This guy claims that Apple is flat out lying for stating that the price drop on the Shuffle caused the SLIGHT margin decline because he believes it is the MacBook Air.
What utter hogwash. Apple, and the senior management, have a fiduciary responsibility to the shareholders, they can't just tell an outright lie, and would not risk doing so.
Just because this moron wants to convince himself that he, standing on the outside looking in, has a better knowledge of Apple's financial operations does not make it so!
Well said.
Apple offered several explanations as to the decline of margin.
There is no way that the decline was due to the MacBook Air. That thing is so obviously one of Apple's highest margin machines! It's competitively priced relative to PC ultraportables, but that's because the ultraportable market as a whole is a niche market, and mainstream PC manufacturers rely on those niche markets to increase margins. It's like the Mac Pro - is that a low margin machine? No, but it's still cheaper than Dell's workstations because Dell can't afford to lower the margins on those; it's not a high-volume market, Dell uses the high margins on its workstations to subsidise the ultra-thin margins on its cheaper desktops.
The initial release of a $600 iPhone completely negates your comments. How was that pricing competitive - only to drop $200 in less than 3 months?
If you read my post, I did say often, not always. To say that the iPhone "completely negates" my assertion is a little odd. Rather, I would say it is the exception that proves the rule. Tell me Apple's other big price drops soon after introduction...
I'm just working from casual memory here, but it seems to me they usually (almost always) wait for a revision to bring the prices down. Even then, they often* do not bring the price down, they just upgrade the specs and keep the price. This has led to a lot of wailing on these boards about Apple not offering competitive low end products, but that is a separate discussion...
The initial release of a $600 iPhone completely negates your comments. How was that pricing competitive - only to drop $200 in less than 3 months?
While I thought the quick price drop was a bit soon, pricing a new product steeply and reducing later it is a common practice, although it's often done a little differently. This might be called the "early adopter tax" and it's unfortunately levied by a lot of companies.
None of those brands necessarily make the cheap ultraportables either. A lot of the people begging for a cheap Air either confuse the Air with the EEE & XO, or confuse the Air with the $400 Walmart specials - both of which is completely silly. It seems much of it is driven by an indifference to what makes the Air a completely different class of device, as if it's just too subtle to them.
I agree completely.
I was talking in general about pricing trends, not specifically about the Air. If it is a runaway success, however, you can be sure that all the manufacturers will have thin aluminum computers out there and they will be beating each other over the head with deals, coupons and discounts while Apple stays above the fray...
Perhaps that's because you don't understand manufacturing and sales?
With both the Playstation I and II, when technological advances allowed for it, Sony released far slimmer versions with the same capabilities. Likewise, advances in technology has allowed Apple to make 2006's computer components (processor, motherboard) much smaller. The only difference is, Sony sold their far slimmer Playstations for considerably less than the original bulkier models, while Apple charges twice as much, and removes half the capabilities in the process.
'Course, it sucks for anyone who wants to buy a cheep super portable by Apple, but it should make the stock holders happy in the long run...
It is difficult to be both a shareholder and a customer at the same time because they have almost completely opposite interests. Customers care about reasonable prices and long term support for the things they purchase. But shareholders only care about bringing in money, fat margins, and high revenue above anything else. If Apple sells something for a reasonable price, it makes prospective customers happy but shareholders start worrying about profit margins. One would almost think that shareholders actually want Apple to price gouge its customers. How many of these guys analyzing Apple stocks even buy a Mac?
As for cannibalization, wasn't it an Apple's executive who said "Better to cannibalize ourselves than for other companies to take our business"?
It is difficult to be both a shareholder and a customer at the same time because they have almost completely opposite interests...
I know what you mean, but it's never really bothered me. I have a significant aapl position(not hedge fund significant, but a few years of income for some people), and I buy my share of Apple stuff. Some of the stuff is priced a little high, like the big classic and some AppleCare. But the last thing I'd want to see is more discounting than they periodically do now. Things are priced within reason. There's definitely an aapl surcharge on everything from RAM to Time Capsules, which is to be expected.
A big part of the recent success is retail - Apple stores look right at home next to Burberry and Louis Vuitton. Cut prices too much and the stores lose that image.
While I thought the quick price drop was a bit soon, pricing a new product steeply and reducing later it is a common practice, although it's often done a little differently. This might be called the "early adopter tax" and it's unfortunately levied by a lot of companies.
"A little differently"?-May I have another example where a product was dropped 1/3rd of it's inititial price in less than 3 months? It was not ony the shortness of the drop but more importantly the amount/percentage of the price reduction itself.
I'd like a smaller bezel around the Air, since the keyboard could remain full-size. However:
* I notice I already ALMOST touch the screen when opening and re-adjusting the lid. With a smaller bezel I would be touching it--which I'd rather not be doing.
* A smaller bezel on all 4 sides would make a much smaller machine--and it can't get any smaller--unless they also made it thicker and/or used a brick shape instead of tapered every which way like it is now (which I like a lot). No thanks.
Still, it's bound to happen--eventually. Things do keep shrinking!
I'd like a smaller bezel around the Air, since the keyboard could remain full-size. However:
* I notice I already ALMOST touch the screen when opening and re-adjusting the lid. With a smaller bezel I would be touching it--which I'd rather not be doing.
* A smaller bezel on all 4 sides would make a much smaller machine--and it can't get any smaller--unless they also made it thicker and/or used a brick shape instead of tapered every which way like it is now (which I like a lot). No thanks.
Still, it's bound to happen--eventually. Things do keep shrinking!
There is stuff that goes into the tapered volume. The antennas, wiring, IR reciever, both wireless modules, latches, ports, camera and even the battery seems to go into the taper a bit. Some But maybe the taper could be a bit steeper.
He probably means it's as slow as the same parts from circa 2006.
But it's still hardly the same parts. Regular notebook chips of any generation aren't all that special, but the LV chips either seem to need to use a different fab process to make, or be one of a low number of rare chips that's low power enough for the bin. I know some people can't read any more than spec numbers, but it's not that hard.
Maybe Apple is pocketing half the price, but we don't know, but not much else out there that compares. There certainly aren't a whole lot of similar ultraportables that are priced significantly less. There are plenty of them that cost more despite being much slower. The closest comparable model to the Air is the Thinkpad X61s, and it's not much less expensive, about $300 less.
Apple offered several explanations as to the decline of margin.
There is no way that the decline was due to the MacBook Air. That thing is so obviously one of Apple's highest margin machines! It's competitively priced relative to PC ultraportables, but that's because the ultraportable market as a whole is a niche market, and mainstream PC manufacturers rely on those niche markets to increase margins. It's like the Mac Pro - is that a low margin machine? No, but it's still cheaper than Dell's workstations because Dell can't afford to lower the margins on those; it's not a high-volume market, Dell uses the high margins on its workstations to subsidise the ultra-thin margins on its cheaper desktops.
While I thought the quick price drop was a bit soon, pricing a new product steeply and reducing later it is a common practice, although it's often done a little differently. This might be called the "early adopter tax" and it's unfortunately levied by a lot of companies.
It's usually done to pay the R&D off up front. It's decided that a certain number of machines will bear the brunt of the costs. Once that number has been sold, and most of the R&D paid down, the priced is dropped by that amount. There may be another price drop later as a manufacturing price drop approaches. Then the cycle starts again with the next model.
Comments
Oh please.
This guy claims that Apple is flat out lying for stating that the price drop on the Shuffle caused the SLIGHT margin decline because he believes it is the MacBook Air.
What utter hogwash. Apple, and the senior management, have a fiduciary responsibility to the shareholders, they can't just tell an outright lie, and would not risk doing so.
Just because this moron wants to convince himself that he, standing on the outside looking in, has a better knowledge of Apple's financial operations does not make it so!
Well said.
Apple offered several explanations as to the decline of margin.
There is no way that the decline was due to the MacBook Air. That thing is so obviously one of Apple's highest margin machines! It's competitively priced relative to PC ultraportables, but that's because the ultraportable market as a whole is a niche market, and mainstream PC manufacturers rely on those niche markets to increase margins. It's like the Mac Pro - is that a low margin machine? No, but it's still cheaper than Dell's workstations because Dell can't afford to lower the margins on those; it's not a high-volume market, Dell uses the high margins on its workstations to subsidise the ultra-thin margins on its cheaper desktops.
Same here. I was ready to buy some more today and benefit from the usual post-conference-call-plummeting... this is highly irritating.
I'm sure you'll see another $20-35 dip, at least, some time between now and Christmas. Patience pays!
(by "sure" I mean maybe there's a good chance that might happen, and I suspect it will)
I have to say I'm shocked the stock is up today. I would have expected something more like this.
Although the cartoon is boring, it's more or less accurate.
Maybe often , but certainly not always.
The initial release of a $600 iPhone completely negates your comments. How was that pricing competitive - only to drop $200 in less than 3 months?
If you read my post, I did say often, not always. To say that the iPhone "completely negates" my assertion is a little odd. Rather, I would say it is the exception that proves the rule. Tell me Apple's other big price drops soon after introduction...
I'm just working from casual memory here, but it seems to me they usually (almost always) wait for a revision to bring the prices down. Even then, they often* do not bring the price down, they just upgrade the specs and keep the price. This has led to a lot of wailing on these boards about Apple not offering competitive low end products, but that is a separate discussion...
*Please note, I said "often"
Maybe often , but certainly not always.
The initial release of a $600 iPhone completely negates your comments. How was that pricing competitive - only to drop $200 in less than 3 months?
While I thought the quick price drop was a bit soon, pricing a new product steeply and reducing later it is a common practice, although it's often done a little differently. This might be called the "early adopter tax" and it's unfortunately levied by a lot of companies.
I'm sure you'll see another $20-35 dip, at least, some time between now and Christmas. Patience pays!
No doubt you are probably right. Except that it will be of little use if AAPL is up $50 when that dip comes...
None of those brands necessarily make the cheap ultraportables either. A lot of the people begging for a cheap Air either confuse the Air with the EEE & XO, or confuse the Air with the $400 Walmart specials - both of which is completely silly. It seems much of it is driven by an indifference to what makes the Air a completely different class of device, as if it's just too subtle to them.
I agree completely.
I was talking in general about pricing trends, not specifically about the Air. If it is a runaway success, however, you can be sure that all the manufacturers will have thin aluminum computers out there and they will be beating each other over the head with deals, coupons and discounts while Apple stays above the fray...
Perhaps that's because you don't understand manufacturing and sales?
With both the Playstation I and II, when technological advances allowed for it, Sony released far slimmer versions with the same capabilities. Likewise, advances in technology has allowed Apple to make 2006's computer components (processor, motherboard) much smaller. The only difference is, Sony sold their far slimmer Playstations for considerably less than the original bulkier models, while Apple charges twice as much, and removes half the capabilities in the process.
Although the cartoon is boring, it's more or less accurate.
Cut me some slack SpamSammy. Cartoonist is like my 5th career.
Cut me some slack SpamSammy. Cartoonist is like my 5th career.
Hope the first 4 careers paid well, cause this one ain't lol .
Hope the first 4 careers paid well, cause this one ain't lol .
I actually had high hopes for my bitstrips characters....
'Course, it sucks for anyone who wants to buy a cheep super portable by Apple, but it should make the stock holders happy in the long run...
It is difficult to be both a shareholder and a customer at the same time because they have almost completely opposite interests. Customers care about reasonable prices and long term support for the things they purchase. But shareholders only care about bringing in money, fat margins, and high revenue above anything else. If Apple sells something for a reasonable price, it makes prospective customers happy but shareholders start worrying about profit margins. One would almost think that shareholders actually want Apple to price gouge its customers. How many of these guys analyzing Apple stocks even buy a Mac?
As for cannibalization, wasn't it an Apple's executive who said "Better to cannibalize ourselves than for other companies to take our business"?
It is difficult to be both a shareholder and a customer at the same time because they have almost completely opposite interests...
I know what you mean, but it's never really bothered me. I have a significant aapl position(not hedge fund significant, but a few years of income for some people), and I buy my share of Apple stuff. Some of the stuff is priced a little high, like the big classic and some AppleCare. But the last thing I'd want to see is more discounting than they periodically do now. Things are priced within reason. There's definitely an aapl surcharge on everything from RAM to Time Capsules, which is to be expected.
A big part of the recent success is retail - Apple stores look right at home next to Burberry and Louis Vuitton. Cut prices too much and the stores lose that image.
It's hardly the same parts, but then, you wouldn't be saying that sort of thing if you actually knew what you were talking about.
He probably means it's as slow as the same parts from circa 2006.
While I thought the quick price drop was a bit soon, pricing a new product steeply and reducing later it is a common practice, although it's often done a little differently. This might be called the "early adopter tax" and it's unfortunately levied by a lot of companies.
"A little differently"?-May I have another example where a product was dropped 1/3rd of it's inititial price in less than 3 months? It was not ony the shortness of the drop but more importantly the amount/percentage of the price reduction itself.
* I notice I already ALMOST touch the screen when opening and re-adjusting the lid. With a smaller bezel I would be touching it--which I'd rather not be doing.
* A smaller bezel on all 4 sides would make a much smaller machine--and it can't get any smaller--unless they also made it thicker and/or used a brick shape instead of tapered every which way like it is now (which I like a lot). No thanks.
Still, it's bound to happen--eventually. Things do keep shrinking!
I'd like a smaller bezel around the Air, since the keyboard could remain full-size. However:
* I notice I already ALMOST touch the screen when opening and re-adjusting the lid. With a smaller bezel I would be touching it--which I'd rather not be doing.
* A smaller bezel on all 4 sides would make a much smaller machine--and it can't get any smaller--unless they also made it thicker and/or used a brick shape instead of tapered every which way like it is now (which I like a lot). No thanks.
Still, it's bound to happen--eventually. Things do keep shrinking!
There is stuff that goes into the tapered volume. The antennas, wiring, IR reciever, both wireless modules, latches, ports, camera and even the battery seems to go into the taper a bit. Some But maybe the taper could be a bit steeper.
He probably means it's as slow as the same parts from circa 2006.
But it's still hardly the same parts. Regular notebook chips of any generation aren't all that special, but the LV chips either seem to need to use a different fab process to make, or be one of a low number of rare chips that's low power enough for the bin. I know some people can't read any more than spec numbers, but it's not that hard.
Maybe Apple is pocketing half the price, but we don't know, but not much else out there that compares. There certainly aren't a whole lot of similar ultraportables that are priced significantly less. There are plenty of them that cost more despite being much slower. The closest comparable model to the Air is the Thinkpad X61s, and it's not much less expensive, about $300 less.
Well said.
Apple offered several explanations as to the decline of margin.
There is no way that the decline was due to the MacBook Air. That thing is so obviously one of Apple's highest margin machines! It's competitively priced relative to PC ultraportables, but that's because the ultraportable market as a whole is a niche market, and mainstream PC manufacturers rely on those niche markets to increase margins. It's like the Mac Pro - is that a low margin machine? No, but it's still cheaper than Dell's workstations because Dell can't afford to lower the margins on those; it's not a high-volume market, Dell uses the high margins on its workstations to subsidise the ultra-thin margins on its cheaper desktops.
How is it obvious?
While I thought the quick price drop was a bit soon, pricing a new product steeply and reducing later it is a common practice, although it's often done a little differently. This might be called the "early adopter tax" and it's unfortunately levied by a lot of companies.
It's usually done to pay the R&D off up front. It's decided that a certain number of machines will bear the brunt of the costs. Once that number has been sold, and most of the R&D paid down, the priced is dropped by that amount. There may be another price drop later as a manufacturing price drop approaches. Then the cycle starts again with the next model.