Saturday, September 15, 2007

Apple's quality hardware days seem to be gone

Well, minutes after posting my Apple iPod Touch article, I came upon a bunch of threads about how crappy the screen is.

I find it amusing that people like to claim that Apple would not skimp on quality. Really. Actually, the numbers tell exactly otherwise. Time for a basic business lesson in gross margin.

Gross margin is the total revenue of a company minus the cost of that revenue (i.e. the cost of making whatever you sell), divided by the revenue. It tries to measure percentage of money that's profit on each widget sold. It's one of the better indicators of how much money a company is making on its product.

Apple's gross margin has gone from 29.2% to 36.9% in the last 4 quarters.

Therefore, Apple must be reducing costs somewhere. Either the parts they build computers with are getting cheaper on their own, or they are seeking out cheaper parts, or they are cutting costs in producing those goods.

Based on all of the complaints about Apple's hardware quality -- and there have been dozens of cases over the last year on all levels of their product lines -- the only logical conclusion is that two out of three, possibly all of the above, must be true.

That's not to say that all vendors aren't dropping quality. You think Dell is any better? Lenovo? I'm not sure when the last time I bought a truly high quality computer might have been. Maybe my Centris 650 in 1993? Even that machine blew up in the first 10 minutes of use with a bad power supply. Maybe it's when I bought a SparcStation 1 on a whim at Weird Stuff in Sunnyvale. That machine was solid (though old).

In reading these threads, I learned a new term today: iTard.


brianc73 said...

Right on... I was just telling someone about this. They told me I was too "impressionable" from a "few" people on the internet; that the net blows everything out of proportion. The reverse-negative problem on the iTouch with the dumbed-down (from the prevent canibalization I guess) interface along with the crooked Nano screens will keep me from buying any of these new generation iPods. It's one thing to be accused of being impressionable - it's another to see crooked screens on display in an Apple Store! From what I read, the fattys are put together with adhesive (no screws), so the work camp where these are assembled are likely working double-overtime to produce them right now.

Hopefully they'll wake up and get their act together before its too late. They're riding a great come-back story but things can flip pretty quickly with a few bad moves...

brianc73 said...

P.S. - I love the iTard term! I never heard that before.

My 60GB 5G iPod is still 2/3 empty so it should last me another 5 years (good thing since their current lineup is now hideous!). The iPhone was my last purchase from them (it works better on T-Mo than it did the 2 days I had AT&T), will likely be outdated in 3 months, but will more likely be decommissioned on Monday with the release of the new UMA BlackBerry Curve (I'm planning on calling a bunch of iTards I know from my WiFi'ed house to talk off most of their iPhones' plans minutes). UMA will never appear on the iPhone because it'd cut into Apple's take of its carriers' revenue. It is amazing what technology is out there...and being bypassed by (and missed by many people because of) Apple.

Trimbo said...

It really doesn't matter what people think -- if an individual is not happy with the quality, that's all there is to say.

Even so, you're absolutely right. All it takes is going to the Apple store and looking at some of this stuff. I saw a 17" MacBook Pro in the store the other day with a broken latch and the lid sticking up on one side. It's like a bad Best Buy, where the cameras are still out for sale but the lens won't open.