This post continues the rant: Windows vs. Mac: Do You Need Hyper Computing?
(Disclaimer: I do not currently work for Apple or Dell in any capacity. These opinions are my own, and more of a statement of the struggling pc industry than a comparison of Apples to others. I did work inside at Dell for two years.)
Update August 2015: Intel’s Skylake processors are on the way. And while I’m excited by the promise of new speed, I’m also aware that I simply *want* but don’t need it. Almost three years to the next CPU release. We’ve certainly smashed into Moore’s Law.
My MacBook Pro is sill the fastest laptop computer on the planet. Sure, in two years, there is a slightly faster i7 processor from Intel, and I’d guess Alienware (owned by Dell) might have some monster graphics/gaming laptops that are more beast than beauty. Either way, when I look at the market for PCs (if I include Windows-based machines) I see only a couple of manufacturers that are even coming close to keeping pace with Apple. Everyone else, and the bulk of laptop sales, are being driven by the lowest common denominator. And unfortunately for Dell, that’s where they were born. The “low cost leader.” But in today’s marketplace that no longer holds true, and the cost of the machine is only part of the equation, if you are a business.
Still, it would be silly to look at the MacBook Pro and compare it to a top of the line Dell or HP. That is not where these companies focus. As revealed recently in a Time Magazine piece on Michael Dell and year one of their privately held Dell, even Dell’s enterprise business (The big companies that make up 80% of Dells overall revenue) are buying mainly PCs and Laptops. Sure Dell sells big hardware and servers, routers, blade computers, but the large majority of Dell’s business, even in their big business vertical markets is for their PCs and their laptops. And I can assure you that Walmart and Microsoft are not buying top-of-the-line laptops. They are buying the cheapest model that will get the job done and that they can write off and sell in 2 – 3 years. That’s the life-cycle of a business PC these days. And most Dell, HP, Acer, and Asus, computers are targeted accordingly.
So it’s not fair to compare BMWs with Chevys. There is simply no grounds for comparison. Sure they both have four wheels, use gasoline, and have the driver on the left side in the US and the right side in the UK, but there’s more that is different about them than is similar. Computers are the same way. If you are trying to build cheap but useful laptops at the lowest cost possible, you get a lot of plastic, you get generic keyboards, and mid-range wifi and graphics chips. And when the 3 – 5 year refresh cycle comes you introduce some faster plastic laptops with slightly better specs. That’s the world of big business computing. And that’s the trap that Dell and many other manufacturers find themselves in today. It is not only tough, but nearly impossible to make money on laptop computers that sell for less than $700. When the prices are hovering in the $300-$400 range, you’re most likely losing money on the computer and trying to make up for it with contract support or software sales. It’s a horrible model if you’re in the pc building business, and a great business if you need a lot of cheap computers for your startup. Dell can deliver them with Windows 8 (7 if you prefer) with Office loaded at about half the price of the least expensive Mac laptop.
That’s fine with Apple. Playing in the extremely low margin, or negative margin, space has never been their strategy. They don’t coupon or discount their prices every week. Even on holidays and big events like Back to School, Apple holds their price firm while giving away iTunes and Apple Store dollars. A smart play, that costs them a lot less than the face value of the gift card they are using as a rebate. Dell and the other guys, have to battle it out with the URGENT calls to action. Right now is a great example. Go see what Dell is hawking on Black Friday. My guess is they started their “sales” this Monday and will continue them right until they announce the EVEN BETTER Cyber Monday deals. A deal is a deal. And Dell’s only tool in their marketing mix is SALES. Sad, but true. They’re cutting more of the margin that they don’t have, hoping they might be able to sell you an additional monitor and some speakers to go with your PC.
But looking at the car industry again for a minute. Notice the number of 5 – 15 year old BMWs still on the road. They are often well-kept, washed, and still look like the performance cars they were designed to be. Look at my MBP and you see the top-of-the-line Mac. And even though it is two years old it is sporting an SSD drive, 16 gigs of ram, and a wicked fast i7 processor. When doing my work, day after day, I am certain I am not waiting on my computer to do much of anything. I have the fastest technology working as hard as it can. And the unibody aluminum frame is sill pristine and strong.
On the other hand, looking at the top-of-the-line Dell’s my sister’s kids got for high school a couple years ago, the contrast could not me more profound.They are big, black, plastic, and heavy. They feel slow when we’re waiting for them to boot up. And the screen seems anemic when sitting next to my MBP. Granted, these were $1,200 laptops two years ago, and mine was $2,000, but that extra $800 has made all the difference in the world. I’m trying to help one of them work out a technical problem with their configuration to record music, and I keep thinking, “If you just had a mac.”
But not everyone can afford BMWs. That’s fine. And Dell must keep putting out the Chevy Nova’s of computers for their market share not to plummet completely. And in all the hurry and design and finance of the Dell business, the actual build and quality of the computer is not the first priority. (They tried that once and came up with Adamo. Go Google that one.) So with Dell, you’re looking at surviving on sub-quality cheap laptops that are contract manufacturer along side Asus and Acers. Essentially the PC market is still a clones market.
Apple, on the other hand is building the best computers money can buy. They never sacrifice the quality to shave off another $10. If anything, Apple adds a better processor and keeps the price the same. And there’s no wonder the MacBook Air is the best-selling laptop in history. Still. If you want a Chevy Nova it’s okay, you can probably get one for $400 – $600 depending on the features you need. But if you want a computer that will hold it’s value and hold up under the real work load you’ll look to spend $1,000 and get a mac. That’s fine with Apple to not play in the Chevy market place. There are a lot of Novas and Nova knockoffs. And the contract manufacturers who have entered the marketplace, Asus for example, are building some kick ass Novas and working their way towards AIR quality and near-MBP quality.
The rough world of computing. Where would you rather be building the “people’s computer” for razor-thin margins, or building the BMW of computers and sitting on a pile of cash from the rich margins. And you can reinvest that cash to build better and faster computers rather than manipulate your supply chain and strong-arm your suppliers into giving you better terms and better prices.
And happy birthday to my two-year old MacBook Pro. I was looking to see what kind of upgrade I could move to, but the newest machines are only fractionally more powerful. Maybe something is coming in 2015 from the bleeding edge designers. Or maybe they are happy selling a ton of AIRs and iPads and iPhones.
(Note: And please let the next version of Windows not suck like 8. They had it just about right with 7 and tried to “over-innovate.” The entire pc industry has suffered for the mistake. Let’s hope 2015 brings a better Windows experience for all those required to compute on that side of the fence.)
Reference: Why Your Next Computer Might Be a Dell – Time