Originally Posted by Jag_Warrior
I didn't see that claim. And I'm unaware of any stated strategy by Apple, that it seeks to capture greater market share at the expense of margins. As I said previously, chasing volume at the expense of margins is a key reason for the struggles that so many of these PC OEM's have suffered, and the primary reason that IBM chose to exit this typically low margin business several years ago. It's rather amusing that a company, which by your words is not a "true competitor", is seeing the styling of its products copied by these new ultrabooks.
Selling and leasing low end, low margin, cobbled together junk PC's to corporations, for use on the shop floor, just isn't what Apple does. HP and Dell do it to sell service contracts. They make very little money on many of these corporate machines. But, if you bother to read the 10Q's from HP and Dell over time, you'll see that they do fairly well on the service contracts. This is precisely why HP was tempted to exit the consumer PC business and why Dell is now focusing its major efforts on contracts with large businesses of more than 500 employees, federal and state governments, non-profits and education - and shifting focus away from the low margin consumer and small business market. What matters most is not how many you sell, but how much you make off each sale. Understand?
There is an old story used in many business classes to explain the fundamental basics of margins, and how some people don't understand that volumes and scale don't make up for a lack of margins. See, there were these two guys who drove to North Carolina to buy watermelons to sell in the north. They bought 100 watermelons. They had their truck completely loaded down. They sold every one of them once they got home. They had the market cornered in their home town. Now, you could pop up a graph and try to tell me how *successful* they were, right? Well, here's the problem. They bought each watermelon for 40 cents. They sold each watermelon for 45 cents. A nickel of profit, right? But by the time they figured in the transportation, the total cost of each watermelon was actually 50 cents, not 40 cents. So instead of a nickel of profit, they had a nickel of loss on each sale. They sat down at the end of the month to come up with a new plan. So the one guy says to the other guy, "we're going broke. We've got just enough money to make one more go of it. What do we do???" And the first guy (we'll call him Mr. Dell) looks at him and says, "I've got it! We'll just buy a bigger truck!"
And now their stock is down 23% over the past 12 months and down 57% in the past 5 years. While the stock of their neighbor, who by chance, sells apples at his stand (but he makes sure to only sell premium goods at a profit), his stock is up over 73% over the past 12 months and up 371% over the past 5 years. Now, those are the facts of the matter. And no amount of spin can discount them.
