Re:Sorry, Steve: Here's Why Apple Stores Won't Work (2001)
by programminggeek on Wednesday May 21, 2014 @02:26PM
(#7779875)
What the article missed on is the economics of Apple. They don't sell at 10% margins, they sell at like 30 or 40% margins. So, at the same $8 million/store/year they would make 3-4x the profitability of a Gateway store. So, based on the estimates of needing to make $12 million a year they only needed to make $3-4 million a year for it to make sense to run the stores.
The writer was focused on market share, not margin. That is a common mistake that people make when they look at Apple and it's been wrong over and over again for over a decade now.
If there is one "secret" to Apple, Google, Microsoft, and Intel it's profit margin. All of those companies have solid margins that allow them to invest in growth over time. Somehow other companies seem to believe that you can run at break even or a loss and somehow turn on the profits once you reach some huge scale.
Smart, successful companies are turning a profit consistently on just about everything they do at any significant scale and they shut down projects that don't.
The writer was focused on market share, not margin. That is a common mistake that people make when they look at Apple and it's been wrong over and over again for over a decade now.
If there is one "secret" to Apple, Google, Microsoft, and Intel it's profit margin. All of those companies have solid margins that allow them to invest in growth over time. Somehow other companies seem to believe that you can run at break even or a loss and somehow turn on the profits once you reach some huge scale.
Smart, successful companies are turning a profit consistently on just about everything they do at any significant scale and they shut down projects that don't.