Components: Apple getting better deals than Dell?
A lot has been written about Dell’s third-quarter earnings report, but what caught the eye of analyst Shaw Wu of American Technology Research was its disappointing gross margin: 18.5%, down 150 basis points from 20% a year earlier.
“Controversial and confusing,” Wu called Dell’s (DELL) explanation for these results, especially in comparison to competitors like Apple (AAPL) and Hewlett Packard (HPQ).
“DELL cited a tougher component pricing environment. We find this odd as AAPL and HPQ experienced the opposite and our own supply chain checks indicate otherwise. … It is interesting to note that DELL’s costs may actually now be higher than HPQ and AAPL, something that was unthinkable not that long ago.”
Shaw Wu needs to compare Apples to Apples (pun intended). DELL is mostly PC’s. HPQ has other products, too. AAPL has Macs, iPods, iPhones, and software. AAPL gets higher prices for its products because consumers are willing to pay for a much better product. Even at higher prices, Macs are a better value than PC’s. Terrific (iLife) software included, no repeated crashes, no virus worries, etc. That is why their gross margins (which also include ipods, iphones and other software) are significantly higher compared to DELL. If DELL says their gross margins fell, that does not mean their costs are higher. It may mean consumers don’t care about their products anymore because they all want the Mac.
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
Since Mac use Intel chip set and make their computer running in all popular operation platforms include Mac OSX, Window and Linux.
People also like the built in popular software when they purchase the hardware. Unlike the PC, you have to buy software beside the Operation system.
Plus APPLE products cover entertainment and telecommunication such as iPod, iPhone which they all can communicate to each other.
A big family I would say.