A friend and Microsoft engineer asked me a few years back why Apple bothered to make anything but music players. They really had something with the iPod, after all. But what could Apple manage in computers now that the platform war was over?
I tried to suggest that he misunderstood Apple's product by mentioning that Apple built multiprocessor rack-mounted servers that were highly-regarded for their maintainability. I wanted him to understand that Apple supplied a fairly complete line-up from lightweight laptops to massive supercomputer clusters ranked in the top 500 computer systems worldwide. He didn't get the picture, but instead wondered: why did they bother? Not getting Apple was apparently common at Microsoft. (Apple still bakes high-performance computing support into Macs, incidentally.)
The answer becomes clearer with each passing quarter: Apple sells a lot of computers, and makes good money on them. Recently, Apple stood ranked as the #4-ranked PC vendor in the US by volume (higher by profit) and was a shockingly small number away from the #3 position. Although iPads and music and software are all hot sellers, Macs have better margins and they are a growing market. The more powerful the hardware becomes at a lower price, the cheaper Apple will be able to build outstanding products and the larger will be its addressable market. Competitors who can't offer Apple's differentiating features will be forced into a classic commodity pricing competition and will compete their profits toward break-even. Apple, which owns quite a bit of the intellectual property in its products and spends less per unit licensing technology from third parties, has a margins advantage at any price point at which it sees fit to compete.
The Talk Show, Live
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