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Technology Stocks : Apple Inc.

AAPL 278.12

+0.8%

Feb 6 4:00 PM EST

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To: Jaime H. Ayalde who wrote (4354)	8/20/1997 7:56:00 PM
From: Bill Jackson	of 213185

Jaime; That is far too low. It should approximate the total profit that Intel makes on the CPU and Microsoft makes on the Win95. I think that the oem Win95 is $45 US to big makers to load on machines and then Microsoft prints nothing, pure profits. On the CPU there should be a scale from around $150 for the fast powerful machines(total $195) down to perhaps $50 on the slow ones. Does Apple control CPUs? or are they bought direct from Motorola and IBM? In that case Apple should charge from $100 to $200 over the spectrum of machines, for the fee in total and inore CPU sales. This would be around 5% of the final selling price for most machines. Apple also gets a special rate on CPUs, and could expand profits by selling them as well. It is natural if there is a flat rate of $50 to sell only expensive ones. So Apple must introdice a spread into it that keeps it a flat rate, perhaps 5% of the wholesale price? With clones 25-45% under Apple in price this should be doable. The trick is to avoid multi tiered distribution by selling the right to anyone at all as a packaged product for $??? depending on the CPU. I can see Apple packing them up to sell at the dealers with the CPU and OS all in one for a price to be determined as around the 5% aforementioned amount. And then you buy a case and power supply,etc and go for it, just like the IBM clones al over the place. To try and have a threre tiered name brand secondar system like COMPAQ or Zenith is useless. This Power Computing and UMAX, how do they sell? Direct to the home/business like Dell, or through a tiered network of dealers like Compag(with its' extra 15-20% overheads??)?? Tiers are no going to do it. There needs to be a Dell like network to make it go. I think I will suggest that to Dell and see what he says. Bill

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