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WebDragon (1204)

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Macintosh owner/user since 1987
Perl hacker since 2000
Linux (Redhat/Fedora) user since 2001

Journal of WebDragon (1204)

Tuesday February 03, 2004
11:19 AM


[ #17185 ]

I don't think it's so much that Microsoft and the PC manufacturers are doing so much more of a good job than Apple, or that Apple's doing such a bad job of it (considering Apple's overall profitability over the past 5 years, and how often they beat the analysts predictions)

Let's bear in mind just how cut-throat the PC business is. For years the clone-makers and clone-resellers (I refer of course to the phrase IBM-Clone) cut their own gross profit margins in order to make sales, so much and so many that their margins dwindled away to nothing.

Now you either need hefty service contracts, tons of add ons, or sheer volume to make up the difference. So, it suddenly becomes pretty obvious to me WHY there's so many windows-running systems out there. The sales people HAVE to sell so many just to make up their nut and keep their companies profitable... and in many cases STILL have to cut their own throat to make the deal stick.

Apple had a different problem 7-8 years ago, and thankfully Jobs's return stopped their slow spiral into obscurity (Since I love these things, and have disliked the whole clone-scenario since I noticed back in the day before I bought my first PC OR my first Mac, how much more MS-DOS sucked compared to TRS-DOS [I kid you not. I HATED MS-DOS. Owned a TRS-80 Model III before I got my first Mac 512K used off a friend] That was a decision I hated making, since it meant I wouldn't be getting the next model TRS-80.. fortunately for me Apple came along in the nick of time. :)

Having been in Macintosh sales for about 10 of the ensuing 17 years since then, I *saw* the margins getting away from me and every other vendor out there. 18 points of gross profit used to be the rule.. ($sale = $cost / .82;) (gross profit calculation is different from percent markup, for you who are not aware of the difference. 20 points of gross profit is the same as 25% markup, i.e. $cost / .8 = $cost * 1.25).

Thus, in order to keep the pipeline filled, one must churn the waters ever faster and faster, since there's less and less 'water' (read: liquidity) coming from each base sale. One is veritably forced into selling the hell out of add-on peripherals and service contracts in order to make your company any profit. (I mean, we DO want to still have jobs (and/or companies) a few years down the road too)

I think Apple's doing a *fine* job of keeping the prices low enough (while selling ever more incredible systems) to balance between starving the company for liquidity, and staying profitable enough to continue doing the R&D that they _HAVE_ to do in order to continue innovating to any degree whatsoever.

Granted I still have to find a full-time job, (or enough contract work), and a car is my next priority to replace, but after that, it's definitely gonna be a new Mac.. the raw power since I bought my last (a PPC 7600/132) and the price point for what you get hardware-wise is just too attractive. [notwithstanding the other benefits, which I'll get into later] ...unless some kind soul wants to donate a G5 tower to a worthy cause... :)

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