Newsletter #360 Preview: The Silly Season Revisited: Should Dell Take Over Mac Hardware?

October 23rd, 2006

It seems that almost anyone these days with the title “analyst” can go ahead and make a downright absurd claim and have it taken seriously. Take the Gartner Group, which is now suggesting that Apple should stop building Macs and hand off that assignment to Dell.

I remember what that fellow named Forrest Gump said in that famous movie: “Stupid is as stupid does,” and to call Gartner’s pronouncement stupid is an understatement.

Gartner’s theory, such as it is, is that Intel is giving Apple a sweetheart deal on processors to allow it to keep prices low. It also claims other suppliers are doing the same, which is why Macs are priced so competitively in today’s marketplace.

Well, at least Gartner is not repeating the silly claim that Macs are more expensive than comparably-equipped PCs, or is that really their excuse? At the same time, they provide no evidence as to how much Apple is being propped up by its suppliers, or even that it happens at all. That is, first and foremost, one of the biggest faults in this argument, but there are others.

Story continued in this week’s Tech Night Owl Newsletter.

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6 Responses to “Newsletter #360 Preview: The Silly Season Revisited: Should Dell Take Over Mac Hardware?”

  1. Matthew says:

    Apple doesn’t seem to slow in its attempts to fascinate with their quarterly reports, they keep constantly proving the ‘experts’ wrong in their ‘predictions’, the article makes valid points especially about the past of Apple in the mid 90’s.

    Now I’m not a Mac user from that far back, so much of my knowledge about Apple before I started using Macs came from the Cult of Mac book, the book didn’t mention much of why Apple was in trouble at the time, but did mention they bought Power Computing, which gave them their online store technology which was considered quite advanced at the time. Great article that expanded on what I felt was some missing information. Thanks Gene.

    I believe what the analysts/experts need to start doing is stop making predictions and start doing in-depth research on the past of companies, and start focusing on more positive attitude on how companies can improve themselves without resorting to outside sources, especially those that are currently down in profits. Apple still heavily relies on their hardware sales more so than their operating system, of course if these people did their research they would know that by now.


  2. KT says:

    Many Apple fans like to poo-poo a suggestion like this for the wrong reasons. Namely, that it will be a detriment to the ‘Mac experience’ in terms of component quality and driver support. This is mostly false as outside of spiffy case design, Macs use the same components as Dell. Linux sells their OS despite less than stellar driver support, and those that buy it understand this because they want something other than Windows.

    You would think the bottom-line justification for doing this (or not) would be simple dollars and cents. If Apple thought they could achieve enough market penetration with an unleashed OS X to offset and surpass loss of hardware sales, wouldn’t they, as a profit driven public company, be compelled to do it? My guess is it’s just too speculative to venture in this direction.

  3. Dana Sutton says:

    The idea that Dell should make Macs is silly. The idea that Dell should distribute and advertise them might or might not be so daft, since these are Dell’s real corporate strengths. As long as it is content with a 5% or 6% market share, Apple can get by with its own resources. If it ever decides to make a serious challenge to the supremacy of the PC (and why shouldn’t it?), it may well need resources, expertise, and a marketing model that it doesn’t have. and Dell might be the logical place to go. There’s something else too. In a sense Apple’s current marketing model seems to come dangerously close to being price fixing, but the Feds have been willing to look the other way, probably because they have primarily viewed Apple as a welcome counterbalance to Microsoft. If Apple becomes a major player in the marketplace, this attitude will probably change, and Apple will need an entirely different marketing and distribution model.

  4. Matthew says:

    I think Dana makes great points, however I do have a question.

    If Apple were to become a major player in the market place, wouldn’t Apple have like a ‘grandfather’ effect? Meaning they always had their Operating system only run on Apple branded computers since they started, except during that brief period in the mid-90s, but for a government to come in after so many years and claim you need to open up OS X (or whatever the future OS is called) to other computer manfacturers, could a governmental body really do that?

    Apple having it this way since before they became a “monopoly” or “near monopoly”. I could see how it would make sense for a government to step in if lets say Apple had it open to all manfacturers before they became a major player, and when they did they restricted it to the Apple branded computers only when they did become a major player.

    Just a question I haven’t really seen before in real world (at least not that I’m aware of).


  5. Dana Sutton says:

    Matthew, I don’t imagine that the gov’t would do what you suggest and force Apple to throw their OS open to other manufacturers. What I was thinking of is the way that Apple sharply limits the number of non-Apple outlets that are permitted to sell the Mac and requires such distributors as it does permit to sign a contract that they won’t sell them at discounted prices (yeah, I know, some mail-order retailer outfits get around this a little bit by throwing in a free printer or free memory, but you know what I mean). If Apple got a large enough market share, the Feds might notice this was an unfair business practice, order Apple to stop requiring these contracts, and decree that it must allow Macs to find their own price in the marketplace. If this ever happens, you can say goodby to your local Apple Store (if you’re lucky enough to have one), and Apple will have to look around for an entirely different model for its distribution and marketing. And Dell offers a very good one.

  6. Matthew says:

    Ah thanks for the response Dana.

    I do know that currently all manufacturers with the exception of Apple have an profit of usually not even 1% on each computer they sell, and if Apple were forced to have such a thing happen, it would really be cutting it out from Apple, however I guess Apple could just respond by raising the prices of their products wholesale to make up for the loss of profit.

    Any case, thanks for the reply once again.


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