Posted on 01/16/2005 1:58:25 AM PST by Swordmaker
You have to love Apple Computer. Not, however, for its products. Those are over-glossy fashion plates designed for the people who like to overpay for products and then brag about it.
No, you have to love Apple for its ability to manipulate the press. Here is a tiny company with 3% market share in the personal computer, and yet Steve Jobs' new product announcements at Macworld earlier this week were treated as if they were auguries of the future of computing from a descending deity.
They weren't. Instead it was mostly Apple -- and more specifically, chairman and founder Steve Jobs -- backing and filling as he tried to put a happy face on a radical and self-refuting change in Apple product strategy.
Why self-refuting? Because Apple has long called itself the BMW of personal computers. In other words, it priced its products 30% to 40% above comparable Windows-based product because of a conscious premium-pricing market strategy, not because its costs were out of control.
Fair enough. While many people would never buy a BMW-style personal computer, the same way many people who can afford a BMW car would rather buy something cheaper and more functional for half the price, there is no denying tastes, so there is undoubtedly a market for people who want to buy opalescent over-priced computers from Apple.
But this week's announcement flies in the face of that prior strategy. By launching products -- its Mac Mini and iPod Shuffle -- at low-low prices, undercutting comparable products from computer-makers and portable music player makers, respectively, Apple is getting down and dirty and fighting it out on price.
Where, in other words, is the BMW strategy? It is as if BMW suddenly tried to undercut Honda's Accord or Toyota's Camry. While there's no denying there is a large market for value-priced cars, by competing directly against those products BMW would be putting its margins at risk. More importantly, it would be ample reason for investors to wonder whether BMW executives had lost their minds. Why would they suddenly abandon what they did best -- engineering interesting products -- and start trying to sell family econo-boxes?
It is precisely the same with Apple. So why is the company doing it?
Because Apple has a problem. Most of the company's growth in recent years has come from its foray into consumer electronics. From a standing start only a few years ago, the company's popular iPod music player has becoming a standout performer, accounting for something like 30% of the company's sales -- and more sales units than the company's Macintosh personal computers.
It is a remarkable performance from a nominally personal-computer-oriented company. It has competed head-on with some of the largest consumer electronics companies in the world and come out on top.
Now, however, Apple has to figure out what to do with all this "success."
Because iPods get lower margins, generally, than Apple's personal computers, so being successful at selling iPods, however glamorous and attention-getting that might be, doesn't contribute to profits the same way Mac sales do. Apple would like to find a way to turn iPod sales into Macintosh sales before the bloom goes off iPod in the fickle consumer electronics market.
Hence the company's announcements this week. Far from being forward-thinking and strategic, Jobs was busily shoring up a currently foundering product line -- Apple's over-priced Macintosh -- by leveraging a soon-to-be foundering product line -- Apple's iPod.
Why did no one call Apple on it? And why do people pay so much attention to this company with so little share of the personal computer market? After all, Dell sells more in personal computers in any three-week period than Apple does in an entire quarter. But when Dell CEO Michael Dell announces new prices for his products you don't get saturation coverage from the major North American business press.
It is partly because people want a horse-race in personal computers -- they want there to be someone selling PCs other than the Windows-compatible sorts. But that is not all. There is also the so-called reality distortion field that surrounds Steve Jobs. He is a mesmerizing speaker, someone skilled at turning sows' ears into silk purses. Case in point: His new iPod product plays songs in any order because it lacks a screen or any way to select songs, so he is pushing the slogan that "life is random." Nice trick.
So, kudos to Apple. It is the consummate media manipulator, a company that, puffer-fish-style, blows out its cheeks and convinces people that it is much bigger and more formidable than it actually is, thus attracting oodles of media coverage -- including, I suppose, this column.
Way to go, Steve.
I have to admit that I'm pretty lax with most things, but I am definitely an obsessive-compulsive neat freak when it comes to computers and coding. A freely-dangling wire or a bad indent drives me nuts.
My computer is tidy... but the office is a mess.
Let me add a couple for the OS: hardware accelerated 3D UI features (which MS is copying for Longhorn), and libraries (Core Image) to let graphics applications, still or video, offload image processing to the graphics card. I can imagine the image and video editing benchmarks when Core Image optimized apps on Tiger are tested against their PC counterparts later this year.
Apologies to all. My typing seems to suck rather badly today.
Geez. I'll remember that the next time I'm reading about machines with browser holes you can drive a semi through, spyware, viruses, Trojans, adware, malware, search-engine hijackers, keystroke-recorders, denial-of-service enablers, zombie creators, and an audio-visual Tower of Babel, all of which just happen to run Windows.
Don't get me wrong, I use Windows machines from time to time, and I don't think Bill Gates is the anti-Christ. Both platforms have problems: Apple's are ones of scale and broad-based acceptance, and Microsoft's are security, intertia (where is Longhorn?), and lack of imagination.
And please tell us why Walt Mossberg thinks so highly of one of those "misengineered tangles" (originally published in the Wall Street Journal):
http://www.macobserver.com/article/2004/09/23.2.shtml
(excerpt quoting Mossberg)
I am writing these words on the most elegant desktop computer I've ever used, a computer that is not only uncommonly beautiful but fast and powerful, virus-free and surprisingly affordable.
(end of excerpt)
Other than that I guess it sucks, eh?
Generally love your posts,
litany_of_lies
Thanks. I was just being a troll on this thread anyways.
Hey, what can I say? Slow Sunday.
Well you definitely had the desired effect on me.
It's not your typing. It's that crappy Apple keyboard you are using.
Sorry, your cheap shot misses, PC keyboard right now.
Last month, my power supply to my Dell laptop quit working. It was the evening of December 22. A new one was delievered by DHL to my door early on Christmas Eve. The shipping proably cost many more times than the power supply was worth. I love Dell.
I don't get it. The Apple mini is $500 without monitor. Isn't that the same as $800 with the monitor?
Why would I buy that over the $350 complete Dell?
Am I missing something in the story?
No, you're not missing anything, Joe. The market gave a collective yawn at Job's announcement. Only Mac Moonies could get excited over being gouged by Apple for too-expensive hardware.
2) Because the mac comes with an os at least 150$ better..
A mini computer is a great idea and it's about time that computers became VCRs, but this doesn't appear to be it. The computer built into the keyboard looks better to me.
And, why not put the printer and the PC in the same box? We have to have both, why not put them together.
Of course, I can't see what's so marvelous about the MAC OS. It bores me.
Because that $399 complete Dell ($350 is only if you sign up for their internet service) comes with a processor no faster than the Mac's, a castrated Windows XP, no CD writer (and no DVD-ROM, but for the current special), almost no software, almost useless graphics (with agonizingly slow shared video memory), no Firewire, a lesser warranty, and the cheapest monitor available.
When Steve came back to rescue the company they had 7% of the market. They've lost 60% of their market under his tutelage, there's nothing to celebrate in Appleland.
Plenty to celebrate. Apple was hemorrhaging money, losing market share, and living on its past glories.
Jobs turned the company around, gave it back its dream, and put Apple back at the forefront, trendsetting the personal computing industry.
I'd say there is plenty to celebrate, and Apple may not have 7% of the market share anymore, but if everyone will stop moving the goal posts and just admit that Apple is a solid, profiting company with products that appeal to consumers, the sooner people can get over the OS war and deal with the reality that the OS one uses is rapidly becoming irrelevant.
He didn't turn them around. He slowed down the hemorrhaging of money, they're STILL losing market share and STILL living on past glory (oh and lies to themselves about how great things are going).
No a 3% marketshare is NOT in the forefront and does not set trends. It's a miniscule blip on the radar that deserves to be ignored completely.
I'd say there is absolutely nothing to celebrate. Apple was an overrated inconsequential company in the PC market at 7% of the marketshare, and all of those things have become even more true with less than half of that. I'm not moving any goal posts, my hit on Apple has been the same for a decade: for a seperate system with seperate hardware a seperate OS and requiring seperate development of applications to be relevant they need at least a double digit marketshare.
The OS one uses is still highly relevant, it dictates what software you can use. Macs are surviving now only because their OS can pretend to be other OSes and use software not written for Mac, that's important because very little is actually written for Mac anymore, with good reason, why should anybody spend millions to develop for an OS with a 3% share?
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