Mac Makes 45% of PC Industry's Operating Profit
slate.com
slate.com
Apple makes profits by not playing the game of selling a fungible product. If you want a Mac, there is only one place to buy one. They can't charge whatever they want--other PC's are substitute goods--but they have more pricing power.
It also says something interesting about competitive markets in the economic sense. I think one of the reasons you see very little innovation out of the Acers of the world is that they have no money for R&D. They make a few percent on each item sold and can't afford to do anything other than figure out ways to cut costs. I think that kind of situation is bad for innovation even if it does result in cheaper goods.
But also: Apple's profits from selling Macs include Apple's profits from licensing OS X; the figures for Windows PC vendors do not include the profit Microsoft makes from licensing Windows. They're not comparing like with like.
Apple DOES make more per machine sold than Dell does. Part of that difference is the fact that its price includes an OS.
A pie-chart from the underlying data[1] shows that the author somehow forgot to mention 21% of the profit from "Other" PC manufacturers.
What isn't in dispute is that Apple charges more than its competitors for what is essentially the same Intel hardware, cobbled together in the same factories in China and elsewhere.
Thus you could make an argument that Apple are the worst when it comes to profiteering from impoverished workers, even though their hands are clean thanks to the wonders of offshore outsourcing.
I agree that the processor is the same, but a computer is more than its CPU.
Seriously? What sensationalism.
Apple has been given a really hard time in the press, but they're also the only ones out there pressuring their suppliers to cut overtime, a move unpopular with the workers, and improve working conditions.
Where are all the other companies that use Foxconn and other suppliers doing? What about clothing and fashion companies where the working conditions are apocalyptically bad compared to Foxconn?
Apple have managed to keep prices high and thus maximize profit. If Mac manufacturing returned to the US, where Victorian working conditions are banned, it would probably be hard for Apple to keep those fat margins.
If you want 5,000 skilled workers to assemble a new product that's shipping in three weeks, in the manufacturing districts of China and Taiwan you can snap your fingers and get them by the end of the day. In the US and Europe this would take weeks, if not months. There's no on-demand talent pool like this. It doesn't exist.
On top of that, if you want something made, nearly anything, you can get it sourced immediately. You want magnets for your new iPad? There's a factory down the road from Foxconn that makes billions of them. You want batteries? Specialized rubber pads? A particular adhesive? A solvent? A new type of display panel? It's all being made right there, and probably just miles away. It could be on a truck to your factory within the day. No customs. No duty. No logistics other than picking up a phone.
Don't forget Apple's original Macintosh computers were made in a state-of-the-art plant in California, but the scale of overseas manufacturers, who were making everything from toothbrushes to televisions, made it very difficult to keep competitive. It's not necessarily the wages of the workers, or their thrifty working conditions. It's the entire ecosystem.
Despite all this, Mac manufacturing is returning to the US: (http://tech.fortune.cnn.com/2012/12/08/apple-mac-pro-made-in...) Details aren't clear at this point, but it seems Apple's partnering with Foxconn to open up domestic manufacturing for selected products. This will probably make the supply chain a lot more complicated, but for something like the Mac Pro, which is low volume, high margin, and on a much more relaxed update cycle, it wouldn't be impossible. Same goes for other products like the Mac Mini.
Let's not forget how horrible Victorian working conditions were. People in those times would find working at Foxconn to be like living in a palace. Flush toilets? Showers? Beds with mattresses? Company provided health care? A hard limit on over-time? No beatings? Foxconn's wages are well above the norm in that industry, even if thrifty by American standards.
"...for its penetrating look into business practices by Apple and other technology companies that illustrates the darker side of a changing global economy for workers and consumers."[2]
[1] http://tech.fortune.cnn.com/2013/04/16/apple-pulitzer-ny-tim...
[2] http://www.pulitzer.org/citation/2013-Explanatory-Reporting
Mike Daisey made up things. Big time. He invented things. His report was half fabrication, half stretching the truth. The New York Times, for all their credibility, did really go out of their way to paint a dramatic picture. Such is what happens when you want awards, and not the truth.
In any case, all this did spur Apple to crack down hard on Foxconn, but the infractions they've found so far are pretty minor. A handful of under-aged workers that submitted fraudulent paperwork. Some industrial accidents that, while unfortunate, do happen at a plant with 800,000 workers.
The deeper down in the supply chain, the more problems you'll find, but at least some are doing the right thing.
While working at Foxconn isn't as nice as working at, say, an American automotive plant, it's actually not a bad career for someone who's in their twenties, with no academic accreditation and looking to make a living.
If I had a choice between working in a toilet factory, a forge, or a Foxconn factory, I would go with Foxconn every single time.
All your rage seems misdirected. What about the people who built the American Embassy in Iraq and had to live in containers in the middle of the desert, who had their passports taken away, and who might never have been paid at all once "living expenses" were deducted from their pay?
Ah, but there's no "Apple" in the headline there, so it won't get any traction.
The fact that Apple enjoys such fat margins makes them look, at least to some people, that bit more egregious than their competitors.
I don't know if the Pulitzer was deserved or not, but I feel it was a tech story worth covering.
How many times does Apple have to strong-arm their suppliers into doubling wages (http://www.forbes.com/sites/timworstall/2012/05/28/apples-fo...) before people are happy? I haven't heard of any other company doing this.
Apple uses the same factories, the same suppliers, and the same logistics as everyone else. Why do they have such high margins, then? Could it be they know how to run a business better?
Remember Apple focuses on creating a handful of products and manufacturing the hell out of them. HP, by contrast, has over two thousand different printer models. Why do you need so many models? How can you build up enough volume on any of those to cut manufacturing margins?
Sony's PS3, by contrast, is basically a single unit, so they can slash margins tremendously. The only variations are accessories and an easily replaced hard drive.
Apple comes as close to that model as they possibly can. There's actually an unusually large diversity of notebooks now with the Retina machines being introduced, but that's still a fraction of what Dell or HP has in their line-up.
Samsung's starting to "get it" and they're promoting their flagship phone instead of any of the hundreds of others they have.
It's not just about the hardware, it's about the combination of hardware and software.
But regarding hardware, I think apple was one of the first to have good mobile hardware: decent high resolution small size screen, good battery life, thin and light, and still good enough performance. It might be off the shelve hardware, but it's the choices they make that matters.
For an extra $100 per year (30 cents per day) you can purchase the One-to-One service that allows you to schedule one hour appointments for one-to-one help as frequently as you like.
No other PC firm offers that kind of service.
Also, Running Parallels with Windows and Office 2013 gives you what most people use a Windows laptop for Office.
Kinda of a "We picked a few companies that are sorta randomly similar and look this other company is doing better". Means nothing
Which is why Apple is much more profitable when you are discounting Microsoft from that equation.
And If you are talking about Hardware, ( which by the way includes both component inside and exterior as well ), please makes an proper comparison before jumping in to say they are insanely expensive. While i am not saying that they are not, it is not a huge difference as some have put it.
Apple's memory prices are somewhere between Dell's consumer prices and Dell's server prices.
I just buy the model with the less RAM and upgrade myself, in some models it's covered in the instructions and are not too hard to upgrade.
Example: http://www.ubuntu.com/partners/dell
The biggest drag on PC profits is paying the heavy Microsoft tax on every unit sold.
Also crapware makes your product seem crappier, so you have to drop the price to remain competitive. I'm not sure there's much to gain from it despite how prevalent it is.
http://www.asymco.com/wp-content/uploads/2013/04/Screen-Shot...