Mac Makes 45% of PC Industry's Operating Profit

http://www.slate.com/blogs/moneybox/2013/04/16/mac_profits_are_high_too_high.html

by jseliger • 13 years ago

37 34 13 years ago

mooism2• 13 years ago

The chart on the page the article links to indicates that Apple makes 45% of the profit from the PC industry (counting Macs as PCs), so less than the entire Windows PC industry, I think.

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.

nathan_long• 13 years ago

That's a good point, but it helps explain, rather than invalidates, the comparison.

Apple DOES make more per machine sold than Dell does. Part of that difference is the fact that its price includes an OS.

Oxxide• 13 years ago

huge markups on cheap hardware leads to profits, Slate reports.

stcredzero• 13 years ago

Isn't being able to accomplish a high profit margin the whole point? Being able to do that while maintaining high levels of customer satisfaction is simply excellent.

dclusin• 13 years ago

Huge markups on RAM, mainly.

astrodust8• 13 years ago

Every vendor does this, especially on the enterprise side.

Apple's memory prices are somewhere between Dell's consumer prices and Dell's server prices.

Adirael• 13 years ago

You're not really paying for the RAM, you're paying for the RAM plus installation. It's cheaper to produce 2, 4 models on an assembly line and if you wan't to have 4x RAM just charge you a lot.

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.

madoublet• 13 years ago

I assume you are talking about the internal components. I have found the components you actually interact with (screen, keyboard, trackpad, etc) to be really well done. Maybe if other Manufacturers spent more time getting these things right and less time on specs, they would have higher profits.

astrodust8• 13 years ago

If Dell made an effort to promote non-Windows offerings, their margins would be a lot higher, but they seem hesitant to pursue this angle aggressively.

Example: http://www.ubuntu.com/partners/dell

The biggest drag on PC profits is paying the heavy Microsoft tax on every unit sold.

recoiledsnake• 13 years ago

Why isn't Microsoft's Windows division included in "the entire PC industry" ? Or even Intel?

scott_s• 13 years ago

Because they don't sell computers.

astrodust8• 13 years ago

Intel does sell computers, but not very many. Example: http://www.pcworld.com/article/2020577/how-we-built-a-tiny-h...

bitcartel4• 13 years ago

The headline is misleading.

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.

[1] http://www.asymco.com/2013/04/16/escaping-pcs/

wmf2• 13 years ago

Arguably Mac hardware is not essentially the same because the fit and finish is better, the BIOS is not total garbage, etc. Another way to look at it is that Apple charges $200 for OS X.

btian• 13 years ago

Mac has different hardware. Screen is better quality, retina screens are amazing. Finish is much better. Battery is denser. Fan is less noisy. I can go on but you get the idea.

I agree that the processor is the same, but a computer is more than its CPU.

Einherji• 13 years ago

Especially in a time where even low-end consumer processors are enough for most people (even power users), I would argue that one of the most important metrics when buying a laptop is fit and finish. Not having 200 different SKUs in their product lineup also helps apple shave off development and production costs.

astrodust8• 13 years ago

> Apple are the worst when it comes to profiteering from impoverished workers...

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?

bitcartel4• 13 years ago

A key argument for offshore outsourcing is to take advantage of a lower cost base so you can price your finished goods more competitively.

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.

ako• 13 years ago

I didn't buy my iMac for the hardware, but for OSX and also because it runs the best productivity suite for stuff that matters in my personal life: iLife.

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.

steverb• 13 years ago

Where I bought a MacBook for the hardware and immediately installed Windows 7 because it runs the best productivity suite for stuff that matters in my personal life: Visual Studio.

cooldeal• 13 years ago

45% is not greater than 55%. Headline is wrong.

http://www.asymco.com/wp-content/uploads/2013/04/Screen-Shot...

mindstab• 13 years ago

Kind of a hard comparison. the rest are just hardware where as Mac is a hardware/software company and also sell other form factors than pc like phones and other portables. So its not a fair comparison at all. Apple to oranges like. Should think about including other hardware from Samsung, HTC, to Intel and software like Microsoft.

Kinda of a "We picked a few companies that are sorta randomly similar and look this other company is doing better". Means nothing

boundlessdreamz• 13 years ago

Huh? The comparison does not include iPhones/iPads

rayiner• 13 years ago

I'm not sure what is surprising about this. PC makers (Dell, Lenovo, HP, Acer, etc) produce fungible products in a market that's approaching perfectly competitive. Lenovo makes only about half a billion of profit on $30 billion in revenue. Acer made $11 million in profit on $3.8 billion in revenue in Q1 of last year. That's what happens in competitive industries--profits approach zero.

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.

davidf18• 13 years ago

The price also includes great service. In Manhattan there are 5 Apple stores -- one is 10 minutes away from me and one is open 24/7/365 just in case I need some Genius Bar help or some Apple accessory.

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.

ksec• 13 years ago

Apple makes money on both hardware and software. So while all those manufacture have to pay for its OS ( Windows ) to M$, Apple gets those themselves as well with MacOS.

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.

Mac Makes 45% of PC Industry's Operating Profit

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