Sorry Apple Kool-Aid drinkers, but using underpaid peasants in Chinese sweatshops to make your beloved Apple computers has caused a dramatic decline in quality.

Check Apple's Form 10-Q for yourself, for the three months ending 12/25/04 warranty costs soared from $21 million to $35 million, an increase of 67%. There's no way to spin this except more proof of declining Apple quality.

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RealityCheck wrote:
Check Apple's Form 10-Q for yourself, for the three months ending 12/25/04 warranty costs soared from $21 million to $35 million, an increase of 67%. There's no way to spin this except more proof of declining Apple quality.

Well, here's a spin for you. Mac sales have been up dramatically. Thus, the cost per unit is probably not much different. I know this involves facts, but don't let that confuse you RC.

Dude

Warranty costs have increased because the number of product units sold have increased. As of Dec 27, 2003, Apple had 3098 Macs and 1453 iPods still under its 1-year warranty. As of Dec 25, 2004, Apple had 3507 Macs and 8263 iPods under warranty. Apple sets aside an accrued warranty amount (liability) based on the number of units sold and its past experience.

So, from Oct-Dec 2003, Apple expensed 21 million for warranty costs. From Jan-Mar 2004, 27 million. From Apr-Jun, 28 million. In almost every quarter, Apple's actual warranty costs have been less than the accrued warranty.

So given the incredible increase in units sold, 35 million is not a big deal. And that's why Apple sees no reason to comment.

I think it's funny that Reality Check recognizes Apple as such a big threat to the Windows PC industry, that he spends time telling lies at a Macintosh website. Which means he knows he'll be reaching Windows PC users with his lies if he posts on a Macintosh website. That says something, doesn't it?

That's right RC. That 67% increase of warranty costs just might be because Apple is selling more computers and millions upon millions more ipods compared to last year. over a 200% increase of ipods over last year. so while apple's sales are up 200%, warranty costs have only increased 67%. which, as hard as this is to believe, indicates that the number of repairs are growing much slower than how fast apple is growing.

this warranty statistic does not indicate also what percentage is of computers and what percentage is of ipods. i'm sure there are lots of customers returning ipods for the free battery replacement before their included or extended warranty expires reguardless of their battery condition

and, RC, don't give us all that "non replaceable battery" crap because so many third parties are selling battery replacement kits for ipods with higher capacity batteries for $50 and i've even seen one selling them for $39.

as if all those other budget PC makers out there dont ever use chinese labor. apple doesnt even manufacture most of their products anyway, they design them and build them then contract another company to mass produce them.

i.e. ipod shuffle made by asustek, mac mini made by foxconn, and powerbooks made by some other guys.

yeah. as if dells aren't made in china! PLEASE!

There is acknowledgement by Apple, according the article, that it is limited in sales by people who think that Apple computers are slower, professional customers who would otherwise buy PowerMacs.

Have these studies come to some numerical figure what percentage, or what numbers of people will not buy Macs based on the Mhz(Ghz) numbers?

Actually, Dell desktops are manufactured in the US. They have to be in order to sell to the US government. Dell has the manufacturing proces down to a science.
Only laptops are manufactured overseas.

That certainly doesn't stop the US Govt. from purchasing Dell laptops. BTW, the DellBoatAnchor(tm) on my desk here in my DoD job was made in China.

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Guest wrote:
Actually, Dell desktops are manufactured in the US. They have to be in order to sell to the US government. Dell has the manufacturing proces down to a science.
Only laptops are manufactured overseas.

I can tell you why the support costs rose. It's all the frickin tech support phone calls that Winblows users make about not being able to make their iPod work with XP.

The garbage OS that MS pumps out actually ends up costing Apple more in tech support.

First off, warranty costs are a measure of dollars. Quality is measured in units such as number of defects versus number of units shipped. Since Apple doesn't report this figure, making any sort of statement about Apple's quality is mere speculation.

To demonstrate that dollars aren't a measure of quality, I can point to a situation I had with my most recent PowerBook 12" purchase. I had an issue where one one of the little plastic posts (there are 4) that hold a key to the keyboard had broken. The machine was usable, but this was an annoyance. Rather than sending me a new key, which I would have been happy with, they replaced the whole keyboard. I'm sure they billed it as an entire keyboard, instead of the cost of a single key. So I repeat, warranty costs is not a good measure of quality.

But if RC wants to play this game and use this faulty reasoning, then Apple's dollar figures clearly demonstrate that their quality is increasing. According to the 10-Q, Net Sales increased 74% from the year-ago quarter, while warranty cost only increased by 67%. There's no other way to spin this than that Apple's quality is improving!

You KNOW it's high quality.

If you're RC you don't have a clue.

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Guest wrote:
Actually, Dell desktops are manufactured in the US. They have to be in order to sell to the US government. Dell has the manufacturing proces down to a science.
Only laptops are manufactured overseas.

Almost all the components are made in Asia:
MB, RAM, Processor, CD Drive, Cables, power supply, Enclosure ... Dell's are just assembled in the U.S.

Open up a Dell and I doubt you will find 2 things that are made in the U.S. ..... I most cases there will be nothing made in the U.S.

At least Apple is acknowledging that this is one of the two PERCEIVED reasons folks don't consider Macs instead of PCs. Myth or reality, consumer perception is everything, so maybe Apple can get over the hump somehow, as they did with the "Macs are too expensive" myth.

With Moore's Law seemingly in limbo right now, hopefully some chip breakthrough will leapfrog us all way beyond current MHz levels and render this whole speed issue moot. C'mon, how freakin' fast do computers neeeeeeeed to be??!!!!

-Ken P

Check out all the problems people are having with iMac G5s. People are having to swap out mid-planes to fix problems with the fans, mostly to no avail. Many have tried two or three mid-planes in their iMacs. Something is wrong with iMac G5 midplane. It may only affect a small percentage of iMac G5 owners, but in conjuction with other new products it may be big enough to cause higher than normal warranty costs.

I'm speaking from experience. I'm a frustrated iMac G5 owner that will be swapping out a midplane in the next couple of days. Read the boards on Apples support site for yourself. I think Apple has some new-product rough edges to smooth.

Apple said it will amortize the R&D costs when Tiger begins shipping and will spread out the costs over the next three years.

Interesting. Judging by this comment, Tiger will be the operating system for the next 3 years. I can't see Apple releasing Cheetah (or whatever its called) before they finish paying the R&D on Tiger.

How long did Jaguar and Panther last?

And a simple Google search will tell you exactly how long Panther and Jaguar were around.

I am a bit confused here. Didn't Apple expensed the cost already? How come there is still amortization?

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Mace wrote:
I am a bit confused here. Didn't Apple expensed the cost already? How come there is still amortization?

Development costs are amortized over the development life of the product. Apple is very aggressive in writing down development expenses. Why? It reduces tax expense in the current period.

Rather than inflate earnings and asset values, Apple writes down development assets as quickly as they can. There are development expenditures that can not be expensed until product release.