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Summary:

Analyst firm Gartner suggests Apple quit hardware business and sell software to its hardware competitors. Gartner’s anaylst suggest as Apple adds volume, higher component costs will decrease their margins. Somehow they seem to suggest that Intel is doing business with Apple ‘just because’. “Apple’s margins for […]

Analyst firm Gartner suggests Apple quit hardware business and sell software to its hardware competitors.

Gartner’s anaylst suggest as Apple adds volume, higher component costs will decrease their margins. Somehow they seem to suggest that Intel is doing business with Apple ‘just because’.

“Apple’s margins for its Mac business, currently around 40 percent, are only sustainable because component makers such as Intel choose to prop up the business.”

Is Gartner suggesting that the only reason Apple is able to sell computers is because Intel feels like it? Please, I would love to see the real justification for that theory. It’s simple business, Gartner. Apple makes whole computers, Intel makes parts of them. There is no other reason for them not to do business, even before the official transition announcement.

The ‘analysis’ continues…

“As a result of permanently changed market conditions, Intel has been forced to restructure and, in our opinion, cannot go on supporting Apple (or any other customer) indefinitely.”

First, Apple is only alive because of Intel. Then later on it’s because HP cried pricing unfairness, Intel can’t support any customer indefinitely. What type of business can survice that isn’t designed to produce for their clients?

It’s obvious there is something brewing with consumers, and when one company continues to post growth in a down market no one can argue that. It doesn’t take analysis to see that Microsoft’s Vista troubles have hurt PC manufacturers, and they are eager for an interim solution. Even if it is only for a few years until Vista SP2 RC1 Build 1996 Extreme Home Table PC Edition N fixes come.

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  1. I agree. It’s total nonsense. Gruber gave them Jackasses of the Week. What an honor!

  2. On the same day that statistics show that Dell are losing market share to both Apple and HP too. To me that suggests that the growth in the bottom end of the market has flattened out – as with iPod sales it had to sometime.
    The problem they have is that they have established a brand that is associated with being ‘cheap’ rather than ‘good value’. People often buy a cheap first car, but rarely buy the same model again, whereas they will stick with a better quality manufacturer.

    Equally, Gartner seem to miss the point that Dell probably could not manufacture the Mac any cheaper than Apple could. There is nothing particularly magical about how Dell do what they do, and they could not do it and deliver something like the iMac.

    Gartner seem to specialise in either stating the obvious or the ridiculous, rather than anything I’d actually call analysis.

  3. Concerned Reader Thursday, October 19, 2006

    This is the worst analysis of an analysis that I’ve ever read. From that line, how did you come to the conclusion that the analyst was suggesting that Apple is able to sell computers because Intel feels like it? Read what he said again. Gartner said that the 40% margins on the computers are only sustainable because Intel doesn’t charge Apple as much as they could, and said absolutely nothing about Apple’s ability to actually sell computers without Intel.

    Anyway, it doesn’t make a difference because there isn’t an analyst in the industry that actually knows what he or she is talking about. I work in the securities industry and have access to a lot of research on the track records of analysts. Turns out that the vast majority of their track records suck not just in performance but in facts. Analysts have very little (read: almost zero) knowledge of the inter-workings of the companies they’re analyzing. As a result, they pull stuff out of the air that seems reasonable and pass it off as an “analysis.” Truth is, all they do is make reasonable guesses. Very little analyzing actually goes on. There’s only one analyst that I can think of who’s track record has been consistently impressive — and they are that way because they take a quantitative approach to the companies they analyze (they have a formula they follow and the computer decides the stock’s rating) rather than what every other analyst does (which, as I mentioned before, is to take a guess).

  4. Apple’s not Microsoft enough said.

  5. Contra Gartner, The whole point of going to Intel hardware was to neutralize the differential between Apple and Dell and HP. If Intel declares bankruptcy tomorrow, Apple, Dell, HP, and the others would all simply move to AMD, or whatever other chip company sprung up to serve this vast market.

    I fail to see how Intel’s fortunes affect Apple any differently than the rest of the PC makers.

  6. Worst Apple analyst, yes, but a great publicist. He’s getting this article plastered everywhere today.

    At any rate, there are a ton of reasons even the vaguely Apple-informed analyst would never propose such a pairing.

    Not to mention the fact that these companies are reported to be on two ends of the reliability survey scale (Apple, 201; Dell, 4). Nice.

  7. The basis of this analysis left me with whiplash … what, higher volume ‘increases’ your component costs?? Since when, per unit costs go way down with bigger orders …

    This just seems like a dig.

    Intel seems geniuinely excited to be working with Apple on new products which offer the promise of new untapped markets for those custom chips.

    Has it been sugested that Apple gets fovarble pricing for the same chips compared to PC makers other than in this article?

  8. this is just another example of how erroneous Gartner’s research tends to be. I can’t believe that people continue to give their “insight” credence.

  9. I have had the “pleasure” of presenting to Gartner and many of their ilk while representing a major consumer electronics and software company or two. Whenever I read a report concerning a topic with which I am intimately familiar, I conclude that the writer is an imbecile, or at best, a lazy moron. I try to keep that in mind when reading analyst reports.

  10. I think what he meant with intel proping up Apple is that they did not just support apple like they would do with any pc manufacturer,
    they brought the intel core duo for example, first to the mac and a couple of months later to the pc market.
    And yes, apple is stll able to sell computers not because intel feels like it, but because of intel doing business with apple.

    If at a point they were not be able to strike a good deal intel could bail, that would mean at the point where they are now, big problems for Apple.

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