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."
Apple is a fad and luxury brands are collapsing left and right. I read about two near bankrupt European luxury brands just the other day. So far Apple is defying the laws of gravity but that doesn’t last forever
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”.
Excuse me? "Off topic"? Apparently you have a reading comprehension problem or you're cross posting from some other thread or planet. The only one here who is "off topic" is YOU. Read the article, MrEdd. No, here, I will provide some salient quotations from the article that demonstrate exactly what the IS on topic in this thread:
But in the view of those of us focused on raw processing power and speed, Apple has always been just a cute toy.
"Cute Toy." How dismissive and insulting to those of us who are professionals in computing that have chosen to use Macs. Just how much have you used, actually used, not just played around, a Mac?
We've already established that contrary to your mis-comprehension, this article IS about sales in the $1000 and up market share segment, the "high end," not about processing power or speed; however, Macs can also hold their own in processing power and speed as well.
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.
"Silly diatribe." Ah, More ad hominem attacks against Mac users, this time me personally. Typical.
I assure you, it is YOUR trolling argument that is "silly" in light of it completely off topic claims about "speed" and "processing power."
MrEdd, as to what you don't know about... I can't be held responsible for your ignorance. However, some may believe your opinion so let me provide some facts. Even the article quotes an authoritative source:
Another fact, PC World Magazine announced in October, 2007, that the fastest laptop computer they had tested running Vista was a MacBook Pro.
Let me quote your opinion again: "...Apple has always been just a cute toy."
So, in your opinion, is that why Virginia Tech chose the Apple Mac to make System X, the third fastest Supercomputer in the world, in 2003? And that's why they migrated the 1,100 Dual processor (2,200 processors) G5 PowerMac Towers to 1,150 dual processor (2300 processors) xServes in 2004? Because Macs are slow toys?
The original 2003 Terascale System X was running on OSX.2 Server... and produced just under 10.3 Teraflops continuous but peaked at over 14. The second fastest supercomputer in the world cost 20 times what Virginia Tech's Mac OSX cluster cost, and produced 15 TFlops peaking to 18, not a very good economic result for 20 times the cost. While the fastest supercomputer that year, the Japanese Earth Simulator which cost over $250 million—50 times the cost of the VT Mac cluster—produced 35.4T Flops and peaked to 39.
In 2004, Virginia Tech upgrade to a Mac xServe based System X, using OSX.3 Panther Server, which produced over 12.5 Teraflops peaking to 17, consumed less energy, and occupied 1/3 the space of the original System X.
The US Army contractor Colsa selected Macs to build another supercomputer called Mach 5. Consisting of 1,566 Dual Processor G5 PowerMacs, the Mach5 was designed to be used in designing aircraft wings by simulating airflows at multiple supersonic speeds. That's quite an engineering applications, wouldn't you say?
In November of 2008, Virginia Tech built another Mac based supercomputer with 324 eight-core, 2.8GHz Mac Pro towers—called System G because of the "green" toxin free build of the Mac Pro line—, produces a continuous 22.8 TFlops and can peak to 29 TFlops. It is the 65th fasted supercomputer in the world... but still one of the least expensive.
Right. Not powerful enough. A "toy." Sure.
A fad... 33 years a fad... 25 years a Macintosh Fad... 8 years an iPod fad... 8 years an OSX fad... two years an iPhone fad...
This is where your predictions fail, Dennis. Apple is NOT a fad nor is it a luxury brand. Apple provides value and functionality, and most of all, usability for the money they charge for their products.
Beretta would disagree with you. Their “fad” products have been produced since *1526*.
Some things aren’t fads.
This is where your predictions fail, Dennis. Apple is NOT a fad nor is it a luxury brand. Apple provides value and functionality, and most of all, usability for the money they charge for their products.
Dell Small Business - Dell Vostro 220 Mini Tower with Intel Dual-Core, 2GB Memory, 160GB HD, DVD-ROM, plus 23" Samsung 1080p LCD Monitor for $386.10 plus Shipping! LINK
To the above computer I would add Vista home premium ($29) and a 250gb hard drive ($15). So make that $430 not including tax or shipping. So I get a good solid computer and big honking LCD monitor. I get a free Windows7 upgrade too which really lets that computer run faster
The above website has computer deals every day
Apple is vastly over priced compared to this Dell deal @$430
It will come as a shock to you but that Dell Vostro is more than enough computer for 85% of buyers. They don't need Apple though you may need Apple. Get it? They are not you and you are not them
Beretta would disagree with you. Their “fad” products have been produced since *1526*. Some things aren’t fads.........
IPOD is a fad. Apple doesn’t even make money on them anymore. There are tons of MP3 players out there
Prove your assertion that Apple doesn’t make money on iPods.
Last time I looked at their quarterly report, Apple was still making money on iPods - lots and lots of money.
Most (not all!) Apple laptop buyers are just surfing the internet and doing light “Office” work like word processing and Quick Books. They can do that with a 50% cheaper Windows7 laptop
Apple has two big money makers. iPhone and laptops especially its high end laptops. But the average Joe who needs a solid 15.4 in laptop for $400 or less? There are plenty out there made by solid companies such as Toshiba, Dell, HP, Acer etc. I see those deals every week. My advice to such buyers is to only buy one with Vista Home Premium so they can get the free Windows7 upgrade
And if the consumer has $400-$600 to spend he can do even better. And any laptop with Vista Home Premium gets a free upgrade to Windows7
Windows7 runs great on 2Gb memory. This is exactly what my laptop has and a weak dual core processor
Last time I looked at their quarterly report, Apple was still making money on iPods - lots and lots of money.
Just my educated guess due to the laws of supply and demand. The market has tons of cheaper and some better MP3 players out there. Ones with the tiny shiny LCDs too
Does Apple itemize its iPod profits?
How about its iPhone profits?
I monitor memory usage under windows task manager. I have been doing it with Vista and Windows7. XP too
The results are in. You have read it elsewhere but my own observations are that Windows7 is a tremendous memory miser. Identical computers with 2gb memory will do much better with Windows7. It’s quite a sight
Bosch is the new Lucas.
For just one instance of why, look at the coilpack failure problem VAG had in the early 2000s.
http://www.freerepublic.com/focus/chat/2319077/posts?page=1
Not long ago, Google produced a video that's making the rounds [1] on the Internet. In it, a Google employee asks people in Times Square in New York City a series of questions, such as "What is a browser?", "What browser do you use?", and "Have you heard of Google Chrome?" (Chrome [2] is Google's new Web browser; it's available for Windows and in pre-release test versions for the Mac.)Among the geek set, the video has gotten a lot of play because most of the people in the video - who appear to be functional adults and who use the Internet regularly - come off as highly clueless. According to the video, only 8 percent of people queried that day knew what a browser is.
The video is clearly not a scientific study, and suffers from horrible methodology. It's likely, for instance, that simply asking "What is a Web browser?" would have produced better results, and the middle of Times Square is undoubtedly not where most people are thinking about the names of programs on their computers. But let's leave aside such criticisms for the moment.
What's Your Browser? Instead, let's take the results on face value and consider their implications. What does it say about the technological world in which we live that 92 percent of the people asked could not identify the name of the program they use to access the Web? If other statistics are to be believed, browsing the Web is the primary use of computers today, so that's saying these people couldn't name the program they use more than any other.
Worse, some of the answers on the video reveal that they don't even know what a program is. A number of them identified their browser as "a search engine" and "Google." When asked which browser he used, one guy said "the big E," undoubtedly meaning Microsoft Internet Explorer, which has a stylized lowercase letter E as its icon.
http://www.freerepublic.com/focus/chat/2319077/posts?page=1
Which bolsters the Apple argument. People buy tools to get things done. Apple does quite well at that. And I say that as a long time PC guy who doesn’t own an Apple computer (I do have an iPhone).
You made the assertion. You must prove it. Do so or STFU and GTFO.
No need for foul language. I made a casual guesstimate. I have an educated guess and all I asked was whether Apple itemized its profits which you refereed to for iPods
Which bolsters the Apple argument. People buy tools to get things done. .............
Hmmm I’m using a lowly PC and getting things done. Lucky me
Which will probably endure less than half the time the Macbook will.
The government ought to do something about those people.
</sarcasm>
Nice try, Dennis. That deal looked just too good to be true. It isn't. Following the link path takes you to someone who claims to have found this bargain Dell but HIS link takes you to half a dozen rapid links, giving hits to who knows who, before finally going to Dell Italy which then redirects you to Dell USA which says "...that product is not available" and suggests that you may have entered the promo code incorrectly.
Deal expired. Dell has new deals all the time that expire after a few days or maybe 5 days. Go to gotapex.com anytime to see them __>> http://www.gotapex.com/deals/category/1/5.htm
Dell deals come and go. You missed out
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