“There are a variety of factors driving gross margins for companies making physical products. But assuming companies have access to similar materials and manufacturing methods, difference in gross margin are driven primarily by uniqueness and branding,” Comeau writes. “In any given geographical area, gas prices are pretty much the same because all gas is pretty much the same, and there are a lot of people selling it. That means low mark-up and a low gross margin because people have no reason to pay up.”
“All computers running Microsoft’s Windows 7 operating system are basically identical, and you have hundreds of models to choose from,” Comeau writes. “And since PC companies can’t or are unwilling to set themselves apart with design or customer service, their products are commodities, no different from generic toilet paper.”
“Apple of course, is the exception… Apple has single-handedly revolutionized the computer, mp3 player, smartphone, digital music, electronics retail, and tablet markets. In doing so, it’s mastered the gentle art of making powerful products that are easy to use — the perfect complement to great design,” Comeau writes. “Embedded deep in Apple is a willingness to ignore critics, break the rules, and make products that change the world. It’s the uniqueness of the brand that makes Apple different from all of its competitors, and that’s why its products sell for a hell of a lot more than the sum of their parts.
Read more in the full article here.
[Thanks to MacDailyNews Reader “Wingsy” for the heads up.]
I wouldn’t wipe myself with a Dell Inspiron. Lenovo, maybe, but certainly not Dell.
The ironic thing is that Apple products don’t sell for that much more than comparably-equipped Dells, HPs, etc.
Of course, iPads, iPhones and iPods just sell, sell, sell, because they have no real competition.
What’s wrong with a one-ply Dell?
Don’t give them so much credit.
I think Dell and Charmin should co-brand the “Bear Shitting in the Woods” campaign. Adamo the Bear, anyone?
This explains the “No Flushing PC/netbooks Down the Toilet” sign I see in the restrooms.
The major problem with Dell is that most people that buy computers want the cheapest that they can get away with. I am sure that Dells higher end PCs would be quite profitable if they could sell them
Well we’ve all been saying this for years. Dell made a bad mistake by resting on it’s laurels and not looking to innovate when it had the opportunity.
Or to summarize, it lies with the priorities of the company.
Apple:
1. Make great products
2. Profit
Others:
1. Profit
There is no #2
Yep, I took a Zune this morning. Good thing I had my Dell computer from work with me. Somebody throw me a DJ Ditty. It may blend but I want to know if it squirts.
First of all, I am absolutely ecstatic that a company like Apple can thrive. I love good products and I vote with my money. Second, I am thrilled that a company that thrives on peoples ignorance (Dell Inc), and give them products of third world quality, can still be breathing. Dell is not adding to American innovation or ingenuity, just another commodity company. Just like all the other Wal-Marts out there. I hope one day people of the world and businesses can see what a horrible product a Dell is. I hope that Dell can change their business model to accommodate todays market. Dell seems so 1990’s!
@Metryq
your finger easily goes through it
To further summarize, it also lies with the priorities of the consumer.
Consumer type A:
1. Research product functionality, reliability, design, support
2. Price
Average / typical consumer:
1. Price
There is no #2
Author closed with a killer quote that perfectly describes Microsoft and Dell.
“Those content to ride the wave are destined to decay.”
I don’t think Dell is using slave labor as much as Apple is in China and their margins are less. Apple products have higher margins because they use the cheapest Chinese parts that are bolted together by 9 year old girls working 18 hour shifts at the Apple plant.
Dell DOES SELL High End Laptops: M4500 & M6500 15″ & 17″ with i7 processors and able to run higher end 3D, FEA & Video software.
Dell’s Problem: Load up one of these Dell “Mobile Precision Workstations” and they run $4000-$6000 for a laptop. The 4500 starts out below $2000, but put on the horsepower and it more than doubles the price.
Apple’s Advantage: Pick a 15″ or 17″ MB Pro and you get it for $3000 to $4000. Plus you get higher speed CPU and more RAM on the MB Pros than stock on most of the Dell’s.
Anyone can check these numbers in 10 minutes on their websites.
So is it any wonder why engineers, number crunchers, coders and serious data crunchers who are mobile pick an Apple?
I run Mac OSX, XP Pro in Parallels and Win7 on boot camp. Can’t do that inexpensively or easily on Dell’s machines.
yeah right Brian, your sister.
kikamouse noted “I hope that Dell can change their business model to accommodate todays market. Dell seems so 1990’s!”
Well, until a couple years ago, Dell had only a half dozen designers in their company. That is telling.
Notes on the web indicated they now have well over 100 product designers in house. My guess is that to get truly great products out the door and get the team running like Apple it is going to take them 4-5 years to start to see visible results…assuming they let the design team be creative with a top notch creative leader.
I have not heard that they hired someone who has the creative capability of Apple’s Jonathan Ives.
So we’ve gone from, “Dude! You’re getting a Dell.” to ‘Do-Do, you’re getting a Dell.’
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this does nothing to explain gross margins.
he went on to explain branding and success in selling your product… nothing at all about gross margins.
lol
Today Dell touched new bottoms.
Investors who bought at the top have been wiped clean.
Probably more like:
1) Market share
2) Profit? Oh yeah, after getting enough market share, we’ll worry about profits
Kind of like the analysts who blast Apple for not having more market share.
Funny that, “Dude, you’re getting a Dell!” is now an insult.
1 9 8 4 Pegged!
If ANYONE says that Apple is becoming the big brother company that the 1984 Ad emphasized, correct them and tell them this instead:
From the article above,
Michael Comeau writes, “Embedded deep in Apple is a willingness to ignore critics, break the rules, and make products that change the world. It’s the uniqueness of the brand that makes Apple different from all of its competitors, and that’s why its products sell for a hell of a lot more than the sum of their parts.
When Apple builds a product, it does not question how many of these it can sell. The only question they have, is this the best product in it’s class? If it is, they will make it and sell how many they can. Others, like HP think, lets sell as many as we can, and there is the deference.