[snom370]

Sure, they buy a lot of components off the shelf. But they are extremely involved in the design and manufacturing process of their products, and often work with the manufacturers to push the manufacturing technology forward to meet their design goals (machine milling is nothing new, but machine milling a $999 laptop requires quite a bit of innovation).

Unlike many other companies, Apple _doesn't_ just take various technologies and piece them together to make a product. And they do a lot of core technologies in-house, which is why they've bought companies like FingerWorks and PA Sami.

The interview with Jony Ive in the Objectified movie (http://www.youtube.com/watch?v=t0fe800C2CU) shows some of the thought process that is involved in Apples hardware design process.

By your logic, other PC/mobile manufacturers should have similar profit margins to Apple, but they don't. Now, the usual answer is that Apple has a "cult-like following" that will pay a higher price for "more or less the same hardware in a different box".

A better explanation, given that the "cult following" has only increased the last few years, is that Apple manages to make more appealing products by being extremely involved in _both_ hardware and software, leaving other companies to compete by sticking together commodity components. Apple did not say that they expected decreased profit margins because they would have to slash their prices, what they did warn was that their forthcoming products would have higher hardware costs. But of course, time will show.

[ergo98]

"By your logic, other PC/mobile manufacturers should have similar profit margins to Apple, but they don't. "

How you could you possibly extrapolate that, attributing it to me?

I propose no such thing. Electronics is a low margin arena, and this is great for consumers. High margin companies like Monster cater, arguably, to suckers.

So when someone makes a lot of margin in electronics they're usually serving the sucker market, or they're offering something other than electronics. Apple puts good software on otherwise vanilla hardware, and that's what their differentiation is. It's how they get their margin.

There's a cert cult essence to Apple that makes it impossible to discuss their products. The number of faults in their devices is legendary, and there is that telling moment of truth: When a new anointed device comes out, suddenly there's a mass realization that the last device really was kind of shoddy (see the 3GS when the 4 came out).

There just isn't anything special about them. There really isn't. Motorola has made any number of brilliantly engineered products...but it's just Motorola so who cares, right?

[snom370]

You wrote:

"You could directly attribute the fact that Apple isn't responsible for most of that hardware R&D for their high profit margins. They know to buy the cutting edge from the rest of the industry, put some software on it, and they've got a product."

I read this to mean that Apples high margins were primarily due to their offloading their hardware business to others. And I only pointed out that this is only _partly_ responsible for Apples high margins. But I see that I've read you incorrectly.

I never heard anyone say that the 3GS was shoddy when the iPhone 4 came out. Even before the iPhone 4 was released, everyone agreed that the screen resolution, camera etc. was a generation or two behind, and most reviewers had started recommending other phones with more features.

Like I said, some people "get" or appreciate Apples product design, and some don't. The fact that you're say that there's nothing special about their products shows that you don't. There's nothing wrong with that, just as there's nothing wrong with me not wearing designer clothing and being unable to tell the difference betewen a generic and a designer suit.

But as you say, it makes it impossible to discuss their products. Which is why this discussion is pointless :)

If Apples advantage was something very measurable, for instance if all their laptops had 20GHz processors and 256GB RAM, it would be obvious to everyone, including their competitors, why they were able to make so much money with such a small market share.

But it's difficult to quantify what "good product design" is. I can give countless examples of small details that Apples designers have thought about that other laptop makers haven't, but this is simply irrelevant to people who don't appreciate that. Similarly, a BMW owner could point to lots of small features and details that they like about their car, but others simply see an overpriced car with high maintenance costs.

Still, unlike Monster cables, you can point to many features or details that you simply don't get with other cars that still do the job of transporting people. The question is simply whether someone is willing (and able) to pay for the added design, features, and comfort.

I think that Apples success shows that there are enough people who _do_ care about it, and I think that's a big reason for their high profit margins.

Finally, I think you'll see that Motorola has won a lot of praise and attention for some of their better designed products, even though Apple is the current media darling.