Adam,
I basically agree with you. however I have one question:
Anyway, unit volumes were actually up, but revenue was down. However, if you think this is
all just "cost-cutting", you are mistaken. Apple's current product mix, especially PM G3s, is
very cheap to manufacture.
They sold more machines, yet revenue went down and margins went up. How can one then explain
their profit? It has to be due to cost-cutting measures. You state that the G3 is cheap to make. This
counts as a cost-cutting/streamlining measure.
I agree with your statement that Compaq should tell us the margins for the sub-$1000 machines. I'm
not too sure how we are getting the short end of the stick, but I think management needs to re-think
this market and determine how beneficial it is to Compaq.
-Eddie
This is simple to explain, actually. In the restructuringm, Apple eliminated most of its imaging products. Quicktake cameras were never a large part of revenue, but printers were. Apple has stopped offering low-end printers (low margin, but they sold a lot of units).
Decisions like this are one of the reasons Apple is posting lower revenue, but more machines shipped. That's also the reason they are profitable again, by cutting low margin product lines.
However, I'm not all roses about the situation - there was price deterioration because Apple still is not offering a true high-end machine (6 Slots, dual-processor), and the PowerBook line needs a new high end (and low end). This should be solved in May.
As for Compaq, I don't think they are in the same situation as Apple - obviously, they are the major Wintel vendor. So, if they get their inventory management in line, they should soar again.
However, to me, this sub $1K machine phenomenon and channel stuffing seemed faintly reminiscent of Apple's high revenue 1995, featuring: the $999 Quadra 605. (Which was a great machine - I just set one up for my Grandma with Mac OS 8.1, Quicken 98, Netscape 4.04, and AOL 3.0)
Somehow I doubt that in 2001 these sub-$1K machines will be that useful.
- Adam |
