The Cost of the iPod 217
An anonymous reader writes "The New York Times is running an article today entitled Apple's Got a Secret. They discuss the cost behind making the ever-popular iPod ... a secret the company is keeping close to its chest. As a result of the company's signature secrecy and antiquated way of tracking profits, analysts are beginning to question the 'trust me' nature of buying Apple stock." From the article: "Geographic disclosure was adequate when pretty much all Apple sold were computers, Mr. Renck said. But the iPod has changed everything. Sales of Macintosh computers now trail those of iPod, which last year made up 46 percent of revenue. 'Apple clearly has its feet in two separate and distinct business models, namely computer manufacturing and software creation, and the consumer electronics industry,' Mr. Renck said."
What secret? (Score:1, Interesting)
Re:That was actually surprisingly good article (Score:4, Interesting)
He's got a point. It shouldn't be too hard to figure out what an iPod costs to make, within a margin of error, of course.
That's not the point. Apple is a public company and has a duty to disclose to its' owners what the profit margins are on various products. That's pretty standard. If Apple doesn't disclose the margin of their primary product to their shareholders, I also wouldn't touch the company. In fact, it may even be an SEC violation.
who says (Score:1, Interesting)
Computers now their own classification? (Score:5, Interesting)
Computers (and peripherals) are Consumer Electronics. You see inside that tiny Consumer Electronic Ipod thingy your kids have there is a tiny computer running tiny software. Ipods are specifically a peripheral to a computer, be it Mac or PC. Same business model, Apple makes attractive easy to use consumer electronics. (Covers up Newton>) BTW, why not just link to the artcle three links and two blogs deeep. http://www.marketwatch.com/News/Story/Story.aspx?g uid=%7BEE4732BB-BCFC-49FE-9CA3-6E11FC25122D%7D&sit eid=mktw&dist= [marketwatch.com]
FTA:
Accounting standards, he adds, require that segments generating more than 10% of a company's revenue be broken out by several metrics, including sales, profit and assets. The iPod first passed that threshold in early 2004. Commenting on the issue, in a statement on current accounting and disclosure issues, the SEC staff has said it believes segment information should be broken out unless "separate reporting of segment information will not add significantly to an investor's understanding of an enterprise [because] its operating segments have characteristics so similar that they can be expected to have essentially the same future prospects." Renck goes so far as to say he believes Apple should do a separate breakout for computers, iPods, music-related products, peripherals and software and service. "Their business has changed and they should be doing it differently," he says. "Transparency is what everyone wants, and they don't want to be transparent."
Dude, I want a transparent Ipod too.
economic model and pressures on governments (Score:1, Interesting)
Apple has an economic model that enables the company to make a lot of money from the sales of their device.
It seems that it also would prefer that law strengthens that economic model, for instance by criminalizing those who would dare make compatible players.
As a result, they have begun bullying governments around the world, with the help of the US government. (I'm surprised that a Republican administration should help Apple, but Apple probably funds both parties anyway.)
Re:Kinda Obvious. (Score:3, Interesting)
I think the reason why people want to know how much money they are making is because they want to know how to price the Apple stock. Right now the PE is about 30, and the question is how much more will this company grow. Personally I think Apple stock is a dud because Apple is nearing its peak.
Apple is a funny company that has highs and lows. Right now they are on a high, but with the introduction of the Intel chip they are sliding down (eg computers cost more, quality problems highlighted in ZDNet, and delays in the latest iPods).
With Steve Jobs antagonizing the stock market it will hurt. It will hurt for a couple of reasons.
1) Stock options: Who would want to work for a company with a dud stock, hint hint Microsoft.
2) Take over of other companies: If you have a sliding stock you have quite a bit less leverage when trying to buy another company. Apple is moving towards a content company and might be interested in taking over content companies.
Re:Kinda Obvious. (Score:2, Interesting)
I do agree with you on that the OP should not have told people how much he made, but I think it would be the same idea with Apple, especially if/when coupled with other information, such as the manufacturers of the boards, processors, etc.
Re:We love Apple (Score:1, Interesting)
Umm.... I don't know how to say this politely, but here goes:
You do NOT understand what the "information wants to be free" tagline refers to. (Either that, or you're intentionally mis-understanding for the purpose of a troll post.) The "information wants to be free" refers to the ease with which information can be replicated and distributed in today's society. It is not a call to open up every classified document, trade secret, or piece of personal info. Rather, it is a call to stop placing artificial boundaries on the distribution of information that has already been released to the public.
Nothing to See Here... (Score:3, Interesting)
Investors will make decisions to buy or sell Apple stock based on a number of factors, the least of which revolve around gross margin disclosures to investors or just how much information Apple executives are willing to share outside the company. Analysts can and will examine, regurgitate and then pontificate about the most minute information available on a company, but the only meaningful question investors should have about buying or selling Apple stock is, "Will I make money if I buy this stock?" or, "Will I make more money if I sell this stock?" It really is that simple, and it doesn't take an analyst to figure it out.
What analysts may know or not know about Apple's business is secondary and, in most cases, immaterial to calculating the profitability of owning Apple stock. If you trust that Apple's management team knows what they're doing, than buy the stock, even if the executives won't tell analysts how much money Apple makes every time an iPod is sold. If you think Apple is hiding crucial information that affects your own profitability as a stockholder, than your best move is to unload any Apple shares you currently have and not to buy any more. Stock tips from the New York Times are worth about as much as you've paid for them, and it shouldn't take a rocket scientist with reams of mathematical proofs to demonstrate such an obvious fact.
What/who is going on...? (Score:4, Interesting)
Re:What/who is going on...? (Score:3, Interesting)
Re:What/who is going on...? (Score:3, Interesting)
Creative has been trying to play hardball lately.
The Recording and Movie industry aren't happy with Apple's success.
Many in the free software crowd don't see Apple as much better than Microsoft.
I'm sure SCO wants a piece of the action for the Unix-derived OS X.
This is largely business as usual for any American company that can make a headline.
McDonalds is evil... Burger King is evil... Coca-Cola and Pepsi are evil. Farmers are evil, cattle ranchers are spawn of the devil... fill in the blank...
There's always going to be some schmuck who tries to hide her/his incompetence by blaming somebody else. It's been happening throught human history. It's poetic that history has shown that such behavior usually has the opposite of the intended effect. Nero blaming the Christians, Hitler blaming the Jews... just more blanks to fill in.
The WOZ Inventor Of Apple Says Apple Should Split (Score:1, Interesting)
Music Labels Once Wanted iPod Profit Percentage (Score:2, Interesting)
If Apple showed a 50% percent profit on iPod sales, labels could demand a percentage of that 50% without regard to how iPod sales cover losses in other areas. This article already shows a penchant for dividing iPod from Apple computer sales. In the event of label demands and/or legal actions Apple could end up getting hung with its own rope.
Of course Apple could always use a shell game to manipulate profits. How many Hollywood films ended-up not showing a profit after some "broader" accounting. Not providing info while also not shape shifting any books is probably a prudent to way to go even is it looks bad in a narrower context.
Cost Too Much? Don't Buy It! (Score:2, Interesting)
Who cares how much it costs them to MAKE the iPod, if the actual value of the device for the consumer is not equal to the price point then people won't buy it. The iPod seams to have crushed all the other music players, so obviously it's at a good price point for most people.
Personally I think the iPods are over priced, so I won't get one. Pretty simple.