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From: jan@bagend.uucp (Jan Isley)
Newsgroups: comp.sys.mac.misc
Subject: Re: Mac IIsi for sale...
Message-ID: <1990Dec20.052010.4291@bagend.uucp>
Date: 20 Dec 90 05:20:10 GMT
References: <36714@cup.portal.com> <5350@crystal9.UUCP> <1990Dec13.035030.27241@bagend.uucp> <17358@natinst.natinst.com> <1990Dec17.064020.27189@bagend.uucp> <1990Dec17.225300.23301@athena.mit.edu>
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rsfinn@athena.mit.edu (Russell S. Finn) writes:

>Of course, not all of that margin is going to Apple; the dealers are presumably
>getting a piece of that action.

When Apple is making about 1,000%, the dealer's less than 10% does not even
enter into the equation.

>I'd also be curious to know how that compares
>to markups for other computer companies with established retail channels

Manufacturers that I have delt with and worked for are *real* glad to get 100%.

>|> And don't even suggest to me that it took that kind of markup to pay the
>|> non-recurring engineering costs for the Plus and the SE.  Rubbish.

>But Apple is no longer a company run by two guys out of their garage; they have
>significantly more expenses than hardware engineering costs.  (For instance, I
>heard once that Apple was employing around 250 software engineers on System
>7.0; whether you regard that as a gross over-estimate, or an excellent reason
>why it's so late, :-) they've still got to pay those people, and they don't
>charge much for system software....)

another excellent reason why the product has improved so little over the years.

>Regardless of whether or not you think the actual profit margin is too high,
>this kind of reasoning strikes me as a bit specious.  I mean, it only costs
>about a dollar to stamp out a compact disk, which routinely sells for more than
>ten dollars.  Now obviously you're paying for more than acrylic and aluminum
>foil when you buy a CD; but it's equally obvious to me that you're paying for
>more than silicon and a power supply when you buy a Macintosh.  (People who
>bought their computers from Joe's PC Klones may not agree with this point.  :-)

This line could go on forever.  The box of cereal cost more than the contents.
Oil companies make about $0.01 per $1.00 and the government gets 0.15 to 0.25
per gallon, while charging that the oil companies are making windfall profits.
While you are talking economies of scale, reevalute your analogy of a comparing
markup on a $10 item to a $1,000, $3,000 or even $10,000 item... it !=

>Apple's previous policy was to sell computers at a high markup, sacrificing
>market share for gross margin; this strategy seems to have resulted in the
>accumulation of several hundred million dollars.  Apple's current policy, which
>represents a partial reversal of the previous policy, has so far resulted in
>their being unable to keep up with demand; I predict this will lead to the
>accumulation of several hundred million more dollars.

No, Apple's previous policy was to stress the limits of what the market would
take while engaging in ridiculus legal handwaving to crush any potential of
fair trade and competition.  New models, same policy.

>Feel free to run your own company any way you want.

I do.
-- 
Jan Isley  jan@bagend  {known universe}!gatech!bagend!jan  (404)434-1335