Michael Dell: Apple Has Priced Itself Out Of The Market
Michael Dell: Apple Has Priced Itself Out Of The Market
by , 10:00 AM EDT, April 6th, 2004
Long time Apple watchers will likely know that there has long been a weird sort of rivalry between Apple and Dell, and indeed between their head honchos. Michael Dell once said that the best thing that could be done with Apple would be to shut it down, liquidate its assets, and return the money to its shareholders. Steve Jobs responded a bit later by showing an image of Michael Dell with cross hairs over his face, saying that Apple was going after Dell (we should note that this obviously resulted in little).
Both of those events happened years ago, but since that time, a Dell exec criticized Apple's education efforts, Steve Jobs slammed a Dell notebook during the white iBook's introduction, Mr. Dell responded by saying that his favorite thing from Steve Jobs was Toy Story 2, and Steve Jobs eventually made the observation that Dell's PCs were the Ford Taurus' of the PC industry. Apple also criticized Dell's entry into the MP3 market as being unoriginal.
In other words, there is no love lost between these two companies. Thus, it shouldn't come as much of a surprise that Mr. Dell has come out swinging again, this time saying that Apple has priced itself out of the market. The comments came in an interview with CNBC's Ron Insana that was published by USA Today. From that interview.
Insana: Getting back to your bread and butter, who is your major competitor in PCs?
Dell: It's many of the same companies from the past. Maybe a few of them aren't as strong as they used to be. Last quarter, our unit growth in notebooks was 40%. In desktops, it was 21%. We gained share in every region of the world. In the U.S. our share is greater than the next several companies combined. You'll note, as well, that we're kind of the only company in the industry that actually makes a profit.
Insana: What about the resurgence of Apple (AAPL)? Steve Jobs says he sells the Mercedes of the computer business while you sell the Taurus.
Dell: If you go look at where jet engines are designed, for example, you might be curious to note that more than half are designed on Dell computers. What Apple has done is build the Bang & Olufsen of the computer industry -- very nice products, but they've priced themselves out of the mainstream market.
Note that Mr. Dell also claimed that Dell is "kind of the only company in the industry that actually makes a profit," a claim that is untrue. Apple also turns a profit from PC operations, though not as consistently as Dell. HP also turns a profit, but its PC division loses money, while its services and printing businesses make money hand over fist. Then again, this misperception about Dell being the only profitable PC company has persisted for years.
This isn't the first such blatant mistake that Mr. Dell has made in an interview. He made another incorrect claim a few years ago by bragging that Dell was the first PC company to integrate 802.11b support into its portable line. Dell did so 13 months after Apple had done so.
The Mac Observer Spin:The interesting thing is that Mr. Dell might have been on to something, at least with the Bang & Olufsen thing. Apple has, for all intents and purposes, priced itself out of the mainstream market. As with most things in life, the proof is in the pudding. Apple is not selling Macs to the mainstream -- though it is selling iPods to the mainstream -- and this is as much about price as it is about the incompatibility and difference perceptions.
It will take some mainstream penetration for Apple to increase its market share, which in our opinion is necessary for the long term health of the Mac market.
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