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That's a Whole Lotta Apples
Posted by Stephen Green  ·  22 October 2007

Apple profits are up 67% this quarter. Critics might tell you that Apple if coasting along on "fad" items like the iPod (now in its sixth year of market domination), or the iPhone (the best selling smartphone on the market, and fourth cell phone in sales). But they'd be wrong. Apple is making its big money the old-fashioned way, by selling lots and lots of Macs:

Apple said it sold 2.16 million Macintosh computers during the quarter. The market research firm Dataquest estimated last week that it had sold 1.3 million computers, and I.D.C. put the figure at 1.1 million. Dell sold 5 million computers and H.P. sold 4.3 million in the same period, according to the I.D.C. report.

With those numbers, Mac's Q3 US market share is now approaching nine or ten percent, including the lowest-of-the-low end, where it doesn't even compete.

Comments


...and the largest unix vendor in the world.

Aheh.

yours/
peter.

PS: Halp!
Leperd iz in my computer
Makin everythin look lik iTunz

Posted by: peter jackson at October 22, 2007 10:51 PM

TO: Bill Gates
RE: Thank YOU....

...for Vista.

It's the BEST EVER early Christmas gift I ever had.

Regards,

Steve Jobs
CEO
Apple Computer

Posted by: Chuck Pelto at October 23, 2007 01:55 AM

Apple's margin on Macs is miniscule, Steve. They absolutely are coasting along on profits from iPods and iPhones, in spite of the fact that existing alternatives from their competitors kick the everliving shit out of their offerings on both features and price.

Apple is a one-trick pony: it has an uncanny ability to wrap mediocre technology in technicolor plastic casings to which boutique price tags are attached, and then brainwash otherwise-sensible people into believing the myth that their products are robust, sexy, and reasonably-priced.

Posted by: BC at October 23, 2007 03:01 AM

Chuck, you called it.

I already hate Windows Vista, and I'm not even running it. - Steve Yelvington.

The Vista shrinkwrap license restriction on criticizing Vista may be keeping it out of the media, but the general public seems to have caught on.

Posted by: Looking Glass at October 23, 2007 03:46 AM

BC, you're dead wrong on Apple's margins. Apple's bread and butter is in marking up Macs, especially the higher end stuff (I used to work for them). That's why they're probably about to cut loose the tiny-margin Mac Mini (poor decision in my opinion; the Mini is an outstanding HTPC) and concentrate on 20%-ish (that's taking out development costs) iMacs and laptops. And don't even get started on the Mac Pros.

You're also wrong and ten years out of date about anybody else offering anything close in features or usability (on price, you have a scintilla of a point, but nothing like what it used to be), but appropriately enough, that's a very old argument. There's something other than snazzy marketing and voodoo going on when Apple is the only major manufacturer whose market share is expanding (and at a gigantic rate of increase).

Posted by: Will Collier at October 23, 2007 06:40 AM

Windows computer makes for a decidedly poor household appliance. On the other hand, you have to have a boutique shopper mentality to pay for Apple's hardware, at least in the desktop/laptop market segment. Perfectly serviceable laptops are had for $400 these days, not thereabouts of $1K. Of course you have to be skilled enough to configure Ubuntu on them... When Apple starts selling OEM licenses for OS X (or XI or whatever) on 3rd party hardware, you could seriously talk about it competing with Windows... if either is still around by then ;)

Posted by: ...Max... at October 23, 2007 07:22 AM

Will, can you point to a reliable source for the rumor regarding the Mac Mini? You're not the first person online that I've seen dropping that hint. I'm concerned, as I'm getting really close to dipping my toes back in the Mac pool (my last Mac was a 1990 Mac Classic), and at the $799 price, it seems like the Mini is a very low-risk way to test drive a Mac again. I was hoping to hold out until Xmas, to justify the indulgence.

Posted by: JohnL at October 23, 2007 10:31 AM

You're also wrong and ten years out of date

Truer words have ne'er been spoken, at least with respect to BC.

Hey BC. Remember those profits that you insisted I was lying about? Well, I'm now up over 850%.

Original investment, starting in April: $18,791.75.

Current value: 160,965.00.

Bite me.

Posted by: NukemHill at October 23, 2007 10:44 AM

JohnL, the base Mini (w/Intel Core cpu) is $599, not $799. The differences are 1.83Gz vs. 2Gz, 80Gb drive vs. 120Gb drive, and the $799 includes the Superdrive, instead of a CD/RW.

Dunno about you, but I can get a USB/Firewire external DVD burner for a lot less than $200; ditto for an external hard drive.

Of course, there's always eBay... :)

Posted by: Casey at October 23, 2007 12:20 PM

Whoops, almost forgot.

Max, the reason Linux isn't gaining market share the way Apple is, is that most folks don't want to install anything. They want to use a computer like a stereo; just take it out of the box, plug it in, and go.

The Debian distros are good, and apt-get works wonders from what I've heard, but Linux is still a "tinkerer" OS. I hear Linspire (which recently switched to a Ubunto-based package, heh) is working hard to get PC makers to bundle their distro with new PCs. If they can get that off the ground, you may see some progress.

I've been using Windows for years, and find XP acceptable, but I refuse to use Vista. If I have to pony up the dough for a new computer just to run the next point version of Windows, I'll buy a Mac, thanks so much! :)

That reminds me: does anyone here have access to a Vista machine? I want to see what version number MS has assigned vista via the command-line "ver" utility. I bet it's 5.2... {/snerk}

Posted by: Casey at October 23, 2007 12:31 PM

JohnL, here you go. Hope they're wrong about this.

Posted by: Will Collier at October 23, 2007 12:43 PM

Will, you're clueless if you think Apple's making anywhere near 20% on iMacs and MacPros. It's closer to 7%.

You're also clueless if you think that Apple's offering anything approximating SOTA in terms of features or usability. For example, Creative's media players have been routinely kicking iPod ass in side-by-side reviews for at least the last three years. Meanwhile, Treos and Crackberries have been doing everything the iPhone does, oftentimes better and cheaper, for eons. Apple's triumphed at making smartphones sexy, for which they probably deserve some modest praise, but the iPhone fad is the product of packaging, marketing, and bullshit, not features, usability, or price.

NukemHill, meanwhile, continues to lie out his ass about the value of his AAPL portfolio. An ~$18k investment in April would be worth no more than ~$45k today -- or about a quarter of what NukemHill claims his AAPL portfolio is worth. In his wild wet dreams has the value of AAPL stock increased by 850% in the last seven months: it's more like 210%, which is certainly nothing to sneeze at, but hardly unheard of.

Posted by: BC at October 23, 2007 01:52 PM

Will: Thanks for the link. I may move more quickly.

Casey: Thanks for the info; I had already compared the two models and messed with different configurations at the online Apple store to determine what I want. Since I've already got an external hard drive, I think the $200 is worth it for the faster processor and built in DVD burner, weighed against the additional cable clutter and limited computer desk space.

Posted by: JohnL at October 23, 2007 01:53 PM

BC,

You don't know shit about options, do you?

Like I said before, do some research before you blast your mouth. You're stinking the joint up.

Just one example, so you can get your pea-brain around it:

I purchased 13 QAAADs at an average cost of $7.25. That would put the total cost at $9,456.33. They are now worth $87,945.00. They saw an increase in value of $14,365.00 today, as AAPL increased by $11.80.

I also own APVAJs, QAAATs, and VAAAWs.

Learn to read, fuckwit. It'll improve your life. And mine, as I won't have to deal with idiots like you.

Posted by: NukemHill at October 23, 2007 03:26 PM

The margin just in terms of cost of materials to retail price (and virtually everything Apple sells is at full retail) is right at 30% for iMacs (it varies obviously based on commodity component parts, but Apple cuts pretty mean deals with suppliers). It's a lot more than that for Mac Pros; the top end has always been the extreme markup item for Apple (the idea that they're taking 7% on a Pro is beyond laughable; those products are in so much demand in their particular market that Apple can almost name their price).

That doesn't count marketing and R&D, but Apple spreads that across all the product lines and has billions in the bank to boot; those line-items certainly don't eat 23% of the unit cost on anything.

As for the rant about Creative... I've owned Creative's MP3 products. They're clunky and the PC-side interface was and is a joke. Apple's not killing them through slick marketing, they're doing it with a substantially better all-around product. You can not believe that all you want, but you're not kidding anybody else. The same goes for Treos and Blackberries--they're kludges, and using one of them is akin to thumb-wrestling. The usability of any of them (or any other "smartphone") is a joke. If you want to use clunky junk, go ahead, but spare me the hyperbole.

Posted by: Will Collier at October 23, 2007 03:30 PM

What Will said, only double.

Also, try looking up the price of a used Mac Pro on eBay.

Now, these are machines which consumers simply don't buy. They're made for, and purchased by, graphics, video, photography, and music professionals. And as a quick glance at eBay shows, even used Mac Pros go for near-retail price.

Professionals don't buy crap; they don't have time to waste on it. Look at what they do buy, and look at what they're willing to pay.

The proof is in the pudding.

Posted by: Stephen Green at October 23, 2007 03:38 PM


Anyone who thinks Macs aren't superlatively engineered needs to go to Circuit City and have the salesperson remove the cover off of a few PCs and check out the innards. Then go to an Apple Store, take the aircraft aluminum side panel off of a Mac Pro and look inside.

You'll be able to tell which is the better engineered product before you even get the Mac open, just by the finger latch. But the first glance inside makes it utterly obvious; the contoured, see-through removable plastic air dam in the Mac Pro has more engineering in it than an entire PC.

yours/
peter.

Posted by: peter jackson at October 23, 2007 04:08 PM

Apple certainly isn't perfect. The AppleTV, for instance, stinks, and it's a flop in the marketplace. It's underpowered and, appropriately enough for a television device, not ready for prime time (the picture on downloaded iTunes movies is horrible on a decent screen). Jobs' HiFi "boom box" was a stupid, overpriced product that failed immediately. The Mac Cube (another Jobs fetish) was a design-cool but customer-stupid product, priced way beyond its market.

But none of the above means that iPods or the iPhone or pretty much anything in the current Mac line aren't great products. The market is speaking to that better than Apple ever could.

Posted by: Will Collier at October 23, 2007 05:11 PM

Casey wrote, "That reminds me: does anyone here have access to a Vista machine? I want to see what version number MS has assigned vista via the command-line "ver" utility. I bet it's 5.2... {/snerk}"

Microsoft Windows [Version 6.0.6000]
Copyright (c) 2006 Microsoft Corporation. All rights reserved.

C:\>ver

Microsoft Windows [Version 6.0.6000]

Posted by: Looking Glass at October 23, 2007 07:36 PM

Will, you're clueless if you think Apple's making anywhere near 20% on iMacs and MacPros. It's closer to 7%.

If this CNN article is accurate, I don't think the math works out. Key points:

The company sold 2.164 million Macs in the quarter, accounting for 62% of the company’s revenue.
The revenue was $6.22 billion. Its gross margin for the quarter was 33.6%.

If the margin on all of the Macs was 7%, 7% of the 62% of that revenue from Macs would be profit, so Macs would only account for 4.3 of the 33.6% margin. So 29.3% margin off of the 38% revenue that's left? Margin of 77% on iPods/iPhones? I think not.

I may not be clear with the figures above, bottom line is the majority of the revenue is coming in from Mac sales. So to get a margin of 33.6% total would require a ludicrous margin on everything else.

Posted by: dorkafork at October 23, 2007 07:59 PM

ver 6.0.6? Well I'll be dipped in dung!

Thanks Looking Glass...

Peter? I think you're letting your woody for Mac stuff go to your head. I mean, yeah, Apple has been executing some great design work the past (ohhh) 8 or 10 years, but comparing a piece of plastic to an entire PC design? Sheesh... :-)

Posted by: Casey at October 23, 2007 08:18 PM


Have you seen one Casey? That's my point, in a PC it would just be a piece of plastic, in the Mac it has a form which follows it's function and is beautiful as a result. If you've never looked inside a Mac Pro, do so if you get the chance. They're amazing.

Don't get me wrong, Apple's had some throw-offs, like the old all-in-one eMac that required the removal of the logic board and chassis parts just to get to the hard drive mechanism. I haven't been inside one of the new iMacs yet, but it's predecessor was put together pretty well, especially when you consider they're less than four inches thick.

yours/
peter.

Posted by: peter jackson at October 23, 2007 11:07 PM

TO: BC
RE: One(?) Trick????!?!?!?

"Apple is a one-trick pony:..." -- BC

Yeah, in like 1 every few years. And each one is a stunner!

Apple II
Apple IIc
Macintosh
Color Macs
OS X
iPod
iPhone

What WILL they think of next?

Regards,

Chuck(le)
P.S. Eat your heart out....B[ill]C[ates]

Posted by: Chuck Pelto at October 24, 2007 12:08 PM

Next? Funny you should ask. Next up is Leopard, aka OS X 10.5. My copy should arrive from Amazon on Monday or Tuesday. Can't wait to install it!

Posted by: Stephen Green at October 24, 2007 12:12 PM

It's easy to dismiss Apple products as overpriced, marketing-driven shams, if you've never used one.

If you have? Not so much.

Posted by: Brian Tiemann at October 24, 2007 12:23 PM

TO: Brian Tiemann
RE: Indeed

"It's easy to dismiss Apple products as overpriced, marketing-driven shams, if you've never used one." -- Brian Tiemann

As an old saying goes....

The pain of poor product lasts long after the pleasure of low pricing.

Regards,

Chuck(le)
[You get whats you pay for.]

Posted by: Chuck Pelto at October 24, 2007 12:57 PM

Well, if I may add my 2 cents, I just bought a MacBook after 20+ years with PCs. It's been a real surprise for me just how well it works. And, since I had tinkered around with Linux on the PC, I immediately recognized the underlying system as a variant of the robust Unix system.

Love it. At school, the kids are fascinated with it (I teach high school). When I use it to show DVDs and downloadable movies, I also use the remote - they are enthralled with it. It looks a little like a mini-IPod, with the wheel to control it.

Any tech that can captivate the teens, has a real chance to grab a large share of the market.

So far, it's an easy connect with the Internet - wirelessly, as well as wired. It quickly accepts my peripherals (except my Panasonic digital videocam), and I've been able to find Mac-able apps to perform all the functions I normally use.

Posted by: Linda F at October 24, 2007 07:13 PM

Linda,

Three years ago, I was busy making a bunch of mix CDs for a trip to Mexico we were going on with another couple. Frustrated with the latest version of my then-loved MusicMatch software, I finally broke. I said, "Screw this, I'm buying an iPod and bringing ALL my music with us."

And I fell in love with iTunes, much more so than the iPod itself. (When people tell me their Whatever Player has such-and-such features the iPod lacks, all I can say is, "Your player doesn't run iTunes.)

A few months later, somebody told me that if I liked iTunes, I'd love Mac -- they worked the same way. As soon as Mac moved to Intel, I moved to Mac. Haven't looked back, either.

And I know what you mean about your MacBook. I bought one a few months after I got my iMac. It's the first laptop I've ever used that I liked. My old Dell came out of it's case whenever I HAD to have a notebook -- travel only. My MacBook gets used all the time. Which is time I can spend out of my office and with my family. Sweet.

Posted by: Stephen Green at October 24, 2007 07:41 PM


"If you want a computer for your business, buy a PC. If you need a computer for your business, buy a Mac."

Macs are supposed to be fantastically popular with multimedia types because they're so much more reliable and easier to use. That's why so many early shots of personal computers in movies were Macs.

Posted by: Looking Glass at October 24, 2007 09:39 PM

By the way:

http://www.flickr.com/photos/16066408@N08/1734058747/

That, BC, is what we're talking about. That's on a $70 keyboard. Overpriced? If anything, Apple gear is underpriced for the amount of obsession they pour into its design.

Posted by: Brian Tiemann at October 24, 2007 11:24 PM

TO: Looking Glass
RE: What a Crock....

""If you want a computer for your business, buy a PC. If you need a computer for your business, buy a Mac."" -- Looking Glass, citing some erroneous adage

....of excrement.

US WEST/DexMedia used a mix of Macs and Windows.

When Red Flag struck, and got into the network, the IT types spent 24 hours rushing from room to room.

They rushed into the White Pages Computer Lab—14 Macs running 24/7/365 cranking out white pages for all the directories in 14 states—took one look, uttered a UGH sigh of relief, took a deep breath and rushed out again.

If you want to run a business and use computers, do it with a Mac.

Regards,

Chuck(le)
[When Microsoft FINALLY makes a product that doesn't suck...it'll be a vacuum cleaner.]

Posted by: Chuck Pelto at October 25, 2007 09:21 AM

P.S. At that time the distaff worked in another part of the Inverness Business Park.

She was on a Windows-based system.

She reported that she had to have the OS reinstalled about once a month.

This is 'efficiency'???!?! And doesn't business—successful business—rely on 'efficiency'?

That's why I say that if someone thinks they can run a business, efficiently, on a POS....they're full of excrement, themselves.

Posted by: Chuck Pelto at October 25, 2007 09:27 AM



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