PC OEMs don't do the R&D... Remember, Apple does the OS, the hardware, the design of all the cases and mobos, the chip sets, the packaging, the marketing....etc. etc.... They literally *touch* everything, including the power supplies. The list goes on.
Dell, Gateway and others simply "repackage" components, mobos included, along with the Windoze OS...
The Dell’s, Gateways, and Compaqs of the world are specifically positioned to be low cost providers of repackaged components. None of them have to amortize software (OS) development costs (as well as many other R&D costs) in their prices. Apple does. As you can see, the PC market is extremely cutthroat with absolutely no brand-loyalty. People will simply buy the *cheapest* machine with the highest perceived *number* ratings / specs. during any given week. This is killing Gateway and it looks like Gateway is going to be the next to do a belly-up.
Apple at least provides a means to differentiate their products from the vast majority cookie-cutter Wintelon PC systems. But I would have guessed that this argument has been debated to death already. It's incredible that there are still a bunch of people out there that just don't get it.
Which is what Gil Amelio did when he was CEO. They arn't seperate companies, but the seperate divisions are forced to be financially independant.
I don't know what this guy is smoking, because here in Australia Apple is gaining big time in popularity (from anecdotal evidence and personal experience).
Barto</strong><hr></blockquote>
I dont know if I would call it BIG TIME, but yeah they are becomming more popular.
Whatever the three of you will like to think, just look at the R&D expenditures of Dell, IBM, Compaq-HP. They fall nicely in line with R&D expenditures of Apple. Dell itself, roundly criticised as a dumb box assembler, spends more money than Apple on R&D. Apple's R&D also yields an OS and exclusive apps; the others have to buy/license an OS on top of their R&D expenditures!
Component costs? When Apple cried wolf over RAM and LCD prices almost no major vendors registered even a blip on their retail prices and within months even faint rumblings of possible prices hikes had dissapeared along side further price drops. Even if Apple had built their iMacs to such a thin margin that they would register a loss with a slight increase in RAM or LCD costs (a line which is clearly bullshiat) that says more about Apple's business sense than mine. Who makes a 2000 dollar product that they're not sure will have enough margin? Gimme a break!
The rest is absolutely true. Do not other major vendors also pay VAT? Do they not also pay the going rate for components (often better specified ones)?
There is nothing in macs to make them more expensive except for the cases (which are superior) everything else in use on a mac costs the same money as teh stuff in use on PC's, and for a few key components like the CPU, actually costs quite a bit less than the fastest X86 parts.
I know the truth hurts, but it has nothing to do with my business sense or lack thereof. Those are the facts, look it up for yourselves if you doubt it.
I'd just like to point out one thing - with the exception of the last quarter, which was dealt a blow due to non-reoccurring costs, Apple seems to be the only PC manufacturer that consistently turns a profit.
That's just for all of you out there who claim that if you were running the company, cheaper boxes would be the way to go. Quarterly losses likely come with the deal. It doesn't matter how many you sell, look at Dell (which would have turned a hefty loss, had their accountants not been cooking the books.)
Ed M. and a few others see the pickle Apple is in trying to stay competitive. A maker of PC motherboards will likely produce over 20 times as many boards of a particular design as Apple does. So, if this company needs say 8 dollars a board to pay back all the development costs, Apple needs 160 dollars a board, if we assume engineering costs are the same. This kind of analysis would also shows a large burden for OS X, compared to the cost for an OS to any of the PC assembly houses. And this analysis applies to other items, such as the enclosure.
I'm not making excuses for Apple, but pointing out the facts. Sure, I believe there are things Apple can do to be more competitive, but even running a mean and clean operation they would be at a disadvantage. The only way out is for Apple to increase market share, so they can amortize development cost over a greater number of products. This is one reason market share IS important, very important. The other is to keep developers keenly interested in the OS X platform.
One question to ask is this. How many PC makers, with the same market share as Apple, will still be in business a year or two from now? Apple has no choice but to stay profitable, even if it means slowing or halting any growth for a while. The time for Apple to move for more market share aggressively, is when they have a killer product that can be priced more competitively. Can anyone say IBM 970?
Apple's costs are not significantly more, if they were, th profitability wouldn't be there. Personally I don't give a damn about Apple's profitability, I car about how much I have to pay for something and I don't care who gets run over to deliver a reaonable price to my door step.
There are plenty of reasons why computer makers are not as profitable as the could be, most of them have to do with piss poor investment over the last 5-10 years and a truly obscene amount of executive fat. Companies are actually quite profitable before the bills come in for all their execs and their pet projects. Price competition is just a convenient scape-goat, it isn't the reason why your average earnings per share so miserable.
<strong>Whatever the three of you will like to think, just look at the R&D expenditures of Dell, IBM, Compaq-HP. They fall nicely in line with R&D expenditures of Apple. Dell itself, roundly criticised as a dumb box assembler, spends more money than Apple on R&D. Apple's R&D also yields an OS and exclusive apps; the others have to buy/license an OS on top of their R&D expenditures!
</strong><hr></blockquote>
You are aware that both IBM and Compaq-HP both do quite a bit more than just build PCs right? In these other businesses there is quite a substatial R&D investment by both companies. In the last 4 quarters Dell has spent $447M on R&D. Apple spent $446M. As a percentage of sales Dells R&D was about 1.33% and Apples was 7.77%
You seem to be confused by some facts. Consider a computer made by Apple and one made by Dell. If the technology in both computers is equivalent , then it will require the same amount of R&D to make design both machines. To make up some numbers to make the point. Lets say it takes $100M of R&D to make either computer. In the case of the PC. Dell, Intel, Microsoft , and all the companies that makes parts all spend some of that $100M doing R&D. If the total sales for computers is 100 million and Apple has only 5% of that market then for every PC sold $ 1.05 pays off the R&D for that computer. While for every Apple sold $20.00 pays off the R&D. Again the numbers are made up and are somewhat extreme to illustrate the point. I am also pretty sure that I may have screwed up some of the math.
I also don't care if Apple makes a profit. However, companies that continually loose money eventually go out of business. Banks will only lend you so much money before they realize that they won't get it back and stop. Employees are kind of funny, because they like getting paid. When they don't get paid they go looking for work in other places. Imagine that, people who won't work for nothing. I also own a Mac and would like to buy a faster one some day. If Apple is out of business I won't be able to buy one. So even though I don't care if Apple makes any money, the fact that they do or not does affect me.
Mac prices in Russia are $200-400 higher than in US. It's critical for such a country because you can buy a white no-name box (Pentium 4/1.7GHz/256MB PC133/20GB ATA133/P4X333/SB/32MB Abit GeForce2 MX) for measly $406 or HP Compaq Pentium 4/2.4GHz/256MB PC2100 DDR SDRAM/40GB/CD-RW/10/100 Eth, WinXP Pro) for $1211. It's very hard to convince customers to switch if they don't decide to see the difference for themselves.
Sometimes, especially in poor countries, the only means to sell a computer is to lower its price. I think Apple should compensate the dropped G3 iMac with a cheap 1GHz G3 headless box to please home users and (which is downright obvious) introduce a G5 as soon as possible for pros. I do hope Steve knows it.
Apple also does more than make computers. Fact is they aren't the only company spending lots of money on R&D, far from it. R&D as a percentage of totalsales is meaningless, sell more boxes and you can distribute that cost over more units. Dell being Able to have R&D be a smaller part of overall costs while simultaneously spending more tells me that they're doing something right. That Apple's R&D cost per unit is higher only means that they aren't selling as many boxes as they should. Don't forget that Dell still has to pay a windows licence for every box sold (on top of their R&D cost), Apple's R&D includes the OS. There's is nothing in a mac to make it so much more expensive than a PC, a non-biased look at expenditures in R&D, the delivery channel, and component costs bears it out quite convincingly. If people choose not to see that, I can't help it.
Dell's R&D was 1.33% and Apple's was 7.77% last quarter.</strong><hr></blockquote>
That doesn't make a differance, it doesn't matter if it is 1% or 99.9999% the PC vendors still spend more on R&D than Apple does, there is no other way you can spin that!
Critical Mass is what is important, Nothing else.
Your idea of R&D would have made me as a child a bigger spender than IBM, because I spent almost all my money buying parts trying to upgrade old radios,
There is nothing in macs to make them more expensive except for the cases (which are superior) everything else in use on a mac costs the same money as teh stuff in use on PC's, and for a few key components like the CPU, actually costs quite a bit less than the fastest X86 parts.
</strong><hr></blockquote>
I',m sure the same holds true for a lot, like Bose for example. But I'll take a set of Bose over most any brand. Tommy Hilfiger clothes arent made with different fabrics and yet they are popular. I can go on and on. Also, as noted by a few, your business skills are limited. Whne you're a small company selling a small amount of product, it has to be slightly higher to cover expenses. Supply and demand, if Apple was selling millions of machines (like Dell) they could lower their prices because of the quanity being sold. They don't so they can't, that's why they are a niche, like Bose and Bang Wolfsen.
That doesn't make a differance, it doesn't matter if it is 1% or 99.9999% the PC vendors still spend more on R&D than Apple does, there is no other way you can spin that!</strong><hr></blockquote>
I guess that Michael Dell is wrong when he slams Apple for using six times as much money on R&D than he does.
R&D as a percentage of sales is how you measure it.
And if you want to look at it by the dollar: how many models are Apple making? How many are Dell making?
Who spends the most per model?
And what do you mean by 'PC vendors'? You can't take the numbers from HP and IBM directly since they are making much more than just PCs.
<strong>Apple at least provides a means to differentiate their products from the vast majority cookie-cutter Wintelon PC systems. But I would have guessed that this argument has been debated to death already. It's incredible that there are still a bunch of people out there that just don't get it.
--
Ed M.</strong><hr></blockquote>
Nicely done, Ed, you make excellent points and I hope people understand why Apple is just different. If they wanted to compete with the Wintel's of the world, they would probably be in the same boat as Gateway...
Comments
Dell, Gateway and others simply "repackage" components, mobos included, along with the Windoze OS...
The Dell’s, Gateways, and Compaqs of the world are specifically positioned to be low cost providers of repackaged components. None of them have to amortize software (OS) development costs (as well as many other R&D costs) in their prices. Apple does. As you can see, the PC market is extremely cutthroat with absolutely no brand-loyalty. People will simply buy the *cheapest* machine with the highest perceived *number* ratings / specs. during any given week. This is killing Gateway and it looks like Gateway is going to be the next to do a belly-up.
Apple at least provides a means to differentiate their products from the vast majority cookie-cutter Wintelon PC systems. But I would have guessed that this argument has been debated to death already. It's incredible that there are still a bunch of people out there that just don't get it.
--
Ed M.
<strong>
Which is what Gil Amelio did when he was CEO. They arn't seperate companies, but the seperate divisions are forced to be financially independant.
I don't know what this guy is smoking, because here in Australia Apple is gaining big time in popularity (from anecdotal evidence and personal experience).
Barto</strong><hr></blockquote>
I dont know if I would call it BIG TIME, but yeah they are becomming more popular.
<strong>
Dell, Gateway and others simply "repackage" components, mobos included, along with the Windoze OS...
</strong><hr></blockquote>
And they've also "borrowed" some of Apple's innovations...
Component costs? When Apple cried wolf over RAM and LCD prices almost no major vendors registered even a blip on their retail prices and within months even faint rumblings of possible prices hikes had dissapeared along side further price drops. Even if Apple had built their iMacs to such a thin margin that they would register a loss with a slight increase in RAM or LCD costs (a line which is clearly bullshiat) that says more about Apple's business sense than mine. Who makes a 2000 dollar product that they're not sure will have enough margin? Gimme a break!
The rest is absolutely true. Do not other major vendors also pay VAT? Do they not also pay the going rate for components (often better specified ones)?
There is nothing in macs to make them more expensive except for the cases (which are superior) everything else in use on a mac costs the same money as teh stuff in use on PC's, and for a few key components like the CPU, actually costs quite a bit less than the fastest X86 parts.
I know the truth hurts, but it has nothing to do with my business sense or lack thereof. Those are the facts, look it up for yourselves if you doubt it.
That's just for all of you out there who claim that if you were running the company, cheaper boxes would be the way to go. Quarterly losses likely come with the deal. It doesn't matter how many you sell, look at Dell (which would have turned a hefty loss, had their accountants not been cooking the books.)
I'm not making excuses for Apple, but pointing out the facts. Sure, I believe there are things Apple can do to be more competitive, but even running a mean and clean operation they would be at a disadvantage. The only way out is for Apple to increase market share, so they can amortize development cost over a greater number of products. This is one reason market share IS important, very important. The other is to keep developers keenly interested in the OS X platform.
One question to ask is this. How many PC makers, with the same market share as Apple, will still be in business a year or two from now? Apple has no choice but to stay profitable, even if it means slowing or halting any growth for a while. The time for Apple to move for more market share aggressively, is when they have a killer product that can be priced more competitively. Can anyone say IBM 970?
There are plenty of reasons why computer makers are not as profitable as the could be, most of them have to do with piss poor investment over the last 5-10 years and a truly obscene amount of executive fat. Companies are actually quite profitable before the bills come in for all their execs and their pet projects. Price competition is just a convenient scape-goat, it isn't the reason why your average earnings per share so miserable.
<strong>Whatever the three of you will like to think, just look at the R&D expenditures of Dell, IBM, Compaq-HP. They fall nicely in line with R&D expenditures of Apple. Dell itself, roundly criticised as a dumb box assembler, spends more money than Apple on R&D. Apple's R&D also yields an OS and exclusive apps; the others have to buy/license an OS on top of their R&D expenditures!
</strong><hr></blockquote>
You are aware that both IBM and Compaq-HP both do quite a bit more than just build PCs right? In these other businesses there is quite a substatial R&D investment by both companies. In the last 4 quarters Dell has spent $447M on R&D. Apple spent $446M. As a percentage of sales Dells R&D was about 1.33% and Apples was 7.77%
You seem to be confused by some facts. Consider a computer made by Apple and one made by Dell. If the technology in both computers is equivalent , then it will require the same amount of R&D to make design both machines. To make up some numbers to make the point. Lets say it takes $100M of R&D to make either computer. In the case of the PC. Dell, Intel, Microsoft , and all the companies that makes parts all spend some of that $100M doing R&D. If the total sales for computers is 100 million and Apple has only 5% of that market then for every PC sold $ 1.05 pays off the R&D for that computer. While for every Apple sold $20.00 pays off the R&D. Again the numbers are made up and are somewhat extreme to illustrate the point. I am also pretty sure that I may have screwed up some of the math.
I also don't care if Apple makes a profit. However, companies that continually loose money eventually go out of business. Banks will only lend you so much money before they realize that they won't get it back and stop. Employees are kind of funny, because they like getting paid. When they don't get paid they go looking for work in other places. Imagine that, people who won't work for nothing. I also own a Mac and would like to buy a faster one some day. If Apple is out of business I won't be able to buy one. So even though I don't care if Apple makes any money, the fact that they do or not does affect me.
Sometimes, especially in poor countries, the only means to sell a computer is to lower its price. I think Apple should compensate the dropped G3 iMac with a cheap 1GHz G3 headless box to please home users and (which is downright obvious) introduce a G5 as soon as possible for pros. I do hope Steve knows it.
<strong>Do not other major vendors also pay VAT?</strong><hr></blockquote>
Noone ever said anything else (except it's the consumers who pay the VAT, not the vendor).
Here in Denmark the VAT is 25% and a Mac is (including VAT) is 32-35% more expensive than in the US (excluding VAT).
BUT, so is a Dell, HP and so on.
[ 12-30-2002: Message edited by: JLL ]</p>
<strong>PC OEMs don't do the R&D...</strong><hr></blockquote>
Soooo, if the PC vendors aren't doing R&D then why are they spending more money on it than Apple does?
Is it a scam?
Are they really spending the money on cocaine and hookers?
Lemon Bon Bon
<strong>
Soooo, if the PC vendors aren't doing R&D then why are they spending more money on it than Apple does?</strong><hr></blockquote>
They don't!!
Dell's R&D was 1.33% and Apple's was 7.77% last quarter.
<strong>R&D as a percentage of totalsales is meaningless</strong><hr></blockquote>
That's how you look at it - perhaps you should take some business courses.
[quote]Originally posted by Matsu:
<strong>Don't forget that Dell still has to pay a windows licence for every box sold</strong><hr></blockquote>
No they don't. You pay that (including a profit for Dell) and it's even specified on your price list.
[ 12-30-2002: Message edited by: JLL ]</p>
<strong>
They don't!!
Dell's R&D was 1.33% and Apple's was 7.77% last quarter.</strong><hr></blockquote>
That doesn't make a differance, it doesn't matter if it is 1% or 99.9999% the PC vendors still spend more on R&D than Apple does, there is no other way you can spin that!
Critical Mass is what is important, Nothing else.
Your idea of R&D would have made me as a child a bigger spender than IBM, because I spent almost all my money buying parts trying to upgrade old radios,
<strong>
There is nothing in macs to make them more expensive except for the cases (which are superior) everything else in use on a mac costs the same money as teh stuff in use on PC's, and for a few key components like the CPU, actually costs quite a bit less than the fastest X86 parts.
</strong><hr></blockquote>
I',m sure the same holds true for a lot, like Bose for example. But I'll take a set of Bose over most any brand. Tommy Hilfiger clothes arent made with different fabrics and yet they are popular. I can go on and on. Also, as noted by a few, your business skills are limited. Whne you're a small company selling a small amount of product, it has to be slightly higher to cover expenses. Supply and demand, if Apple was selling millions of machines (like Dell) they could lower their prices because of the quanity being sold. They don't so they can't, that's why they are a niche, like Bose and Bang Wolfsen.
<strong>
That doesn't make a differance, it doesn't matter if it is 1% or 99.9999% the PC vendors still spend more on R&D than Apple does, there is no other way you can spin that!</strong><hr></blockquote>
I guess that Michael Dell is wrong when he slams Apple for using six times as much money on R&D than he does.
R&D as a percentage of sales is how you measure it.
And if you want to look at it by the dollar: how many models are Apple making? How many are Dell making?
Who spends the most per model?
And what do you mean by 'PC vendors'? You can't take the numbers from HP and IBM directly since they are making much more than just PCs.
<strong>Apple at least provides a means to differentiate their products from the vast majority cookie-cutter Wintelon PC systems. But I would have guessed that this argument has been debated to death already. It's incredible that there are still a bunch of people out there that just don't get it.
--
Ed M.</strong><hr></blockquote>
Nicely done, Ed, you make excellent points and I hope people understand why Apple is just different. If they wanted to compete with the Wintel's of the world, they would probably be in the same boat as Gateway...
<strong>...like Bose and Bang Wolfsen.</strong><hr></blockquote>
You meant, <a href="http://www.bang-olufsen.com/"; target="_blank">Bang & Olufsen</a>, right? I agree.