“I’m still digesting the news that Apple’s market cap has exceeded Dell’s. Given that Dell was for darn near twenty years the PC company doing all the exceeding from a stock market perspective, this is clearly an occasion worth thinking about (for that matter, it’s also pretty shocking that HP now trades at a higher P/E ratio than almighty IBM, but I’ll think on that over at the Tech Beat blog some time),” Peter Burrows writes for BusinessWeek. “So what does Apple’s market cap ascension mean?”
Burrows writes, “As I listened to the Apple call with Wall Street analysts the other day, I kept thinking it comes down to one thing: runway. For me, that’s the metaphor that best describes the difference between the firms. Apple is roaring down its runway at a blazing clip, yet it’s got miles ahead of it to grow just by pursuing its current plan and exploiting its current capabilities. But Dell, which has been the poster child for this kind of analysis since George Bush Sr. was prez, is suddenly looking like it’s running out of room.”
“Suddenly, Apple seems to have bumped Dell out of its traditional role as ‘company-most-likely-to-gain-boatloads-of-share.’ OK, no one is talking about Apple zooming from its current 3.3% of the world market to double digits anytime soon. But every point of the $250 billion PC industry is worth $2.5 billion. So if Apple gains a point of market share this year–not a pipe dream by any means, especially given the Intel transition–Jobs & Co. will have already found the fuel for that 15% revenue growth year. And that’s without any iPod sales growth,” Burrows writes. “I’m not saying Apple’s shares aren’t overheated. They may well be. But while Apple’s smallness was formerly a life-threatening problem, it suddenly seems like a big advantage. I guess that’s just how the math works these days, when Steve Jobs’ reality distortion field seems to have morphed into something else: reality.”
Full article here.
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MacDailyNews Note: For the moment, Dell is worth more than Apple, $70.5 billion to $64.1 billion respectively.
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When you have a big chunk of market share, it is easier to go down than up.
When you have a small market share, you have at lot of room to grow.
RDF becoming “reality”?
Shocking!!
Exactamundo. Apple is just setting off down the runway and as it takes off in about 18 nonths time it’ll look down and see below it the wreckage of Dell and Windows Vista et al.
Fasten them seat belts guys and gals..
Doubling marketshare in 10 years time is not bad! 1996 2% 2006 4%
Double DOuble DOUBLE
What if they double in 5 yrs, I will bet they will double that in half the time
10 y 2x 4%
5 y 2x 8%
2 y 2z 16%
Momentum Baby!!!!
Surely it’s the difference between a company that manufactures a commodity product more cheaply than anyone else (and has a very efficient sales/distribution model) compared to a company that creates/defines the way entire markets will function in the future?
Remember, somebody somewhere will alway be able to make something cheaper than you’re making it…
MW – amazingly – heart. As in Apple has one, Dell doesn’t
“BusinessWeek: How can Apple be worth more than Dell?”
Simple. Apple is an innovator, Dell is a repackager. Talent is worth more than boxes.
“But while Apple’s smallness was formerly a life-threatening problem, it suddenly seems like a big advantage.”
Life-threatening is relying on third-parties for both your processors and OS. Life-threatening is letting your brand be identified with “low cost”. Eventually you cut too deep, and “low cost” becomes “cheap junk”.
Dell is on their way out. The next market champs will be HP and Apple.
How can Apple be worth more than Dull?
Hmm, let’s see…
Dull is a commodity “box assembler”. They don’t design the core (no pun intended) hardware or software. Intel and Mafiasoft so that for them. Dull’s margins are based on their famous “direct to customer” and JIT logistics to cut inventory cost. May have been unique in 1985, not anymore.
Apple invents and manufacturers most of the essential hardware, software and services that are offered to the end user. Apple creates “value” and their margins are huge (relative to Dull). Apple’s market share is increasing at a rate double that of the industry. Apple has successfully transformed their computer only business into computer AND consumer electronics (media to come).
Still wondering?
{Grammar nazis, that’s “… Mafiasoft does that for …”}
Not anymore….Apple Inc. lost $6 billion in market capital since last week in the crazy world of stock trading.
Actually, kerrazyjoe, Apple’s computers had 5.3% worldwide share in 1995, and 7.4% in 1995.
http://www.bizjournals.com/sanjose/stories/1996/08/19/newscolumn3.html
The real point to Apple’s share valuation is:
1) Exploiting new markets: iPods, digital music, internet services, software. There’s a reason we now pay for iLife and .mac when it used to be free.
2) All aspects of Apple’s business are profitable: They don’t sell iPod at a loss to enourage people to buy music, they don’t run the music store at a loss to drive iPod sales, they don’ t run the retail stores at a loss to encourage traffic and they don’t develop software at a loss to boost Mac sales.
3) All aspects of Apple’s business are growing and growing profitably. It’s easy in business (GM, Ford) to increase sales by cutting prices; effectively buying growth. Apple doesn’t do that.
4) The trajectory looks oh-so rosy. Digital hardware devices need intellegent software to make the user experience positive. After years of telling Apple to choose whether it wants to be a hardware company or a software company, some anal-ysts are FINALLY getting it that it pays to be really good at both.
” a billion here and a billion there….before you know it, we’re talking real money”
-forget who said it
I guess that’s just how the math works these days, when Steve Jobs’ reality distortion field seems to have morphed into something else: reality.
=
LOL
Queue the high end Dell Gaming rigs with flames on the sides.
Apple is worth more than Dull because I said so.
So there.
The “billion here, billion there” thing is usually atributed to the late Senator Everett Dirksen. The pithy Dirksen himself once admitted he never actually uttered the famous quote, and that it was put in his mouth by a newspaper reporter. Dirksen liked it so much he never bothered to correct the rest of the world.
Above info verified by dirksencenter.org after a quick Google.
Man…”pithy Dirksen” and “quick Google.” Two phrases I never thought I’d say.
Three cheers for the boys in the stock exchanges, accounting firms, and business analyst companies who so rigorously spend their working hours to quantify the net worth of others.
Unfortunately, these exactingly economically minded folks epitomize the old axiom; “They know the price of everything, and the value of nothing.”
Ok, the iPod fad is over, we all got one for the holidays and we are done. We got boatloads of music, spending as much as we were willing and now that’s done.
Video isn’t going off nearly as much as music did, perhaps a few shows every now and then, but it’s going to settle down.
The iPOD fad is over.
Now comes Mac sales, whoops, Intel switch and no software to go with it. Nothing to see here for 6-8 months.
Maybe the demand for Apple pro laptops will be filled, o, but after that. NOTHING.
Most pro users are swinging a lot of PowerMac PPC muscle. They won’t need to upgrade for a few more years, when the PowerMacIntels arrive and they build up enough money to buy all new versions of software AGAIN!!!
Oh yes, time for premature buying of software, ain’t that great? Just add another $2-5,000 to the bill of a new PowerMacTel with slow Core Duo’s which my Dual 2 Ghz can smoke anyday.
Not to mention what that Quad G5 can do. Hehehehe
Yep, and software is REALLY GOING TO COST because little does anyone know, but there is a nice DRM chip in these new MacTels that will lock everything: software, music, videos to that one machine.
NO MORE STUDENT SALES OF MAC’s
Yep, they are usually poor and can barely get a Mac laptop for school but they won’t be able to learn Photoshop or much of anything else because it won’t work without registration and with the cost of software being more than the computer…..
DRM is going to kill Mac sales.
Of course Microsoft is watching this very closely and when they issue Vista they might just let something slip to break the DRM.
Mac’s will be DRMed and nobody will want them and Vista PC’s won’t be.
GOODBYE APPLE
AppleDoom: we’ve been hearing variations of the same bullshit for 30 years.Still waiting for it to happen!!
HELLO APPLE!
No doom, no gloom! “Applegloom”, you’re so full of crap. No other computer maker in the world has been growing in sales like Apple. Read the facts and shut up.
HELLO APPLE, my credit cards are ready – I’m waiting for the Mac Mini for TV, new iPods and more!
Mafiasoft and Dull bite the dust or go sell your cheap trash for 3rd world contries
APPLE RULES and I LIKE IT!
voice: let Apple’s voice be heard through ads on TV
Simple: Put your money in companies that have growth potential. Sell it to the insurance companies when that slows.
And don’t forget to buy the products of the companies you hold shares in.
AppleDoom is correct(sniff sniff sniff).
thing is, this is the first time in 20 years that this makes sense.
Would have been better to keep that 11% share back in 85 and encourage development imo.
As nice as it is to own AAPL now, it wasn’t previously.
http://www.bizjournals.com/sanjose/stories/1996/08/19/newscolumn3.html
The runway analogy is fine however, although it is stolen nearly verbatim from Paul Samuelson’s Economics textbook from 1975.
Dell may be worth more for the moment but what MDN failed to mentioned was that Apple’s trend is up. So are their idea’s. Dell’s is, well you know.
AppleBloom –
We out here in the 3rd world have no desire to be the dumping ground for the trash from companies the developed nations created and no longer can keep under control.
To prevent this from happening we have a secret plan to keep the Bush family in control of the US forever. This will ultimately result in the US becoming the world’s newest 3rd world country thus fulfilling your prophecy but not in the way you thought it would happen.
You can tell our plan is on track – our partner in this plan, Microsoft, has now gained domination of the software used to run your government.
The only glitch we are facing is that Michael Dell has let us down. He is currently undergoing reorientation and we are confident that he will triumph.
Oh, the other part of our plan you may be interested in involves relocating Apple to China. Steve agrees that they just can’t operate out of any country that isn’t a superpower.
MW decision: its too late the decision has been made
PS I will now have to despatch you to keep our secret plan a secret
Looking forward to the MacSlate, the MacScreen, the iPhone, the MacHub, the BigMac….err perhaps not that one..