The End of Apple's Professional Presence Is Here

[JavaTheHut]

Thats interesting regarding the use of the iCloud if the ethernet speeds could manage -- When you think of it, Apple may end up breaking their own end user agreement if they are running it all on Blade servers or what ever...
lol

 

[goMac]

The markets may be same size, but relative to Apple the markets have been shifting to consumer grade equipment/services for at least the last 4 years. The Pro market is tiny compared to the rest of Apple's customer base now.

How does this change anything?

The percentage doesn't matter. That market being profitable does.

I think a lot of people are overcomplicating this. Apple makes a lot of things that likely sell a lot less than the Mac Pro. For a long time, the AppleTV was on that list, and it's possible it still might be making less of a profit than the Mac Pro overall.

Heck, they STILL make iPod Socks.

 

[JavaTheHut]

How does this change anything?

The percentage doesn't matter. That market being profitable does.

I think a lot of people are overcomplicating this. Apple makes a lot of things that likely sell a lot less than the Mac Pro. For a long time, the AppleTV was on that list, and it's possible it still might be making less of a profit than the Mac Pro overall.

Heck, they STILL make iPod Socks.

Is that the iSock? lol

overcomplicating - exactly "where money is to be made why stop?" Farmers still need trucks.

 

[G4er?]

First, Apple has always viewed its mission as making technology accessible by the masses.

Consumer-grade Macs cost several times more than a consumer-grade PC.

Apparently only as long as the masses have more money to spend.

 

[huperniketes]

How does this change anything?

The percentage doesn't matter. That market being profitable does.

I think a lot of people are overcomplicating this. Apple makes a lot of things that likely sell a lot less than the Mac Pro. For a long time, the AppleTV was on that list, and it's possible it still might be making less of a profit than the Mac Pro overall.

Heck, they STILL make iPod Socks.

Of course percentages matter. iPod Socks sell for US$29. Do you believe it costs Apple ~$8 to make, giving it the approximately 35% margin they make on computer hardware sales? Nope. It costs less than a dollar. Giving it several times the profitability that can be had maintaining a line of pro hardware.

Apple is no longer a computer company. It's why they dropped the word from their name. It's why you no longer need a Mac (or PC) to activate an iOS 5 device. It's why they still sell AppleTVs. They retooled their philosophy with an eye to the future. To skate to where the largest market of interaction devices would be. To be the brand that comes to mind first for that market. And to attempt to do so without telegraphing to would-be competitors their intent. And that was years ago.

 

[scottsjack]

Of course percentages matter. iPod Socks sell for US$29. Do you believe it costs Apple ~$8 to make, giving it the approximately 35% margin they make on computer hardware sales? Nope. It costs less than a dollar. Giving it several times the profitability that can be had maintaining a line of pro hardware.

Apple is no longer a computer company. It's why they dropped the word from their name. It's why you no longer need a Mac (or PC) to activate an iOS 5 device. It's why they still sell AppleTVs. They retooled their philosophy with an eye to the future. To skate to where the largest market of interaction devices would be. To be the brand that comes to mind first for that market. And to attempt to do so without telegraphing to would-be competitors their intent. And that was years ago.

You are exactly correct. Apple is a content company that also sells great devices on which to purchase and enjoy their content while all remains carefully under their control. They're creating their market rather than going after the desktop and business computer market they can never successfully compete in. It's brilliant.

Of course that doesn't do much for those of us who are desktop computer enthusiasts/creatives or office staff. But that's OK, no company is required to service our market and there are still plenty who do with great products.

 

[goMac]

Of course percentages matter. iPod Socks sell for US$29. Do you believe it costs Apple ~$8 to make, giving it the approximately 35% margin they make on computer hardware sales? Nope. It costs less than a dollar. Giving it several times the profitability that can be had maintaining a line of pro hardware.

The topic was on percentage of overall sales.

It's well known that Apple has very high margins on the Mac Pro. It's been a big complaint around here, if you haven't noticed.

(Heck, even Apple GPUs have high margins. I really don't think that profit margins are very high on the list of Apple's problems with the Mac Pro.)

Apple is no longer a computer company. It's why they dropped the word from their name. It's why you no longer need a Mac (or PC) to activate an iOS 5 device. It's why they still sell AppleTVs. They retooled their philosophy with an eye to the future. To skate to where the largest market of interaction devices would be. To be the brand that comes to mind first for that market. And to attempt to do so without telegraphing to would-be competitors their intent. And that was years ago.

Yet Mac sales are up and making all time profits and Apple couldn't stop talking about them last earnings call. Doesn't sound like they're not longer a computer company. Sounds like (gasp) they just make more than one thing now.

Sony makes the PS3, PSP, and flat screen televisions and makes way more money on those than they do the PC. Yet they aren't talking about abandoning the PC market either, and no one has suggested it. Why is the same being suggested about Apple?

 

[chrono1081]

Given Marionette is in-house, I've not been able to find out much of anything. But Linux makes a lot of sense IMO, as it's (*NIX, cheaper to develop (don't need to buy as many licenses), and has good development resources and tools.

The same PC's would be able to VM both Linux and Windows, assuming they're not dedicated, as a means of reducing equipment costs. But even if they are dedicated systems, the PC's allow them to build farms/clusters for their purposes, which is no longer really viable with OS X with the loss of the XServe.

All-in-all, a rather smart approach to go about it to my way of thinking (least expensive way to create and run custom software).

The only reason I know about Marionette is because of ONE picture I found on the internet showing a scene from Ratitouue (however you spell it) and I saw that it was Marionette running on a RedHat machine

Oh ya also I saw someone on the CGSociety forums post about it.

 

[wallysb01]

Of course percentages matter. iPod Socks sell for US$29. Do you believe it costs Apple ~$8 to make, giving it the approximately 35% margin they make on computer hardware sales? Nope. It costs less than a dollar. Giving it several times the profitability that can be had maintaining a line of pro hardware.

But real dollars matter. Who has more money, the guy that sells an iPod for $30 with a 70% profit margin, or the guy that sells a Mac Pro for $5000 and a 10% profit margin? Margins are nice, and are very important for many things, but ultimately read dollars are more important.

Apple is no longer a computer company. It's why they dropped the word from their name. It's why you no longer need a Mac (or PC) to activate an iOS 5 device. It's why they still sell AppleTVs. They retooled their philosophy with an eye to the future. To skate to where the largest market of interaction devices would be. To be the brand that comes to mind first for that market. And to attempt to do so without telegraphing to would-be competitors their intent. And that was years ago.

Correction, Apple is no longer ONLY a computer company. That's why they dropped that word from their name.

 

[wallysb01]

Sony makes the PS3, PSP, and flat screen televisions and makes way more money on those than they do the PC. Yet they aren't talking about abandoning the PC market either, and no one has suggested it. Why is the same being suggested about Apple?

Probably because a lot of people get a little wrapped up in the idealized image of Apple and forget that that image is really just created to help them make money. So even if the Mac Pro doesn't help them look like the most trendy, bleeding edge techie company on the planet, if it still makes what they consider enough money, they will still build it. They may just not slap images of it all over their stores or adds.

 

[huperniketes]

The topic was on percentage of overall sales.

Yet Mac sales are up and making all time profits and Apple couldn't stop talking about them last earnings call.

Is that Mac Pro sales going up or Mac sales in general?

It was a Back-to-School quarter.

And the sales figures were for the quarter which saw refreshed MBA and Mac Minis. The Mac Pro hasn't been updated in over 15 months.

Sony makes the PS3, PSP, and flat screen televisions and makes way more money on those than they do the PC. Yet they aren't talking about abandoning the PC market either, and no one has suggested it. Why is the same being suggested about Apple?

Because this is a Mac-centric forum. Maybe they have users whining on their support forums about Sony abandoning them. I don't know because I'm not a Sony guy. I'm a Macintosh guy. I really don't care what kind of hardware Sony sells. Do you?

 

[huperniketes]

But real dollars matter. Who has more money, the guy that sells an iPod for $30 with a 70% profit margin, or the guy that sells a Mac Pro for $5000 and a 10% profit margin? Margins are nice, and are very important for many things, but ultimately read dollars are more important.

The guy that sells $30 iPods with 70% profit margin of course! You can sell a lot more of them than you can $5000 Mac Pros! And you only need to sell 24 of them to make more money than selling that one Mac Pro.

That's what Apple figured out with the iPod. Their volume was so much higher than the Macs that it makes sense to sell more devices which are easier to design and manufacture. People are far more willing to risk $200 on a casual gadget than spend thousands on a computer.

"Hmm. I wonder what other high-volume markets are out there where we can apply our user experience know-how."

Correction, Apple is no longer ONLY a computer company. That's why they dropped that word from their name.

Wrong. If Apple were a computer company they would be focused on selling computers. Servers, workstations, laptops, mainframes, etc. for creatives, businesses, science, etc. Apple sells experiences. Technology-assisted experiences, of which computers were the first technology. But they want their employees and the general public to look beyond computers now.

 

[goMac]

Is that Mac Pro sales going up or Mac sales in general?

It was a Back-to-School quarter.

And the sales figures were for the quarter which saw refreshed MBA and Mac Minis. The Mac Pro hasn't been updated in over 15 months.

The sales were quarter over quarter. So it was matched against last year's back to school quarter.

I'm not trying to say Mac Pro sales specifically were at a ridiculous all time high. I'm just saying, the Mac seems to be doing really well, and it was specifically noted that iOS is not canabalizing Mac sales. Nothing says that Apple has a reason to back off the Mac.

Someday, it'll happen, but the numbers say not for now.

Because this is a Mac-centric forum. Maybe they have users whining on their support forums about Sony abandoning them. I don't know because I'm not a Sony guy. I'm a Macintosh guy. I really don't care what kind of hardware Sony sells. Do you?

Sony sells lots of electronics and all sorts of PCs. Dell sells cell phones, tablets, MP3 players, and tons of things including high end workstations. HP, before they imposed, sold phones and tablets along with PCs.

I haven't heard of any Dell users fretting about the Dell workstations getting discontinued. And in HP's case, the workstations were nearly the only thing that survived.

-------

Honestly, the Mac Pro is a really good machine for right now. Pros have a stable income currently (the high end tech industry really hasn't been impacted much by the recession.) Pros have a pretty stable upgrade cycle. They're willing to pay a larger premium for hardware. And they spend more money in general.

Meantime Apple can pretty much keep the machine going in their sleep. The Mac Pro's R&D basically consists of throwing a new processor in every year, throwing in a new logic board every few years, and getting ATI to code up a new firmware they throw on a stock card. (Which is honestly what every other workstation on the market is.)

This doesn't seem like a machine Tim Cook is losing sleep over. It seems like a decent pile of money for a very minimal effort. Even if Apple abandons pro apps entirely and gives the market to Adobe, they can still make a pile of money on hardware.

 

[mrsir2009]

I learnt something today: Apple makes iPod Socks! (I should totally buy one!)

 

[mrsir2009]

But real dollars matter. Who has more money, the guy that sells an iPod for $30 with a 70% profit margin, or the guy that sells a Mac Pro for $5000 and a 10% profit margin? Margins are nice, and are very important for many things, but ultimately read dollars are more important.



Correction, Apple is no longer ONLY a computer company. That's why they dropped that word from their name.

What kind of iPod sells for $30?

 

[goMac]

What kind of iPod sells for $30?

I think he's talking about iPod Socks.

I'd put the margin on the Mac Pro closer to 30%.

 

[vitzr]

Apple sells experiences.

Yes they do.

After years as a loyal trusting Apple customer, I pre-ordered an iPhone 4, just as I had at each prior iPhone launch. But this time I was blindsided by Antennagate. It was real and quite a shock.

I also had my company AT&T BlackBerry which made great calls that did not drop or suffer in any way. At first I thought it was simply a defective phone. No worries I'd exchange it. After doing so, two things happened. The replacement was no better and the reports came flooding out.

Then after the one man I respected came out against us in a revolting condescending diatribe, my trust in Apple was dashed. No longer would I be a sucker for their shenanigans. What a shame. My years as a huge advocate flushed away by the reality that Apples business practice is no better than the rest.

 

[wallysb01]

The guy that sells $30 iPods with 70% profit margin of course! You can sell a lot more of them than you can $5000 Mac Pros! And you only need to sell 24 of them to make more money than selling that one Mac Pro.

Can you?

That's what Apple figured out with the iPod. Their volume was so much higher than the Macs that it makes sense to sell more devices which are easier to design and manufacture. People are far more willing to risk $200 on a casual gadget than spend thousands on a computer.

Which does not support the conclusion that you should also not make a Mac Pro...

Wrong.

So apple doesn't sell computers... You're uninspired.

If Apple were a computer company they would be focused on selling computers. Servers, workstations, laptops, mainframes, etc. for creatives, businesses, science, etc. Apple sells experiences. Technology-assisted experiences, of which computers were the first technology. But they want their employees and the general public to look beyond computers now.

But they aren't ignoring computers. You're exaggerating to make your point. That's usually a good indication that you actually have no point.

----------

I think he's talking about iPod Socks.

I'd put the margin on the Mac Pro closer to 30%.

Yeah, iPod socks, doesn't really matter the point stays the same.

And yes, I'm sure the Mac Pro probably takes in a fair bit more than 10%.

 

[nanofrog]

I'd put the margin on the Mac Pro closer to 30%.

I calculated SP base models @ 235% (thanks to the ~$1k extra they're getting for it), and the DP models @ ~41% (in line with Avg. Gross Margin).

 

[zeussz]

I calculated SP base models @ 235% (thanks to the ~$1k extra they're getting for it), and the DP models @ ~41% (in line with Avg. Gross Margin).

margin = (retail-cost)/retail, which is never >= 100%
if you're thinking of a $1000-cost machine that sells for $2350, then that's (2350-1000)/2350 = 57% margin, which is high but seems possible.

41% for the DP also seems reasonable, but only calculated the above way, i.e. not a $1000-cost machine that sells for $1410, which would be a 29% margin, which seems low.

 

[thekev]

For what? A lower number of units sold? In a market where prices continue dropping because the cost of components keep going lower? In a market which demands constantly improving performance so you have to go through the expensive process of redesigning your products in a shorter cycle?

You pretty much lost me on that point because it's completely inaccurate. Aside from IOS devices the time retained on a given form factor has increased. Most of the macs basically get an annual bump. The mac pro hasn't seen any real changes aside from switching drop-in parts since 2009. As for Apple's laptops, sales volume has only gone up in absolute units sold, and continuing to make these makes sense as long as people still want them because of how they integrate with the IOS devices currently pushed by Apple.

For the mac pro, I'm not sure how you expect development costs to be high when they haven't made any real changes in almost three years, and it's retained the same basic shell for roughly eight.

 

[nanofrog]

margin = (retail-cost)/retail, which is never >= 100%
if you're thinking of a $1000-cost machine that sells for $2350, then that's (2350-1000)/2350 = 57% margin, which is high but seems possible.

41% for the DP also seems reasonable, but only calculated the above way, i.e. not a $1000-cost machine that sells for $1410, which would be a 29% margin, which seems low.

Sorry about that...I calculated the markup, not the margin on the SP.

The computed cost (direct + indirect) = $1063.40. So margin is (2499 - 1063.4)/2499 = 57% for the base Quad SP model.

DP's are more, but due to the CPU cost increases, not the rest of it ($1543.40 for a pair of E5620's). For the base Octad, that puts margin at 56%. Not as much as the CPU's go up, as the top DP drops to 41%.

Might teach me not to post at almost 4AM and no cafeine... .

 

[deconstruct60]

These threads are a symptom of bad PR. If they just said something was on the way, it would calm the waters. We are totally in the dark

These threads are mostly just trolling and/or irrational venting. The only folks totally in the dark just aren't looking very hard. One of the parts for a major upgrade is missing so they haven't launched. End of story. It really isn't all that opaque.

As to whether Apple is going to kill the Mac Pro. If fewer people buy them they will kill it. Again there is no complete blackout there because the folks who buy them (or not) are around. If "everyone" here says they aren't going to buy Mac Pros ( at roughly current prices and feature sets ) then it will die off.

 

[deconstruct60]

Hi. I am sorry. I've been watching these forums for a while. The notion of Apple completely abandoning the Pro market because .... or "they only sell xx units per year" or .... just does not make any sense to me, given the circumstances and Apple's current position and capabilities.

Growth matters to Apple. Growth impacts the stock price. The stock price impacts the personal wealth of the people working at and running Apple. They may love working at Apple, but they will love working at Apple more if they are more wealthy.

If the Mac Pro doesn't contribute to Apple's growth ( i.e., keeps pace with the other Macs and has growth potential ) it will get cut. Plain as day.

Look at the iPods. Shrinking share and growth. No product upgrades. Apple isn't going to kill them off right now because still have 70+% share of the market.

The Mac Pro enjoys no such dominance. It is around 4-8% of the workstation market. Single digits. You have a single digit product that is shrinking over a multiple year period ......... unless that is your only product it is probably going on the chopping block.

The effect of abandoning the Pro market is something that may not be immediately measured-- it's a bit more intangible, and may have longer-term, larger effects.

Not really. What is being measured is revenue growth. If they were not contributing to revenue growth that dropping them will have zero impact.
In fact, revenue growth could increase if resources are shifted from a zero growth project to another one with more viable growth potential.

I'm not smart enough to guess what these may actually be, but common sense tells me a few things. One, pros played a large role in getting Apple where it is today.

"Pros" as in users or the Mac Pro class macintosh? "Pro" users utilize a variety of Mac models not just the Mac Pro. If they have primarily transitioned to other models dropping the Mac Pro would have no huge long term impact any more than dropping the Mac Cube had.

The Mac Pro class machine played no more significant role than the othe Mac models. In the beginning there was no "Mac Pro" model.... only the Mac 512/Plus/SE. The Mac II and decendants expanded the line up but if nuked the other models the Mac line would have folded. The "second coming of Steve" lead off with the iMac. The central essence of the "Macintosh" was never some big iron machine with large number slots.

Can we not see this trend reversing itself, or at least being seriously impacted?

Nope don't see it.

If Apple were to just drop the Mac Pro, and/or Final Cut Pro, and/or Logic Pro, there would be some serious negative energy from a lot of professionals.

No more than the significant negative engery from "a lot of professionals" not buying the Mac , FCP, or Logic Pro in the first place. The causality here is whacked. If folks stop buying it so Apple kills it ...... it is not Apple who is the primary driver of the event.

Such a move would begin to drive these people *away* from Apple, if nothing else because they stopped supporting their everyday lives and

If that group was leaving anyway, it is nothing new here. Apple has billions in cash. They don't deparately need every possible customers. They just need the customers who like their limited stuff. Chasing the folks who don't like it down the street isn't necessary if can reach the folks that do want it.

professions that they have become dependent on.

Again the fallacy that apple is financially dependent upon a shrinking revenue segment. Not.

but is a "cool" company that's developing other great products that "hey, you should try out!" -- it's now a sell-out company catering to the masses, that is no longer cool, that is no longer something that I want to be a part of, support, or help spread its popularity.

LOL. This argument is not so much about Apple's business decisions as about ego and arrogance of prima donna "professionals". "Apple won't be 'cool' if we privileged few don't put the stamp of 'coolness' on it ". I doubt Apple buys that. I think they more likely buy into "if we make great products, people will discover and buy them". The retail Mac stores make sure that 100,000's of folks per day get to see Mac products every day. Nobody needs someone to drag them into the store to try it out. Nor would it hurt Apple all that much if they spent 0.2% more of their revenue on advertising rather than leveraging freebie word of month. [ For example Macs sales are increasing there is practically zero money being spent on ads. There is no Mac ad campaign right now. ]

I have less desire to own and/or use an iPad, iPhone, or whatever else is appealing

The vast majority of iPod, iPhone, iPad owners don't own Macs. Remember Apple dropped the FW connector on the iPod to go after the primary market for iPod owners.... Windows PC users.

So why *not* keep this team around to fulfull the niche and keep potentially influential people happy, when the expense for not doing so is a much greater risk for the company long-term?

So Apple should spend limited resources on a product that the group as a whole is walking away from just to keep some small group of folks external to Apple "happy" just because.... No.... that doesn't look like common sense.

 

[huperniketes]

You pretty much lost me on that point because it's completely inaccurate. Aside from IOS devices the time retained on a given form factor has increased. Most of the macs basically get an annual bump. The mac pro hasn't seen any real changes aside from switching drop-in parts since 2009. As for Apple's laptops, sales volume has only gone up in absolute units sold, and continuing to make these makes sense as long as people still want them because of how they integrate with the IOS devices currently pushed by Apple.

For the mac pro, I'm not sure how you expect development costs to be high when they haven't made any real changes in almost three years, and it's retained the same basic shell for roughly eight.

That's my point entirely. These are the things you'd see a company engaged in the pro market doing, and Apple isn't doing them. Apple keeps selling these machines with nothing more than a speed bump, and they're still getting bought. There hasn't been a refresh in over 5 business quarters, and they still find folks ordering them. Why outlay the kind of investment a redesign would require? Just keep selling warmed over pro machines.

If the demand drops below an acceptable level, the decision has to be made whether they need the market enough to do the R&D. At this point, with record Mac sales in spite of the pro business, it doesn't look like they do.