Thread-topic: Virtualization... to the original question.. Running Xen on OSX
>> Possibly, but nonetheless the incremental profit on a $999 OS X Server sale
>> (sunk costs are just that, sunk) dwarfs the profit margin on a $2999 Xserve
> Again I don't know where you come off stating this.
> OS X development costs are very, very high.
Dan, do you not understand the concepts here?
Incremental profit is the profit from selling an additional unit. R&D costs
are sunk already-- Apple can't recover them if OS X server doesn't sell.
When Apple sells a boxed OS X Server, their incremental costs are the costs
specific *to that box*-- physical deliverables (disk, manual, cute little
Apple software coupon, packaging) and the costs to deliver that specific box
(shipping, warehouse space, sales rep time). If Apple sells only one copy of
Leopard server, they will lose a lot of money-- but every additional copy
has a minimal incremental cost and a huge incremental profit.
Xserves don't work that way-- the processor in the 2,000th Xserve they sell
costs roughly the same as the processor in the first. Ditto logic board,
hard drive, power supply, etc. (Yes, component prices fall over time, but
not enough to bring Apple to the 99% incremental margins that software
So, Technology Economics 101 review: Software has huge up-front costs for
R&D and much smaller incremental costs. Hardware has much smaller R&D
up-front costs but very high incremental costs. This is why MS has gross
margins in the 79% range (software company) while Apple has gross margins in
the 33% range (hardware/software company) and Dell has gross margins in the
18% range (hardware company).
Dave Pooser, ACSA
Manager of Information Services
Alford Media http://www.alfordmedia.com
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