In a blog post titled "A Consequence of Losing the PC Wars," high school student and amateur tech journalist Matt Richman performed basic number crunching in comparing Apple's profit margin from the sale of Macs to that of Hewlett-Packard PCs.
The results are striking.
Richman recalled that Apple amassed $4.976 billion in revenue from the sale of 3.76 million Macs during its previous quarter, yielding an average selling price of $1,323.40 per Mac. He then multiplied that figure by a 28% gross margin estimate for Mac sales from Jefferies & Co. — which is still several hundred basis points below the company's reported average — to arrive at a profit of $370.55 per Mac sold.
By comparison, HPâs Personal Systems Group brought in $9.415 billion in revenue and turned a profit of $533 million last quarter. The PC maker's operating margin, which doesnât factor in overhead costs, came in at 5.66%.
"If we assume they spent 1% of their $9.415 billion in revenue â $94.15 million â on operations, then their profit margin was 6.66%," Richman wrote. "But letâs give them the benefit of the doubt and make it 8%."
Given that the average selling price of Macs increase 5.71% over the previous two quarters, he applied growth rate to data published by market research firm NPD, which identified the average selling price of PCs in November as $615, to reach a current average selling price of $650.12.
With an average selling price of $650 and a generously-calculated profit margin of 8 percent, HP would be making approximately $52 on the sale of each PC, meaning "Apple makes more money from the sale of one Mac than HP does from selling seven PCs."
"Numbers like these have to scare the hell out of Appleâs competition," wrote the Loop's Jim Dalrymple, who was first to draw attention to Richman's revelation.
190 Comments
This only shows how Apple makes their products too expensive.
This only shows how Apple makes their products too expensive.
Yes. Apple sells more and more of them EVERY. FREAKING. QUARTER., so they're OBVIOUSLY too expensive.
It couldn't possibly be because of their higher quality, better software, and ease of use. No, they sell a lot of them (and they sell MORE lots-of-them every year) because they're "too expensive".
Oh, no, there's no Apple tax, is there? This is great for shareholders and the fan base, but it stinks for people who want to simply by the machines and use them.
Yes. Apple sells more and more of them EVERY. FREAKING. QUARTER., so they're OBVIOUSLY too expensive.
It couldn't possibly be because of their higher quality, better software, and ease of use. No, they sell a lot of them (and they sell MORE lots-of-them every year) because they're "too expensive".
Just because they sell these things (with like a 9% market share) does not mean they are fairly priced. They are expensive, and that is reflected in the market share.