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>
umm, yeah, ok...
how about you pull your ford festiva over and read this...
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.
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.
[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.
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.</strong><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.
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.</strong><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.
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.
[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.
<strong>I think you guys (and gal) are missing the point that Michael Dell was clumsily NOT trying to make, but did, which is[...]</strong><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.
<strong>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.</strong><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
<strong>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.</strong><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.
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).</strong><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:
<strong>Apple has to increase its customer base.</strong><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.
<strong>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.</strong><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.
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....
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.
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.
Comments
<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>
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.
<strong>
It ain't just software.</strong><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 ]</p>
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.
<strong>
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.</strong><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.
<strong>
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.</strong><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.
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.
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.
<strong>I think you guys (and gal) are missing the point that Michael Dell was clumsily NOT trying to make, but did, which is[...]</strong><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.
<strong>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.</strong><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.
<strong>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.</strong><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.
<strong>
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).</strong><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:
<strong>Apple has to increase its customer base.</strong><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.
<strong>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.</strong><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.
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....
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.
(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.