Apple's $500 or Microsoft's 81% tax?
Which do you prefer? Even if it were true, Ballmer's "$500 Apple tax" comment is stupid: Microsoft's profits are way beyond Apple's. And, get this: that $500 - if it was real - is a great investment. Here's why.
Margin, margin, who's got the margin? Gross margin is simply the difference between what something sells for and what it costs to make.
Microsoft's GM for the last 5 years: 81.69% Apple's GM: 31.83%
But Microsoft is a much large company than Apple. To put this in perspective in the last 5 years Microsoft had revenues of $232 BILLION.
Apple's revenues were $98 billion.
Microsoft's GM "tax" on customers: $190 billion. Apple's comparable number: $31 billion.
That's right: Microsoft has pulled 6x the gross margin dollars out of customer pockets in the last 5 years than Apple.
Of course, Ballmer invested your dollars in very important products: Zune - crushed by Apple; Live Search - crushed by Google; Xbox - crushed by Nintendo Wii; and, best of all, Vista - crushed by Windows XP!
Not to mention $10 million to Seinfeld for those head-scratching ads. Really, if any other CEO had such a lousy track record he'd be toast. Don't you wish YOU'D been Bill's roommate at Harvard?
What about that $500? Just the cost of anti-virus protection for Windows justifies the mythical $500. For example, Kaspersky anti-virus protection costs $40 a year.
If you invested $500 and that earned $40 a year, that's a return of 8% per year. Excellent compared to bank CD rates - or a 5 year investment in Microsoft stock.
Which ignores another important fact: Mac's retain their value a lot better than Wintel stuff. My 3+ year old MacBook is worth about 50% of its purchase price. A 3 year old Dell is more like 20%.
On a $1200 Mac vs a $600 Dell that's almost $500 right there. Ouch.
The Storage Bits take For all his flaws, no high-tech CEO matches Steve Ballmer for pure entertainment value. Who else would urge consumers to settle for their product because they can't afford the best?
Steve Jobs' Reality Distortion Field can mesmerize millions. Ballmer's reality distortion field, alas, extends only to his ears.
Comments welcome, of course. A good friend had to buy a new Wintel because it was so compromised with malware that the local tech couldn't fix it. AND she'd been paying for anti-virus "protection."