Posted on 08/17/2009 3:09:25 AM PDT by Swordmaker
How does a company that owns only 8 percent of the handset industry revenue kick so much butt? Apple's ability to reinvent markets leads to command of high-end, high-margin business.
Apple's stock has been on a tear this year, starting at around $85 per share and rising steadily to $165. Sure, the new iPhone 3GS and the ever-popular MacBook Pro line are big reasons for the lift.
But how does a company that owns only 8 percent of the handset industry revenue, according to Bernstein Research, kick so much butt?
Apple plays almost exclusively in the high end of the handset and computer markets, which translates into mighty profits. In the handset industry, for instance, Apple commands nearly a third of all profits while being only the fifth largest vendor.
Bernstein Research analyst Toni Sacconaghi, quoted in an AllThingsD post, said: "Even if we exclude the operating losses generated by Motorola and Sony Ericsson, Apple still accounted for 25 percent of industry profits. iPhone's success is akin to Apple's position in the PC industry—where the company enjoys an estimated 25 percent of industry profits, despite capturing only 6 percent of industry revenues."
Apple, of course, is known for delivering stylish high-end products. Its MacBook Pro line consistently ranks among the highest performing laptops, according to the InfoWorld Test Center, a sister Web site to CIO.com.
Oppenheimer analyst Yair Reiner contends that Apple delivers good bang for the buck. He says iMacs, for instance, match up favorably against Dell and HP's All-in-One's on a price-to-performance basis. "Apple's pricing has been perpetually misrepresented and misunderstood over the years," he told me earlier this year. "With a few notable exceptions, such as the MacBook Pro, Apple has typically offered more hardware for the money than competitors."
Although Apple slashed the cost of MacBook Pro computers earlier this year, MacBook Pros are still some of the most expensive on the market—as are Macs, which has stymied Mac's numbers in the enterprise. "You can buy a PC for $400, while the cheapest Mac is over a thousand," Jon Graff, director of IT operations at A&E Television Networks, told me earlier this year.
So why is Apple successful on the high-end, high-margins of the market? Good technology is one reason, for sure. Another reason: it's much easier to capture the highpoint in a market you've reinvented. Put another way, Sacconaghi credits Apple's first mover advantage to its success.
"With the iPhone and its Apps Store, Apple has established a formidable smartphone ecosystem, which history suggests is very difficult to overcome," said Sacconaghi in the AllThingsD post. "In fact, Apple has the potential to become a de-facto standard of sorts in the consumer smartphone market ... due in large part to its first mover advantage and tight software and hardware integration."
That is a great deal on the 2.4ghz Optiplex w XP-Pro plus 19”LCD. Adequate memory at 512mb. Good enough for 80% of computer users
My only minor quibble would be the small hard drive. 80GB is best for some storage and ghost backups. It would have no DVI connection and I got to have that but most others could care less
And for Father’s Day I got Dad a Dell Inspiron (15-inch) laptop running Ubuntu for $350. .......
They have jacked up the prices on those Ubuntu laptops. But great deal
15” Inspiron laptop w Ubuntu is $514 now
She uses her computer for playing card games, emailing, web surfing and snapshot photography.
Mom had a “budget” of about $600 - $700 for a new computer, about a year ago. I tried to talk her into a Mac Mini - she already had a monitor and printer - but she would have none of it. We got her a nice HP system instead for $695. We also spent and addition $59.95 on Norton System Care.
Since that time, I have made at least monthly visits to Mom’s to “fix” a computer issue. First her older digital camera wouldn’t be recognized, so we tried using the built in card reader instead. Somehow there was a compatibility issue between how her camera stored pictures and how the computer wanted to read them. The final solution was a new digital camera.
Another issue was her printer. If you are not comfortable digging into the printers utility in Vista, you cannot clean your print heads (Dell printer). This led to many “my printer isn’t printing right” visits. The final solution was a new printer.
Installing the new printer was an issue. She was okay with unpacking it and plugging it in, but when it came to the software installation, she was confused. Frankly, when I was called in to install it, it was a bit intimidating and it wanted to install a bunch of junk that wasn’t needed. Then it seemed to hang up for about 10 minutes in the middle of the install. It did eventually finish, but someone not so patient would have probably rebooted the machine thinking it was hung up, causing even more problems.
There were many other visits - some having to do with automated updates that just stop in the middle of updating, some having to do with the anti-virus software catching some evil code and Mom not knowing what to do - but basically all of the problems could be laid at the feet of those in Redmond. There are just too many problems when you have hundreds of different vendors of hardware and software and no clear, consistent set of interaction rules.
She may have saved a little money up front, but with the time I’ve spent fixing the darn thing, and the money she has had to invest in new hardware, she would have been better off with the Mac Mini.
92% of all personal computers sold that are over $1000 are Macs. I'd say that is owning the high-end... Chief Information Officer Magazine seems to agree.
Exit stage left, Prince of Darkness, enter stage right Tata. Wonder why would Jaguar want to copy the 3-series platform? You’re going to have a Jag full of Fiat parts.
Anyway, about Apple ...they will do well b/c they nurture their brand personality. And 90+% of the market share ain’t bad!
Apple products are designed to be Benutzerfreundlichkeit
Some memorable (but paraphrased due to fading memory) guidelines:
Those may not be exact quotes, but I expect many users wish Microsoft and its co-developers had disciplined themselves to adhere to such simple principles... (Note to self: gotta go find that little book; it is worth a re-read...)
As a current example, the "Multi-Touch TrackPad" was "rolled out" on the iPhone, but, since it was developed on the Mac (in the same OS), it was simple to apply it to the high-end Macbook Pro. Now, I wonder how I ever got along without it. (The timing was particularly good for me: my eyesight has begun to degrade, and the ability to "zoom up" the tiny type (that results from 1920 X 1200 pixel resolution on a 17" screen) with a flick of my fingers is a real boon.
In fact, as I was waking up this morning, I started a "head design" of a wheelchair control using the M-T TP. It should work spectacularly well. In fact, I just may try it out with this MBP... (Try that with the little "'eraser nub' in the middle of the keyboard" found on some PC laptops...)
...just another example of the Apple policy of "He who spends the $$$ gets the real goodies -- first"...
Both you and Chief Information Officer Magazine had to redefine servers and workstations as being something esoteric that is discarded from the statistics to make that assertion work. But power users have always bought just that even for home use.
Thank you for playing, you may pick up your consolation prize on the way out.
Proof of this is that many people are very happy with those underpowered netbooks. That need to run on XP since Vista is too much burden. Hardware requirements have hit a ceiling when you see Microsoft putting out an OS Windows7 that has lower hardware requirements than the one that came before. For the first time ever!! I still have high powered home built desktop computers with lots of memory and big LCDs but my low end Compaq laptop does most of what I need and flys on Windows7
What on earth are you talking about?
Netbooks are fine for web browsing and email. But then, so is an iPhone.
Most people I know that bought netbooks have been sadly disappointed.
Netbooks are selling like hotcakes. They are the people’s choice right now. Even some fancy and expensive netbooks out there
http://www.just-auto.com/article.aspx?id=100234
http://www.thetruthaboutcars.com/just-auto-predicts-tata-will-double-then-triple-jaguars-sales/
http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2008/10/what_tata_shoul.html
As you’ve said about Apple’s sales explosions: They’re just a fad, people will stop buying useless toys.
Saw those. Jaguar isn’t copying the 3 series platform. They’re going to pull a Nissan and build a smaller sports car (XE) then use that platform to build new small sports sedans.
Who to believe, MrEdd—an unknown guy who REALLY wants to believe that Apple is just a marginal player in the PC Market segments—who claims that Macs have never been dominant in the over $1000 PC market segment , or the published data from numerous sources that say he hasn't got a clue about what he is talking about. What a conundrum. Not.
Gee, I think I will go with CIO Magazine, ITWorld, Computerworld, Silicon.com, ZDNEt, NetworkWorld, Forbes Magazine, Gizmodo, BetaNews, Current Tech, and dozens, if not hundreds, of other industry news sources that have posted or published articles this month asserting that Apple has a 91% share of the over $1000 premium PC market in the second quarter of 2009.
And the domination is not just currently either. In May Apple was reported as having over 88% of the over $1,000 PC market in the first quarter of 2009. Apple's share of this market segment has been growing for several years, especially as the other PC vendors have been racing each other to the bottom of the barrel, bargain basement market segment. In the First Quarter of 2008, Apple had 66% of the over $1,000 PC Market as reported in eWeek:
and InformationWeek.
You also seem to forget that Apple Mac Pros are Workstation class computers with Intel® Xeon® multicore processors... and Apple sells a LOT of Mac Pros. . . those are included in the over $1000 premium PC Market segment... and Apple also sells the xServe servers, which are not probably not included in this segment as servers really are not considered personal computers.
You can keep your "consolation prize", you've earned it through wishful thinking and by ignoring the published data.
Posting off topic sales figures on your part does not now, and never will translate into processing power on the part of Apple’s machines.
The topic was “high end”.
since Apple doesn’t do well in that respect you personally seem to want to redefine the thread title to “Best Selling” or perhaps “Popular with executives and artists - who are really cool dudes”
But in the view of those of us focused on raw processing power and speed, Apple has always been just a cute toy.
And it still is.
Contrary to your silly diatribe, I never said Apple didn’t sell. I said it wasn’t in the running to be considered “high end”. I can’t remember any articles about cutting edge CAD programs changing engineering or any similar topics mentioning Apple machines ever. They are not up to the task.
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