Dear Jay-
When you speak of Apple having 3 or 5% of the market wouldn't we have
to look at what percent each of th PC producers have. In other words
when we say Apple has 5% of the market and PC has the rest it sounds
like Apple is insignificant, But what is IBMs, Sony, Toshiba, Dell,
Gateway etc. shares?
regards,
doug
On Jun 29, 2005, at 1:30 PM, Jay wrote:
On 6/29/05, Lewis declared:
My understanding of the numbers - Mac sells significantly less than
5% of
the cpus at this time. This can't to be that big a deal financially
for
Intel. I am sure that Intel is very, very happy about Apple coming
over
for lots of the reasons you mention but the least reason is financial
(at
least directly).
On 6/29/05, chris declared:
So to Intel... Apple is really a loss leader. They use them to get the
new chips into the public eye, knowing full well they will be lucky if
they even break even on development with sales to Apple... but once
Apple
gets them into the public eye... sales will take off as the other 95%
of
the market decides this is the latest "must have" product.....
.....Intel has lots of goodies sitting on the shelves of labs, waitng
for
someone to get them into the public eye. Yes Apple needs Intel, but
Intel
wanted Apple. Intel isn't going to make money off of Apple... Intel is
going to make money off all the stuff Apple makes "cool".
I think we sometimes underestimate the impact of Apple's little market
share, estimated variously at between 3% and 5% of the personal
computer
market worldwide. How nice it must actually be to control between 3%
and
5% of a multi-billion dollar global market. If you review Apple's
financial statements, you realize that Apple is HUGE, and it's market
is
HUGE. Just because the PC/Windows market is indescribably enormous does
not make Apple's share insignificant.
I'm not an expert on the subject of development costs, but I believe
that
Intel's development costs for Apple chips is not significant
(especially
insofar as Intel is already tooled for chip production and can use
much,
if not most, of the technology already in place for its PC chips) in
comparison to how much revenue Intel will generate when Apple buys
hundreds of thousands, if not millions, of units from Intel. CEOs sweat
blood as they figure out how to increase their sales by 5%, 3%, 2%,
even
1/2 of 1%. Each percentage point is a huge amount of money, and black
ink
is good. When AMD steals market share from Intel, and a little bit of
red
ink runs for awhile, stockholders get upset and profits go down. In my
opinion, not only does Intel make good money off the chips it will sell
to Apple, it also strengthens its market position by keeping AMD from
getting the Apple contract.
The fact that Intel will get the added benefit of being able to
showcase
its other products through its partnership with Apple is frosting on
the
cake, but let's not minimize the economic importance to Intel of its
primary contract to provide CPUs for Apple computers.
---Jay
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