Apple's latest financials - what do you think?

Discussion in 'General Mac Discussion' started by ChrisH3677, Dec 20, 2003.

  1. ChrisH3677 macrumors 6502a

    Joined:
    Oct 6, 2003
    Location:
    Victoria, Australia
    #1
    These aren't too bad. PB figures look pretty good. The year of the laptop is working! And iPods are doing their bit.

    Do you think this is a good, average or bad report??

    http://www.macminute.com/2003/12/20/10k
     
  2. ksz macrumors 68000

    Joined:
    Oct 28, 2003
    Location:
    San Jose, CA
    #2
    I think these numbers confirm the suspicions of many people on this forum. So many numbers, so I'll summarize:

    Doing Well:
    • iPod. 141% increase y-o-y to $345M.
    • PowerBook. 69% increase in unit sales. 42% of all Macs sold.
    • Apple Services (iTunes, .Mac, AppleCare) increased 30% to $69M.
    • PowerMac sales in Q4 increased 26%.
    • Software. Increased 18% to $55M.
    Not Fared As Well:
    • PowerMac sales in Q1-Q3 dropped 24%. Overall 13% drop for the year.
    • iMac. Unit sales declined 16%.
    • iBook. Declined 4% or 30,000 units.
    • Apple Retail grew 119% y-o-y, but still suffered a loss of $5M (but less than $22M loss previous year).
    • Education channel. Sales were/are weak, down about 5%.
    Finally:
    • Net sales increased 8% to $465M.
    • Mac sales declined 3% to 3 million units.
    Some of the drops were due to shifts from desktop to laptop, others were due to the G5 (announced in Jan, shipping in Aug), but overall Mac sales decline of 3% should bother Apple.

    However, there is a lot of promise in the new processor roadmap and still a bit of pent-up demand for high performance Mac systems. Apple would do well to update the iMac to the next higher performance level. It is easy to see from these numbers that all high-performance systems increased in sales while all low-performance systems declined. The message is simple: consumers want high performance, even at the lower price points.
     
  3. ChrisH3677 thread starter macrumors 6502a

    Joined:
    Oct 6, 2003
    Location:
    Victoria, Australia
  4. ksz macrumors 68000

    Joined:
    Oct 28, 2003
    Location:
    San Jose, CA
    #4
    My pleasure. Thanks for pointing out the article.
     
  5. dukemeiser macrumors 6502a

    dukemeiser

    Joined:
    Dec 17, 2002
    Location:
    Iowa
    #5
    I think the G5 will prove better in the next year.
     
  6. ksz macrumors 68000

    Joined:
    Oct 28, 2003
    Location:
    San Jose, CA
    #6
    The G5, G5+ (90nm PPC 970), G5 Extreme (90nm PPC 980) should make it a banner year for Apple. I am confident the G4 iBooks will also do well. And 90nm G5 PowerBooks this time next year should keep the momentum going for that line.

    The 3G iPods are doing well and I don't see any immediate need to retire the current models; price cuts would be nice in light of increasing competition. However, 4G iPods ought to be introduced at the July MacWorld.

    iMacs are the wild card. They're seriously overdue for an extreme makeover. New G4 models will not really cut it, but Apple could still pull a rabbit out of its hat to make them sell. However, G5 iMacs will reignite the flame. Apple also has to consider whether there is still a strong market for all-in-ones. Detaching the screen from the base might make for a more compelling iMac.
     
  7. ChrisH3677 thread starter macrumors 6502a

    Joined:
    Oct 6, 2003
    Location:
    Victoria, Australia
    #7
    Interesting thought. Apple seem to like having an all-in-one though (dating right back to even before the Mac). Here's a suggestion/idea... How about replacing the eMac with an LCD all-in-one version? That would free Apple up to take a different direction with the iMac - eg separating the screen and base.

    ksz - are you in an apple selling business? You seem to have a very good understanding of them from that perspective.
     
  8. ksz macrumors 68000

    Joined:
    Oct 28, 2003
    Location:
    San Jose, CA
    #8
    You're right, Macintosh started life as a little all-in-one and a very cute one at that. Its predecessor, the Lisa, was also an all-in-one but considerably bulkier and heavier. I owned a second-hand Lisa for some time and sold it to a big Apple fan. The LisaOffice suite laid the conceptual groundwork for office applications that would follow.

    However, at the time, laptop computers were simply not practical. They weren't even called laptops, but "portables". The original Mac's form factor made them both desktops and portables at the same time! However, expandability was limited and so was power. Imagine 8-inch captive screens.

    With the release of the Macintosh II, Apple introduced the true desktop form factor. Color also made its debut in the Mac II series and performance was raised. The Mac II was very successful and expanded to a variety of models and form factors. The all-in-one remained on sale, but the excitement was in the II and Quadra series.

    Afterward, the first Macintosh laptop appeared. One might say that it didn't really make sense to continue selling all-in-ones. Laptops could totally replace them, were it not for the price difference. To be honest, I was never impressed by Apple's OS 7,8,9 laptops. There was always one thing or another about them that made them a deal-breaker for me.

    Apple's PowerBooks today, however, are so compelling in every respect that I abandoned my search for another PC laptop to replace my 4-year old, operationally perfect, Dell Inspiron. In fact, during my search, I found PC laptops to be significantly lacking in one way or another. Apple's 15-inch 1.25 GHz PowerBook was the perfect answer: FireWire, USB 2.0, 80GB HD, Fast CPU, memory expandable to 2GB, 15-in high-res screen, built-in 54g, built-in Bluetooth, compact form factor, 3+ hour battery life, and light weight. The industrial design, moreover, was beautiful. Beauty and Brains. Try to find that in the Windows world.

    With low-cost and powerful iBooks and PowerBooks now available, I would expect the primary market for desktop all-in-ones to consist of institutions who want to provide public access Macintoshes (libraries, printing bureaus, internet cafes, etc.) and corporations, without having to worry too much about theft. Laptops, on the other hand, are more easily stolen. Nevertheless, there's a market for desktop all-in-ones among individual consumers, but I suspect they'll be migrating to laptops in greater and greater numbers and drying up that segment. Apple wanted to make the laptop a perfectly viable alternative to the desktop. I think they've succeeded. Power users, however, will always go for the dual-processor towers.

    Thus, the home desktop market, I think, might be better served with at least a two-piece unit (detached monitor). The all-in-one iMac form factor doesn't make much sense to me any more. Why should the monitor be permanently coupled to the computer? What benefit does it provide now? Portability? I don't think that's a compelling reason. Ease of setup? Nope; the rest of the world (Wintel) has no problems connecting VGA cables. Children? Nope; all the kids I've seen are, on average, MORE computer savvy than the typical adult!

    No no! I'm just an Apple admirer (don't like the connotation of the word "fan" :) ) -- a layperson when it comes to talking about Apple. Professionally, I'm an engineering manager.
     
  9. alxths macrumors 6502

    Joined:
    Apr 3, 2003
    #9
    You bring up some really good points ksz... I had never really thought of laptops taking over 'allinone' computers, even though I myself chose a powerbook over an imac.

    I think an important reason for apple to keep the all-in-one concept is branding. All-in-one computers better carry the sleekness that apple is trying to associate with themselves nowadays. If someone walks into someone elses house and sees an imac sitting there they think "that's a mac"--it's unmistakable. It's uniqueness sticks in their mind more and migth even stimulate a discussion about it. If that same person were to come in and see some silver cube and a monitor with wires all over place, they jsut wouldn't have the same reaction.

    Apple's the underdog in today's pc business, they need to stay far behind the line between them and the wintel world. Getting too close and blurring the differences between their and other computers could end up removing the incentive for customers to pay more for equivilant or inferior hardware, which is what was happening bakc before steve came back wasn't it?(im really asking that, im not sure)

    oh, and i liked the summary, thanks.
     
  10. ksz macrumors 68000

    Joined:
    Oct 28, 2003
    Location:
    San Jose, CA
    #10
    I understand. However, given the financial numbers for FY03, I think Apple has to either prop up the lagging product lines, further bolster the strong product lines, or pursue new market opportunities in order to continue to grow the Macintosh market share and corporate revenue and profit.

    If Apple's market research team determines that all-in-ones are not a high-volume or high-growth item, they might still continue to produce them in limited quantities, but begin to offer a more enticing product to the home user market. If, however, they conclude there's still a viable market, all-in-ones will be updated and maybe in spectacular fashion.

    Apple has radically changed form factors since Steve Jobs returned, and has in fact shown a predilection for change. The New Apple (Think Different) has amazed us already and I'd expect some trends to continue and others to change. It's about adaptation to the marketplace and about leading that market in compelling new directions (e.g. the shift to LCD screens, the shift to laptops, the re-emergence of style, the push to 64-bits, the first to release 802.11b, etc.).

    I'm not against all-in-ones. I question whether there's a strong market for them now, given the huge success of the iBook and PowerBook lines.
     
  11. ChrisH3677 thread starter macrumors 6502a

    Joined:
    Oct 6, 2003
    Location:
    Victoria, Australia
    #11
    Here's a wild idea....

    How about the next iBooks and pBooks screen hinges open a full 300 degrees (or so) and the computer then sits on the desk like an upside down V. In this configuration, the displayed screen also automatically flips (just like DV cameras screens do when you rotate them)

    Then you drop your wireless keyboard and mouse in front of it and off you go!!

    A totally unnecessary development but damn eye-catching! And Apple seems to like eye-catching.

    And also the ultimate convergence of laptop and desktop.

    :D
     
  12. alxths macrumors 6502

    Joined:
    Apr 3, 2003
    #12
    I guess right now imacs are just too middle ground. It's sort of like a high end, low end product. I can't really see them making it high, high end since those people are going to want expandibility. And of course, in the low low end they still have the emac... hmmm, I'm really interested to see what they're going to do with this in the coming year.
     
  13. topicolo macrumors 68000

    topicolo

    Joined:
    Jun 4, 2002
    Location:
    Ottawa, ON
    #13
    From the massive increase in revenues from both the ipod and the services (including iTMS), as well as the corresponding decrease in overall mac sales, it seems that Apple is starting to shift towards becoming a consumer electronics company.

    Considering the fact that the margins on an ipod are generally better than those for a mac, this may not be a bad idea, although if a price war begins in the hard-drive based mp3 player industry, Apple's growing exposure to it could hurt them.

    just my 2 cents
     
  14. ksz macrumors 68000

    Joined:
    Oct 28, 2003
    Location:
    San Jose, CA
    #14
    The consumer electronics sector is one of the most difficult to compete in, and it gets quickly saturated and commoditized. Margins are slim, branding is very important (advertising), product lifecycles are short, and price competition is high.

    Today Apple controls their sales channels tightly which is why there are no substantial differences in price among retailers (even mail order firms).

    Today Apple and its shareholders see value in Apple's innovation. Apple is not a commodity player. They control the hardware, the software, and more recently they've established their own retail stores, so they're controlling the sales channel as well.

    Today Apple's product lifecycles are not particularly lengthy, nor particularly short. We see speed bumps every couple of quarters, but that's relatively easy to do. No grounds-up redesign or even significant redevelopment effort is needed. That happens every 12-18 months. The existing iMac form factor, the previous G4 and G3 towers, the iBook form factor, the current PowerBook form factor, even the iPod form factor have remained unchanged for longer than 6 months, sometimes as long as 2 years.

    Today Apple does not have a highly diversified product portfolio. For the home and educational market there is the iMac/iBook/eMac. For the professional and power-user market there is the PowerBook/PowerMac. For music lovers everywhere with a willing pocketbook, there is the iPod (cheaper 2/4GB iPods at $100+ will be a significant new source of revenue).

    In order to justify higher stock valuations, Apple, like any other publically traded company, needs to demonstrate continued revenue and profit growth, and also to convince investors that they can sustain their levels of growth. Convincing stockholders and potential stock buyers that growth can be sustained over a reasonable outlook requires more than fancy Keynote/PowerPoint presentations. If Apple has a product on the market (or on the near horizon) that offers a tremendous competitive advantage and has a large and ready demand, and it's unlikely that competitors will or can catch up within a short period, then higher stock valuations are justified. On the other hand, if Apple has or develops a virtual monopoly on a product through aggressive development and marketing, that too will raise valuations.

    Apple, like Gateway, is in a difficult position strategically. Whereas Gateway has chosen to enter the commodity markets (PCs, Plasma TVs, DVD Players, MP3 Players) without offering any real innovation or product differentiation, Apple I think will rather dissolve itself than pursue such a course. In each of the last 3 keynotes I've seen of Steve Jobs, he has asked his engineering team members in the audience to stand up and be recognized for their excellence. He has gone on to say that at Apple they truly love what they do and it's their passion to make "insanely great" stuff. And he thanks Apple's customers for allowing them to continue to make it possible. Steve Jobs is not about to yield to boring, cookie-cutter designs and products...it is simply not in his makeup to accept such a horrific defeat.

    Apple will continue to innovate and they will need to charge extra for the initial generation of their new products. But the world will be much better off because of it.

    It is often difficult to reconcile this with the demands of Wall Street, but if anyone can do it, then given his track record so with with Pixar and with Apple, Jobs will find a way.
     

Share This Page