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Yeah...when your company makes almost all of its money selling software your profit margins are clearly going to be higher than a company that does both hardwar
by ericmsimons 16y ago
Yeah...when your company makes almost all of its money selling software your profit margins are clearly going to be higher than a company that does both hardware and software. Hardware is expensive and the profit margins suck. MSFT is still winning though, probably not for long ;)
- daemin 16y agoIn general hardware margins compared to software margins suck, in that once the sunk cost of software development has taken place you can sell the software with a near zero manufacturing cost. (I think everyone knows this.) However Apple's hardware margins compared to other manufacturers hardware margins are quite huge. I've heard figures from those tear downs say that Apple have a margin close to 50% or more (or at least in the double digits). Compare that to a more competitive field (by this I mean more direct oranges to oranges competitors) like TV's (or Cars) where margins are squeezed tight in order to sell. Also don't forget now that Apple have this whole *Store thing going where they make pure profit from the sale of software that someone else has made (and taken the sunk cost hit for). That means the ratio of profit to software development cost is near infinite, so how's that for a profit margin.
- ugh 16y agoApple has had about the same gross margin for the longest time. It was 38.5 percent in the last quarter compared to 40.5 percent a year ago. Microsoft’s gross margin in the last quarter was 75.8 percent compared to 80.9 percent in the year-ago quarter. No need to speculate about that, it’s all publicly available data.