Dell vs. Apple: 10 Years Later
It was 10 years ago that Michael Dell, speaking before several thousand technology executives at ITxpo97 in Orlando, answered a question about what he would do if he were CEO of Apple with a remark he probably instantly regretted:
“What would I do? I’d shut it down and give the money back to the shareholders.”
As others have noted, Apple’s (AAPL) market capitalization today is more than double that of Dell (DELL):
Apple: $140.4 billion
Dell: $62.27 billion
1
Support the Blog — Buy This Book!
For Kindle and with free ePub version. Only $9.49 Great reading.
Here is what Gary Shapiro CEO of the Consumer Electronics Association (CEA) said: Dvorak's writing sings with insight and clarity. Whether or not you agree with John's views, he will get you thinking and is never boring. These essays are worth the read!
Put this ad on your blog!
Syndicate
Subscribe to Main Blog feed here:
Subscribe to Comments too (below):
Junk Email Filter
The stock price of a company has nothing to do with it’s true value. Just look at Microsoft, they make 100’s of millions every quarter and its stock price doesn’t budge. If I were an Apple shareholder I’d sell sell sell because the market does have a way of correcting itself, eventually.
It’s more complicated than that. The market already went through a correction. Apple’s price is based on expected future earnings. Short term i might sell 1/3 and buy back in at $145-$150. 3-4 months should see $200 or more after post-xmas earnings report.
That means Apple is growing, Dell is not. Yay. Dell is still bigger and does not brick their products.
#1 – Correction? Their stock value has increased dramatically over the past few YEARS. This is beyond a “correction.” This is a company whose investors place high faith in the company to bring good returns.
I told my mother to buy in Apple in 1996, back when the price was hovering around $15/share, I believe. She’s kicking herself now, because the stock has split two or three times since then, and it has shown NO sign of diminishing anytime soon.
Let’s face it – their market share is going up, their product line is improving, and they are innovating in a cost-effective manner that draws consumers in. Anyone who believes this is just a fluke is an absolute idiot who can’t see past the fact that it’s Apple.
I think we have to give John some credit for predicting this. On the week Apple said they were shifting to Intel chips, John said that Apple could be a $300 stock in the next few years. For any who want to hear this, it was in a TWIT (This Week in Tech) podcast.
It will be interesting to see if Apple can blow away analysts EPS estimates again this quarter. Average underestimate for the past 4 qtrs is 33%
Right now each 100-share lot of Apple shares is worth about 16,000 dollars, and I have a nice six-figure pad to my long term piece-of-mind. Sell on some miraculous “it-just-has-to-correct” hope to make a few dozen-grand more?
I’ll keep what I have and weather the minor “corrections” and buy extra when there are future stock splits.
What’s the hockey stick graph doing attached to a Dell vs. Apple article?
ummm….iPod?
Long term, Apple is doomed. It is a cult-of-personality, and without Jobs working at peak efficiency, the company will slowly rot (as it did with non-Jobs CEOs).
Microsoft is more like big government. It plods along slowly and surely; sometimes making great strides (like the time NASA put men on the Moon). Gates is a great “president”, but there will be other great men or women leading Microsoft for the next several hundred years – as well as some poor ones.
#10 – Yet another clueless commentator with no presence of mind to see that Microsoft is shipping a bloated product that no one wants. #1 reason why people switch from Windows to Mac OS? Windows sucks.
#10, I’m worried something will happen to Steve and Apple will appear to be in real trouble. It would be good if they started to find another celebrity CEO. a mini Steve?
#11 – You’ve proved my point. Thank you.
Dorksters,
I like apple, but am not religious about it. I just think that, while no system is perfect, osx is a better windows than windows and a better linux than linux.
Other than that though, I’m curious about your take on apple as a cult. Are you expecting it to die the same way other cults have, e.g. scientology, latter day saints (mormon), christianity, islam, and judaism? Or, do you expect it to be more like jonestown with some nice almond flavor-aid?
#10 – Dorksters – Long term, Apple is doomed. It is a cult-of-personality, and without Jobs working at peak efficiency, the company will slowly rot (as it did with non-Jobs CEOs).
Agreed. Apple is Steve Jobs, and Steve is a one-man show.
#12 – bill – I’m worried something will happen to Steve and Apple will appear to be in real trouble. It would be good if they started to find another celebrity CEO. a mini Steve?
It won’t happen. Steve has a too big charismatic ego to allow another charismatic ego stand beside him.
#14 – Misanthropic Scott
Dorksters point is that Apple’s popularity is founded on the charisma of Steve Jobs. Once Steve is out of the picture, the fans will disperse and Apple will become another RCA… a company in the outskirts, someone who does the same as everyone else… essentially just being a brand name…
Dorksters – Naturally, you don’t know me. My online personae is, of course, Mac Guy, but what you don’t know about me is that while I am one of Apple’s biggest fans, I’m also one of their biggest critics. Believe me when I tell you that I have never held back in my criticism of Apple’s strategies and policies, and I’m not some mindless drone from “1984” who blindly follows the status quo. I am, however, an IT guy who does support for both Windows and Macs. I’m on the front lines day in, day out.
Trust me when I tell you from experience that Apple has the better platform, and Microsoft is all too often the one playing catch-up.
That being said, it should be no surprise to anyone that Apple’s stock value is as high as it is. It should be no surprise to anyone that Apple is gaining ground in market share. Face it: Apple has a great platform, and people are now realizing it. Investors have been seeing it for the last few years, so the value of owning stock in Apple has increased accordingly.
#16 – Jägermeister,
Yes. As were Scientology (L. Ron Hubbard) and Latter Day Saints (Joseph Smith). Some of the other cults I mentioned may never have had a real person with the persona of their original leaders. So, I’ll avoid mentioning those.
#17 – Mac Guy – Investors have been seeing it for the last few years, so the value of owning stock in Apple has increased accordingly.
Just an advice… If Steve Jobs dies… be quick to sell your Apple stocks.
#18 – Misanthropic Scott
And Scientology and LDS has shown such a great growth since their founders died… 😆
Apple is entirely re-organized, into something unique in the sector. Product development is distributed among working groups, who have arbitrary members. An example, an engineer may be involved with pod display development one hour and power supply regulation testing for macs the next. This culture of ephemeral talent, permiates all levels of the corporation. It allows the company to grow and to develop along product frameworks, independant of specific individuals. This is why Apple will continue to out perform.
The death of Apple has been declared as inevitable over and over.
Apple keeps on ticking and somewhow keeps reinventing itself as a meal tasty for yet another dinner
Apple’s effect on inovation on anotherwise staid , technical computer industry is rather remarkable – whether it be colors for computer cases , as in the case of imacs or in the fashion statement of ipods
Its noteable the commanding lead that ipods have in market penetration – even mighty dell has not made a dent in their market numbers.
Why would you be in something slow growing like Apple when you could be in something that has 400% annual growth potential like VMWare? In then next year their stock is gonna split twice, and by this time next year they are gonna have a market valuation something like Apple.
Also, since virtualization came on the market in a big way at the beginning of the summer, there have been numerous very big announcements. First is the availability of portable thin client computers. Sure these are the first generation devices, by next year they will be competing directly with the traditional laptop devices, and affecting significantly the traditional laptop sales. Second I have found at least three companies offering virtual desktop/computer services to end users and SMB’s, I expect to see unprecidented growth in this market in the coming year. Finally, it looks like google and IBM are partnering up to offer this service to students at several large universities. Microsoft has its own virtual computer initiatives as well.
Apple is simply missing from this potential new market, and seems oblivious to the threat it poses to their computer business. They don’t seem to have any virtulization strategy other than as a means to access legacy applications.
From my reading of the market, you could say that Apple finally became competitive in the desktop computing market as the desktop computing market entered its twilight years.
Apples product line does look promising until you realize there are even deeper changes happening in the industry.
Apple is already starting to falter, and smart money would not be joining the herd right now.
There are several factors influencing this statement:
a) The lackluster acceptance of new products. The new iPods have been a complete failure… nobody cares. The iPhone had it’s moment of glory, but it probably has already peaked… unless they can penetrate the business market with the iPhone (not much sign of that happening), the pool of nerds willing to shell out big bucks for a fancy cellphone is shrinking.
b) The deteriorating economy. Say what you may, the reality is that the entry level Mac is over twice the price of an entry level PC. Only at the higher end do hardware prices start to come closer. Apple will have to start to decrease it’s margins substantially or produce realistic lower cost systems. Tighter budgets mean delay purchases of bargain hunting.
c) Virtual lack of business market penetration. A slew of factors will continue to impede Macs from making any real penetration into the business market. Software incompatibilities, cost, limited options, etc. And running “Parallels” is not the answer… if a business needs to run Windows software in the first place, it has no reason to choose a Mac.
d) Cult of personality. The “Apple Shine” is starting to be not so bright. Many people are starting to be more irritated by Steve Jobs than were irritated by Bill Gates. That is a bad sign. Even apple disciples are starting to sneer.
e) Alternatives. The whole iPod phenomenon is what.. 5 years old? The fad will pass, and it’s showing it’s age. Alternatives are starting to show up. People are starting to realize that they are idiots if the buy Apple DRM’d music, that can only play on a specific device. Better options like teh Amazon offerings will start to quickly erode iTunes dominance, until it just becomes another player, much like what happened to RealAudio and it’s offerings.
g) The “Who cares?” attitude about the next OS release. No excitement there at all.
h) The more people that use the Mac OS, the more people realize that it is just as unreliable and complicated as “the other” option, with the great disadvantage of far less hardware and software choice.
The only area that Apple seems to remain strong is in their notebook offerings, which are very well designed and very price competitive in the mid-upper range of cost.
Yeah but didn’t Mr. Dell buy plenty of Dell stock when the market crashed? He looks like he made plenty of money then.
Also, can we compare the Dell price changes to when various commentators praised Dell for selling PCs with linux?
Dell doesn’t have growth potential, they are saturated at what they do best.
Apple can either grow rapidly or sink rapidly.
It is pretty clear that Apple could rapidly gain market share if they chose to do so. But what isn’t clear is whether or not they will ever choose to do so.
I think Apple has a long history of not taking decisive action to expand and to favor control at the expense of growth.
Nice chart! What the heck does it say? Sure years along the x-axis and just numbers along the y-axis. What exactly are those numbers? Any MBAs out there? I know Excel allows you to label axes.
As for Apple, I feel Steve Jobs is doing a great job for the company, and do fear that if he is lost the company may lose some of its foresight. I hope he’s grooming someone to take over the reins in case… Alas, I fear #15’s last comment may be the case.
When Apple was in dire straits some years back, a friend commented that Bill G. wouldn’t let Apple die. He needed them for research and development for Windows.
#27 – market cap in billions.
#23 – That normalized P/E ratio of 353.3 and a %R of -3. 85% doesn’t concern you for long-term growth, especially when a recession is bound to happen in a year to two, followed by outward liquidity flows into other speculative markets around the world? Moreover, the fundamentals, e.g. cash flows, sector growth, & operating income (which is rather lack-luster) will justify some short-term speculation gain, but when compared to other investments, especially in developing markets, better numbers can be found.
GregA, you’ve been predicting the demise of apple on DU since before it was $60. Nice call, LOL.
Wager…
Apple today is $167.91 (up 4% today), VMWare is $95.09 (up 4.35% today). Let’s see who does better by Feb 15, 2008… straight buy and hold, unless you want other terms.
#24, Awake… bla, bla, bla. Make your dire prediction on Apple shares 4 months from now. Post it and we can compare notes.