Posted on 02/03/2007 6:52:37 PM PST by ShorelineMike
A big week for Microsoft is winding down - the company's first new operating system in five years has made its debut without major hiccups. It was a launch as typical as it can get for Microsoft and very different than one of those Apple product announcements. Get the background launch story and how Apple's Vista reaction could look like.
You have to admit the PC guy probably does more positive for Microsoft's image than anything Microsoft has done for the PC in a long time. But Microsoft has brought out Vista, the first really new operating system since Apple launched OS X and that means things should get rather heated going forward.
As promised we'll take a look at the Vista launch and compare it to an Apple event and then we'll chat about the rumored response Apple is supposedly cooking up to spoil Microsoft's party. Oh, and yes, we'll chat a bit about Vista someplace in the middle.
Vista launch: It sure wasn't an Apple event
I was talking to another analyst about this and he probably said it correctly. When Apple does a launch event Steve Jobs takes special interest and personally has a great deal to do with the staging, something he is incredibly good at. For Microsoft, they contract it out and you often wonder if the folks that designed the event either understood or cared about what it was they were launching. Microsoft's events tend to be parties bracketed by stunts designed to make people remember the name so surveys testing name recognition show improvement.
Apple, on the other hand, does events designed to sell products and the most recent example was their launch of the iPhone which virtually overwhelmed everything at CES and caused Apple's stock price to spike. This is a good example of doing an event that has a clear purpose and goal to sell product vs. doing one where the goal is visibility.
Now it may actually be kind of smart to do this with a Microsoft OS launch. The biggest problems with upgrades and migrations to a new OS occur in the first three months and things get vastly better after that as fixes are created for OS and application migration issues and more and more people are embraced by these fixes. If you realize that something like a billion PCs run some version of Windows, then, say even a 10% initial migration would be 100 million folks or 2.5 times Apple's estimated entire installed base of Macs. If only 1% of those folks had problems, and typically it will be much more than this, you would have 1 million people in dire need of help and there is no support organization or combination on the planet that could handle that kind of load over a short period of time.
This initial sales spike for Windows 95 nearly shut down Microsoft support and partially resulted in sales that were estimated to be only 50% of potential over the first year. This would suggest a softer launch would be better for a stronger first year sales ramp.
If Vista eases into the market, then the techies get it first and they, by nature, become part of the virtual support organization that updates to both Vista and the applications that run on it. In effect, the percentage of problems drops and the support capability of the market improves resulting in a sharp decrease of really upset people who can't get this product to work.
This could, and to be honest should, result in a more linear ramp for the product and a better overall experience for everyone involved. We'll try to revisit this at year end and discuss how it went.
Vista: When do you move?
Typically there are a couple of rules to moving to a new major OS release. The first is the migration gets much better, as I've noted, after the first three months because more of the third party applications have both migrated and been patched and because the drivers are more mature (both more reliable and better tuned).
The best experience will always be on new hardware and, if you bought a new PC last quarter, you probably already paid for a copy of Vista. This copy should come from the OEM designed specifically for the machine you purchased. Some will have them right away while others may take a few weeks to get it right. Trust me when I say it is better you get this right than get it early.
When you migrate, try the built-in Vista migration tool coupled with a migration cable. The Belkin Data Migration Cable for Windows Vista which costs under $50 seems to work fastest but you can also do the migration over your home network.
If you want to see just how much can be done automatically, the PCMover Application from Laplink actually moves many of the applications, you can get the download version for $50 and it should save you a lot of time. You will probably still need to upgrade these applications to their newest versions but this is arguably the simplest way to move to a new PC running Vista.
Is it worth it? That depends on you, I do identify with the PC guy in Apple's ads and it sure was worth it for me. But there is no need to rush, it isn't going anyplace. Some of us just like to get places first.
Apple's rumored response
With every major upgrade, there is a significant opportunity for a competitor to come in and steal market share and this one is no exception. At the Vista launch, there were folks chatting about Apple's supposed planned response to Vista and it could actually work.
If what they said is to be believed, Apple will come out in force when the most breakage is likely to occur and will roll against Vista with a campaign that targets this breakage and promises to give more benefit than Vista does without all of the pain.
Based on some informal sampling, if Apple was able to execute on such a campaign it could increase their market share by two points this year taking them to 6% of the market or nearly half again what they currently have.
Now because this is the slowest time of year for PC purchases in general that 2% may be conservative but the overall numbers sold won't be as impressive because they will be a fraction of what could have been sold had this occurred in the fourth quarter. Still, you play the cards you are dealt.
While I was thinking that the Super Bowl ad Apple is funding might kick this off, other industry observers who are likely better connected to Apple indicate that this will be a launch of the iPod based on the iPhone design instead. While I don't like the iPhone for a lot of reasons, an iPod based on that design could, if done correctly, get even me into the store wanting one. This is because most of the things that make the iPhone a bad phone simply don't apply to a device that doesn't need to be a phone in the first place.
Of course, if Apple does this after saying nothing about PCs during Steve's MacWorld address its going to cause folks to once again wonder if Apple is exiting the PC business. The other rumor was that Apple was going to license out their OS, that's been around for awhile and I still doubt that Steve would do that, but given the iPhone is actually a kind of a newer version of the Newton and we know Steve would never do that, maybe someone has upgraded his brain while he wasn't watching.
We'll see, regardless it may make the Super Bowl required watching for those of us that are more into tech than sports. I'm guessing even the PC guy from Apple's ads will be watching this game for that very reason.
Gates, like Jobs, is a college drop-out (which says something about success being antithetical with a higher degree).
Apple will react by releasing even more obnoxious commercials. Heck, they're even giving GEICO a run for their money.
Are you sure he has it in the air? I am reminded of the South Park episode on hybrid cars.
Or if Apple didn't have Al Gore on the board. Sheesh, a nest of vipers.
What did you download?
Windvd. It's better for video anyway, I haven't tried music on it. On my Linux PCs I use Xine, it's the best player I've used for anything. Too bad it isn't ported to Windows, that I know of anyway.
Apple is NOTHING like Air America. Apple is the BMW of the computer world. More expensive but worth it. The unchallenged leader in technology. Satisfied with a 5% market share as long as it is the top 5%. And immensely profitable for its shareholders. One billion dollars-- billion with a 'b'-- net profit for the last quarter.
How do ya like them apples?
-ccm
Hmm, I had just that exact experience working on a friend's Dell PC.
Well, yes, but that makes MS even more of a pirate, don't you think? Xerox, then apple, then FINALLY Mr. Gates decides to get in on the action and actually did steal code from apple. Gates has never marketed a really GOOD version of windows, one that was bullet proof from hackers and one that didn't need 50 SPs before it worked any where close to what it was supposed to. BTW, I use PCs but only because of the price, not because they work so well, which they don't!
It was a question of engineering, not economics. You don't know what you're talking about.
I partially agree with your analysis, but if Apple maintained their sales levels while the others were declining, that translates into real market share growth for Apple. Apparently some Windows customers got tired of waiting - or tired of Windows.
What need is there for a "reaction" to Vista on the part of Apple? Vista is basically a reaction to the last 4 generations of MacOS X.
Apple, I suspect, will just continue doing what they have been doing so well - developing quality hardware and a super OS that is more secure and still more user friendly than any version of Windows to date, including Vista.
Even many Pro-MS/Windows publishers have put their reviews of Vista in context of what OSX Tiger (and the soon-to-be released Panther) ALREADY do. If I were Bill Gates, I would be most worried that OSX is the benchmark by which my own software is evaluated.
Over the years, Windows has grown closer to the Mac OS in features and user-friendly-"nes", yet still seems to be trying to play catch-up more than being truly innovative. Yes, from what I have heard, Vista has some interesting features, although some have a bit awkward implementation. Yet most of these new features are just warmed over versions of what OSX already contains.
And to continue with that idea - at what cost the "new" Windows? I suspect many will have to do some serious upgrading (either components or whole new machines) to be able to satisfactorily run Vista. The eye candy and features come with some serious hardware load.
But hey----Let the FUD continue...
How long until Vista SP1 and SP2? How long until some MAJOR security holes rear their ugly heads?
I will continue using my several year-old MDD Power Mac that has never seen nor worried about worms, virii, or other Malware....
I am not an Apple basher - they make an interesting product, although from a usability standpoint, I much prefer XP/Vista, especially when you consider that I am free to build myself a new machine with whatever hardware components I like without having to hand Mr. Jobs a couple of mortgage payments for a new tower.
The thing that pisses me off about Apple is that they act as if they want the world to switch from PC, but if they really did, they'd license their OS to hardware manufacturers and let it go head-to-head with Vista. This is because Apple doesn't really care that much about the OS - they make their money selling overpriced hardware. From Wikipedia:
Official Macintosh clone program
By 1995, Apple Macintosh computers accounted for about 7% of the worldwide desktop computer market. Apple executives decided to launch an official clone program in order to expand Macintosh market penetration. Apple's clone program entailed the licensing of the Macintosh ROMs and system software to other manufacturers, each of which agreed to pay a royalty for each clone computer they sold. From early 1995 through mid-1997, it was possible to buy PowerPC-based clone computers running Mac OS, most notably from Power Computing. Other licensees were Motorola, Radius, APS Technologies, DayStar Digital, and UMAX. In terms of exterior styling, Mac clones often more closely resembled generic PCs than their Macintosh counterparts, but they frequently offered better performance at a lower price than true Macs.
Jobs ends the official program
Soon after Steve Jobs' return to Apple, he attempted to re-negotiate the clone manufacturers' license agreements to raise Apple's royalty. Jobs proposed to raise the per-computer royalty by an amount that would render all the clones unable to compete on price. When the clone makers refused, Jobs in turn refused to license later versions of Apple hardware and operating system software to the clone vendors. The initial OS license was valid only for the 7.x series of the Mac OS; at the time these contracts were signed, Mac OS 8.0 was expected to be the next-generation Copland OS. Jobs exploited this loophole by declaring the imminent version of the Mac OS (which would otherwise have been numbered something like 7.7) to be 8.0, leaving the clone manufacturers without the ability to ship a current Mac OS version and effectively ending the cloning program.
Jobs publicly stated that the program was ill-conceived and had been a result of "institutional guilt," meaning that for years, there had been a widely held belief at Apple that had the company aggressively pursued a legal cloning program early in the history of the Macintosh, consumers might have turned to low-priced Macintosh clones rather than low-priced IBM/PC-compatible computers. Had it pursued a clone program in the 1980s, in this view, Apple might have ended up in the position currently occupied by Microsoft—an extremely powerful company with high profit margins and a wide base of consumers perpetually dependent on its system software products. Jobs claimed it was now too late for this to happen, that the Mac clone program was doomed to failure from the start, and since Apple made money primarily by selling computer hardware, it ought not engage in a licensing program that would reduce its hardware sales.
Prospects for official Mac clones
Since Apple transitioned the Macintosh to an Intel platform in 2006, and subsequent to a major increase in visibility (if not in computer market share) for Apple with the success of the iPod, large computer system manufacturers such as Dell have expressed renewed interest in creating Macintosh clones. Mac OS X is currently widely perceived to be free of the viruses and other security threats that afflict computers running Microsoft Windows operating systems, and also includes consumer-oriented "lifestyle" software (such as the iLife suite) that is thought to be attractive to home users. While various industry executives have stated publicly in 2006 that they would like to sell Macintosh-compatible computers, Apple VP Phil Schiller said the company does not plan to let people run Mac OS X on other computer makers' hardware. "We will not allow running Mac OS X on anything other than an Apple Mac," he said.[4]
Windows unit sales ought to increase now that Vista has been released. But Microsoft has chosen the worst time of the year to release it - in the dead of winter. They missed a huge selling opportunity for Christmas 2006, and that could affect their long-term market share.
When Christmas 2007 arrives, Apple will have several new products on the market, including Mac OS X 10.5 Leopard, Apple TV, new Macs, the iPhone, new iPods, and some other undisclosed products that will enhance the Mac environment. Vista may look rather stale by then.
True … perhaps I should have made it clear that "How will Apple react to Vista?" was Enderle's original title, not mine.
I agree with you that Apple doesn't have to worry about "reacting" to Vista … and if there's any "reacting" to be done, it will be in the form of operating system upgrades (see Leopard) and hardware upgrades.
That is, the innovation in question is simply figuring out how to make a lot of Macs economically enough to be able to make a profit in the market.It was a question of engineering, not economics. You don't know what you're talking about.
economicallyMaking things economically in America is of course an engineering problem; I had no other thought.
- in a thrifty or frugal manner; with economy.
- as regards the efficient use of income and wealth: economically feasible proposals.
- as regards one's personal resources of money: He's quite well off economically.
But since you raise the issue, that is only true if you are in an economy which allows the risk of development to be undertaken. In hindsight, there is no risk associated with the development of the Mac; in prospect there seemed to be a lot of risk. Actually, it was a moderate risk in the sense that individuals (operating in a corporation) could finance the development; big risks like Apollo programs and wars are things that only governments can do. And the Soviet system was designed to be risk-averse in small things like developing a Mac. Only in mass engineering projects did Stalin lay down the dictum, "Make no small mistakes."
So the Mac could be developed in America, and especially in Silicon Valley. It could not have been developed in the USSR because the inherent inability of its "deciders" to take small risks assured that the USSR could not lead the way in new, nonmilitary, technology (and even in military innovation, it had limitations). The American model of making small mistakes - mistakes that can at most only seem tragic for the people who committed fully to the ideas in the belief that they would pay off big - is far more dynamic and suited to the furtherance of progress.
So, strictly in the American context, development of the Mac was an engineering problem. In the larger global context, having an economy able to generate people willing and able to risk that development is a problem of "political economy," as the field of economics was formerly designated.
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