It's true that Apple does not compete in Dell's marketspace. Dell makes generic products of mediocre quality and supports them badly. Apple makes innovative high performance and high quality products and supports them very well.

There is no competition in the enterprise market. Companies buy Dells and M$ server products.

Of course then there is the consumer market. Apple definitely is competition there. I'm not sure what the breakdown is revenue-wise between the two markets. It's possible that the consumer portion is so small that Dell really won't be impacted that much by Apple stealing alot of its consumer business.

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Biff wrote:
There is no competition in the enterprise market. Companies buy Dells and M$ server products.

How's that?
We run 2 Poweredge 2650 servers because the Departments that use those systems couldn't be bothered to figure out how to make their software work with anything different from what they had done before. (Oh no we won't modify our back up program to support SATA drives. SCSI will be here forever). The rest of ours are BOLData, though I've run Macs and and in house built RedHat system in the past. On our systems we run several with WinServ2003, but we also have a Novell file server, and a web server running Centos Linux. As I look around the server room I see a lot of Dell, as well as Sun, HP and even a few Xservs. Dell has a head start but I'm seeing their edge slowly dropping as sysadmins around here get fed up with poor support and high prices. If their quality ever starts to decline they'll be in serious trouble.

Apple's stock is trading at $60+ per share.

Dell's has been languishing in the $20 range for almost a year.

Yep, no competition at all.

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geoduck wrote:
How's that?
We run 2 Poweredge 2650 servers because the Departments that use those systems couldn't be bothered to figure out how to make their software work with anything different from what they had done before. (Oh no we won't modify our back up program to support SATA drives. SCSI will be here forever). The rest of ours are BOLData, though I've run Macs and and in house built RedHat system in the past. On our systems we run several with WinServ2003, but we also have a Novell file server, and a web server running Centos Linux. As I look around the server room I see a lot of Dell, as well as Sun, HP and even a few Xservs. Dell has a head start but I'm seeing their edge slowly dropping as sysadmins around here get fed up with poor support and high prices. If their quality ever starts to decline they'll be in serious trouble.

Well I'm talking enterprise-level stuff here, not small businesses. But of course there are always exceptions. The main problem here is not hardware-related, it's Microsoft's enterprise applications. Nobody can come close to touching those on any OS. Nobody will be able to touch them for many, many years. Yes you could technically run them on Intel XServes. Maybe someday IT departments of large commpanies will buy Apple hardware to run Windows. But then again is that where we want things to go?

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Tiger wrote:
Apple's stock is trading at $60+ per share. Dell's has been languishing in the $20 range for almost a year. Yep, no competition at all.

Oh my... So by your math, we should all go buy GOOG at $390/share. Google is more than 6x the company that Apple is.

Stock market 101 time... The share price doesn't mean squat. What you want to look at is the P/E (price to earnings) ratio compared to the broad market and to similar companies. And you want to look at the dividend. Neither AAPL or DELL pay a dividend because it's not cool for tech stocks (except MSFT). DELL's P/E was about 14 before the little drop, and it's about 14 now. AAPL's was about 28 before the quarterly conference call and it's about 28 now. The stock price in both cases just corrected itself to earnings data. Historical average for the stock market is about 13. Good tech stocks seem entitled to a P/E boost to about 19 or 20. MSFT's is 20 and they pay a dividend.

The market seems to be saying that it sees no real growth opportunities now for DELL, reasonable growth for MSFT, and better than average for AAPL. AAPL also gets a special boost because it's cutting edge and exciting, a boost which is already worked into the price. And AAPL gets boosts around product announcements because they still have some magic, but months after, the market finds its way back to reasonable P/E. Get out your historical price charts and plot product announcements -- that would be a great TMO article since TMO has every Apple product announcement over past 5 years (and then some). Once you do that, buy some AAPL before WWDC and dump it a couple weeks after.

Wu and Munster have price targets for AAPL of $85 and $99, can't remember which. Assuming a continued P/E of 28-ish and assuming a stable price (not a trade show spike), that would require a 25% or 40% increase in earnings respectively. Apple's margins are phenomenally high already, growth in iPod business is slowing and formidable well-financed competition is on the horizon, iTMS is a wash, and the jury is still out on Mac market share. Even the most optimistic long term market share predictions don't suggest that kind of earnings growth for several years. Should AAPL hiccup or disappoint along the way, or continue to have dust-ups with foreign countries over iPod market share or DRM, it's P/E premium could dwindle, requiring even more earnings growth to meet those price targets.

HP's post-reorg P/E is 24. HP does have a dividend though. Seems like if DELL could get it's act in order, it ought to be able to approach MSFT or HPQ. It's earnings probably won't shrink too much as it's still one of the gold standards in business PCs and has diversified its offerings (and cost dependencies) by adding AMD processors. Might be a good time to buy now and hold.

That's one thing Mikey Dell is right about. Dell is the the fleet sales of the PC world. They sell white cargo vans. If you wear overalls, that's the vehicles you drive - just like Dell's are fine when someone pays for it and maintains it. Yes, they are not all that great but it's not money out of your pocket.

Even for people who take off overalls at the end of the day, do they trot on over to the lot and buy a white cargo van? No. And neither should you.

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Bosco wrote:
The market seems to be saying that it sees no real growth opportunities now for DELL, reasonable growth for MSFT, and better than average for AAPL. AAPL also gets a special boost because it's cutting edge and exciting, a boost which is already worked into the price. And AAPL gets boosts around product announcements because they still have some magic, but months after, the market finds its way back to reasonable P/E. Get out your historical price charts and plot product announcements -- that would be a great TMO article since TMO has every Apple product announcement over past 5 years (and then some). Once you do that, buy some AAPL before WWDC and dump it a couple weeks after.

Another thing to look at is relative performance--percentage change over a particular time period. As Bosco knows better than most of us, that has absolutely nothing to do with future performance. However, it is an indicator of the confidence investors had in a particular company THEN. Over the past 6-7 months, Apple, Dell, and MS have not been doing very well in that regard. In Apple's case, that has been coming off an all-time high, as one can see looking at a 1- or 2-year timeframe. In those periods, though, Dell and MS have been trending down, down, down--especially Dell. Another way to look at this is to compare stocks to averages--S&P, DJ (not really very good), and the NASDAQ average. (Apple is not on the NY Stock Exchange; it is one of the bigger companies in NASDAQ trading.) Apple has beaten the market over the 1- and 2- year periods, while MS has been at or a little below the market averages and Dell has done considerably worse.

Now, how much do you want to bet that Dell voted all its top executives large bonuses, despite the decline in stock prices, market share, and earnings?

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Biff wrote:
Well I'm talking enterprise-level stuff here, not small businesses.

Possibly elsewhere but that's not what I'm seeing here at the Univ of MN. For example, we are in the middle of a complete replacement of our financial system with Oracle/PeopleSoft and it's running on Sun. It's similar with our other enterprise systems; CUFS, JDEdwards, the University Web Hotel, etc., etc., I don't believe any of them are running on Dell/Windows. A major portion of the file servers run Novell, though that's one of the groups that keeps insisting on Dell hardware for no particularly good reason. The pattern around here is for smaller, departmental and local servers, people tend to use Dell and Windows especially when they are short on trained techs. But when it's a major University wide Enterprise app that HAS to stay up 24-7, they use something else for both hardware and software.

Interestingly for many of the sysadmins I've talked to around here when they know they are going to put up a server the first question seems to be "Do we HAVE to use Windows?" There seems to be an understanding that while Windows is simpler to get up and running, you pay for it in the long run with more patching, fiddling, and security worries. Similarly, while some areas require Dell, there is a growing bias against them simply because the company is a pain to deal with and their stuff is way too expensive.

Of course you milage may very. A University environment is not the same as a large corporation. I only know what I see in my immediate surroundings.

Dell should just close the doors, hold a sale, and return the assets to its shareholders.

(Somebody had to say it.)

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Rainy Day wrote:
Dell should just close the doors, hold a sale, and return the assets to its shareholders.

(Somebody had to say it.)

I suspect that the only way Michael Dell would do that is if Apple did it first. He does seem to keep copying whatever Jobs does.

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geoduck wrote:
He does seem to keep copying whatever Jobs does.

If that were true, he'd be turning a profit!

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Intruder wrote:

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geoduck wrote:
He does seem to keep copying whatever Jobs does.

If that were true, he'd be turning a profit!

Maybe you should have said, "If Dell was good at copying Apple he'd turned a profit."

Vern Seward