Apple now bigger than Dell

Here’s something I never would have imagined as possible just a few years ago: Apple now has a larger market capitalization than Dell — 72.13B versus 71.97B. Neither company is cheap — Apple’s P/E is 55, while Dell’s is 24.

There is no word for that other than astonishing. I’ve been a Mac user for 20 years, never was a fan of Windows (although XP is pretty good), but I never in my wildest dreams ever envisioned this happening. 

Recall what happened after Jobs returned to Apple back in 1997. When asked what could be turn to turnaround Apple, Dell’s founder and chairman, Michael S. Dell advised "shutting down Apple and give the money
back to the shareholders."

The NYT reports that in an email to employees:

On Friday, apparently savoring the moment, Mr. Jobs sent a brief e-mail
message to Apple employees, which read: "Team, it turned out that
Michael Dell wasn’t perfect at predicting the future. Based on today’s
stock market close, Apple is worth more than Dell. Stocks go up and
down, and things may be different tomorrow, but I thought it was worth
a moment of reflection today. Steve."

Dell executives did not return calls over the weekend asking for comment on Apple’s rising fortunes.

Does this imply some additional froth in the market? That’s hard to quantify.

I cannot recall anyone making this forecast 7 years ago.  Truly astonishing . . .


Michael Dell Should Eat His Words, Apple Chief Suggests
Published: January 16, 2006

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What's been said:

Discussions found on the web:
  1. spencer commented on Jan 16

    At the peak of the bubble there were numerous little start up firms with under 100 employees and virtually no sales, let alone profits that the market was saying were worth more then, old, established, highly profitable, well managed businesses.

  2. Chad K commented on Jan 16

    Now that they’re going intel… the only reason to buy a Mac is because you like things that look (and are) overpriced. Since the OS will now work on intel machine (limited hardware), there’s more reason to buy from Dell.

  3. B commented on Jan 16

    This stock is definitely a favorite of momo players and momo funds……of which there are many of both. I just don’t understand the 55 PE but when a stock has momo, I’ve learned not to question it and take the trade if you want to participate.

    Steve Jobs is a very creative and brilliant man with many flaws like the rest of us. ie, He has been prone to mistakes like the rest of us. He had better enjoy the gloating while it lasts because I tend to think the days will get a little rockier and the stakes a little higher from here. (We’ve seen this manic, arrogant side of Jobs twenty years ago. Btw, I don’t think arrogance is always a bad thing and I do respect Jobs tremendously. I’m simply trying to point out the fallibility of the Apple story.) Dell’s business is heavily anchored in the business world as well as consumer world. The business world tends to be much less fickle, margins tend to be higher and those who embrace fads are quickly forgotten in the hallways of failure.

    Apple still is dealing with the same dilemma as it was twenty years ago. Windows/Apple products have limited compatibility and people aren’t going to start ditching hundreds of thousands of consumer programs, tens of thousands of corporate programs and customized code and hundreds of billions in training, support and life cycle management infrastructure. Hence, people are not going to adopt Apple PCs in droves at work. And what was the foregone conclusion when it came time for the consumer to buy a PC at home? What I learned at work. Apple is still a niche, albiet still superior, PC. And regardless of the popularity of broadband and the network, the network is not the PC and won’t likely be for some time.

    This leaves Apple as a one trick pony. iPods & iTunes. That model will be busted at some time. As cool as it is to have an iPod, that fad will pass. We still are so early on in the digital content revolution that will likely encompass nearly everything in our lives. So, the chance that we will be carrying MP3 players around five years from now is mighty slim. The next phase will likely be controlled by those who control the content beyond simply downloading songs with a very limited purchase only model. Does anyone know who makes the set top box controlling video content to your home? You know the provider of your content. TW or Comcast. You know the actual content. Sony movies, Fox News, HBO.

    Apple will likely face overwhelming odds of being able to pull off another pony when that next phase arrives. Harman Kardon & Delphi in the wireless equipped, fiber enabled automobile, Cisco, Microsoft & Intel in the home, Nokia, Motorola & telecom companies everywhere. TW and Comcast. Content providers everywhere. Going on the busienss model that the majority of creative, talented people reside outside the walls of your company, hence partnerships are key to long term sustainability, Apple needs to turn its Jobs-driven culture upside down and do what it has never, ever been able sans iTunes: Learn to partner and give up rights to areas they want to control to get back elsewhere. Will they be the aggregator of all content? No way. That means a worst case scenario is they could eventually end up without a seat in the game of musical chairs.

    They offer a compelling brand to attempt to form partnerships but so do dozens of other companies. Companies that cumulatively have revenue of hundreds of billions, if not trillions in annual revenue compared to a handful of billions in portable, MP3 player revenue. So, doing so will likely require a paranoid, humble Jobs. Doable? Only time will tell. While Apple is doing well today and may do well for some time, life down on the farm will get much more difficult and complex from here.

  4. royce commented on Jan 16

    From a distance, it looks like Dell has squeezed about as much fat as it can out of the PC making business and that PC market isn’t growing in leaps and bounds the way it did when people who had never had a computer bought one to get on the internet. So what we have now is a mature company that is making forays into other business lines, none of which seem to be catching fire. A P/E of 24 might be generous. Could be they’re just another cylical now.

    Apple gets the 55 P/E because of the I-POD. When you can demonstrate the ability to create whole new product markets, you’re going to get more optimism from the market on growth. Whether that optimism is justified depends on what Jobs can pull out of the hat next.

  5. nate commented on Jan 16

    Dell may have been better at PCs, but Apple is better at small, handheld devices.

    HP (iPaq), Apple (iPod) and others have handhelds that trump Dell’s handheld.

    Dell has development opportunities in R&D and customer service.

  6. Let Me See You Get Low commented on Jan 16

    Apple now bigger than Dell

    It’s not that surprising considering the popularity of Apple’s ipod and related accessories. I would think that the revenue from those products is far greater than those of their computers sales. Link: The Big Picture: Apple now bigger than Dell.

  7. blue commented on Jan 16

    barry, i’m glad you’re writing on this subject, it is near and dear to me. the whole reason i began analyzing stocks was an article in the san jose mercury news in the mid-90s with a bleak review of Apple, along with a stock chart. I intuitively felt that Apple would come back, non-silicon valley natives wouldn’t know this, but Apple is the local hero. The industry that grew up through the early nineties, the Ciscos and Silicon Graphics and stuff, that was all great (and windows oriented, and staffed by a lot of out of towners) but Apple was before that, they sparked the personal computer revolution, brought it in the house with the Apple ][e(rring).

    Anyway, when Steve Jobs came into the picture “advising” Apple on their tough situation, that was the sort of fix that I was intuitively expecting. When Jobs came up with the first iMac (with the colored chassis) which had no floppy drive and USB printer and keyboard conections, the direction seemed to be correct. By spring of 1999, I was working for the pacific options exchange for the summer before college to find out how to trade options to capture the most gain when apple became ‘fairly valued’ by the market.

    The reason Jobs is there is to remove windows from the personal computer operating system market. This has always been the case. When Jobs left Apple he started a company called NeXT and they became (ultimately) an operating systems company, this operating system IS the OS that we call Mac OS X. The dev(elopers developers developers) tools were supposedly very very good, I didn’t get a degree in computer science I got one in economics, so I’ll have to take their word for it.

    Lots of things had to happen, apple has to be successful with hardware to build cash. Then they had to begin porting the NeXT OS to PPC chips so that mac users would be forced to switch. Then when everyone was on Mac OS X, then they needed a crossover product that windows users could love which contained a crossover application that ran on windows (ipod + itunes). Then they needed to switch to intel processors, then start installing over windows.

    As it turns out, the devil is in the details, and just like every step along the way it’s necessarily obfuscated (i’ll miss you greenspan), and the transition to intel is no different. Apple OS on intel runs the EFI firmware which is not compatible with Windows Anything™, yet. It is compatible with the new ‘Vista’ OS which will supposedly ship at the end of the year. It’s complicated, but I am definitely in the market for long calls now, and am anxiously awaiting a break in the stock to reprice the jan07 110s down from $7, or the 08s down from $14.

    I think that now that Apple is on the intel chips they are beginning the phase of mass consumer adoption of the CPUs, and that simply has more revenue in it than the previous ‘hot crossover product with windows application to sample apple’s software skill’ phase.

    Anyway, the internet is littered with 7 years of this prediction about apple, and in june apple switched to intel and said they had maintained an OS X version for intel from the beginning of the port process in 2000.
    i cover this extensively in my weekly apple stock podcast.


  8. Jamie commented on Jan 16

    Spencer: You have it wrong, I’m afraid. Now that macs are on intel, there’s no reason to buy anything *but* a mac. You get, in the WSJ’s Walter Mossberg’s words, the gold standard for hardware, and the option to run OSX, Linux, or Windows (should you enjoy security and configuration headaches, and poor UI design). Why would a person (or, more importantly, a company) choose clunky, awkward Dell hardware, which, contrary to what you say, will *not* run OSX, when you can have the most carefully, well thought-out computer on the market and the option to run any OS you choose. APPL is underpriced, given how smoothly this major transition is going. Once the talent currently focused on the transition is freed up, there will undoubtedly be more of the same brilliant innovation than we’re seeing now, the kind that we have really never seen from any of the big commodity PC makers, or Microsoft, for that matter. When’s the last time you saw a news story on the latest new idea from Dell?

  9. Anonymous commented on Jan 16

    Dell is stuck in the role of assembly line manufacturer of inexpensive commodities. They have little hope of competing with real technology providers like an IBM, and face ever-stiffening competition from Asian manufacturers. Dell is increasingly becoming slow and fumbling…just look at their torturous decision on whether to offer AMD chips.

    Apple on the other hand is a lean, innovative company with excellent leadership. As such, it is prepared to move quickly into emerging technologies to maximize revenue. I think Jobs has positioned Apple just as about as well as can be expected for now. Sure, the I-pod will wear off, but there will always be more possibilities for newer, cooler gadgets, and Apple is well positioned to create, market and sell them.

    At this point I would take Apple over Dell… not as a stock pick (55 P/E is pretty crazy), but as a company.

  10. DF commented on Jan 16

    Both companies are overpriced. PE of 55 is a recipy for future crash… End of story.

  11. blue][erring commented on Jan 16

    i must say, as an apple options trader on the long side for many years, and last quarter unfortunately on the ‘waiting for a pullback’ side, i am truly pleased to see such hand wringing over the p/e of apple and the framing of the ipod as the potential giver or taker of apple’s market cap going forward.

    this i believe will give me an opportunity when the ipod sales stabilize, people will say “bah, it’s over just as we suspected”. But the real deal is CPU sales this year, they cost many times the price of the ipod. If iPod sells flat all year to the Christmas quarter, that’s something like 14 million this quarter and the next two, then there’s Christmas 06, let’s say 14 million there too. That would be 0% quarterly growth, but it would be about double 2005’s ipod unit sales. double, for flat sequential growth.

    but that’s a $300 product… if this is indeed the year of the CPU, and we see 40% CPU sales like we did in the third calendar quarter of 05, then that would be (on an annual basis) doubled ipod units and 40% increases on the 4x more expensive CPUs. but those 40% increases from last year were before the intelMacs came out, so i’m expecting that there will be something more than just “we make good software” behind this years hardware move to intel. it’s part of the bigger plan. so let’s say doubling profits and doubling the stock price would still be the high p/e of 55 but that would be 100% profit growth over the same time period.

    if you really think 55 is ‘too high’ then i encourage you to do a cursory check of apple’s stats to justify that position. zero debt, 1/4th the cash of microsoft, etc. i honestly couldn’t imagine that at this size apple would still have enough volatility to make it a profitable options vehicle, but these comments about the ‘one-trick pony’ and the ‘too high’ p/e are very encouraging!


  12. fiat lux commented on Jan 16

    I agree with ‘B’ above that offices are not going to convert to Apple, but I think he’s underestimating the impact of Apple at home. Apple has been rebranding itself as a ‘lifestyle’ company, and it is working.

    An anecdote: Last week, I was on the phone with my mother, who told me that the ~4 year old laptop she uses has rolled over and died. She’s thinking about buying an Apple laptop as a replacement. When I asked her why, she said, ‘Because we have a digital camera now, and Apple is supposed to be better for that kind of thing.’

  13. David Silb commented on Jan 16

    I know everybody here has an opinion (What you say!?) but I want to point out that back when Steve Jobs bought (and don’t remember exactly what it was,) to do with music. I heard it announced on Squawk Box and Joe Kernen and David Faber were exchanging quips and jokes about how Jobs wants to be this or that.

    Then….. The ipod came out. Nobody but nobody is laughing now.

    Call it a one trick pony. Call it a fad. Call it what you will.

    What you can’t call it is stupid. This company and Steve Jobs march to the beat of a drummer that does not care what Wall Street thinks. (Sorry inflated trader types.) These guys are doing what every company in the world should be doing, innovating and finding where there is a need or want and fulfilling it. (And nobody can say that Apple products lack style and quality.) As for me my Nano has really changed my life. Podcasting and the ability to join in to the world community through simple downloads and uploads and mind for free most of them is absolutely a Revolution.

    You say you want a revolution well here it is and no one’s using a gun. If the big media conglomerates aren’t scared than well they should be. Right now you can download your favorite TV shows to your ipod video. Now wait what if your a producer and you pitch your show to the networks and they pass. Now you can go straight to the consumer. And if you think the ipod video won’t be compatible with televisions in the future than there another adventurous entrepreneur who comes up with an adapter, look to Radiosahck to carry it.

    Following the Bouncing ball. Mr. Jobs opened the door, those standing idly by in the entrance way will get trampled by the stampede.

    Lessons should be learned. We are watching the dismantling of a hundred years of the entertainment industry. Those of you saying yes but the distributors won’t stand for it. I answer the net is the distributor and it don’t care who buys, sells or broadcasts.

  14. Chad K commented on Jan 16

    It’s interesting calling Apple a gold standard now that they run intel… does that mean you were buying overpriced crap before the intel versions came out?

    And yes, OS X does run on intel. If you like, come on over to my house and check it out. I’ve machine made of spare parts running the latest OSX release.

    I love the OS [X], as they ganked most of their code from my favorite OS (FreeBSD). But the pretentious nature of the mac users needs to go.

    I believe penny arcade said it best:

  15. Karmakin commented on Jan 16

    A 55 P/E!!! Absurd. For anything. But I’m actually pretty strong on Apple as a company right now.

    Their MacBookPros are VERY competitive. Competitive isn’t the word. They’re going to own the high-end laptop market. Assuming, of course that you’re not going to have too much problems with shortage.

  16. John commented on Jan 16

    That penny arcade comic made me laugh out loud. Eases the pain of being short AAPL, if only for one brief, shining moment.

  17. anon commented on Jan 16

    Apple is not a one-hit wonder. Apple has been around for a long time. Steve Jobs has repeated, multiple success stories. Yeah, so Apple has to pull something out of the hat next. So does everyone in tech because it changes so fast. Jobs has been pulling stuff out of no where for a while. It is a little bit of luck and unpredictable, yet one has to at least think Jobs and Apple have decent prospects in the future.

    And as for those who point to “content” being important: Steve Jobs has Pixar. Sure, the Disney relationship is a little muddling, and Disney may own the distribution rights to a lot of “hits”. But think about it: Jobs has content. He knows content.

    iPod has yet to go international.

    What do you think inspires and motivates Jobs? Perhaps the Disney-Pixar relationship may give clues. Disney tried to twist the arm of Pixar. Disney thought Pixar needed Disney’s distribution. Eisner was a total establishment blue-blood on this, and he alienated Jobs. This probably fueld the Jobs passion and vision for digital distribution, which weakens the distribution advantage of Disney. It also weakens Disney’s bargaining position with Pixar.

    So content may be more valuable. Jobs has some content. Jobs also now has distribution – digital iPod and who knows what is next.

  18. stock guy with a big mouth commented on Jan 16

    apple’s cheap. stock goes to $100 and then another stock split.

    HANS and MIDD are two others I’m convinced will split inside the next 90 days.

    All three are growing rapidly and have astonishing growth ahead of them.

    MIDD’s got the best ovens, Apple has every other digital media wannabee’s balls in a moustrap, and Hansen brings products coupled with personality to market faster than PEP and KO, whose size is their achilles heel.

  19. Ralph commented on Jan 16

    Apple has esprit de corps. Dell does not strike me as a company in which an employee would have much pride. They may be grateful for the job security and in this age they should be but esprit de corps – not likely.

  20. anon commented on Jan 16

    dell does not have job security. DELL has had layoffs and restructuring (see around when DELL got confused on distribution and tried to go through stores in addition to direct).

    Dell is a demanding, high-performance organization. The industry is incredibly demanding and challenging.

  21. anon commented on Jan 17

    “Dell does not have job security” You are kidding. Right? Apple nearly went out of business and laid nearly everyone off. It was a place of true misery. Revenues declined to nearly nothing.

    “Esprit de corps”? You don’t think there was alot of back slapping during Dell’s rampant run when people were making a killing on stock? Everyone is kicking Dell now. I’d likely be a buyer of Dell before Apple at these levels because of the sentiment. Jobs is known as a short-fused tyrant who manages via brute force and tyranny. In effect, somewhat of a mad genius who has little tolerance for those without the same intellectual capital. Now, I don’t work there so I don’t really know but it is not unbelievable.

    People think Jobs is a genius. And he likely has some very creative, unique abilities that few people have. He may be a genius. But, remember, he participated in a strategy that nearly drove Apple into the ground in the past regardless of whether he was CEO when the maximum pain was inflicted. The damage was done by missing the strategic inflection point before he left. Plus his venture at Next didn’t exactly go well. ie, He caught a wave and has been riding it. Can he take it to the next level? No one knows but it’s rather amazing that I see such unabashed bullishness on these posts.

  22. GrowState commented on Apr 20

    DELL Hell and Innovation Vectors

    DELL sales grew slower than the market for the first quarter in recorded history. Geoff Moore foreshadowed this outcome back in November 2005, when he warned that DELL’s process innovation vector seemed to be producing diminishing returns.

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