Interesting statement from Apple's CFO

[jamesa]

Fred Anderson, Apple's CFO, spoke at the Smith Barney Citigroup, Inc. 2003 Technology Conference yesterday... macrumors.com and macobserver.com have the highlights, but what really caught my attention was this:

"You can see, we are getting more and more into the software business so that we become - over time - less dependent on hardware."

[aaronjf]

Thanks for the post Jamesa that is a really interesting quote. I hope this does not mean that they ever stop making their own hardware. However, I am glad to see that they have finally taken a page from the Bill Gates playbook of "...the real money is in the software."

[andy_boyd]

Yeah, aaronjf, I agree.

Apple have endured one false start after another with Motorola, they cannot afford to become overly dependent on one company like that, notice how they are using IBM's Fishkill plant where processors are made to order.

They know that margins are tight in the hardware market. There's all the years of R&D, marketing materials, shipping the products which are large, bulky and heavy from the Far East, logistics, breakages, packaging etc etc.

With software you can keep it all in-house, and the cost of development is small compared to hardware. Apple have started successfully with iTunes, iTMS and the iPod. My guess is they are seeking out a similar market where they can innovate and dominate.

Some people think that this statement signifies Apple joining Intel, but really, how likely is that? They'll keep making great hardware and fantastic software that integrates tightly together. That's their stronghold, that's what attracts people in. That, in my opinion, is where the future ot Apple Computer lies.

[aaronjf]

Yeah, I saw the post about Intel. But, what is that all about. I have been out of the loop for the past couple of weeks. I am converting 11 300+ ecom sites over to full use of CSS so I have not had much time to read the news.

[andy_boyd]

11 ecommerce sites with 300 pages each is a lot of work. I'm in the middle of redesigning 1 site with 400+ pages and it's hard work. The best of luck to you aaron! BTW, what are you using? DW? GoLive? TExtWrangler?

[jamesa]

One of the biggest arguments against Apple releasing an Intel version of OS X is that - because they make their money mostly from hardware - it would be financial suicide. Apple has always considered themselves a hardware company.

However, now you are seeing one of their hottest products the iPod is cross-platform and iTunes will be cross-platform in a few months time. Furthermore, with the advent of OS X Apple has dropped their "if not invented here we won't use it" policy and is adopting standards and ensuring that Apple fits seamlessly in cross-platform environments.

But Apple is so good at industrial design... yet OS X, iTunes, iPhoto, iDVD, Final Cut Pro, etc. has so much cross-platform appeal. They've been using great products like these to lure people into the platform, yet hardware is becoming so commoditized how long can they maintain their margins there?

This statement from Fred Anderson (the CFO) proves that they "get it". Have to wonder where they are heading.