You would be surprised how tightly Microsoft works with the hardware vendors... There is a tight coupling there, and a continual push to strengthen it, it's just not visible like at Apple.
Hundreds of millions of dollars of development - LOTS of hardware - done for other companies, so that the products developed will work 100% with Microsoft OSes and applications and services. It's tight, it's just not visible. When that product is developed and designed at Microsoft, but sold under another company's name, the consumer doesn't know - but it's still from the same company, the same tight coupling.
You think those new WP7 phones have been developed by HTC and Samsung in a vacuum? ;) No, there's been heavy MS involvement from the beginning.
It's easy to have high margins when you manufacture little hardware.
EXACTLY. Which is why crowing about how Apple has high margins (even with a shrinking marketshare), and how it's going to overtake companies with even HIGHER margins (and in the case of Microsoft, more revenue AND profit), doesn't make sense.
What technical reason is there for claiming Apple will be the most valuable company in the world? Other than hope and enthusiasm, precious little. They make their profits in a low-margin field!
And ask the general consumer who the competitor to Apple is; they'll say Microsoft and Google. It's not Samsung or HTC or Motorola. In the consumer's mind, Apple is competing against Microsoft and Google. And when you look at the margins, Apple comes up short.
Apple's margins have been compared to other phone and computer MANUFACTURERS. Apples to apples, figuratively.
Why? Doesn't Apple also make computers and operating systems? Why should they only compare to phone makers (in which case, we should also look at market share, as that is the best predictor of long-term success given the 2+ year lock-in in the US and brand loyalty overseas)? Is the computer side of things, the OS side of things, really not important any more? Is Apple now just a phone and media player maker?
Google's PHONE operating system sells on more phones than Apple's. Does that mean Google should not be considered a player in the telecom/mobile phone market, just because their phone hardware sales are basically nil?
Microsoft builds hundreds of thousands of desktop phones every month. Conceptualized and designed in-house by Microsoft (right in building 31, 2nd and 3rd floors - I was there). They're labeled with another company's name and sold under their brand. Microsoft bears the burden of that hardware, but they still make more margin. And they do it because it couples that office phone system even more tightly to Backoffice Server and Office Communicator (their software sales).
If we're going to trumpet the "margins" of Apple, then by all means - let's look at the margins of the others in their fields, their competitors - Microsoft and Google. And in that case, we find Apple coming up well-short.
Never mind all we hear from the pro-Apple camp is "high margin! High margin!" Well, great - then Microsoft and Google must REALLY be good because of even HIGHER margins!
How BRILLIANT of Microsoft and Google to get hardware makers to take the smaller share of profits! How absolutely genius to defray the costs to someone else, and reap the lion's share of the rewards! Apple's being stupid about trying to do both and keeping that anchor of hardware tied around its waist!
Why do we not hear that regarding margins? Because it would be praising Microsoft and Google at the expense of Apple and Lord knows that just is NOT tolerated.
Oh, I know how Microsoft tries. It's the success that matters. That Microsoft is willing to weaken the compatibility due to partner pressures is disturbing.
When that product is developed and designed at Microsoft, but sold under another company's name, the consumer doesn't know - but it's still from the same company, the same tight coupling.
Is this like the original Zune, basically a Toshiba Gigabeat? Or the XBox 360 CPU, ripped off from the Sony/Toshiba Cell R&D? Do you have better examples? Unless I hear better examples, I continue to believe that the last innovative consumer hardware product from Microsoft was the Intellimouse.
You think those new WP7 phones have been developed by HTC and Samsung in a vacuum? ;) No, there's been heavy MS involvement from the beginning.
I would like to know the level of involvement beyond making sure the OS will work on the hardware.
Doesn't Apple also make computers and operating systems?
In most cases, Apple has a heavy manufacturing expense. Microsoft and Google do not.
Google's PHONE operating system sells on more phones than Apple's. Does that mean Google should not be considered a player in the telecom/mobile phone market, just because their phone hardware sales are basically nil?
No, it means Google has no manufacturing expenses (I'll allow you to forget the embarassing Nexus One). In fact, the CEO brags about it. There's R&D and the profit it returns, without the expense of manufacturing.
Well, great - then Microsoft and Google must REALLY be good because of even HIGHER margins!
As I've shown you, Microsoft doesn't do all that well when hardware manufacture is involved. And is Google even making any money off of Android yet? Does Google's profit have anything to do with anything that competes with Apple?
Apple's being stupid about trying to do both and keeping that anchor of hardware tied around its waist!
Apple gets to lead the way because Apple controls its hardware and software. Apple can come out with fully integrated products on day 1. Many Android users are still waiting for Froyo on their devices months after its release.
So maybe Microsoft and Google are like the Soviets, saving costs by letting the Americans do it first, then copying. Don't worry, Apple is used to the copying by now. Microsoft's been doing it since the 80s.