Path: utzoo!utgpu!jarvis.csri.toronto.edu!mailrus!cs.utexas.edu!usc!apple!sun-barr!newstop!sun!concertina!fiddler
From: fiddler%concertina@Sun.COM (Steve Hix)
Newsgroups: comp.sys.apple
Subject: Re: The results of our cash cow
Message-ID: <128542@sun.Eng.Sun.COM>
Date: 29 Nov 89 18:41:28 GMT
References: <1154@umigw.MIAMI.EDU> <113300187@uxa.cso.uiuc.edu>
Sender: news@sun.Eng.Sun.COM
Lines: 65

In article <113300187@uxa.cso.uiuc.edu>, saa33413@uxa.cso.uiuc.edu writes:
> 
> Indeed, Apple is rolling in the dough.  Here at the U of I, everything is (ugh)
> Macintosh.  In MacWorld (I think it was MacWorld), they did a price analysis
> 	[...]
> MacWorld broke the machine into about eight components to get the materials
> cost.  The hard disk, at $250, was the most expensive component.  All the parts
> of the Mac SE (including keyboard) cost Apple only about $600!  Simple 
> arithmetic indicates that Apple is making an over 500% profit on the Mac SE!

Last time I saw "real" figures, an Apple CPU (includes Macs and //'s) selling
price was roughly 4-5 times the actual component/construction cost.  Remember
that Apple *doesn't* get all the money you spend:

	- Dealer mark-up takes out some.
	- Warehousing takes out some.
	- Transportation cost takes out some.
	- The box, packing foam, systems software, and manuals cost more
	  than you would believe.
	- Advertising has to be paid for.
	- R&D has to be paid for (even Apple// R&D).
	- Employees have to be paid, and even the tech
	  writers deserve to be paid *something*.
	- Overhead (rent, utilities, taxes,...) has to be covered.

At one time, the marketing cost alone, per system, on the Apple//e was
a bit more than Apple's cost for making the hardware.  Like almost
twice as much.

> (Put that way, it's no wonder Apple Marketing loves the Mac and would like to
> dump the II--more profit! :-) ).

Nope.  The Apple// generates about the same profit margins as the Mac line.
(Have you looked at //gs list prices lately?  They're not giving them away.)

But, you say, "why do they charge so much when you could get a PC clone for
about 50% more than the cost of the parts and assembly?"

Well, two things, for starters:

1 - The clone make doesn't have the overhead that Apple does.  And
they're not doing much development work on the machines they sell,
either.  Try to get some support.  (Yeah, try to get support from Apple
some times, too.  That's another issue, though.)  How many ads do you
see from low-priced clone makers other than maybe in Computer Shopper?

2 - People will pay the extra for Apple's products.  As long as that
holds true, don't expect to see closeout prices.  (But watch out if you
do:  Apple will be going down for the count.)

All the above doesn't make me like paying the money much better, but I
can live with it.  I know what the consequences of prices cut in half
would be.  (And there's always someplace to go to get some sort of
worthwhile discount...if you're willing to pay the price for the lower
price.)

TANSTAAFL!

------------

"...Then anyone who leaves behind him a written manual, and likewise
anyone who receives it, in the belief that such writing will be clear
and certain, must be exceedingly simple-minded..."

		Plato, _Phaedrus_ 275d