Will the sick man of the PC industry drag Apple down?

Discussion in 'Apple' started by Marcel Pagnol, Feb 28, 2009.

  1. Dell Could Drag Apple Down Too

    Brian Caulfield, 02.26.09, 06:00 PM EST

    Dell's low-cost laptops ensure that if it has to suffer, it won't do so

    BURLINGAME, Calif.--Word is, Apple chief Steve Jobs is resting, quietly,
    away from his computer lately. And why not? He's probably got calluses on
    his right foot the size of IHOP pancakes after kicking everyone in the
    technology industry in the butt, repeatedly, for the past 25 years.

    Apple's (nasdaq: AAPL - news - people ) mercurial co-founder, however,
    really doesn't need to hear this right now: You can install Apple OS X
    Leopard on a dinky $249 laptop from Dell (nasdaq: DELL - news - people )
    and make a nice little Mac netbook. Hey, for the price of Apple's low-end
    $999 Macbook you can get four Dell Mini 9s.

    Jobs may be on a six-month medical leave, but Dell is the sick man of the PC
    industry. Dell reported Thursday that its fourth-quarter net income fell
    48% to $351 million, or 18 cents per share, from $679 million, or 31 cents
    per share, during the corresponding period a year ago. Sales slumped 16% to
    $13.4 billion from $16 billion over the same period.

    But while the numbers are bad, Dell chief Michael Dell's plan to share the
    pain is working. Dell slashed operating expenses 16%, compared with the
    year-ago quarter, as it shifts from relying on basic-black PCs for
    businesses to marketing cheap, stylish notebooks for penny pinchers and
    prepares a new high-end line, dubbed Adamo, for anyone who still has any
    money to burn.

    The launch of a $399 Mini 10 on Thursday only underscored that strategy. The
    2.86-pound machine sports a 10.1-inch screen and an Intel Atom processor.
    And while Dell says its latest machine is targeted at kids, tweens, teens,
    travelers and "Tweeters," this thing has enough power to handle simple
    business chores such as e-mail, word processing and basic spreadsheets. Or
    it could make for a mighty fine little Mac if you want to tinker a little
    and violate Apple's end-user license agreement a lot.

    Maybe that's why Dell's shares were up 4.99% to $8.62 in after-hours
    trading, despite its flagging sales, while Apple's shares were flat,
    despite its rival's woes. Tech tracker NPD Group reported last week that
    Mac unit sales fell 6% in January, compared with the same period a year
    earlier. And strong sales of Acer's Aspire One--available for as little as
    $320 on Amazon.com (nasdaq: AMZN - news - people )--helped the Taiwanese
    computer company hustle past Apple to grab fourth place in the PC market
    during the last quarter of 2008, according to Gartner.

    So will Apple counter Dell and its rivals with a netbook of its own? That
    could hurt Apple's high margins and damage its cachet. On Apple's earnings
    call last month, Chief Operating Officer Tim Cook trashed the products as
    underpowered, saying only "we'll see" when asked if Apple will enter the

    Marcel Pagnol, Feb 28, 2009
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