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Technology Stocks : Apple Inc.
AAPL 278.06-0.2%Dec 11 3:59 PM EST

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To: Jonathan Bird who wrote (9633)3/17/1998 7:23:00 PM
From: rhet0ric  Read Replies (1) of 213176
 
All those advantages you attribute to the Mac OS, while true(and some potentially true), also apply to windoze. They have nothing to do with the issue. This is that MacOS development is financed by OS sales which are minute compared to windoze.

Well, there's a big difference between Apple and Wintel, and that is that Apple makes both the OS and the boxes. So there's no really way to compare Apples to oranges, so to speak.

You're quite right in pointing out the economy of scale advantage enjoyed by PC hardware manufacturers. And you're equally right in arguing that Microsoft makes most of its cash from applications (actually, I believe Microsoft uses its app sales to subsidize its OS development, which at times has been a money-loser; this is very smart on their part).

My point is simply that the cost of opening a new channel, or a new layer of a channel, for MacOS devices, doesn't increase the cost of OS development. So I argued that doing so wouldn't cut into Apple's margins on those products, as it does for PC box makers (witness Compaq). Apple has to continue to develop MacOS regardless.

In other words, the cost of the OS component is a zero sum game for Wintel between the box makers and Microsoft, whereas for Apple it's an internal plus sum game.

This isn't to say that Apple could sell a low-end Mac more protifably than PC box makers; just that, if Apple can't do so, it won't be because of OS costs, as it is for PC box makers. It would more likely be due to relative manufacturing efficiency, economy of scale, things like that.

I suppose I'm standing by my OS cost argument, while conceding that you may be right on the larger issue of overall profitability, which is admittedly much more important.

rhet0ric
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