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  (Source: TechSpins)
Dell will still devote energy to its XPS lineup

Dell, a company that rose to prominence on direct sales to customers, lean operations, and competitive prices is moving its focus away from the PC market. According to PC Pro, this revelation comes courtesy of Brad Anderson, Dell Solutions Group President.
"We're no longer a PC company, we're an IT company," said Anderson. "It's no longer about shiny boxes, it's about IT solutions [that let companies drive efficiencies]."

The company killed off its netbook lineup in late 2011.
Dell experienced record growth in its enterprise solutions and services divisions with $18.6 billion in revenue for fiscal 2012 ($4.9 billion for Q4). Revenue from its consumer unit dropped 2 percent for Q4 to $3.2 billion.
PC Pro also reports that enterprise solutions represent 50 percent of Dell's profits.
Not surprisingly, the signs that a move away from PCs was right there in the company's earnings report. “Our customers think of Dell in much broader terms now, trusting us with their comprehensive IT needs, from the datacenter to the device,” said CEO Michael Dell last week. “The expanding mix of revenue and earnings from enterprise solutions and services is critical to our future."
According to Anderson, Dell will still devote energy to its XPS family of PCs that have been successful for the company.
Rival Hewlett Packard pondered such a move last year, but new CEO Meg Whitman decided against tossing asides its PC unit. "HP objectively evaluated the strategic, financial and operational impact of spinning off Personal Systems Group (PSG)," said Whitman in late October. “It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees.  HP is committed to PSG, and together we are stronger."

Sources: PC Pro, Dell Earnings

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By hiscross on 2/27/2012 6:51:29 PM , Rating: 2
Dell stayed with Microsoft as long as it could. Good for them. But times have changed and Dell is going the way of IBM and have become a service company. The trouble with that model will be the rise of the Cloud. Like the mainframe, data center server support will shrink and not be money maker. Mobile devices and Cloud is driving the future.

RE: MainFrames
By TakinYourPoints on 2/27/2012 11:09:50 PM , Rating: 2
Yup. Dell looked at IBM's revenue and stock chart over the last few years and decided that was the right thing to do, and he's right. As you infer though, we'll see if the move is too little too late. IBM was well ahead of the curve when they spun off most of their business and focused on being a service company. They saw what was coming way ahead of most of these techs like Dell and HP, who are just now reacting to changes in the market that have been clobbering their bottom line.

RE: MainFrames
By 91TTZ on 2/28/2012 10:53:07 AM , Rating: 2
This makes no sense at all. I often hear people refer to the "cloud" as if somehow sidesteps the need for actual hardware, whether it be PC or servers. Wrong.

The "cloud" is just an old idea rebranded. It's a return to the client/server model that was popular in the 70's and 80's, brought forth by cheap high speed network connections that are even available on the go. Companies love this model because you no longer own a product, you must perpetually rent a service which ensures a constant stream of revenue.

The company I work for provides "cloud" services and that means servers. Thousands and thousands of servers. We run large datacenters with high speed connections to the internet. When you store your information to the cloud you're simply attaching to servers the same way that businesses have for the last 40 years. The only difference is that instead of the access being constrained to a LAN, high speed wired and wireless internet now enables people to access these servers from anywhere.

Setting up a cloud environment is pretty much the same as for any other website. You typically have a web server backed by a database server. I work on the Microsoft side of things so the typical setup usually involves racking a few Dell or HP servers, installing Windows Server 2008 R2 on them, installing the IIS services on the web server and then installing SQL 2008 R2 on the database server. We IP them, provide them a connection to the internet and then turn the servers over to the developers which configure the website. While various websites look completely different from one another, the infrastructure is usually nearly identical on the backend. The push for cloud computing has increased the number of servers in our datacenters dramatically.

RE: MainFrames
By hiscross on 2/28/2012 7:41:35 PM , Rating: 2
You need too understand how Amazon, Google, Apple, Oracle, IBM, Terramark, etc operate their Cloud services. They are quite a bit different than what you have described. Try CISCO servers using L3 storage on virtual lans. Huge difference.

RE: MainFrames
By 91TTZ on 3/1/2012 12:00:56 PM , Rating: 2
What you described is all stuff that datacenters have done for years. And Cisco servers are nothing more than rebranded HP and IBM servers.

It's not much different than what I described. I deal with this stuff day in and day out.

RE: MainFrames
By borismkv on 2/28/2012 2:50:38 PM , Rating: 2
Uhh, Dell is still staying with Microsoft. MS provides the vast majority of OSes for their servers, which is what their focus is going to be moving forward. And as someone else said, just because something is "In the cloud" doesn't mean it isn't still running on a server. If anything this means a potential for greater profit for Dell, because the high end servers that run cloud services have a significantly higher profit margin.

RE: MainFrames
By 91TTZ on 3/1/2012 12:01:57 PM , Rating: 2

By nafhan on 2/27/2012 5:11:13 PM , Rating: 4
So, today I learned that reselling low margin products made by others is not a high margin business, AND may even be a no margin business when competing directly with those who DO manufacture their products.

Seriously, Dell has seemed pretty lost in the consumer space since laptops started overtaking desktops, and the whole smartphone/tablet thing was just a nail in the coffin.

By retrospooty on 2/27/2012 5:13:53 PM , Rating: 2
Yup. To be honest, I'll bet Dell did some internal analysis on their failures and the cost to support, repair, ship, re-ship their failures and determined it eats too much profit and is not worth it.

Its not like it cant be done. Lenovo makes the best quality laptops in the business, besting even Apple. Rarely ever a failure that isnt customer damage or hard drive (which you cant blame on the OEM).

By Keeir on 2/27/2012 5:38:29 PM , Rating: 3
The question though is how reducing focus on the "core" product may affect their "growth" sectors.

Its one thing to declare your going to "focus" on only high margin areas of your business... but this can ruin your high margin areas when they are dependant on your core services. For instance, I would say Dell made a business being a one-stop IT provider with the low cost of PCs/Laptops being the "hook" that got them into the door at alot of places. They may discover thier high margin IT contracts disappearing if the end customers find a better business computer supplier.

By theapparition on 2/28/2012 10:14:25 AM , Rating: 2
That is a good point.

This EXACT change has been done before, by many companies.

DEC had a consumer level PC business and then decided to focus on enterprise only. So did Sun.

But the real comparison goes to IBM. The founder of the modern x86 PC, at one time the largest retailer of consumer level PCs. When margins shrunk they divested their PC business. Then divested their laptop business to Lenovo. Finally, they removed themselves from the typical server market. IBM now concentrates on providing "IT Solutions" to only enterprise customers. Custom blade servers and mainframes are all they do now with hardware. It's a very high margin business, but also lower volume.

Much of IBM's name recognition is starting to erode though. There's a lot of IT guys who aren't thinking IBM first anymore. It's now Dell for a lot of mid-range enterprise solutions. But if Dell's name starts to fade, they could be facing a similar diluting of their brand as IBM.

By nafhan on 2/28/2012 11:30:09 AM , Rating: 2
I didn't see anything in the announcement or this article to indicate that Dell is absolutely not going to resell PC's. They may, for instance, merely stop selling them to consumers at Best Buy/Walmart/online, and instead sell mobile and desktop workstations directly to business as part of an "enterprise IT solution".

My guess is that they're primarily wanting to get away from selling $300 laptops, etc.

I am not surprised.
By retrospooty on 2/27/2012 2:54:17 PM , Rating: 2
Our company has a Dell contract... All of our IT is purchased through them. All of our servers, network equipment, NAS, SAN, etc etc are awesome. No complaints at all. Everything works perfectly and the support is tops.

On the downside, all pf our Laptops and Desktops are also Dell, which sucks. They STILL have major quality issues to this day. Way too many defects. I am really missing Lenovo at this company.

RE: I am not surprised.
By The0ne on 2/27/2012 4:09:20 PM , Rating: 2
For those that commented but don't actually know what the hell they're talking about, what you've said is key. I can't count the number of companies I've worked for and supported that has contracts with Dell for all their needs. Dell just makes it simple and often times cheap to get what you want. This is the real silent culprit, if it must be, that people don't recognize.

I'm not surprise at all by this move but can't comment how successful it'll be. All I know is that I'm hoping they keep their high end laptops around.

RE: I am not surprised.
By jeepga on 2/27/2012 5:45:36 PM , Rating: 2
No complaints with Dell either. I haven't had any quality problems with my laptops though. I order from the Precision line. That may be the difference.

I don't know if I'd ever run another Stinkpad if I had choice in the matter.

RE: I am not surprised.
By TakinYourPoints on 2/27/2012 11:49:10 PM , Rating: 1
The Precision certainly is the difference. Paying more for a high end Elitebook, Precision, Macbook Pro, or Thinkpad will yield much better quality and vendor support than a cheap consumer laptop.

Was your Thinkpad under $1000? If so, I'd bet that's the issue right there. As good as Lenovo is, even their low end models suffer the curse of being cheap products. You get what you pay for.

alien ware
By cow021 on 2/27/2012 5:29:38 PM , Rating: 2
no matter what happens with dell they still have alien ware

RE: alien ware
By TakinYourPoints on 2/27/2012 11:02:47 PM , Rating: 2
This is a joke, right?

If so, hilarious, and if not I should brace myself for the Alienware fanboys that are about to come out...

By borismkv on 2/28/2012 2:56:11 PM , Rating: 2
Dell started the PC Industry's Race to the Bottom, so I guess it's fitting that they be the first to sideline their involvement in the PC Industry. I guess they got to the bottom first.

Normal shift
By mosu on 2/27/2012 2:45:43 PM , Rating: 2
It appears that the only PC left in the wild will be those of enthusiasts and professionals , because tablet is the new PC(or laptop or netbook)and this proves how little the resources of an actual PC are used besides gaming.For the moment, Dell doesn't produce a tablet,only laptops and netbooks, hence the major shift towards enterprise.

RE: Normal shift
By TakinYourPoints on 2/27/12, Rating: -1
Apple rakes in the profits . . .
By Denigrate on 2/27/12, Rating: -1
RE: Apple rakes in the profits . . .
By Brandon Hill on 2/27/2012 2:36:36 PM , Rating: 2
Interesting though that many analysts are trying to lump iPad sales in with Mac notebooks sales to create a PC/tablet two-headed monster.

Take that into consideration and Apple is at 26% of the market:

I don't know if that's quite fair though...

By Solandri on 2/27/2012 6:20:28 PM , Rating: 2
It can be fair if you're consistent with your definitions. If Apple has 26% of the mobile market (counting tablets and laptops together), then iOS only holds only 21% of the mobile OS market (making it a distant, distant second to Windows).

Or you can say Apple has 8.3% of the mobile PC market (counting only laptops), and iOS has 59% of the tablet market.

What's unfair is using one definition of "mobile" when talking about market share, then using a different definition when talking about OS share. You can't say Apple holds 26% of the mobile market (counting PCs and tablets together) and 59% of the mobile OS market (counting only tablets). That's just inconsistent, if not outright deceptive.

RE: Apple rakes in the profits . . .
By Tony Swash on 2/27/12, Rating: -1
RE: Apple rakes in the profits . . .
By JasonMick on 2/27/2012 3:06:38 PM , Rating: 2
Apple's revenues from Macs are bigger than Microsoft's revenues from Windows.

Apple's revenues from iPhone alone are bigger than the whole of Microsoft's revenues.

How times change :)

True, but there's money and then there's power.

Warren Buffet has money, but he's not as powerful as President Obama is (or President George W. Bush was).

Apple has the money, for sure, and it has some power thanks to iTunes controlling the world of digital music. Likewise it controls the tablet industry and is a top player in the smartphone industry. But outside the digital music/mobile gadget sphere, Microsoft Windows enjoys a much broader reach, including controlling the software that drives modern business.

In that sense, you can certainly say that Apple has higher revenues/profits than Microsoft, but you could also make a fair argument that Microsoft has greater market influence than Apple.

Apple reaches at best a couple hundred million customers with its devices, maybe a bit more with its digital media. Microsoft reaches billions of customers. An order of magnitude more Windows equipped PCs and servers are used globally than i-devices.

RE: Apple rakes in the profits . . .
By Tony Swash on 2/27/12, Rating: -1
RE: Apple rakes in the profits . . .
By apinkel on 2/27/2012 4:07:42 PM , Rating: 5
I would say that's very disputable.

I work in a large company and I know of only one person out of approximately 300 people in my area who uses an apple product for real work.

There are lots of iphones/ipads used by folks to keep on top of email/calendar after hours but everday work is done in word and excel, documents are shared via sharepoint, emails are sent via outlook/exchange to our business partners who also almost exclusively use office, windows and other microsoft products.

So your comment may be true for consumers but even in that space I wouldn't count Microsoft out just yet. They came out of nowhere in the game console space and are now one of the top, if not the top game console manufacturer... they have a lot of money and a lot of talented people.

Right now they are (finally) putting together a cohesive phone, tablet and cloud service for the consumer space with windows 8, windows phone appollo and skydrive. I don't know if they will succeed in breaking into this market but to paint them as somehow irrelevant is IMO very premature.

By Sazabi19 on 2/27/2012 4:17:28 PM , Rating: 2
Yes, a lot of the execs and higher ups around here (and judges) got iDevices thinking they were cool and easy to use only to realize they can't really do a whole lot on there for actual work. They can sync their emails from our exchange server but don't like using them for typing emails because it's not practical. We use a Windows environment (switching to Win 7 this year, we are almost done deving it) and all our machines are Dells. I don't like Dell on a personal line and never refer anyone to them, but for an enterprise they seem ok, we don't need high end machines most of us. For those that do we get higher grade machines. Dell does have a wide array of machines that we use, anything from a standard desktop to a ruggedized laptop for various Public Saftey devices. Any iDevice in our environment is going to get pulled within the next few months and not allowed back on to the system. We are however looking at Android based phones (instead of BB) and already have many in the environment as well as Android and MS based tablets for certain areas in the enterprise.

By Sazabi19 on 2/27/2012 4:12:11 PM , Rating: 2
Wow... I wonder if "Dr. Suess" was ever actually like this in real life. I think you should start writing down what goes on in your little world man and then have someone talented (or on LSD) draw some pictures to go with your books, make them rhyme, and then market the hell out of them. You'll either be loved or carried off in a trendy new white coat with cool sleeves, if you are lucky they may put a little apple stick on your back. I do however think your cell will still have yellow padding :( I guess it will match the iMac screens from a few months back :) You'll feel right at home.

By retrospooty on 2/27/2012 5:04:45 PM , Rating: 2
"So Microsoft has greater market influence but can't make more money - which is after all the basic reason businesses operate. Windows position reminds me of Symbian just a few years ago."

Its not like MS is hurting. Just becasue Apple is posting record profits doesnt hurt MS's lineup. Apple makes hardware. MS makes mostly software. And MS=Symbian is just silly. The whole world runs off MS software. Symbian never ran anything but peoples old phones.

As far as MS being obsoleted, tell me when there is applications for the following that will run in a secure enterprise client/server environment for the following areas.

Reverse Logistics
Shop floor
Customer Service (tracking, case management etc)

Do you have apps that address all that and support them? Windows does. until then, you are dreaming.... and that is just a few standard things that all companies use. This doesn't even take into account the thousands of custom apps for specific disciplines.

Apple, Mac and/or iPhone isnt anywhere near MS's level of importance. Not by a longshot. You tell me when at the very least the factories that Make Mac's and iPhones stop using MS to run thier businesses. If anyone could do it, surely that would be a place to start. Good luck with your dream though. Its good to dream.

By TakinYourPoints on 2/27/2012 10:57:39 PM , Rating: 1
So Microsoft has greater market influence but can't make more money - which is after all the basic reason businesses operate.

It isn't like Microsoft is doing poorly. They have even higher profit margins than Apple and are still making billions off of Office and Windows (in that order). The main things holding back their net profit are sinking billions into projects that don't get off the ground, ie - $2 billion into Bing which still has yet to make a dent in Google's business. In any case, Office and Windows make so much money that they can still grow annual revenue with those losses.

They still manage to grow their business year over year, it is just that their growth isn't what it used to be since their ceiling as a software company is currently much lower than the ceiling is in mobile devices. Mobile is a product category that has a LONG way to go towards saturation, while desktops reached that point years ago.

I don't see it as a "versus" thing, Microsoft makes good applications. They are making loads of money off of Android licenses, not to mention selling their own iOS applications for iPhone and iPad. Office is set to release soon on iPad. They can easily clear over half a billion dollars in only the first few weeks if you figure that it comes out at $30 for the suite and it sold on 20 million iPads out of the existing ~60 million (and still rapidly growing). Microsoft is tapping into the huge iOS ecosystem and stands to make more net profit from it than even their own XBox 360 line, which is pretty impressive.

In any case, Microsoft's back end or desktop software isn't going away anytime soon, they're doing very well developing for iOS, and hopefully Windows Phone 7 will gain traction at some point (it certainly deserves to over Android). Microsoft will keep operating as a very profitable software company, nothing to mock IMHO.

By TakinYourPoints on 2/28/2012 12:22:21 AM , Rating: 1
When you talk about the diminishing of the desktop PC, I certainly hope you're including Macs in that analysis. Macs are used for work here in California, from the obvious content creation to things like software development and back-end work (bigger than most people here realize), as well as things like budgeting/scheduling. Mac/PC is a weird distinction given that they have nearly everything in common compared to their mobile computing counterparts.

The role of a full featured desktop OS may be diminishing as the simpler needs of the many can actually be fullfilled by things like smartphones and tablets, and things like media organization will continue to be moved to the cloud, but at the same time it will be quite a while until the functions of a desktop or laptop are replaced, at least for professionals.

The Symbian comparison is ridiculous btw.

RE: Apple rakes in the profits . . .
By Reclaimer77 on 2/27/2012 3:13:06 PM , Rating: 2
Which is a stupid comparison for several reasons. First off, Windows doesn't cost thousands of dollars. Secondly, every Mac sale is a potential Windows sale because of Bootcamp.

And again with the financial comparison. Do you Apple guys like drop trou and start jerking it or something at the thought of Apple's profits. Seriously, why does it matter so much to you?

It seems like you, and others, suffer from a type of second class citizen syndrome. Where you, foolishly, emotionally invested yourself into a company (Apple) that you yourself felt somehow repressed and marginalized when Microsoft was dominating them. That today you somehow feel vindicated and personally satisfied that Apple is doing so well. When, in fact, you have nothing really invested in either entity except your own projections and self-worth.

It's really disturbing Tony. Truly.

RE: Apple rakes in the profits . . .
By retrospooty on 2/27/2012 3:27:41 PM , Rating: 2
Exactly. The entire world runs off PC's and Windows servers. Even the factories that build Mac's and iPhones couldnt do it without PC's and Windows server OS's and the apps that run off of them.

If Apple suddenly went away, that would be that. People would buy other gadgets. If MS went away the entire world would grind to a halt.

Apple makes nice toys, but at the end of the day, they are just toys. MS makes an open platform that any company can make hardware or software for, all while supporting multi-trillions of dollars in the enterprise sector. The comparison is silly.

RE: Apple rakes in the profits . . .
By Sazabi19 on 2/27/2012 4:22:08 PM , Rating: 2
Ok, 1 thing is bugging me here. PC is Personal Computer, not a Windows based machine, it can also be a Mac. Client or Workstation is used for a machine that is not a home owned machine, usually at a workplace (but not always). I know you probably know this it's just annoying to see. Tired of seeing all these iTards saying "PCs, zomgawd thei arr just sew stewpid and run s#itty... iDerp!!!1!one!"

By retrospooty on 2/27/2012 4:29:56 PM , Rating: 2
technically yes, PC = personal computer and can be a Mac. But in a real world sense, PC came from the old IBM PC. So when doing your PC v Mac, that is why its called that. So, its slang, its universally used and its been for well over a decade. If I start talking "workstation" "client" and relatively un-used outside of IT terms like that, most people don't follow.

RE: Apple rakes in the profits . . .
By Tony Swash on 2/27/2012 6:20:14 PM , Rating: 1
It's not that Microsoft are completely irrelevant it's just that they don't matter much anymore. They seem a bit toothless. They are a big company and will continue to be big (probably) and they seem to have a solid business in the corporate world. But they dropped the ball big time on the mobile computing device revolution in the consumer space and they have a awful lot of catching up to do.

The consumer space is driving IT at the moment and the dynamic of the consumer space is leaching back into the corporate space all the time. It looks like the old model of one OS straddling lots of OEMs (design by committee) seems to struggle in the consumer space where customers are not forced to use stuff mandated by the IT dept but can and do reject that which is clunky and awkward and seek out that which is polished and integrated.

It is interesting that Google bought motorola and it may be a sign that vertical integration is the new essential paradigm. It was argued that Google bought Motorola for the patents (which seem a bit of a damp squib) but I think that was only part of the reason, possibly a small part. I still think Google/Motorola could be working on a cheap/free super feature phone with baked in Google services and targeted at the developing world. I also think it is still odds on that Microsoft will by Nokia.

What we can be certain about is that the world of IT and technology is changing more rapidly than ever and that the old giants are struggling.

Dell should just wind itself up and give the money back to the shareholders.

By retrospooty on 2/27/2012 8:22:03 PM , Rating: 2
"Dell should just wind itself up and give the money back to the shareholders."

Dell has a huge enterprise business and they are actually good at it. As for the consumer space driving IT. Its not really happening the way Consumer device makers would have you think it. Like I said in my other post. Call me when the plants that build Mac's and iPhones can do it without PC's and the Win based servers the world runs on. Call me when they come out with the accounting, procurement, logistics, reverse logistics, inventory, shop floor, CRM software etc. comes out on any other platform and integrates it all in to one working ecosystem... No one else is even close, no one else has even started.

RE: Apple rakes in the profits . . .
By Paj on 2/28/2012 7:50:23 AM , Rating: 2
Pretty much every medium sized business and upwards runs at least an Exchange server, if not a fully blown Windows server. OSX still causes headaches with Exchange and SMB integration, and most likely always will. You could just as easily argue that Apple dropped the ball when it came to enterprise level server side software and OSs (hint: it did).

Which, in a way, is to their credit. Often, it's about being able to say "Hey, we've been trying to do this for ages but it would appear we're not too good at it, we may as well leave it to others who do it better than us." Maybe this will happen with Bing one day.

Saying Microsoft has failed in the consumer space simply isn't true - the Xbox is the prime example. Apple tried to make a game console once - it was an unmitigated disaster. Microsoft has had a lot more success in this field. The Kinect is a revolutionary device which goes beyond gaming - future versions will find use in hospitals and other fields where gesture based UI can be not only useful, but safe. Microsoft's support of the homebrew Kinect community and the release of the SDK is opening up new avenues for the device, and is a prime example of excellent corporate technology governance.

Defining success in consumer electronics by referring to smartphone sales only is myopic at best. Feature phones are still a larger market globally, and Nokia's brand equity and expertise in this area coupled with WP7 could lead to them taking over in emerging markets where iOS has little foothold.

By TakinYourPoints on 2/27/2012 10:41:47 PM , Rating: 2
The entire world runs off PC's and Linux servers.


RE: Apple rakes in the profits . . .
By JediJeb on 2/27/2012 6:24:24 PM , Rating: 1
Apple's revenues from Macs are bigger than Microsoft's revenues from Windows.

How about we compare Apples to Apples and mention how Apple's OSX sales compare to MicroSoft's Windows sales? Does Apple sell more units of OSX than MS sells units of Windows?

Of course if you compare iPhones to WP7 phones sure, Apple is winner hands down. But MS is not a major Hardware vendor.

Then again it doesn't matter to me either way, I am pretty much 100% Linux Mint now at home. Just wish I could be a work too.

RE: Apple rakes in the profits . . .
By CharonPDX on 2/27/2012 8:24:00 PM , Rating: 2
Companies don't care about "units", they care about revenue.

Porsche doesn't want to sell more cars than Hyundai, they want to make more revenue than Hyundai. If you can do that by selling fewer of a higher-profit-margin item, great. If you can do it by selling a lot more of a lower-profit-margin item, fine.

It doesn't matter if Apple sells fewer units of OS X than Microsoft sells of Windows. Apple makes significantly more profit off each OS X sale than Microsoft makes off each Windows sale - partly because OS X is (largely) tied to a high-profit hardware sale.

RE: Apple rakes in the profits . . .
By acer905 on 2/28/2012 12:41:34 PM , Rating: 2
Apple isn't alone in making record profits...

Profit margin doesn't matter that much if you are still raking in money, and hording cash like Apple does is somewhat pointless.

It really doesn't matter what your profit margin is if your consumers never pay full price for your products (Carrier subsidized iDevices). IF people actually had to buy an iPhone outright, Apple's high profit margin on it would kill them. But the stupid device is carrier subsidized to the same cost as any other "comparable" phone. HTC, Samsung, and the like simply can't convince the carriers to pay them as much because they aren't Apple

By TakinYourPoints on 2/28/2012 3:58:13 PM , Rating: 2
Wholesale price for iPhones is actually around what they are for other high end smartphones. The difference is that Apple's cost of materials and manufacturing is pushed lower due to economy of scale and producing devices in much higher numbers than everyone else. They also use their cash pile to further drive down component prices by paying for them years in advance. They've been doing this with flash memory for years, they invested hundreds of millions in machinery for producing their aluminum casing, and the most recent example is the $4 billion to LG to produce displays for the next few years, presumably for the upcoming high resolution iPads and possibly 2880x1800 Macbook Pros.

Their operations as well as knowledge that they won't sit on unsold inventory is a huge driver for their profit margins.

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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