from the order?!

The one year limited warranty, "At Home" service and phone support will appeal to many also.

[ 01-23-2002: Message edited by: Belle ]

MacGregor

01-23-2002, 03:08 PM

Changing over to the enterprise market would require ALOT of preparation by Apple, not to mention a bit o' philosophy change. And what is more, it would have to be big, visible boardmember, marketed in your face change by Apple. Apple would have to invest so much money in people and infrastructure to deal with problems. Also enterprise wouldn't like to have to always wait for MWNY's to know whether they were getting new computers or not.

What I just keep wondering is ... what is the $4 billion going to be used for? I assume it has been held to support the retail stores and buy a few small companies once in awhile, but if the store turn a profit like is being expected, then Jobs has that cash available for something else. The iMac may not be making 30% for awhile, but they aren't going to lose money on it and I bet by next year they will still have a healthy margin of 25% or so.

Apple to get into enterprise would best partner with someone ... like IBM ... with whom it isn't competing in quite the same market, but from whom it could buy lots of processors!?!?

Amorph

01-23-2002, 04:45 PM

Belle wrote:

[quote]You and many, many others. It's a topic of conversation over many meals, usually accompanied by vicious assaults on VB.<hr></blockquote>

Of which there cannot be too many.

We'd count ourselves lucky to have to wrestle with VB, though. We're dealing with FoxPro.

FoxPro. In 2002. The mind boggles.

[quote]Out of interest, what tools are you using to write this replacement? I take it it's going to Windows?<hr></blockquote>

Borland C++ Builder. Initial target is Windows, because we have a big hairy deadline and that's are current platform. But we're writing as much as possible in ANSI C++ and isolating the GUI code so that we can port quickly and easily. The GUI will be described in XML and built dynamically rather than hardcoded.

Then we'll port to OS X and Linux (classic MacOS is unlikely, just because nobody in our field has Macs now, and if they bought Macs they'd come with OS X), because supporting Windows is a costly, bug-ridden, time-sucking PITA consisting of a multitude of platforms that seem always to be just different enough to give us a constant stream of grief, and as a non-profit we can't really afford that.

[quote]This may be the problem. Considering the investment required to put Apple in a position to make a viable attempt at capturing some of the enterprise market, it'll need to take it by storm. It's not so much getting the hardware and software up to spec, it's more the related support and services.

It costs a phenomenal amount to set up and maintain the kind of support and services required for the enterprise market.<hr></blockquote>

And that's exactly why Apple is targeting the education market first. They have time to build and test that infrastructure, and then they can go to enterprise customers and say, "look, we set up a wireless network of 75,000 CPUs and we've had them running smoothly for a year now. We can do the same for you."

That was the point of my post at badflamingo: If I'm reading this right, Apple is setting themselves up so that by the time their platform is enterprise ready, they'll have built up the services - which, as you note, are the most important part - and they'll be able to point to several large installations and a seasoned crew. They can take education by storm by treating school districts like enterprise customers, and then enter the business-enterprise market from that base of strength.

[quote]Meanwhile, Apple announced in its financial report that it's shedding "administrative" jobs, so if this is going to happen, it'll be some time a long way off.<hr></blockquote>

Certainly. I'm thinking this will happen over a period of a few years.

[quote]Hey, don't knock Big Blue.<hr></blockquote>

Try and stop me. :p

[quote]they've got some *incredibly* smart, intelligent, and dare I say beautiful people working on new processing technologies.<hr></blockquote>

I'll grant that they have at least one person matching that description. ;)

I'm not dissing IBM in toto. They do some great work, especially in research where all the stunningly beautiful, impossibly intelligent people are. ;) But there is a particularly well-known part of IBM that really should have been extincted by a certain meteorite a few million years ago.

[quote]This is another problem. If there is even the slightest hint that less people may be sucking on Microsoft's teats (Did you have to? I have this horrible image of Bill Gates breastfeeding) it'll pull out all the stops to prevent that from happening. And it has large scope for price reductions.<hr></blockquote>

And a government that will look the other way if they decide to start "competing" really aggressively. :rolleyes: That's really the biggest problem: flying under Microsoft's radar.

But if Apple "passively" grows enterprise market share by clearing their throats in the direction of corporations who are sick of Microsoft's licensing policies, what's Bill going to do? He's powerful, but there are companies that are as big or bigger than Microsoft is, or at least big enough to put the hurt on him if they wanted to.

Don't short Apple's aggressiveness, either, by the way. They attack bids like wolverines. Henrico County got millions of dollars in software for free - big software, too, not AppleWorks.

[quote]Hmm, I'm still sceptical about just how much impact a 64-bit platform and the G5 will make.<hr></blockquote>

Those are just icing: The last obstacles to adoption as an enterprise platform for some customers (some 3D, big databases like Oracle, mid- to heavy-duty server work). The cornerstone will be Apple's demonstrated ability to design, deploy and maintain large installations of machines, and that's what they're working on now. OS X running on 64- and 32-bit hardware, with highly compatible networking and several different RAD options, will just make the deal sweeter.

[quote]It's going to take a heck of a lot to persuade enterprises to switch, even if Apple does have all the pieces in place. And I'm not certain Apple has the necessary capital or expertise to get the service and support in place.<hr></blockquote>

A lot depends on factors outside of Apple, of course, including Microsoft. But Apple can't worry about that. What they can do is look as pretty as possible when they have all the pieces in place.

[quote]There's certainly no indication such a plan to enter the enterprise market is currently in progress - I suspect there'd have been some fairly high profile new additions to Apple's board and workforce.<hr></blockquote>

There's no point to their entering now. I consider their activity in education to be laying the groundwork for an eventual push into that market.

[quote]A word of advice though - if you truly believe Apple will do this, and make some sort of success out of it, start your own Cocoa-based development company now. You'll be able to retire within a couple of years.<hr></blockquote>

True. Time to start burning the midnight oil in earnest. :)

[quote]quote:Typical IBM: Compare the competition's offerings to something you'll deliver years from now.

Ouchie. <http://forums.appleinsider.com/cgi-bin/smile.gif> Well, I made the comparison to the "competition", so I deserved that.<hr></blockquote>

Never underestimate the power of corporate culture. :)

[quote]However, as far as I'm aware, there are only three labs around the world working on this stuff, and two are universities. We have a slight advantage. And it won't matter how many GHz Intel can achieve by then.<hr></blockquote>

Cool! Look forward to seeing it someday. :)

I suppose it's far too late for me to point out to myself that this whole thread has nothing to do with Future Hardware. Bad mod! No cookie!

[ 01-23-2002: Message edited by: Amorph ]

Chumley

01-23-2002, 06:31 PM

Who's Michael Dell? <img src="graemlins/hmmm.gif" border="0" alt="[Hmmm]" />

Chumley

01-23-2002, 06:35 PM

I know who Steve Jobs is, he's the dude who created the whole desktop computer thing and he wins Oscars too.

But who's Michael Dell?!

Wasn't he in Monty Python?

MacGregor

01-29-2002, 04:00 PM

According to reports from independent sources the new iMac has a larger number of pre-orders than the original iMac did. That doesn't ensure success, but it will keep Apple in the game for a few more years.

Also the Register is giving an objective opinion about the speed bumped PowerMacs as being very competitive workstations, and they don't give praise lightly....
<a href="http://www.theregister.co.uk/content/53/23851.html" target="_blank">http://www.theregister.co.uk/content/53/23851.html</a>

I think again this means that Apple's business model will be successful at keeping it profitable and all. It looks to me that there will have to be fundamental change within the industry as a whole before Apple will be able to expand its market percentage though.

For example, <a href="http://www.infosatellite.com/news/2001/11/h301101intel_boasts_usb.html" target="_blank">http://www.infosatellite.com/news/2001/11/h301101intel_boasts_usb.html</a>
This is partially Intel marketing, but as long as the Wintel monopoly stays in existence and both companies give unfair advantage to each other, Apple may only be able to exist as it is now.

The PC industry is in more than an economic downturn, it is in the stage of the sheepherders verses the cattlemen. Barbed wire is being laid down all over the PC range and people's choices are slowly and not in a suble way being reduced to the level of a McDonald's menu. Lots of stuff that looks like a choice, but all tastes the same.

I am hoping that Apple can thrive long enough to still be around when the free market and true innovation again drives the industry and not the other way around.

Barvow

01-30-2002, 12:01 AM

As just pointed out, iMac pre-orders are very heavy. I can't remember when I've felt more ready to spend money on Apple, and apparently that's happening all over, despite disappointments of the faithful about G5's or MX4
cards, etc. Since the iPod release in November, I've bought an iPod for myself and two for family members, a new iMac for my wife, and I'm about to order a 933 PM for myself. My son has ordered a new iMac for himself, and his Windows-using fiancee decided she wanted an iMac once she saw one at the Apple Store, so they're ordering another one.

We weren't computer-poor before doing this. All of us had good computers that still had some life in them. We don't make a habit of changing computers every so often just to keep up.

I know that a lot of people are waiting for bigger and better, but there must be plenty of us out there who feel the strong appeal of what Apple is offering now. My Windows-using work friends and extended family (many of whom own Dells) all think of computers in terms of what's the cheapest box that they can get away with buying. They've been conditioned by Dell to think that way, and that's not good for Dell in the long run.

Apple isn't aimed at that low-end market, even though they like to say they want that business (the other 95%). They really want (and need) people who will pay for the R&D. All the business model discussion in this thread aside, I think that most Apple users
know that they pay more for that, and the current orders on the iMac show that lots of people are willing to do just that.

[ 01-30-2002: Message edited by: Barvow ]

[ 01-30-2002: Message edited by: Barvow ]