This has always been my question of why don’t companies just directly emulate Apple.
If lenovo is buying a billion chips a year, why can’t they lock in like Apple?
If lenovo is buying a billion chips a year, why can’t they lock in like Apple?
You can't lock in prices forever, though. The more volume and stability you have, the more a vendor will be willing to enter long-term agreements with you. Lenovo has less volume than Apple and is not in as great of a financial position, so they don't have as much leverage.
The bigger factor is that Apple already had more margin in their products. The price premium for RAM upgrades on Apple laptops is large, as everyone knows. They could absorb more RAM price increases without being forced to raise retail prices.
In the consumer space, I recently bought a Sonicare toothbrush, and the number of models and combinations is staggering. 1000x plaque removal, 750% plaque removal, it's ridiculous.
Dell and Sonicare do not have that luxury. They are competing with other PC vendors and other toothbrush vendors.
The strategy is to produce so many models that you appear to serve every price point and need without requiring the user to shop around. You can find something in their lineup that fits your budget or requirements if you look long enough and you don't feel like you need to go looking around at competing vendors as much.
Having may models isn't a high cost because they share so many parts. I bet if you opened multiple Sonicare toothbrushes they'd share many main components like batteries or motors. Dell has a few laptop and desktop lines but they're different combinations of parts within a shared chassis.
So Dell, Lenovo, et Al end up trying to address every niche except the focused product catalog niche.
If you want a PC and your favorite brand
is missing something that a competitor has,
it's easy to switch
Like Dell Vostro, their "small business" line. Versus Latitude, their "business" line. What on earth is uniquely needed by a "small business" versus a... regular business? Why not introduce a third "large business" line? Maybe a "sole proprietor" line too?
It can only be explained as a psychology play. The dizzying array of options is designed to, I suppose, make you feel like Dell surely has the exact right laptop for you, even if that is bullshit.
It doesn't entirely make sense to me from a psyche standpoint either -- I have no idea why purchasers would possibly feel anything other than anxiety and analysis paralysis. But whatever!
Dell also had the Precision line, which was very posh. These cost a lot more.
The Vostro line eventually showed up. They were noisier, and lighter/flimsier, less-expandable, and harder to work on. But they did cost less to buy.
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I would never buy a Vostro computer for myself. I think that buying cheapness as a primary feature is dumb. Given a choice between good/better/best, I tend to pick "better." I like being able to get what I think is a better design, even though it generally costs somewhat more. I don't want the cheapest car tires, the cheapest hand tools, or the cheapest PC.
But the company chose to operate as cheap-at-every-expense. The Vostro line was a perfect fit for their buying proclivities, so that's what they started buying. (I didn't like that, but those decisions were above of my paygrade.)
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Was Dell wrong for offering several different classes of computer back then?
Are they wrong for doing so today?
Why? Why not?
(Remember: In the insatiable quest for the bottom dollar, the company kept buying Dell computers. We could have began giving those dollars to one of their competitors instead, but we did not do so. This suggests that the model is not bullshit at all: After all, they are in the business of selling computers, and we kept buying them.)
Given a choice between good/better/best
What I and others have always questioned is how far beyond that Dell goes. It's not good/better/best; it's Vostro/Alienware/Precision/Inspiron/Latitude/XPS/etc... which all have their own array of models and internal good/better/best subdivisions.
We could have began giving those dollars to one
of their competitors instead, but we did not do so.
This suggests that the model is not bullshit at all:
After all, they are in the business of selling computers,
and we kept buying them.
Which variables helped? Which hurt? Was the dizzying model lineup a pro, con, or neither? The only thing we can conclude from the facts you presented is that the proliferation of Dell's models was not a dealbreaker for your particular company.
Dell has a lot of other things going for them. Namely, their name. They have been around for ages and their products are... fine. Nobody ever got fired for buying Dell. PCs are commodities; by definition one PC can't really outshine or outprice another too much on any technical level because they're all using the same core components. So name really matters. I think that is the overwhelming reason why people buy them, not "I love that they sell 100 different laptop models at any given time."
No, there's really not. I've already explained the main variable here: Price.
The other driving variable, which I left to implication, was inertia.
We didn't have a CIO. Nobody from Dell or HP was taking anyone from this company out for golf outings, dinners, strip clubs, or nose beers. We merely bought and used computers, with perhaps 50 desktop systems at peak that slowly rotated over time as needs ebbed and flowed.
We could have switched to HP or Acer even some box-builder with a non-English name instead, and maybe we would have done so if Dell hadn't introduced cheaper products. Who knows. That version of reality never happened.
It sure seems like the introduction of the lower-cost Vostro line strengthened our inertia. I don't know if that was good or bad for us, but it was almost certainly better for Dell this way than in some alternate reality where it went in some other direction.
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Anyway, I looked at Dell's laptop lineup after I read your previous comment. It's a damned mess. But I'm not sure that this mess qualifies as 70 or 100 (or whatever) base models: It's plainly evident that there's a lot of overlap within this list. :)
The other driving variable, which I left to implication, was inertia.
No, there's really not. I've already explained the main variable here: Price.
That does not even remotely explain why Dell has so many lines and models.
Most companies manage to have budget lines/models without such a brain-melting array of choices. You keep writing, essentially, "well we kept buying dell so I guess it worked!!!!"
But I could just as easily say "a lot of companies don't buy Dell, and Apple has like 100x the market value with like 1/10 of the models so obviously Dell is stupid" but that would not be accurate either because there are a looooooot of other variables.
Anyway, this conversation is going nowhere, and you don't have anything insightful to say, so thank you and good bye.
My vague recollection is that Latitude were nice business laptops; coming with all the enterprise goodies, replaceable parts, service manual, next-day onsite support available and also the enterprise usual costs, lack of sexy displays, and slow model turnover.
Vostro was a lot closer to the Inspirons (sold for personal use); I think just badge engineering a couple selected Inspirons to have a bit longer of a product cycle and better parts availability.
Re: analysis paralysis, that's a real issue. I try to find some feature that really narrows the field and then it becomes easier to decide. If I required a wired ethernet port, memory slot(s), and a specific cpu family, it narrows the field a lot; then I can figure out from what's left. For laptops, off-lease entrerprise refurbs are pretty price competitive with new models targetted for personal use; then it's really a matter of what's available, and how they differ ... and then looking at the units with specific damage/defects to see if the compensating price drop makes sense; personally, I'd take several dead pixels for $100 off, cause I don't do pixel peeping work anyway.
Lenovo controls less of the stack than Apple: CPUs (Intel/AMD), BIOS, operating system, etc. While ostensibly Apple and Lenovo are both selling personal computers, Lenovo is in a (sub-)segment of the market that is commoditized with Dell, HP, etc.
If you need to run Windows and associated (Windows-only) apps, what's special between Lenovo/Dell EMC/HP/etc? How much of a difference is there between Coke and Pepsi?
A lot of vendors hitched their wagon to the Wintel duopoly, and now they're all riding (or being ridden) herd.
More importantly, if you have a locked in price you can sell your products for more profit - or you can sell the things that you have locked in and not have to make the rest of the widget at all. Sometimes someone will give you a good deal to buy out your locked in contract.
Apple is #4 in PC volume but they certainly make up for it with their smartphone volume.
And of course, they have a lot of service revenue to pad the balance sheet.
By the numbers, Apple is a smartphone business that has a casual side hobby of also being the #4 PC maker. Their PC sales are ~3x less than Lenovo's, but their smartphone sales are 10x their PC sales. There's plenty of commonality so the massive smartphone business surely helps with supply on the computer side of things as well.
Apple also makes healthy margins on its hardware products.
Apple’s only structural advantage should be their custom silicon, but I don’t think that’s a cost advantage as much as it’s a performance and battery life advantage. Apple is still buying huge dies from TSMC and designing them custom themselves which is not cheap. Lenovo shares the cost of designing an Intel, AMD, or Qualcomm chip with dozens of OEMs. Same deal with software: I wouldn’t be surprised if macOS costs more per unit for Apple than Windows costs for Lenovo considering all the employees Apple hires directly to develop it.
Apple in theory should be paying a pretty similar amount of money to make the rest of their systems. They don’t make camera sensors, displays, keyboards, DRAM chips, or anything else themselves.
Right, I'm just saying they could afford it if it came down to that. They also have enormous margins on their higher-end systems, so they've got plenty of room to lose some profitability before it comes down to that.
But they make more profit with high hardware margins AND the app store.
I’m pretty sure they could give phones away for free and cover it from AppStore purchases.