Why Windows PCs are no different than generic toilet paper

The new MacBook “After Dell delivered its first-quarter earnings report on Thursday, investors’ attention quickly turned to the company’s disappointing gross margins, which contrasted greatly with Apple’s (AAPL) stunning recent numbers. And so when a reader asked me why there’s such a big difference between the two, I decided to dive in and do my best to explain,” Michael Comeau writes for Minyanville.

“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.]

28 Comments

  1. 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.

  2. 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

  3. 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.

  4. 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!

  5. 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

  6. 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.

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