It may seem as though Apple have more money than they need, but that money gives them lower interest rates and a better credit rating. Also, from a dividend perspective, they are still an infant company. When they've had ten solid years of steady dividend increases, then they will have built a reputation for consistency. I think that Microsoft still has a slightly better credit rating than them due to this.
My friend, Jeffery Schlbobnick, just came back from a shopping trip to the Apple Store. He looked at a MacBook Air and said to the salesperson, "Wow, a thousand bucks, that seems like a lotta dough for an entry-level machine..." The salesperson replied, "Well, Apple has an excellent credit rating." For some reason Jeffery didn't understand how that would benefit him, so he asked me.
I told him to ask you.
(Just kidding around! )
Is your friend, Schlbobnick, related to BobSchlob by any chance?
My friend, Jeffery Schlbobnick, just came back from a shopping trip to the Apple Store. He looked at a MacBook Air and said to the salesperson, "Wow, a thousand bucks, that seems like a lotta dough for an entry-level machine..." The salesperson replied, "Well, Apple has an excellent credit rating." For some reason Jeffery didn't understand how that would benefit him, so he asked me.
I told him to ask you.
(Just kidding around! )
Allow me give you a real-life, rather than a made-up, dialog between an Apple salesperson and a prospective (Windows switcher) buyer. This was overheard by me as I was waiting 35 minutes for a Genius to swap out my battery (which was fully covered by Apple's free iPhone 5 defective battery replacement program, one full year after my 1 year warranty expired).
I'm going to leave out the sales pitch, which makes this short story even shorter, because the OS, UI and HW sold itself. When the prospective buyer balked at the price of the entry-level MBAir he was interested in, comparing it to his Dell/Windows laptop that died after 2 years, the salesperson asked if he knew about how well Apple devices retain their value. To prove his point, the salesperson logged onto eBay, on the very same Air he was interested in, and proceeded to show him how much 3 year old MBAirs and Pros were selling for on the used market. The buyer then said, quite matter-of-fact-ly: 'Really…wow...that's all I needed to know, I'll take it."
Each of the paragraphs above showcase the value that is built into every Apple device. These two reasons, alone, are enough to keep me an Apple lover.
Owning a lot of AAPL shares since 1997 is another.
No matter how clearly one can explain it to her, I don't think there will ever come a day that she'll understand any of this. And by responding, she's only digging herself deeper.
No matter how clearly one can explain it to her, I don't think there will ever come a day that she'll understand any of this. And by responding, she's only digging herself deeper.
Today I was involved in a discussion about how often people, usually unintentionally, base their preferences and decisions on erroneous information. They then argue in defence of their view using flawed logic.
That's what's happening here. I wouldn't care, but for the fact that some here are trying to impugn my arguments and reputation based on flawed reasoning. I joked about at first, but today I decided that I resent that.
Dickprinter: Do you think the iPhone 5 replacement battery program was a result of Apple having high profit margins? Do you think the program would not exist if Apple's profit margins were 20% instead of 35-40%? Of course not.
Dickprinter, would the resale value that persuaded the man in the Apple Store to buy a MacBook Air have been adversely affected if Apple's profit margins were 20% instead of 33%? Of course not.
Philboogie, I don't appreciate the dismissive attitude, particularly since it seems like you are the one who "doesn't get it." Do you have something constructive to offer in response to the question "How are Apple's high profit margins a benefit to the BUYER?" You haven't so far. Why do you suppose that is? Maybe because what is painfully clear to everyone except Apple fans is that the obvious is true.
To all those who said high margins result in better products: bullshit. Apple is extremely frugal, and that approach applies not only to manufacturing and distribution but extends to R&D as well. It has been reported on this very forum that Apple spends, in relative comparison, LESS on R&D than its competitors. If you don't believe it, all you have to do is compare gross margins to net. If Apple was spending more of that profit than do other companies on making your life happier, the difference between gross and net would be closer to 50% like most companies, rather than net being 2/3 of gross as it is at Apple. They are, obviously, NOT spending that extra money on R&D, so that argument is out. Next?
TL;dr: Coming up with examples of why you like Apple is NOT the same as explaining how much-higher-than-usual profit margins are a benefit to the BUYER. Don't accuse me of "not getting it" when you can't come up with a cogent argument.
Dickprinter: Do you think the iPhone 5 replacement battery program was a result of Apple charging you a price that included a margin between 35-40%, or do you think it was in response to a trend that had the potential to turn into a PR and legal nightmare that they chose to head off voluntarily, on their own terms, before they were forced to abide by court-mandated conditions? Do you think the program would not exist if Apple's profit margins were lower? Of course not.
Dickprinter, would the resale value that persuaded the man in the Apple Store to buy a MacBook Air have been adversely affected if Apple's profit margins were 20% instead of 30%? Of course not.
Apple is extremely frugal, and that approach applies not only to manufacturing and distribution but extends to R&D as well.
Just to set the record straight, I was not trying to call into question your argument or mar your reputation. You have one side of the argument and I'm just trying to give you another side (mine), backed up by two real-world examples.
I think the battery replacement program was not only to control PR but more so to recognize and correct a component problem, which was at a slightly higher rate than would be considered an anomaly, and because the rate of failure was higher than Apple's standards…..but lower than a competitors. Do I think Samsung or other competitors would do the same thing if there was a higher than normal (same as what Apple is seeing) component failure rate? No, not at the "very small percentage (rate) of early iPhone5 buyers" in the words of Apple. Do Apple's margins allow this decision to be made easier? Yes, I think so. I feel the extra margin Apple commands allows them to pull the trigger a lot sooner (at a much lower threshold) than their competitors. I feel this is a luxury afforded to their users by Apple because of their high profit margin. (Kind of like insurance)
Price and value are based on perception. I feel that Apple's premium prices directly effect the resale price. It's a recalibration (in the mind of the buyer) of the perceived value of the device. Mercedes achieves this, BMW also, along with a few other auto manufacturers. The major Japanese Auto companies made a brilliant break into the luxury car market with Acura, Lexus and Infiniti. The Toyota Camry shares many components and design cues of the Lexus GS, although the GS has a much higher quality level of materials and fit and finish, which also commands a premium price because of this. But I'd venture to say that the margin on the Lexus GS is much higher than the Camry. Toyota can charge more for the GS than the Camry, not only for material quality and design but because of the perceived value; the schmooze when one walks into the showroom, the relentless ass kissing by the salesperson, etc. Being able to schmooze like they do is a direct benefit of the premium price. Apple does the very same thing via packaging, their customer service, and their company-wide desire to keep user satisfaction as high as possible.
I speak both as a satisfied user and an investor. I don't mind Apple's premium price because, one way or another, it benefits me. Apple's willingness to keep me a happy consumer pays off:
Geniuses have replaced a logic board in a 17"MBP that was 3 months out of a 3 year AppleCare warranty.
They've replaced, without question, a MBP power brick that was close to two years old, at no charge.
They've replaced my daughter's iPod touch 6 month out of warranty because the home button worked intermittently.
This keeps me coming back for more while think less about how much more an iPhone, iMac or MBP is compared to a competing device.
The dividend, which now is also a product of higher margins, benefits me on the back end. This, along with the above, and the AAPL stock ROI, helps keep me completely... Apple drunk!
Lastly, I feel that Apple efficiency, not frugalness, plus their volume buying power and ability to buy components in advance, allows them to keep their margins at an industry-enviable high.
Just to set the record straight, I was not trying to call into question your argument or mar your reputation. You have one side of the argument and I'm just trying to give you another side (mine), backed up by two real-world examples.
That's an awfully courteous and measured response. Are you sure you wouldn't rather punch it out in the parking lot?
Okay, fine. If you insist on being civil, I guess I can try to do the same. Bear with me, though... I'm not very good at it, as evidenced by my last post!
Quote:
Originally Posted by Dickprinter
[snipped to eliminate redundancy, see above for details]
Points taken. I'm not sure I agree that high margins are what make Apple's generally excellent customer service possible, but I understand your point and acknowledge that the grounds you cite certainly give the premise legs.
You're probably right that high retail prices drive up resale value. Except for BMW. The damn things shed value like a snake does skins! Is ~50% every 3-4 years normal depreciation for cars? I was giddy when I bought my four-year-old model for less than half what it cost new. I was sad when I sold it four years later for less than half of what I paid.
That's an awfully courteous and measured response. Are you sure you wouldn't rather punch it out in the parking lot?
Okay, fine. If you insist on being civil, I guess I can try to do the same. Bear with me, though... I'm not very good at it, as evidenced by my last post!
I'm a lover, not a fighter. Thank you for having an open mind, I try to make my comments and replies thought provoking, rather than provocative.
That's an awfully courteous and measured response. Are you sure you wouldn't rather punch it out in the parking lot?
Okay, fine. If you insist on being civil, I guess I can try to do the same. Bear with me, though... I'm not very good at it, as evidenced by my last post!
I'm a lover, not a fighter. :D Thank you for having an open mind, I try to make my comments and replies thought provoking, rather than provocative.
Better to be both, especially with Schultz. Just tease him about headless Macs—he likes that.
Comments
Is your friend, Schlbobnick, related to BobSchlob by any chance?
My friend, Jeffery Schlbobnick, just came back from a shopping trip to the Apple Store. He looked at a MacBook Air and said to the salesperson, "Wow, a thousand bucks, that seems like a lotta dough for an entry-level machine..." The salesperson replied, "Well, Apple has an excellent credit rating." For some reason Jeffery didn't understand how that would benefit him, so he asked me.
I told him to ask you.
(Just kidding around!
)
Allow me give you a real-life, rather than a made-up, dialog between an Apple salesperson and a prospective (Windows switcher) buyer. This was overheard by me as I was waiting 35 minutes for a Genius to swap out my battery (which was fully covered by Apple's free iPhone 5 defective battery replacement program, one full year after my 1 year warranty expired).
I'm going to leave out the sales pitch, which makes this short story even shorter, because the OS, UI and HW sold itself. When the prospective buyer balked at the price of the entry-level MBAir he was interested in, comparing it to his Dell/Windows laptop that died after 2 years, the salesperson asked if he knew about how well Apple devices retain their value. To prove his point, the salesperson logged onto eBay, on the very same Air he was interested in, and proceeded to show him how much 3 year old MBAirs and Pros were selling for on the used market. The buyer then said, quite matter-of-fact-ly: 'Really…wow...that's all I needed to know, I'll take it."
Each of the paragraphs above showcase the value that is built into every Apple device. These two reasons, alone, are enough to keep me an Apple lover.
Owning a lot of AAPL shares since 1997 is another.
No matter how clearly one can explain it to her, I don't think there will ever come a day that she'll understand any of this. And by responding, she's only digging herself deeper.
Is your friend, Schlbobnick, related to BobSchlob by any chance?
Y'know, I hadn't thought about that. I'll have to ask him!
Good catch!
No matter how clearly one can explain it to her, I don't think there will ever come a day that she'll understand any of this. And by responding, she's only digging herself deeper.
Are you talking about me? If so,
"Lighten up, Francis!"
- Sgt. Hulka in "Stripes"
If you're NOT referring to me,
"Never mind!"
- Emily Litella on Saturday Night Live
Today I was involved in a discussion about how often people, usually unintentionally, base their preferences and decisions on erroneous information. They then argue in defence of their view using flawed logic.
That's what's happening here. I wouldn't care, but for the fact that some here are trying to impugn my arguments and reputation based on flawed reasoning. I joked about at first, but today I decided that I resent that.
Dickprinter: Do you think the iPhone 5 replacement battery program was a result of Apple having high profit margins? Do you think the program would not exist if Apple's profit margins were 20% instead of 35-40%? Of course not.
Dickprinter, would the resale value that persuaded the man in the Apple Store to buy a MacBook Air have been adversely affected if Apple's profit margins were 20% instead of 33%? Of course not.
Philboogie, I don't appreciate the dismissive attitude, particularly since it seems like you are the one who "doesn't get it." Do you have something constructive to offer in response to the question "How are Apple's high profit margins a benefit to the BUYER?" You haven't so far. Why do you suppose that is? Maybe because what is painfully clear to everyone except Apple fans is that the obvious is true.
To all those who said high margins result in better products: bullshit. Apple is extremely frugal, and that approach applies not only to manufacturing and distribution but extends to R&D as well. It has been reported on this very forum that Apple spends, in relative comparison, LESS on R&D than its competitors. If you don't believe it, all you have to do is compare gross margins to net. If Apple was spending more of that profit than do other companies on making your life happier, the difference between gross and net would be closer to 50% like most companies, rather than net being 2/3 of gross as it is at Apple. They are, obviously, NOT spending that extra money on R&D, so that argument is out. Next?
TL;dr: Coming up with examples of why you like Apple is NOT the same as explaining how much-higher-than-usual profit margins are a benefit to the BUYER. Don't accuse me of "not getting it" when you can't come up with a cogent argument.
Dickprinter: Do you think the iPhone 5 replacement battery program was a result of Apple charging you a price that included a margin between 35-40%, or do you think it was in response to a trend that had the potential to turn into a PR and legal nightmare that they chose to head off voluntarily, on their own terms, before they were forced to abide by court-mandated conditions? Do you think the program would not exist if Apple's profit margins were lower? Of course not.
Dickprinter, would the resale value that persuaded the man in the Apple Store to buy a MacBook Air have been adversely affected if Apple's profit margins were 20% instead of 30%? Of course not.
Apple is extremely frugal, and that approach applies not only to manufacturing and distribution but extends to R&D as well.
Just to set the record straight, I was not trying to call into question your argument or mar your reputation. You have one side of the argument and I'm just trying to give you another side (mine), backed up by two real-world examples.
I think the battery replacement program was not only to control PR but more so to recognize and correct a component problem, which was at a slightly higher rate than would be considered an anomaly, and because the rate of failure was higher than Apple's standards…..but lower than a competitors. Do I think Samsung or other competitors would do the same thing if there was a higher than normal (same as what Apple is seeing) component failure rate? No, not at the "very small percentage (rate) of early iPhone5 buyers" in the words of Apple. Do Apple's margins allow this decision to be made easier? Yes, I think so. I feel the extra margin Apple commands allows them to pull the trigger a lot sooner (at a much lower threshold) than their competitors. I feel this is a luxury afforded to their users by Apple because of their high profit margin. (Kind of like insurance)
Price and value are based on perception. I feel that Apple's premium prices directly effect the resale price. It's a recalibration (in the mind of the buyer) of the perceived value of the device. Mercedes achieves this, BMW also, along with a few other auto manufacturers. The major Japanese Auto companies made a brilliant break into the luxury car market with Acura, Lexus and Infiniti. The Toyota Camry shares many components and design cues of the Lexus GS, although the GS has a much higher quality level of materials and fit and finish, which also commands a premium price because of this. But I'd venture to say that the margin on the Lexus GS is much higher than the Camry. Toyota can charge more for the GS than the Camry, not only for material quality and design but because of the perceived value; the schmooze when one walks into the showroom, the relentless ass kissing by the salesperson, etc. Being able to schmooze like they do is a direct benefit of the premium price. Apple does the very same thing via packaging, their customer service, and their company-wide desire to keep user satisfaction as high as possible.
I speak both as a satisfied user and an investor. I don't mind Apple's premium price because, one way or another, it benefits me. Apple's willingness to keep me a happy consumer pays off:
Geniuses have replaced a logic board in a 17"MBP that was 3 months out of a 3 year AppleCare warranty.
They've replaced, without question, a MBP power brick that was close to two years old, at no charge.
They've replaced my daughter's iPod touch 6 month out of warranty because the home button worked intermittently.
This keeps me coming back for more while think less about how much more an iPhone, iMac or MBP is compared to a competing device.
The dividend, which now is also a product of higher margins, benefits me on the back end. This, along with the above, and the AAPL stock ROI, helps keep me completely... Apple drunk!
Lastly, I feel that Apple efficiency, not frugalness, plus their volume buying power and ability to buy components in advance, allows them to keep their margins at an industry-enviable high.
Just to set the record straight, I was not trying to call into question your argument or mar your reputation. You have one side of the argument and I'm just trying to give you another side (mine), backed up by two real-world examples.
That's an awfully courteous and measured response. Are you sure you wouldn't rather punch it out in the parking lot?
Okay, fine. If you insist on being civil, I guess I can try to do the same. Bear with me, though... I'm not very good at it, as evidenced by my last post!
[snipped to eliminate redundancy, see above for details]
Points taken. I'm not sure I agree that high margins are what make Apple's generally excellent customer service possible, but I understand your point and acknowledge that the grounds you cite certainly give the premise legs.
You're probably right that high retail prices drive up resale value. Except for BMW. The damn things shed value like a snake does skins! Is ~50% every 3-4 years normal depreciation for cars? I was giddy when I bought my four-year-old model for less than half what it cost new. I was sad when I sold it four years later for less than half of what I paid.
That's an awfully courteous and measured response. Are you sure you wouldn't rather punch it out in the parking lot?
Okay, fine. If you insist on being civil, I guess I can try to do the same. Bear with me, though... I'm not very good at it, as evidenced by my last post!
I'm a lover, not a fighter.
Thank you for having an open mind, I try to make my comments and replies thought provoking, rather than provocative.
Better to be both, especially with Schultz. Just tease him about headless Macs—he likes that.
Better to be both, especially with Schultz. Just tease him about headless Macs—he likes that.
Judging by their name, If he/she is a fellow German, I know how to handle them. My German surname means 'Stone Mountain' in English.