More Apple Numbers: Unit Sales, Net Sales Per Unit, Comparison to Dell

Last Updated Nov 24, 2008 3:03 AM EST

Apple gets more, pays lessWhen Lindsay Blakely dug through Apple's fiscal year 2008 (October through September) 10-K and found the company's actual advertising expenditures, I wondered what else might be in the hundred and one pages. Let's start with the actual number of product units that Apple sold:
  • 9,715,000 desktop and portable Macs
  • 54,828,000 iPods
  • 11,627,000 iPhones
That's a total of 76,170,000 units. Now assume for a moment that 80 percent of the $486 million in Apple's advertising is for these product lines. That would mean a per-product advertising expense of $5.10. (Even if you attributed all advertising to these products, that would be $6.38 a unit.) Yes, it's rough and far from exact, but interesting.

Now look at another intriguing number: net sales per average unit. Although not provided for iPhones, Apple does list it for Macs (desktops and laptops taken together) and iPods. Net sales per Mac unit sold in FY2008 were $1,469. This number remained flat from 2007, but grew by five percent between 2006 and 2007. Net sales per iPod unit sold: $167. The figure dropped 17 percent between 2006's $195 and 2007's $161, and then grew by four percent again.

Consider the implication: Apple managed to grow market share in the PC space while keeping its already considerable margins steady â€" and even saw significant growth between 2006 and 2007. From a point of profitability, this gives some indication just how smart Apple management is. You can credit Steve Jobs with strategy, but this sort of success is beyond the reach of any one individual.

As for the iPod, even though unit net sales dropped by 17 percent between 2006 and 2007, unit sales increased by 31 percent. And then, between 2007 and 2008, Apple actually brought up the unit net sales price by four percent while seeing total unit sales lift by six percent. It's like a giant multi-year experiment in price elasticity, as management tries to maximize profit.

Other gains have been impressive as well. The combination of net sales from iTunes store sales, iPod services, and Apple-branded accessories (whether from Apple or third parties) grew by 32 percent from 2006 to 2007, and by 34 percent between 2007 and 2008. Net sales of Apple-branded and third-party displays, wireless connectivity and networking solutions, and other hardware accessories increased by 15 percent from 2006 to 2007, and 32 percent between 2007 and 2008. Net sales of Apple-branded operating system and application software, third-party software, AppleCare, and Internet services went up by 18 percent from 2006 to 2007, and by 46 percent from 2007 to 2008.

For comparison, look through Dell's FY2008 10-K filing (the company's fiscal year runs February to January). Advertising spending in 2008, 2007, and 2006 respectively were $943 million, $836 million, and $773 million -- each fiscal year ending far earlier than Apple's equivalent fiscal year, but still, that's quite a difference.

For calendar 2007, Dell shipped 40 million units. That doesn't match up exactly with Dell's fiscal year, but given that it's a shift of a month, assume that 40 million units sold in its FY2008. If we take the company's FY2008 net revenue (same as net sales) on its desktop, mobility, and servers and networking categories, the total is $43,470,000,000, or roughly $1086.75 per system, or 26 percent less than Apple. Next, assume, as we did with Apple, that we can ascribe 80 percent of the advertising to those major systems. That would be $754,400,000. Divide that by 40 million units and the per-unit advertising cost is $18.86.

Not only is Apple getting higher margins, but it seems to be far more efficient in its use of marketing dollars. (Trying to compare Dell and Apple to more diversified HP is difficult, particularly as the latter has not yet released its 2008 10-K. However, in its 2007 10-K, HP claimed advertising expenses of approximately $1.1 billion in its fiscal years 2007, 2006, and 2005.)

Part of the apparent marketing efficiency is the effect of all those iPods and iPhones shipping out the door. But does that matter? Apple's branding and marketing strategies get enormous synergy, with each overall positive user experience making it more likely that the customer will get products in other categories. Put both margins and marketing and how long will it be until Apple becomes number two in U.S. PC sales, at least?

â†' For an advertising effective analysis of Apple, see the story in BNET Advertising.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.