Mike Dell :"Confirmed: Apple is Outta Buisness" - Page 2

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.

[quote]Originally posted by blabla:
<strong>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.
</strong><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 The iMac was obsolete, the Powermac is obsolete.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.

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.

[quote]Originally posted by Fluffy:
<strong>Belle, I think we are arguing different sides of the same coin, or perhaps we aren't even in disagreement at all.</strong><hr></blockquote>
I think we are in agreement for the most part.
[quote]<strong>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.</strong><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]<strong>However, I don't think that this is what Dell is talking about. He seems to be saying that Apple needs to expand to &gt; 6% to continue doing what they are currently doing, and I disagree with that sentiment.</strong><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]<strong>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.</strong><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:
<strong>It was a 37% increase compared to the same quarter last year.</strong><hr></blockquote>
Yikes, don't use the first quarter of 2001 as a comparison. That was one of the darkest times since 1997.
[quote]<strong>Rumors are just that - rumors.</strong><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.

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

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

[ 01-19-2002: Message edited by: JLL ]</p>

[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 ]</p>

[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.

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.

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]" />

hope nobody said it yet...

" DUDE! YER GETTIN A DELL!"

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

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

SHUT UP!

[quote]Originally posted by koffedrnkr:
<strong>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.</strong><hr></blockquote>
2.9% market share! Some innovation!!!
<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" />

[quote]Originally posted by dstranathan:
<strong>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.</strong><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]" />

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 ]</p>

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

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

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

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.

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

[ 01-20-2002: Message edited by: JW Pepper ]</p>

Michael Dell is da man!

[quote]Originally posted by rbald:
<strong>
2.9% market share! Some innovation!!!
<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" /> </strong><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 ]</p>

[quote]Originally posted by koffedrnkr:
<strong>


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 ]</strong><hr></blockquote>

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

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

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

nope......

DUDE! I'm gettin' a G5!

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

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.

[quote]Originally posted by Belle:
<strong>
Dude, sometime in the summer or fall. You could get a Dell today. </strong><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 ]</p>

[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.

The flocking will begin!

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 ]</p>

[quote]Originally posted by VVVince:
<strong>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.</strong><hr></blockquote>

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

[quote]Originally posted by Belle:
<strong>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?</strong><hr></blockquote>

[quote]Originally posted by Belle:
<strong>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?</strong><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?

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

Anyone got it?

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

[quote]Originally posted by AirSluf:
<strong>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???</strong><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.

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.

[quote]Originally posted by Majuki:
<strong>
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.</strong><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 ]</p>

[quote]Originally posted by MacGregor:
<strong>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.</strong><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]<strong>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.</strong><hr></blockquote>
Boing! Exactly what Michael Dell says in the quote in the original post.