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Apple Worth More Than Dell, by One Measure


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January 14, 2006

Apple Worth More Than Dell, by One Measure

Arik Hesseldahl

Comparing Apple and its current high-flying position in the market to rival Dell Computer continues to make for some entertaining irony.

A poster over at Slashdot noticed that after Friday's the close of trading Friday, Apple Computer's market capitalization of $72.13 billion (chart here) has eclipsed that of Dell, which is $71.9 billion (chart here). Now the comparison is bit tricky because of the difference in the number of shares trading. Apple has fewer than 843 million shares outstanding, while Dell has more than 2.3 billion shares trading.

Still, Apple and Dell are in vastly different business segments. Dell takes in about as much in quarterly sales as Apple does in a full fiscal year: It's poised to report about $55 billion in sales for the year ended Jan. 28, vs. about $14 billion at Apple for the year ended Sept. 24, 2005. Dell's all about large contracts and low-cost commodity PCs, and much less about rocking the boat with innovation and unconventional industrial design, which is Apple's forte. Dell is who you call when you need a quick-and-dirty Windows machine; Apple is who you call when you want a higher-quality, premium computing experience that costs more but at least for my money is more stable and vastly more satisfying. And of course Apple has a secret weapon in the iPod.

Two months ago I was struck by the irony of a 1997 Michael Dell comment about how he would shut Apple down were he helming that company, and how over the course of eight years, Apple's stock had outperformed that of Dell.

It turns out that Dell was still dissing Apple in 2001. Another Slashdot reader pointed to additional bullish comments Dell made at New York's 92nd Street Y as part of BusinessWeek's "Captains of Industry" series. A rundown on what he said that night at the Y after the jump.

Q: What is the future of Apple Computer?A: Silicon Graphics.

Q: That bad?A: Maybe it's a little bit different. But if you look at proprietary computer companies, whether it's Digital or Silicon Graphics or Apple, I think the fates are all relatively similar. We know how the movie ends. It's just a question of what happens in the middle. Apple has a very little customer base. If you look at the economics, it has been extremely hard for Apple to get a return on its R&D with a shrinking volume base. It's not to say that Apple's products aren't innovative or cool, but the economic factors here are so overwhelming, it's very hard for them to swim against that tide.

Q: If you were running Apple, is there anything you could do to change that?A: I would never take that job.

Don't believe it? Here's an archival video of that appearance, in RealPlayer format. Dell's comments a about Apple appear toward the end. The whole thing runs a little less than an hour and its interesting to watch given how much the industry has changed in the nearly five years that have passed.

I know last year Dell publicly expressed an interest in selling computers running Apple's OS X, which of course Apple would never go along with. But I wonder what he'd have to say about Apple now when publicly reminded of his previous provactive, yet incorrect analysis. Maybe something like this: "Hey, I got it wrong."

01:27 PM

Stock and Financials

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? More on Dell and Alienware from Perspective

Yesterday's post is still on my mind, unwieldy because I was overwhelmed by too many ideas and concepts. For clarity, I'm going to just look again at Dell and Alienware. Rant over, now one can evaluate their corporate strategy and [Read More]

Tracked on April 2, 2006 11:58 AM

Not to mention Kevin Rollins, Dell CEO, who said a year ago that the iPod was just a passing fad.

Posted by: KenC at January 15, 2006 04:35 AM

Thanks for the measured, insightful comments. Despite the fact that our household is a Mac family, my son bought a 24" Dell monitor to go with his dual G5 last fall because it was $400 cheaper than a corresponding Apple monitor. So far, he is pleased. But over the last few weeks I have been inspecting my 4-year-old 22" Cinema Display. I can't find any dead pixels, it is still a joy to use, it is bright and clear and helps me be productive. I wonder if my son will have that exceptional experience with his "inexpensive" Dell. In an intensely competitive world where price really matters for business, there is a need for a Dell. But the computing landscape would be dull indeed without an innovative Apple that turns heads with its singular products. Michael Dell is richer than Steve Jobs, but I can't imagine his comparatively pedestrian job is more satisfying. I should have bought Apple's stock when it was $13.

Posted by: Larry Crockett at January 15, 2006 08:33 AM

Let Dell sell PC's running OS X, just charge them for the OS full price x2 = the price of the iMac Mini.

Money is money, no?

Posted by: Whysguy at January 15, 2006 01:41 PM

You mentioned in your article that the comparison between Apple and Dell Market Cap is bit tricky because the difference in outstanding shares, but I think it is irrelevant in order to make the comparison is bit tricky, since is always a comparisson of the absolute figure obtained multiplaying the # of shares by the close price of a given day.

Actually the # of shares is only an indicator of stock liquidity.

Regards

Posted by: A_reader at January 17, 2006 01:28 PM

Dell is the company that doesn't "get it". Dell management has said the future of computing is commiditization, yet every successful PC maker (and other segments as well) have proven that specilization is the name of the game.

Let's look at it this way.

1. Which company has missed profit targets because they are selling too many cheap machines for too little? DELL

2. Which company is well known for their outsourcing support to India? DELL

3. Which company is trying really hard to make it's computers look for "Apple like"? DELL

Dell is beginning to realize that moving downmarket to gain share has cost it enormous credibility with hard core power users. The recent expansion of the Dell XPS line is a perfect example. Dell states there is no future in high-end computing then tries to release a high-level desktop that is very similar to the lower end with a different case and some higher end cards.

In contrast, Apple releases pleasing designs, laptops that are thin with metal cases, a MP3 player that they cannot produce enough of, and Dell is resigned to throwing in cheap DJ Ditty's with thier computer as an incentive to purchase.

All of this is coming from a current owner of three Dell computers that have been extremely reliable and a remarkable value. Make no mistake about it, I know the difference between cheap commodity product and a high-end desktop. If I were in the market for a high-end machine, it would either be an Alienware (gaming) or Mac (for everything else).

Posted by: Wes at January 19, 2006 02:52 PM

Profit is the name of the game in business, size is nice but not the end. My family and I have 2 Macs and 2 Dells and the only reason I have the Dell's is price. Otherwise I would own 3 macs and some generic PC. Mac users hate high prices as much as anyone else but we pay because we love our Macs. Dell would never get the same money out of me. Depending on how easy it is to run windows on a Mac, Dell may never get my money again. Dell will have a hard time making a profit if many others think and purchase the way I do, and I know there are many. We are the ones buying all those high end Machines and using them to play games. There is not one XPS machine at my company but there are 2 XPS machines in my house alone. If thats where Dell is expecting their future profits they better start thinking Different. I may be gaming on G5 Mac/Intels next year. For virus free computing a small premium is more than worth it.

Posted by: Bruce at January 20, 2006 05:43 PM

I understand how Apple fans get really upset when their rip-off of a purchase gets rubbed into their face, so when I had the option of buying a Mac-Mini or a pc, I bought a pc. I am not going to spend Cdn $649+ to use an operating system. I built a pc for less then Cdn $300 and it is fine! I don't care for iLife and all that crap, I haven't even used WMP or Movie Maker. Purchasing an Apple is like purchasing an over-priced pair of running shoes, but what ever, if people are happy over paying then so be it, Apple thanks you, and they will let you know when they come out a couple of months later with the same thing you purchased but better and cheaper, look at the iPods. I am surprised there isn't an iPod for everyday of the week.

Posted by: Cristhian at February 9, 2006 11:45 PM

Cristhian, I can understand that if you don't want anything the Mac has to offer then you wouldn't pay more. But when you dismiss all the additional benefits as well as the subjective preferences in order to categorize them as "overpriced" you are ignoring the obivous.

So you "don't care for iLife and all that crap." That means they have no value to you. iMovie, iPhoto, iTunes and now iWeb etc are some of the best tools on the market, slick and useful and well worth a couple hundred dollars - but they're free.

If you have no issues with Windows, great. Mac users appreciate the stability of OS X and the increasing number of features that new releases provide, not to mention the lack of viruses, spyware and other junk that comes along with Windows.

It's largely a subjective choice but you yourself have pointed out where Macs have value - just not in hardware or software that you use.

Craig

http://www.pro-tape.com

Posted by: Craig at May 20, 2006 01:11 PM

Just not comparable. One is a hardware vendor that sells at bottom price and focuses on enterprise while reducing customer service and the other focuses on a robust version of Unix with eye candy and great features with quality customer service.

They can't be compared.

Posted by: Nick at December 18, 2006 08:58 PM


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