Apple 1st Quarter Results and Conference Call

[MacRumors]

Apple reported (http://www.apple.com/pr/library/2003/jan/15results.html) first quarter results today:


For the quarter, the Company posted a net loss of $8 million, or $.02 per share. These results compare to a net profit of $38 million, or $.11 per diluted share, in the year-ago quarter. Revenues for the quarter were $1.47 billion, up 7 percent from the year-ago quarter, and gross margins were 27.6 percent, down from 30.7 percent in the year-ago quarter. International sales accounted for 43 percent of the quarter?s revenues.
The quarter?s results included a $17 million after-tax restructuring charge and a $2 million after-tax accounting transition adjustment. Excluding these non-recurring items, the Company?s net profit for the quarter would have been $11 million, or $.03 per share.


Apple's Financial Results Conference call is currently ongoing (http://www.apple.com/quicktime/qtv/earningsq103/).

[Talon1138]

People are asking about powermacs.

I hope Apple fully realizes that while they think that its the "Year of the Laptop," consumers want a new Powermac.

[artistry]

Sales flat, but a loss. A poor business model IMHO.

Apple needs to earn a profit and this should come from what it does best: innovation. It shouldn't be afraid to charge for iApps despite what skinflints might say. This would have been a smaller loss if Apple had charged even a nominal fee for iApps - a lot of crappy shareware costs a lot more for a lot less!

The charge for .Mac makes more and more sense - do the maths...

[MOM]

Looking at the sales of computers , software etc, it looks like the saftware sales and the iPod saved them from a much worse quarter.

[macktheknife]

Posting a loss during Christmas (fiscal 1Q for Apple) is certainly bad news, although it isn't surprising considering how slow sales have been for the pro line of Power Macs. What's worrisome, though, is that Apple continues to lose money even after earning interest on its $4 billion cash hoard. A year ago, a big chunk of that $0.11 profit per share was due in part to the interest earned on the cash. That is, the money they lost in sales was compensated in part by the interest on their cash.

So if Apple is losing money even after the interest they earned, this is very bad news for the company.

[lmalave]

Originally posted by artistry
Sales flat, but a loss. A poor business model IMHO.

Apple needs to earn a profit and this should come from what it does best: innovation. It shouldn't be afraid to charge for iApps despite what skinflints might say. This would have been a smaller loss if Apple had charged even a nominal fee for iApps - a lot of crappy shareware costs a lot more for a lot less!

The charge for .Mac makes more and more sense - do the maths...

Well 200,000 x $100 = $20 million in revenues so far that .Mac has contributed to Apple's coffers in *total*. Compare that to the $6 billion in revenues that Apple makes a year, mostly from harware sales. The math makes it VERY clear, in my opinion, that Apple has a lot more to gain from spurring hardware sales. The iApps are a huge attraction, especially for switchers, and the fact that they're free makes a huge impact.

Look, Apple's sales stayed flat despite the ongoing tech and economic downturn, and the ongoing PPC chip drought. The question I would ask is: how much worse could it have been? I think SJ and Apple have finessed their predicament almost to perfection...

[MOSiX Man]

Interest rates are WAY down over the last year, so a reduction in interest earnings is obvious.

[lmalave]

Originally posted by macktheknife
Posting a loss during Christmas (fiscal 1Q for Apple) is certainly bad news, although it isn't surprising considering how slow sales have been for the pro line of Power Macs. What's worrisome, though, is that Apple continues to lose money even after earning interest on its $4 billion cash hoard. A year ago, a big chunk of that $0.11 profit per share was due in part to the interest earned on the cash. That is, the money they lost in sales was compensated in part by the interest on their cash.

So if Apple is losing money even after the interest they earned, this is very bad news for the company.

Well, interest earnings are down for most people across the board for the past couple years, in case you haven't noticed :rolleyes:

It's all part of the business cycle - I wouldn't worry. Once the economy picks up both Apple's sales and interest income will surge, and Apple will me earning close to $1 Billion a year like they were in the late 90's.

[Rocketman]

Originally posted by Macrumors
Apple reported (http://www.apple.com/pr/library/2003/jan/15results.html) first quarter results today:

Apple's Financial Results Conference call is currently ongoing (http://www.apple.com/quicktime/qtv/earningsq103/).

The 1.47B quarter sales while good is a tiny fraction of other corporations and small compared to several PC companies. So Apple is a small fish in a big pond.

The margin reduction from 30% to 27% is based on several factors including post 9-11 slump, Motorola failing to deliver premium value processors that command new sales at high margins, and a focus on free products like iApps.

I would not place too much emphasis on the "net profit" as it is a tax motivated figure and Apple is not a major dividend paying company. With the elimination of dividend taxes Apple might be one of those few companies that ADD dividends. They have high margins and high cash, which is the conditions necessary for divident paying.

Also the low net profit is largely impacted by strong retail outlet growth. As soon as location growth slows they will be declaring more net profit simply because they have fewer deductions to shelter income with.

I would be very interested to see margins broken down by product line. The year of the laptop sounds like the year of margin growth to me.

Apple could use more software revenues and they are obviously aware of this based on their efforts to charge alot for .mac and and nearly charging for some iApps. But if they charge for apps like their presentation, all-in one programs, whatever office alternative they eventually release and get more adoption for audio and video apps, they will be doing good.

What they really need is the Marklar program to not be yet another prep without a product. Some PC owners will never buy a Mac till they are de-enculturated and that can be done with a single cycle with Marklar/Star Trek/whatever.

Apple could use more zealots but to gain them they will have to establish a clear benefit path. The least resistent path for that id to start something running on PC's and show people WHY they NEED a Mac to really do what they now want.

People learn experientially better than intellectually.

Rocketman

[Nermal]

International sales accounted for 43 percent of the quarter's revenues.

OK, Apple's making international sales. However, as most people outside the US know, most of Apple's products are a lot more expensive internationally than they are in the US. I think that if Apple put their international prices in line with their US prices, then they would make many more sales, and therefore more revenue, more market share, etc. Anyone else agree?

[Redhorse]

Originally posted by Nermal
[B].... Anyone else agree?

A big YES!

We need a Power Mac G4 for home users and switchers. The iMac TFT ist great, but a desktop or tower about 1000 € (incl. tax) will push up the market share!

[macktheknife]

Originally posted by Rocketman
I would be very interested to see margins broken down by product line. The year of the laptop sounds like the year of margin growth to me.


Apple's latest 10-K report shows the following breakout of sales by product lines. Sales are in millions of US dollars and the percentages represent proportion of sales:

Power Macintosh net sales - $1,380 (24.0%)
PowerBook net sales - $831 (14.5%)
iMac net sales - $1,448 (25.2%)
iBook net sales - $875 (15.2%)
Software, Service, and Other net sales - $1,208 (21.0%)
Total net sales - $5,742

You wouldn't have guessed it (and I certainly didn't), but Apple makes more than a fifth of its revenues through the sale of software.

[Rocketman]

Originally posted by Nermal
International sales accounted for 43 percent of the quarter's revenues.

OK, Apple's making international sales. However, as most people outside the US know, most of Apple's products are a lot more expensive internationally than they are in the US. I think that if Apple put their international prices in line with their US prices, then they would make many more sales, and therefore more revenue, more market share, etc. Anyone else agree?

Much of that is taxes associated with differences in how different countries tax. VAT is common in europe and income tax is commin in US. As such much of international sales prices effectively include double taxation. This can only be solved by treaty.

I sell tech products and sadly see the exact same thing.

Rocketman

[vniow]

Originally posted by macktheknife
You wouldn't have guessed it (and I certainly didn't), but Apple makes more than a fifth of its revenues through the sale of software.

http://img.ranchoweb.com/images/veronica/eek21.gifhttp://img.ranchoweb.com/images/veronica/eek21.gifhttp://img.ranchoweb.com/images/veronica/eek21.gif

[lmalave]

Originally posted by macktheknife

You wouldn't have guessed it (and I certainly didn't), but Apple makes more than a fifth of its revenues through the sale of software.

Freakin' Applecare :mad:

Tack on $300 to a product that's on average $1500 or so, and yeah, that'll add to your revenues!

[Chad4Mac]

During the conference call a question arose about the PowerMac and the slumping sales. The question was something like, "what is Apple going to do to boost PowerMac sales?"

The response by Fred was that Apple is confident that future sales will increase due to new product innovations on the PowerMac later is year.

When Apple releases the new PowerMac, and if they can continue to keep sales up on the current computer line/software/iPod, the overall balance sheet or accounting picture could be quite good. This too in retrospect with the better CompUsa and Apple sales revenue.

We are in the worst of the worst (if not in October) and Apple (beside wierd payments) is flat, with no real downturn. Just keep to budget on R & D, release useful, innovation products and there won't be a problem.

I think that the later release of the PowerMac is a good thing, being that later this year we should see some kind of economic turn-around, which should draw bigger demand to a pro-line PowerMac.

IMO, later this year, Apple will be release products that turn heads as usual, increase market share (based on Apple Stores and Apple Online sales to Windows customers), and still produce a rock solid balance sheet.

I like the buy symbol...

Chad4Mac

[Choppaface]

Originally posted by lmalave
Tack on $300 to a product that's on average $1500 or so, and yeah, that'll add to your revenues!

ya, especially when they don't even have to pay for all those powerbooks with the bad paint :rolleyes: :rolleyes:

i wonder how many people actually cost apple $300 or more in tech support

[MacKid]

Originally posted by lmalave


Freakin' Applecare :mad:

Tack on $300 to a product that's on average $1500 or so, and yeah, that'll add to your revenues!

Ever had a problem with your computer, and then used AppleCare to have the hardware/software fixed or replaced? For something that would cost $70-$130, it's totally free! In my opinion, that it's a pretty good thing! :D

[achmafooma]

An overlooked point mentioned on MacMinute.com:

"The quarter's results included a $17 million after-tax restructuring charge and a $2 million after-tax accounting transition adjustment. Excluding these non-recurring items, Apple's net profit for the quarter would have been $11 million, or $.03 per share."

Sounds like Apple isn't doing half bad to me, and even if they can maintain the status quo that would end up being a profit in a quarter without those abnormal charges.

And maybe it's just working on a hunch, but I can't believe that market share has remained stagnant - I see a LOT of people buying their first Mac in the Apple store, and three of my friends PLUS myself have all switched in the last two years. I can't imagine this is isolated to people I know.

Apple's doing okay :-) Have faith!

[MacKid]

Originally posted by achmafooma
An overlooked point mentioned on MacMinute.com:

"The quarter's results included a $17 million after-tax restructuring charge and a $2 million after-tax accounting transition adjustment. Excluding these non-recurring items, Apple's net profit for the quarter would have been $11 million, or $.03 per share."

Sounds like Apple isn't doing half bad to me, and even if they can maintain the status quo that would end up being a profit in a quarter without those abnormal charges.

And maybe it's just working on a hunch, but I can't believe that market share has remained stagnant - I see a LOT of people buying their first Mac in the Apple store, and three of my friends PLUS myself have all switched in the last two years. I can't imagine this is isolated to people I know.

Apple's doing okay :-) Have faith!

I agree!:D My local Apple Store (Tysons' Corner) has been increasing in population ever since the Thanksgiving sale. I think Apple is doing pretty good in terms of catching some eyes.

[Chad4Mac]

Originally posted by achmafooma
An overlooked point mentioned on MacMinute.com:

"The quarter's results included a $17 million after-tax restructuring charge and a $2 million after-tax accounting transition adjustment. Excluding these non-recurring items, Apple's net profit for the quarter would have been $11 million, or $.03 per share."


Keywords: "...would have been $11 million, or $.03 per share."

Keyword: "Accounting"

Chad4Mac

[unfaded]

You wouldn't have guessed it (and I certainly didn't), but Apple makes more than a fifth of its revenues through the sale of software.

Uh, that would include the iPod, under "other" - as it doesn't fit into the other four categories, now does it.

It actually may include the eMac as well, as it does not have its own category. Software is probably not a big portion of that.

[bryng]

I'm guessing those flat sales figures will mean that no matter how pissed we are about the lack of speed bumps, Apple are even moreso.

No great surprise from those software figures that new charges are being either introduced or mooted. Apple's core business is software, and that's not reflected in those numbers...

[Hawthorne]

Originally posted by Chad4Mac


Keywords: "...would have been $11 million, or $.03 per share."

Keyword: "Accounting"

Chad4Mac

Shuffling numbers in accounting is what makes this a great country!

Sincerely,

The Chief Executives of Enron :D

[Tue12]

Aaaaaaaaa. Aaaaaaaaaaaaaa. <clearing throat>

<puts on flame retardant suit>

"Apple is beleaguered."

<runs for dear life>

:p

[Macmaniac]

Originally posted by MacKid


Ever had a problem with your computer, and then used AppleCare to have the hardware/software fixed or replaced? For something that would cost $70-$130, it's totally free! In my opinion, that it's a pretty good thing! :D

Accuracy Accuracy!!! Its not $300 for Apple Care, my family paid $150 for 3 years of Apple care for our iMac, it would have cost us $300 if we had used CompUSA's warrenty.
We had 2 fairly large problems with OS X in its infancy and Applecare made all the difference. They stayed on the phone for over 2 hours and got the problem solved, heck try that with Dell and you'll be on hold for 2 hours(for the doubters yes I was on hold with Dell for 2 hours when Win98 died on my friends computer). I'd say Applecare has paid for itself, if paying $20 more means getting better service I'll take that any day!!!

[MrMacMan]

Gah, apple start making profits or atleast inflate your earning with *other means*.

Arther Anderson, can you help us with our book keeping?

Excellent.


Thinks about future: Apple posted a 400 Million $ profit today blowing away forcasted sales, Mr. Jobs how did you do it?
We sold alot more other stuff that wasn't computer related.
Ah ha... right.

[jamilecrire]

Originally posted by Redhorse


A big YES!

We need a Power Mac G4 for home users and switchers. The iMac TFT ist great, but a desktop or tower about 1000 € (incl. tax) will push up the market share!

Uh, that's around $1100 dollars, I'd buy a G4 Tower for that as well. Don't hold your breath on that one.

[reedm007]

Just a note on european pricing...

Not only does it include a higher tax than the US, it *includes* that tax in the price :)

So: iMac starts at 1 554 ? in France, which is 1 299 ? before tax. Using finance.yahoo.com, the current exchange rate shows:

1 299 ? = $1370

US pricing is: $1,199 + tax. US average sales tax is (again, according to finance.yahoo.com) 7.74%, which means US pricing comes out to:

$1,199 * 1.0774 = $1,294

AKA, european pricing is only $75 USD more expensive.. not a whole lot for a company that is located in the US?

[bbarnhart]

An interesting point to look at this quarter and for many previous quarters is Apple doesn't make much money off the sale of its hardware or software. They make most of their money off investments or interest.

Some may argue that Apple is really a software company or argue that they are a hardware company, but they really not either. They don't make that much money off either side. It the money the already have that is making the profits.

However, this was a great quarter considering how low PowerMac sales were. If you look at the numbers (and I don't have them in front of me now) for PowerMac sales, they were down around 25% from the year ago quarter. If Motorola or IBM can give Apple a fast Mhz processor, the PowerMac sales would have generated a lot of profit.

Perhaps this year it will happen (CPU-wise) and Apple can stop being a bank.

[freemidnight]

How about other platforms.

How they did it in the same period?

Better???

Worse???;)

[lmalave]

Originally posted by freemidnight
How about other platforms.

How they did it in the same period?

Better???

Worse???;)

I think I read that worldwide sales were flat - up only 2% in unit sales, I think. And I think predictions are for 6% unit sales growth this year.

[shadowfax]

from what i hear, Dell is one of the only companies still making a profit in the PC market...

[tgrundke]

A few things come out of the quarterly report that are important:

1) Overall results are not bad - the loss came mainly from restructuring and non-recurring items, which is understandable and justified.

2) Unit sales, far more important, IMO, were 'healthy' in the quarter. I wouldn't say 'fantastic', but they were flat with last year.

3) Diversification: it appears that the attempt to draw revenue from non-traditional sources (applications, services, and new harwdare matrices) is moving toward good profitability for the company.

4) iPod and Windows: I was very impressed to see that 50% of iPod sales were of the Windows variant and that sales were so strong of the product after a year on the market. This bodes well for future well designed, well priced Apple consumer products.

This should help point out to Apple's executive management and board that there is room to diversify successfully into a more 'Sonyesque' company (as was suggested to The Board many times in the 1980s, and rejected).

4) Server sales: Once again proves my point that one should never herald "success!" after a few months of an Apple product launch. The initial success of the XServe comes primarily from the pent-up demand and 'low hanging fruit'.

Market conditions are more of a driving factor here: as few companies are expanding, there is little need to increase server capacity at the moment, especially not from Apple.

This is perhaps the hardest market for Apple to crack and it will take significant time and signficant resources to do so. Patience.

5) Education: Remains a significant point of concern for me. Apple's position there is eroding quickly despire some very decent efforts on behalf of the company.

6) iMac sales: While there was no official breakdown as to WHO bought those computers (schools versus regular consumers) I would be very interested in those numbers. Very telling was that the LCD iMacs made up less than 50% of the product sales. Demonstrating that the pricing is still not in-line with current market trends.

7) PowerMac: Should come as no surprise that sales were horrid during the quarter, and they have been for more than a year. Interesting how Anderson faults the economy and Quark...when we all know what the *real* reason for the sales fall-off is: Your friend and mine, Motorola.

The PowerMac and iMac LCD sales both demonstrate that there is a problem with Apple's price/performance ratio at the moment. In an industry where performance figures clock up near exponentially and prices fall accordingly, Apple has not been able to follow suit. This is hurting market-share growth dramatically, no question about it.

8) PowerBook: Again, no surprise. Pent up demand for the Autumn 'Book revisions helped fuel this, along with significant price cuts to bring this product line back into reality. But the question is, can Apple keep the momentum on PowerBooks going through the year? Chances are - yes, at the moment.

Overall, not terribly bad considering the state of the economy and the extra overhead that Apple has incurred over the last year. I would anticipate that the reaction from Wall Street tomorrow should be neutral to slightly negative, depending on the mood of the markets tomorrow.

It does demonstrate that Apple appears on a clear path at the moment, the Christmas quarter wasn't horrific, and the diversification strategy and retail strategies are beginning to pay off.

The real question will be for Apple going into the 2nd Quarter of the year. As it's the slowest traditionally, it will be imperative that Apple have solid products and beefier margins going toward the March results. My guess is that the new PowerBook 17" is in the matrix now to drive that profit margin (and from the 'lines' at Apple's online store it appears so). I will put $1000 on us seeing significant PowerBook 15" and iMac updates within the next 30 days to help drive solid sales in the 2nd quarter as well.

I think this is how we're going to see Apple shifting its product strategy: release a high-margin product along with a low-margin, high volume product (the PowerBook 17" and 12") to drive growth and help keep margins consistent.

I will also bet that Apple has better learned how its product sales "spike and bottom out" and how it is increasingly impacted by similar spurts in the Wintel world. As a result, products are going to be refreshed more often to keep things moving - particularly in the mobile front for the time being.

Looks to be a good year for Apple if the plan can be executed properly. Best of luck!

[lmalave]

Originally posted by tgrundke
I think this is how we're going to see Apple shifting its product strategy: release a high-margin product along with a low-margin, high volume product (the PowerBook 17" and 12") to drive growth and help keep margins consistent.


I like! You'll see me buying the cheapo mass-market product :D

[tgrundke]

Originally posted by lmalave


I like! You'll see me buying the cheapo mass-market product :D

Ah - you introduce a very interesting dynamic into the Apple universe. Apple has traditionally neglected the "cheapo, mass-market" because Jobs' detests that crowd, but he has recognized that it is vital for their survival.

This is why I still think that the figures demonstrate one thing clearly: That price/performance is still out of balance compared to the rest of the market and what is being demanded at the moment.

[tgrundke]

And actually, I still haven't seen the breakdown on figures of interest income.

This is still a troubling situation for me, as the VAST majority of Apple's yearly profit has been derived from interest income for some time now.

While I like the product offerings and direction, the fact that the company's operating profits are insufficient to float it does not bode well...IMO.

[Telomar]

Originally posted by tgrundke
And actually, I still haven't seen the breakdown on figures of interest income.

They made ~14%p.a. on the investments they had. Equates to around $150 million of $1.47 billion in revenue. It's noteable.

Originally posted by bbarnhart
An interesting point to look at this quarter and for many previous quarters is Apple doesn't make much money off the sale of its hardware or software. They make most of their money off investments or interest.

Some may argue that Apple is really a software company or argue that they are a hardware company, but they really not either. They don't make that much money off either side. It the money the already have that is making the profits.

They make 10% of their revenues as interest. That definitely isn't most of their money. Apple is a hardware and increasingly a software company (offers better margins).

Unfortunately they are a company that if they didn't have their investments would be posting some considerable losses. That's a problem.

[steveh]

Originally posted by lmalave


Freakin' Applecare :mad:

Tack on $300 to a product that's on average $1500 or so, and yeah, that'll add to your revenues!

Since when are you *forced* to buy AppleCare?

[Ramble]

Originally posted by Choppaface


ya, especially when they don't even have to pay for all those powerbooks with the bad paint :rolleyes: :rolleyes:

i wonder how many people actually cost apple $300 or more in tech support

I may have when they installed a new TFT and DVD drive in my Pismo on the last day of my warranty (no apple care) ;)

[alset]

Originally posted by artistry
Sales flat, but a loss. A poor business model IMHO.

Apple needs to earn a profit and this should come from what it does best: innovation. It shouldn't be afraid to charge for iApps despite what skinflints might say. This would have been a smaller loss if Apple had charged even a nominal fee for iApps - a lot of crappy shareware costs a lot more for a lot less!

The charge for .Mac makes more and more sense - do the maths...

Before you charge you must create demand. It's like selling drugs. The first few are free to get you hooked.

Dan

[lmalave]

Originally posted by tgrundke


Ah - you introduce a very interesting dynamic into the Apple universe. Apple has traditionally neglected the "cheapo, mass-market" because Jobs' detests that crowd, but he has recognized that it is vital for their survival.


Yes. It is time for Steve Jobs to embrace the Great Unwashed :rolleyes:

[NicoMan]

Originally posted by MOSiX Man
Interest rates are WAY down over the last year, so a reduction in interest earnings is obvious.
Well if you are a big company like Apple and you are sitting a $4 Bn cash hoard and count on the interests, well you don't let yourself be impacted by lower interest rates. What I mean is there are ways to hedge the interest rate risks, especially when your financial results depend heavily on it. So if they haven't covered at least part of that risk, that is horrendous management. Believe me, that's kind of my job.

NicoMan

[ipiloot]

Fred Andresson said:

We acknowledge that one of our biggest challenges is to get Power Mac sales back up to 200,000 units per quarter at least. The management is very focused on the situation and have a number of plans going forward to enhance performance in the Power Mac area. We truly believe there's some pent-up demand among creative professionals. We think that the typical 24-36 month upgrade cycle has been elongated by the difficult economy.

I think they know better than we do that the PowerMac line is very weak right now.

Let's see what happens

[Trimix]

I started my company last year with a brand new I-mac on my desk. It just works - and the helpline did absolutely everything for me to help me install my printer drivers - wonderful.
This year I will be buying 3 powerbooks and another I-mac (hoping for that 19" screen) for the company. Maybe it is me, but price is my last consideration when I see it all works flawlessly, and professional, friendly and constructive help is only a phone call away. I am a switcher, but an early one :-))

[lmalave]

Originally posted by steveh


Since when are you *forced* to buy AppleCare?

No one's forced to buy it, but they can certainly be bamboozled. When I went to the Apple Store to check out the new iBooks first hand, there was a young woman next to me, clearly not computer-savvy, that had decided to buy the $999 iBook. That's when the Apple Store salesperson really kicked into high gear - trying to sell more memory. Then when she agreeed to more memory, out comes the "well, it's $40 to install, but if you get Applecare for $300 installation is free". The poor woman was like umm...errr....ok.

So I figure after the salesperson was done with her she spent, what, over $1500 probably? Now, I'm not going to get into an argument over the merits of Applecare (already did that on a previous post), but I'm just saying that ANYTIME you go into a store expecting to buy a $1000 product and end up spending over $1500, that's NOT a positive experience. And that's NOT a way to initiate a customer relationship.

[lmalave]

Originally posted by ipiloot
Fred Andresson said:

We acknowledge that one of our biggest challenges is to get Power Mac sales back up to 200,000 units per quarter at least. The management is very focused on the situation and have a number of plans going forward to enhance performance in the Power Mac area. We truly believe there's some pent-up demand among creative professionals. We think that the typical 24-36 month upgrade cycle has been elongated by the difficult economy.

I think they know better than we do that the PowerMac line is very weak right now.

Let's see what happens

I like the double meaning that he slipped in there with the "enhance performance in the PowerMac area". To financial analysts, they interpret that statement to mean financial performance. But the rest of us know what he really means :D

[oldMac]

They're not great either. It appears that Apple's strategy is to spend as much on R&D as they can without ticking off the investors.

So long as other PC companies aren't making a ton of money in this market, it's a good strategy.

So how many PowerMacs do you think they'll sell if Quark is released in conjunction with the launch of a dual G5 at 2GHz in August?

[NicoMan]

Originally posted by lmalave
So I figure after the salesperson was done with her she spent, what, over $1500 probably? Now, I'm not going to get into an argument over the merits of Applecare (already did that on a previous post), but I'm just saying that ANYTIME you go into a store expecting to buy a $1000 product and end up spending over $1500, that's NOT a positive experience. And that's NOT a way to initiate a customer relationship.
Well, as much as I would like to think of people selling Apple computers being of a different breed of salespeople, they are only that: salespeople... You go buy clothes, a car or whatever, this is very likely to happen to you (at least they will try).

NicoMan

[macmax]

Hi:
I know i have told u before, my thesis is about apple.

Doyou know the biggest problem that people encounter when they think of buying a Mac?

Price

The 2nd one is "compatibility" ; so Apple is responsible for not knowing how to educaqte people here, when i tell them that i do everything in my mac and that it is fully compatible they stare at me in ow.

But price is a big factor, Apple can truly lower it's prices a bit without been hurt and they would catch more people by doing so , earning more.

About this quarter, Apple is doing fine, everything is down and i think they are going to be fine in a year and a half, well, if bush's administration don't start a ********** war , which i think will start by frebruary and one that might get out of our hands, let's pray not.

[NicoMan]

Originally posted by macmax
if bush's administration don't start a ********** war , which i think will start by frebruary and one that might get out of our hands, let's pray not.

Amen

[oldMac]

Originally posted by macmax
The 2nd one is "compatibility" ; so Apple is responsible for not knowing how to educaqte people here, when i tell them that i do everything in my mac and that it is fully compatible they stare at me in ow.


To suggest that it's 100% compatible is not really fair. They're not.

Let me count the ways...

1) Microsoft Office
While Mac Office may be mostly file-format compatible, it's certainly not price-compatible with the Windows version. It's much cheaper to acquire Office for Windows. This has me currently using Appleworks to view Word docs and I generally send everything out as PDF.

2) Microsoft Access
To my knowledge, there's nothing on the Mac platform that can open an ".mdb" (Microsoft Access) file. This is a show-stopper for many small businesses. Yes, there is FileMaker, but nobody is going to rebuild all their stuff just to be able to make the Switch(TM).

3) Windows (SMB) Networking
Yes, OS X supports SMB, but it's far from perfect. Many bugs and annoyances exist. This is especially true when connecting to a machine outside of the local network. Ironically, it seems more reliable to connect a PC to a Mac using SMB than to connect a Mac to the PC.

4) Software Titles
While many good titles exist exclusively on the Mac and many good titles are cross-platform, there are many, many others that simply don't exist on the Mac side or exist only as older versions on the Mac. This can be very annoying to businesses when they know that solutions exist and they can't use them. Virtual PC can "help" in this area, but it's a kludgey solution and folks might be better off by placing a $500 PC under their desk next to the Mac. Windows terminal services can obviate the need for a second monitor.

5) Hardware
USB has gone a long way in helping the hardware world to make cross-platform products. However, the drivers are still a problem. Apple needs to go even further in making it as simple as possible for vendors to make high-quality Mac drivers. Furthermore, Apple should have folks dedicated to open source projects that attempt to create drivers for non-supported hardware.

On the bright side, Macintosh's are now more compatible than they've ever been. SMB and printer support is better with each OS X release. I can only dream of a day where it's simpler to use Windows networking on a Mac than it is on Windows!

[snahabed]

I'm confused.

Now I am a retard at all things finance, but it seems to me, that in the worst economy in almost two decades, and certainly in the worst economy since the 90s net/tech revolution, that pretty much breaking even while having 4.5 billion in the bank, all while pumping tons of money into R&D for long term growth, is actually very, very good.

What is the problem? Interest rates will go back up.

[Trimix]

Maybe I have it wrong - but the mac users seem to be in the creative area, the schools and at the home front.
I do not yet :-( see the day that big corporations are switching to the mac. In any event, then if the artsy people around us are content, schools can do what they need to do on a mac and we at home can use office for mac, then what is the point to be griping about compatibility issues ?
I love my mac, it works super-well, and my company runs entirely on mac.

If we get more compatibility for the 'special programs' fine, if not to hell with the Windows world. We all seem to be able to do just fine, there will always someone finding something that does not work on a mac. So what.
The argument about Access is very valid, but MS are not putting Access on the mac for precisely that reason - that we can continue with our self-flagellation, and that would-be-switchers who read these threads have something to turned off.
Mac is a terriffic experience. That is what Apple are trying to sell. Let's give them a helping hand

[oldMac]

There are many, many good reasons to switch. However, the worst thing that we can do as Mac-heads is to mis-lead a potential switcher by suggesting that the platforms are 100% compatible.

Users should switch to the Mac on its primary merits.

1) The Best user experience
2) The Best bundled software
3) Better OS/App reliability
4) Faster-improving technology (Apple is moving much faster than MS these days in improving their systems)
5) Superior hardware/software integration
6) Higher Quality software
7) More overall compatibility (Mac/Unix/Windows)
8) Inherent PDF capability (great for print)
9) HUGE open-source capability (so many projects to build from)

100% compatibility will never happen and people basing a buying decision on that are bound to be disappointed.

[Kid Red]

Originally posted by snahabed
I'm confused.

Now I am a retard at all things finance, but it seems to me, that in the worst economy in almost two decades, and certainly in the worst economy since the 90s net/tech revolution, that pretty much breaking even while having 4.5 billion in the bank, all while pumping tons of money into R&D for long term growth, is actually very, very good.

What is the problem? Interest rates will go back up.

Take away the restructuring fees and they made a profit. You're right, not bad for the economy we are in. Dell is the only other pc make making any money. With Gateway closing stores left and right, Apple is actually rocking.

You're aren't confused, other are.

[Le Big Mac]

Originally posted by lmalave


No one's forced to buy it, but they can certainly be bamboozled. When I went to the Apple Store to check out the new iBooks first hand, there was a young woman next to me, clearly not computer-savvy, that had decided to buy the $999 iBook. That's when the Apple Store salesperson really kicked into high gear - trying to sell more memory. Then when she agreeed to more memory, out comes the "well, it's $40 to install, but if you get Applecare for $300 installation is free". The poor woman was like umm...errr....ok.

Go to Best Buy or Radio Shack, and they'll try to sell you an extended warranty on anything you buy. A guy once tried to sell me an extended warranty on a cordless-phone battery; another one on a $20 digital thermometer. They do this for a basic reason: the margin on these warranties is huge, so most stores give bonuses to salespeople who sell them. Doesn't matter how many computers you sell, your bonus is based on sales of extended care.

My first question when asked is usually: "Do you have so little confidence in the quality of the product I'm buying that you think I need to buy an extended warranty?" That usually shuts them up. If not, I just keep repeating the question, phrased slightly differently. If they persist, I tell them that I'd better not buy the item if they're that certain it will break outside the regular warranty period.

Long and short of it is that unless you are extremely risk averse, extended warranties, like Apple Care, are a waste of money. Sure, things break, but usually in the first few weeks, when they're under the regular warranty. After three years, you probably don't want the thing repaired, you want an upgrade anyway.

[dickrichie]

Yes the Q1 totals dont look good but look at why the totals are the way they are. Apple actually made money this past quarter but do to the restructuring they had fines which caused the loss. I know right off the bat this looks bad but its a one time fee and sets the stage for the next quarter. this doenst mean that "things look bad or apple" or that "This is the end of apple". Trust me Apple is stronger then ever and has all the pieces in place to grow. Read the entire article not just the headline.

[Dave K]

Originally posted by lmalave
That's when the Apple Store salesperson really kicked into high gear - trying to sell more memory. Then when she agreeed to more memory, out comes the "well, it's $40 to install, but if you get Applecare for $300 installation is free". The poor woman was like umm...errr....ok.

You haven't done much electronics shopping lately, have you?

"Would you like an extended warranty" effectively replaces "Would you like fries with that" in the fast food employee to electronics sales rep. transition guide...

[Rocketman]

Originally posted by Telomar


They made ~14%p.a. on the investments they had. Equates to around $150 million of $1.47 billion in revenue. It's noteable.

Unfortunately they are a company that if they didn't have their investments would be posting some considerable losses. That's a problem.

Notably they make $150m/q interest and gains, spend $125m/q on R&D, and use the retail expansion and R&D to take HUGE tax deductions so their huge 27% margins result in only an $8m taxable event.

This company is transferring operational efforts to a huge technology and financial base. This is long term thinking.

Rocketman

[railthinner]

Seems to me Apple should start opening stores at a faster pace. Unload some of that cash and dump it into real estate. It worked for McDonalds for a long time. I know they're hurting now. (McDonalds that is. gee the economy is bad.) Can't wait for the store to open on Michigan Ave in Chicago. Right now there's an empty lot with some scaffolding and a big Apple on it. For those who aren't familiar, this is one of the greatest retail strips in the country and this store is sure to be magnificent.

More store. More stores.

[jettredmont]

Originally posted by railthinner
More store. More stores.

And, yeah, they're only losing a net $1million per store, per quarter, so why not build more? Eight fewer stores and Apple would not have shown a loss last quarter.

There is a down-side to putting Apple Stores in every high-rent mall in the US. I do believe their strategy of increasing brand awareness is smart and will pay off, but there is a point of diminishing returns where the next store costs more than it is worth in brand building.

IMHO, Apple's doing a good job of opening stores at a brisk but not breakneck speed.

[Rocketman]

Originally posted by railthinner
Seems to me Apple should start opening stores at a faster pace. Unload some of that cash and dump it into real estate. It worked for McDonalds for a long time. I know they're hurting now. (McDonalds that is. gee the economy is bad.) Can't wait for the store to open on Michigan Ave in Chicago. Right now there's an empty lot with some scaffolding and a big Apple on it. For those who aren't familiar, this is one of the greatest retail strips in the country and this store is sure to be magnificent.

More store. More stores.

This is a bad time to invest in real estate or bonds. If interest rates tick up the market for real estate will dry up in a big hurry and given RE is a trailing sector and the market recently crashed severely, we are expecting the other shoe to drop really soon. THEN Apple should buy RE :)

When interest rates rise, lower rate bonds drop in principal value. They should be trading out of longer duration bonds into shorter duration bonds for their holdings at this time and be prepared to hold them to maturity.

This is a fairly good time for stocks, and for many countercyclical products. Service businesses can be good and anything that gets paid for right now is fairly good.

Does anybody have links to portable FW800 raid devices which have been released or will be about the same time as the Al17? Thanks.

Rocketman

[Rocketman]

Originally posted by jettredmont


And, yeah, they're only losing a net $1million per store, per quarter, so why not build more? Eight fewer stores and Apple would not have shown a loss last quarter.

There is a down-side to putting Apple Stores in every high-rent mall in the US. I do believe their strategy of increasing brand awareness is smart and will pay off, but there is a point of diminishing returns where the next store costs more than it is worth in brand building.

IMHO, Apple's doing a good job of opening stores at a brisk but not breakneck speed.

Given Apple's strategy of stores within 15 minutes of 85% of the population they could accomplish this with standalone stores in low rent parts of town (and even add valet parking). It would probably STILL save 60-70% of the rental cost since many mall stores take rent + % of sales!.

Heck, just locate next to the top 40 Radio Shack outlets :)

Rocketman

[GeneR]

Originally posted by Rocketman


Given Apple's strategy of stores within 15 minutes of 85% of the population they could accomplish this with standalone stores in low rent parts of town (and even add valet parking). It would probably STILL save 60-70% of the rental cost since many mall stores take rent + % of sales!.

Heck, just locate next to the top 40 Radio Shack outlets :)

Rocketman

I am very impressed with your input, Rocketman, and believe you make some very compelling arguments. I guess we'll just have to see.

[railthinner]

Obviously there are those with more financial know-how than myself here but I believe part of Apple's strategy of holding cash was for times like these. And it is when you start to take a hit on interest earned that you invest that cash. Not in a long term bond which does nothing to expand the nature of the business, unless Apple buys a bank. Rather you invest in expansion; stores. Homes have been selling like mad (slowing down now) the past six or more months because of interest rates. Hasn't the same worked in commercial real estate? And I agree there are other high profile store opportunities outside of blood sucking malls, but I wouldn't put anything in the strip mall, where most Radio Shacks are located for example, unless your replacing a boarded up Gateway just for the sweet picture of triumph.:)

[AmbitiousLemon]

some of you seem to be confused about this report. this is positive not negative. apple did great. profit up. sales up. cash up.

try reading the report before assuming things are bad for apple. i found this summary good.


Analysis: Behind the Numbers - The Financials and Figures of Apple's Q1
by Remy Davison, Insanely Great Mac
January 16th 2003

Related Articles
- Apple reports small loss after charges
- Apple: Back to Performa-Land?
- Apple Financials May Signal End of Tech Drought
- Is the 'Switch' Campaign Falling on Deaf Ears?
- Apple Hardware 2002: Steady as She Goes
- Apple nabs 5.2% of desktop market
- Apple Workforce Up - and Power Mac Profits Down
- Op-Ed: Apple Screwing Resellers to the Tune of 8%
- Education: One little contract at a time
Apple CFO Fred Anderson provided a lot of interesting numbers in his conference call
detailing Apple's Q1
2003 results.

Apple in fact made a gross profit of $11 million or 3¢ per share, in line with market
guidance. The loss was attributable to non-recurring items, including a $17 million after-
tax restructure and $2 million in accounting transition adjustments.

Revenues were $1.47 billion for the quarter, a 7% increase on a year ago - an excellent
performance, according to Anderson, particularly given the softness of the PC market.

Macintosh shipments

Apple clearly place eMac, iMac and original CRT iMac into a single product category, somewhat confusingly known as 'iMac.' The breakdown of iMac sales was as follows:

- CRT: 58,000
- eMac: 106,000
- LCD: 134,000

The 17" LCD iMac was the most popular model, which indicates the rumor regarding EOL for the base CDRW iMac - and the 15-incher itself - may have some credence.

Strong demand for the iBook continued, although Anderson didn't mention a figure. A little math tells us that the figure is around 187,000, which represents a strong performance. The $999 price-leading iBook made a difference, the CFO said, while the 14.1" model was also successful.

The PowerBook G4 received a boost from the late-2002 revamp, and sales climbed once again to top the 100,000 mark. One analyst expressed his surprise at the strength of PowerBook sales; in reply, Anderson noted the 'value equation' of the revised PBs, particularly given their lower price points.

The Power Macintosh line continued to disappoint, with one major exception: XServe. Anderson thought the PM's sales performance "disappointing," with 158,000 units shipped, including XServe. Shipments for the Power Mac line as a whole were down 25% compared to the year-ago quarter.

The reason? Unlike Jobs' not-so-oblique remark at the commencement of his keynote, Anderson didn't keep his powder dry when accounting for flat Power Mac sales. Plain and simple, Pro customers are waiting for QuarkXPress 6.0 for OS X.

XServe is a shining beacon in the Pro sector, however, with sales up 350% and shipments at 6,000 for the quarter. Revealingly, Anderson did disclose a revised server product would ship this quarter, although he would not be drawn on details. Asked about Apple's R&D spending on XServe, the CFO replied that it was not a figure he would disclose.

Not a Mac, but the iPod is like a 'fifth Beatle' in the Apple family. 216,000 iPods shipped and now, Windows has finally beaten us. Yes, Windows iPod shipments now, for the first time, account for over 50% of all 'Pods. Best Buy was mentioned by Anderson as one of the key retail outlets responsible for getting iPods into Wintelians' hands.

Geographical revenue breakdowns

In the America's revenues were up 5% on the year-ago quarter, with Apple Asia-Pacific
sales also up a significant 27%. The US was up 16% including education and Apple
Retail. Excluding Education (the December quarter not being an Ed-purchasing season),
US sales were up 21%, including Apple Retail. Europe and Japan lagged, however;
European sales were down 3% and Japan a massive 24%. However, the latter figure is
more indicative of the Japanese market as a whole, as Apple CPUs continue to perform
strongly, relative to the rest of the PC market.

Unit sales, inventory, expenses and revenues

Apple shipped 743,000 CPU units for the quarter, almost in line with the year-ago
quarter. Sales were flat, but inventory declined 11% during this quarter, which was a
strong performance, in line with expectations. Only 4 weeks of inventory is in the
channel, with 4.5 weeks on a forward-looking basis. Apple's target is 4-5 weeks of
inventory.

The CFO noted Apple's strong revenue performance in a flat market, and attributed it to
four key factors:
- Strong 'beyond the box' revenues
- Higher average selling prices
- Greater range of products
- More direct sales

The LCD iMac also increased revenue margins; pre-MWSF 2002 CRT iMacs were selling wholesale for $876; LDC iMacs fetched $1,195 in Q1 2003.

26.3% of total revenues were 'beyond-the-box' sales. The strongest performers in the 'beyond-the-box' revenues were iPod and software, but Anderson also noted that CompUSA 'beyond-the-box' sales had improved considerably.

Gross margins were up to 27.6%, due to three main factors: lower component costs; increased PowerBook sales; and a higher proportion of direct sales.

Operating expenses were $443 million, in line with previous guidance, including $23 million in pre-tax restructuring. The restructuring including the closure of Apple's Singapore manufacturing operations; and $6 million associated with PowerSchool 'restructuring' [read: sackings - Ed.].

Lower interest rates were canvassed, particularly in light of Apple's enormous treasure chest, now at an impressive $4.62 billion in cash and short-term investments. Cash is up $125 million. Anderson said that declining markets had forced the company to realize some of its investments earlier than anticipated (i.e., as share prices and investment dividends fall). Questioned about the outlook for short-term investments and interest rates, Anderson said he thought interest rates would not fall further, but that the investment climate would remain flat throughout the year; however, he was clearly reluctant to speculate further on this point.

Education

Whereas in Q4 '02, Anderson was decidedly downbeat about Apple Ed sales, there was a more positive spin this time around. Portables account for over 33% of Macs sold in education, "much higher" than the PC education average. He also noted that the free OS X for teachers had been overwhelmingly successful, with over 300,000 copies shipped to educators.

Outlook

The CFO gave the usual cautious, if not pessimistic, guidance for the current quarter. He said revenues and gross margins are expected to be flat, despite anticipated strong sales of the new PowerBook, which Apple is counting on to contribute substantially to revenues.

Lower interest returns on cash investments are expected, with a slight profit projected for Q2 2003. The message Anderson pushed very strongly was that Apple would not sacrifice its long-term growth strategy for "quick profits." By this, the CFO meant Apple's investment in human capital and R&D, with the budget for the latter approaching $500 million per annum, a figure which approximates the expenditures of Apple's glory years.

As a footnote, Anderson added that not all the data was in yet, but that December wasn't a strong quarter for the PC industry as a whole.

Endgame

Now a $6 billion company, Anderson was asked what the end point of Apple's strategy was, particularly with regard to Apple's Retail Stores. Anderson regarded Apple's various initiatives as interrelated, complementary themes: Retail; "our own people" in 174 CompUSA stores selling "our differentiated product".

Apple is "gaining market share", said Anderson, with Retail "controlling more of point of sale." The Switch campaign, vistors/buyers at Apple Retail Stores - they're all closely tied in. And Anderson believes that Apple is gaining "real market share" out there.

The Bottom Line

Steady as she goes, is Anderson's mantra here. Invest in R&D. Ensure consistent profitability. Increase 'beyond-the-box' revenues. If the industry ever turns the corner, Apple should be in a good position to cash in on its investments and strategies.

In a nutshell, this means we'll continue to get spectacular products from Apple. But if you're in the stock market for some quick returns, you're better off somewhere else on the Nasdaq, buddy. link (http://www.insanely-great.com/news.php?id=1540)

[oldMac]

Originally posted by Rocketman
Given Apple's strategy of stores within 15 minutes of 85% of the population they could accomplish this with standalone stores in low rent parts of town (and even add valet parking). It would probably STILL save 60-70% of the rental cost since many mall stores take rent + % of sales!.

Of course, since Apple sells a high-end product, they wouldn't sell any computers in low-rent parts of town.

That's the whole reason for the failure of Gateway's stores. And everybody knows that Apple is more expensive than Gateway. :)

Not to mention that foot traffic is key to what Apple is doing with its stores. The best place to garner that is the mall.

[Sonofhaig]

"if bush's administration don't start a ********** war"

>>>>>>>>>>

Really.... Are Mac sales directly linked to Saddam? :o

[GeneR]

Originally posted by AmbitiousLemon
some of you seem to be confused about this report. this is positive not negative. apple did great. profit up. sales up. cash up.

try reading the report before assuming things are bad for apple. i found this summary good.


Does anyone know how much of the market Apple holds at this point? If Apple is gaining through the Switch campaigns, I'd sure like to know how effective it has been. Thanks! :D

[groovebuster]

Originally posted by reedm007
Just a note on european pricing...

Not only does it include a higher tax than the US, it *includes* that tax in the price :)

So: iMac starts at 1 554 ? in France, which is 1 299 ? before tax. Using finance.yahoo.com, the current exchange rate shows:

1 299 ? = $1370

US pricing is: $1,199 + tax. US average sales tax is (again, according to finance.yahoo.com) 7.74%, which means US pricing comes out to:

$1,199 * 1.0774 = $1,294

AKA, european pricing is only $75 USD more expensive.. not a whole lot for a company that is located in the US?

Hmmm....

1370 -1199 = 171 !!!

So the iMac costs already $ 171 more in Europe before tax. I don't know where you got your 75$ from? :confused:

It's not the VAT the people are complaining about, it is that the price is already about 15% higher before you include the tax.

Another comparison. The "little" G4 costs $1699 before tax in the US (Apple Store) and $2024 in Europe (Apple Store). Now is that sick or what? That's a difference of more than $300. Add a few bucks and you get a PC with Linux for that money...

A lot of people are sick of paying a "penalty" by Apple for not living in the US....

But nobody is buying at the (Online-) Apple Store in Europe anyway. If you buy at the right dealer you get the iMac for less than 1,400 € including VAT... before tax that equals a price of 1286 US$, which is still almost 90$ more than the US price! And if you would know on how low margins those independent stores sell their Macs you would start to cry. They make their money with the extras the people buy...

A good reason could be, that the Apple branches in other countries have to stand on their own feet financially. So Apple is selling the Macs to Apple Europe for almost the same price as to the dealers in North America. Apple Europe HAS to go up with the prices, because the margin they add is what they are living from!

As long as that sick business model goes on, we'll see no change in pricing over here... and sales will slow even more in the future.

And that's pretty sad, because I know a lot of people who are not willing to be charged 100€ (and up) more (for an already pricy item) just for being so "unfortunate" not to live in the US... Especially since we are facing really hard times economically in Europe as well ...

[oldMac]

Originally posted by Sonofhaig
"if bush's administration don't start a ********** war"

>>>>>>>>>>

Really.... Are Mac sales directly linked to Saddam? :o

I would say "indirectly" and I agree with the poster.

I know that this is a little personal for Bush since "he tried to kill my dad" and all, but it's going to get a little more personal for the families of the dead soldiers that will be coming home in a few months. (Assuming we do go to war.)

On a more "economic" note, somehow I don't think a war in Iraq will be good for oil prices and high oil prices will certainly not help our economy, which will not help Apple's sales.

[CrackedButter]

This is what the internet blatantly points out; the differences in price across continents. In the online world everybody is (non business) equal but businesses still draw boundaries by pricing everything as normal in the different parts of the world.

I'm actually looking online right now to see if i can get a flight to the states just to take advantage of the pricing, advantage is i get a holiday as well as a mac. As opposed to just getting a mac over here.

Are there any Apple Stores in Orlando?

[Sonofhaig]

"I would say "indirectly" and I agree with the poster.

I know that this is a little personal for Bush since "he tried to kill my dad" and all, but it's going to get a little more personal for the families of the dead soldiers that will be coming home in a few months. (Assuming we do go to war.)

On a more "economic" note, somehow I don't think a war in Iraq will be good for oil prices and high oil prices will certainly not help our economy, which will not help Apple's sales."

>>>>>>>>>>

What a stretch! You have some imagination. Tell it to Rush Limbaugh..... :D

[Trimix]

I am reading with interest about the price differences in the various countires and across the continents. It is not as if I can throw 300 or 400 dollars away every time I buy a computer, but when I had to take my old compaq to a computer store twice, to rid it of all the viruses that had infested the system, I paid 150 dollars a pop.
Granted, this is Switzerland, but would i happily pay 300 dollars more for a better experience ? You bet. When we look beyond the box and the screen and the keyboard then we are buying an experience. Where would that leave Mercedes, Porsche and BMW if we were all content to run around in a Ford Focus (although it is a pretty car). We have a premium product - everything works they way it is supposed to be. It can talk to whatever gadget we can drag home and plug in. It is darn pretty and it never lets us down.
If we buy a PC and take it home then the thing depreciates already in the parking lot. The mac in my mind holds its value much much better as I can use it a lot longer without being told that oooops sorry you have no MS XP Stellar Cockup 2008 version 2.75865 installed and as such sorryyyyyyyyyyyy.

So roll in the new machines, my credit card is itching - and oops by the way, I only buy via online - great people, good bargaining possible, and terriffic follow-up.

[groovebuster]

I am not complaining about paying more for a Mac. I am complaining about paying more for a Mac than other people for no good reason.

If a Porsche costs 100,000 ? at place a and 120,000 ? at place b it can't be about quality or user experience, since we talk about exactly the same product.

And these days there are no import taxes for computer products to the EU. The "more" goes directly to Apple's bank account...

[AmbitiousLemon]

its actually interesting you used cars as an example as cars do cost different prices depending on where you buy them. i know a lot of people who buy cars in nevada instead of california because the cost of new cars is so much lower outside CA.

[oldMac]

Originally posted by Sonofhaig
"I would say "indirectly" and I agree with the poster.

>>>>>>>>>>

What a stretch! You have some imagination. Tell it to Rush Limbaugh..... :D

Where's the stretch? Everything I said is logical.

5) A bad economy will hurt Apple's sales.
- Try to refute that one, buddy.

4) Higher oil prices will hurt the economy.
- Again, this is logical.

3) If we go to war with Iraq, oil prices will rise.
- This is *highly* likely. In fact, oil prices are already on the way up.

2) If we go to war, people will die and people will be upset.
- Show me a war where this hasn't happened.

1) George is probably upset about Saddam trying to kill his dad. (In fact, he said so several months ago.)
- Wouldn't you be upset if Saddam tried to kill your dad?

Finally, you neglected to say *anything* relevant to this thread. (Which I did in my post.)

I'm not saying that Apple will do worse than anyone else if the economy goes further south, but it will certainly hurt sales.

Fact is, we're in a survival market right now. The companies that will survive are the ones that:

a) Don't lose money
b) Have enough cash on hand to generate interest revenue and outlast the other guys who are bleeding

[Sonofhaig]

"I'm not saying that Apple will do worse than anyone else if the economy goes further south, but it will certainly hurt sales."

>>>>>>>>>>

This is the most logical thing you've said.
If you want to blame anyone, blame someone other than Bush.
Nobody wants this war or any war. And besides, you're taking yourself way too seriously on this issue. Lets put it to bed now, and talk about real Mac stuff. Which is why we're all here. OK?

:D

[oldMac]

Originally posted by Sonofhaig

If you want to blame anyone, blame someone other than Bush.
:D

You mean like Rumsfeld? :) Just Kidding...

Okay... So Apple's dumping all this money into R&D and trying to push the envelope. I see great things happening with OS X, but the big disappointment is the professional-level hardware, or the lack thereof...

Is it a reasonable assumption to see OS X.3 and G5-based PowerMacs arriving at the same time? Assuming that the G5 has some different performance attributes, it would make sense that they would be released together.

I'm going to predict that will happen in October and that Apple will have HUGE Q4 revenue. The only question is how bad things will get on the sales front before then.

[artistry]

Originally posted by Redhorse


A big YES!

We need a Power Mac G4 for home users and switchers. The iMac TFT ist great, but a desktop or tower about 1000 ? (incl. tax) will push up the market share!

I agree a cheaper Mac and more equitable prices would be welcome, but increased sales at a lower margin is, believe it or not, a poor strategy. Better to have low sales/high margin because each sale incurs costs... oh it's too complicated to go into.

I remember my previous life when I did design for a firm that supplied house builders. The low volume high margin sales were the ones that got everybody cheering while the poor guys who spent 50 hours a week selling thousands of low margin bits and bobs were always the poorest. I never quite understood why, but it makes sense in the way that the Uncertainty Principle makes sense ;)
Anyway, getting a bigger market share isn't the answer to Apple's problems, particularly if it is at the cost of margin. A lower share with a high margin puts them in a stronger position. I know, I know...

[tgrundke]

All of the arguments are valid - but the underlying point is that Apple has a fundamental problem with the PRICE/PERFORMANCE RATIO in the industry that it is in.

Each industry is ruled by different dynamics and forces, some are alterable variables - some are not. Again, we're not in the car industry, where customers generally look for a nice balance of performance and features.

Computers are more like commodities whereby people believe in several dynamics:

1) As performance increases, price decreases;
2) There are several set standards, Windows (for better or worse) is one of them;
3) etc.

Now, changing these consumer beliefs is quite difficult when they are set in stone.

While Apple may be able to move a portion of the public into understanding that performance isn't everything (I agree) and that functionality is an important variable - it won't do it for everyone.

For the vast majority, it's a commodity item, much like a television and a radio today. Some are better than others, and a few will pay the extra for the better design and functionality, but the mass market will take the cheapest and fastest because it's "good enough".

Now combine this with the "S" vairable (software) and the issue is greatly complicated. If Apple didn't rely on software vendors, they'd be solid and happy. But unlike TVs and radios, Macs require specialized data streams.

So while I agree that the Quark issue is one that is holding back many a publisher, the price/performance ratio is so out of whack at the moment that it is not even funny any more.

Granted, in Maclandia and our own utopias, every application would be optimized for Altivec and Dual Processors. But sadly, they're not. So Apple is left in the position it finds itself at the moment. The name of the game for the majority is "Fastest for the cheapest." Apple doesn't have to be the cheapest - and we know they never will be. But they do need to be speed competitive.

[MacKid]

Originally posted by artistry


I agree a cheaper Mac and more equitable prices would be welcome, but increased sales at a lower margin is, believe it or not, a poor strategy. Better to have low sales/high margin because each sale incurs costs... oh it's too complicated to go into.

I remember my previous life when I did design for a firm that supplied house builders. The low volume high margin sales were the ones that got everybody cheering while the poor guys who spent 50 hours a week selling thousands of low margin bits and bobs were always the poorest. I never quite understood why, but it makes sense in the way that the Uncertainty Principle makes sense ;)
Anyway, getting a bigger market share isn't the answer to Apple's problems, particularly if it is at the cost of margin. A lower share with a high margin puts them in a stronger position. I know, I know...

I agree. Although a consumer mini-tower would be very welcome, I think $999 is just unreasonable. The most they can squeeze out for $999 is a 700mhz G3 laptop, so I think Apple is doing great appealing to each defined user category, instead of filling the gaps at this point (which they do so well :D ).