⇥ Business by the pound

Analysts and journalists seem to have an unhealthy obsession with Apple. For example, I came across this article on Business Week, whence I draw this gem of journalistic imbecility:

And while a teardown doesn’t account for the costs of design, software, manufacturing, or shipping, these cost estimates help fill in the blanks toward estimating the profit on each device sold.

Let me put this another way: would you accept my measuring the worth of your house based on the pounds of timber or the number of bricks it contains? Not only would that ignore things like the cost of designing the house, researching the materials, hiring the labourers, building it, getting all the necessary permits, and so on, but also other things, like, say your location (comparable perhaps to all the marketing money Apple has to funnel into iPods), the cost of maintaining it, the risk of somebody slipping and falling (lawsuit, anyone?), the cost of improvements, and so on.

On one hand, I almost pity these journalists. Apple treats them like rabid dogs, instead of kissing their ass like everybody else does, and so what else can they do but take what essentially amounts to a curiosity—or, at best, a relatively insignificant aspect of the production of a device that belongs to an ecosystem as complex as the iPod’s—and build a whole business analysis out of it.

Edit: oh, incidentally, I’d expect that a magazine called “Business Week” would actually know that “profit margin” is not calculated based on the cost of raw materials alone. Heck, even Wikipedia knows that it’s the net profit-to-revenue ratio after all costs and taxes. Sheesh!