The great Apple experiment

Years ago Apple introduced computers which were a conscious effort to put computing power in the hands of individuals.  It's actually been a grand experiment, and our world is a far different place than it would have been without Apple's efforts.  Individuals with computers can do amazing things, but long ago most of those computers stopped being Apples.

Yet one of Apple's claims to fame has been the ability to take amazing technology and put it in a computer and at the same time make it affordable.  In fact some of Apple's best moments have been when they took technology that appeared unaffordable and made it available for computer users.

Some good examples of this are wireless technology, actually the original CD-ROM drives, even built-in Ethernet, and flat panel displays. There are many other examples.  Granted after Apple has broken through the barriers even on something as simple as USB, other companies have often made far more money off of the technology than Apple.

Somehow the part of Apple that tried to create the most affordable greatest computer technology seems to have taken a back seat recently.  Apple's computers can be among the most expensive these days.

Yet Apple has survived, sometimes lurching from one crisis to another, and often going from being a media darling to a media pariah in the blinking of an eye.  Apple has often been bigger than life, and yet sometimes seemed so irrelevant that people were willing to completely write Apple off.

Somehow whether through luck or extreme talent Apple has found a new cash cow, the iPod.  It's been a wonderful ride for Apple.  It has given Apple more than enough time to fix their computer business.  Unfortunately that hasn't happened.

An objective look at Apple's latest computer numbers isn't pretty.  I'm completely ready to discount all the inevitable excuses from those who wouldn't recognize a Cupertino mistake if it chomped down on their rear.  These numbers are real.  This is from a ZDnet article, "PC shipments up, but Dell loses ground."

Apple Computer so far hasn't been a boon to Intel. Apple, ranked fifth in the U.S. but not in the top five worldwide, saw its U.S. market share decline from 3.6 percent to 3.5 percent. Apple's worldwide share is around 2.3 percent.

For some perspective, let's jump back nine years to an article, "Apple market share sinks again."

Worldwide, Apple went from fourth place overall with a 5.5 percent market share, to ninth place with a 3.3 percent share, in a year-on-year comparison. Apple also slipped from this year's previous quarter: In the second quarter of 1997 it had a 3.8 percent market share.

So in spite of everything that has been done, iMovie, iTunes, OS X, and even the initial part quarter of yet another platform migration, Apple has managed to shrink it's worldwide market share 58% from 5.5% to 2.3%.

So at what point does the great Apple experiment become irrelevant.  Lots of Apple people will say that the platform migration has just begun and that the buyers will come when the applications are optimized.  I've heard that before.

I just don't believe it.  These most recent Apple products are missing something that has been a part of Apple product announcements for years, extended product unavailability.  Every Apple product except the newly introduced 17" Macbook Pro has a shipping time on the Apple Store of 24 hours or less.  The first argument that this means nothing is that moving to Intel has given Apple better availability.  Of course if the platform switch has meant better availability, where are the buyers?  Oh I forgot they're waiting for the applications to be optimized.  Perhaps they're waiting to see if they can get a loan from the new Apple bank.  Apple seems more interested in protecting its horde of cash than in selling computers.

Actually I'm tired of waiting for Apple to start selling computers.  I'm going to start actively trying to sell Apple products again.  Now I'm not going to quit my day job, but I can't just sit back and wait for Apple to increase it's market share.  They obviously either can't do it or aren't interested in doing it.

I tried very hard to move to Linux.  I even got comfortable with the enemy, Windows XP.  I actually got pretty good with both Linux and Windows XP, but they weren't Mac OSX.  I found that using Apple products is part of who I am and how I do things.  i don't want to give up using Apple products.

Now I could be optimistic and say that the next ten years will be different and Apple market share won't drop another 50%+, but I see no real signs of change at Apple other than the platform switch and the hail Mary, "Bootcamp."  Even if Apple grows 50% it won't be back to 5.5% which was actually no where near Apple's high water mark.  It's time to take matters into my own hands.

I don't think I'm going to sit back in the office any more and listen to all the Window's chatter and not respond with some Apple chatter.

At the company where I work, Webmail.us, we're getting ready to order an Intel iMac for one of our support people who also happens to love Macs.  I think we're gong to have a Mac seminar at the office so all the Windows folks can learn about the world of Apple.  We work to make certain both Safari and Firefox running on Macs works well with our webmail interface, and we also check Thunderbird and Apple Mail to make certain there are no problems with our mail servers.  However, that doesn't mean our iPod toting Windows users understand the benefits of Macs.

So what do I need from Apple to help me?  Well better support for the product, and more testing before major software releases would be nice.  Most importantly if Apple wants to win over some of the Windows guys, we need some more aggressive pricing for Apple hardware.  If that isn't going to happen, please let OS X loose in the wild.  I believe the response to OS X running on other hardware would be huge, but we'll never know unless Apple gives it a try.

Letting OS X loose can't work much worse that what's been tried for the last ten years. Barring that I think Apple's future is in the hands of its users.  It's obvious that it we want our Macs to survive for another ten years, we're going to have to help.  As the hype for Vista starts to get intense, I'm going to be vigilant.  Sixteen months ago, I took a local computer writer to task for a biased article on Macs. I wrote one of my early posts, "Computer Battle."  That won't be my last.

I haven't been very successful at changing Apple, maybe I can change a few Windows users or at least go down swinging.

Comments

[cre8ive]

Today, when it comes to computers, people almost choose Windows PCs by default without giving Apple a thought for similar reasons people choose the iPod without giving any other MP3 player a thought.

It’s the mind share game - customer perception. With music, Apple helped establish a new, hip market they were able to capitalise and build on, pump millions into marketing and create an unmatched customer experience. With PCs, the same could be said for Microsoft when Windows ‘95 was released, and because Apple was a company in such disarray with so much bad press at that time, for better or worse, Microsoft has continued to clean up the desktop market over the last decade. People lost confidence in Apple for years, and those (at times unfounded) views still continue to resonate with many today. I’m still hearing Macs are only good for ‘graphics’. Macs are too expensive.

Whether its business, education or retail, altering a customers ‘mind share’ after a decade of Microsoft dominance may actually be in the 'too hard basket' for Apple now, no matter what goodies they offer up. Boot Camp's an interesting step, but one other possible scenario that could still unfold in Apples favour, is if Microsoft end up failing - at least a little. Even the most die-hard Microsoft fans and employees have been less than kind about Microsofts lack of vision and recent progress with Vista...

http://www.winsupersite.com/reviews/winvista_5308_05.asp

It's interesting to see some of the very issues that hit Apple over 10 years ago - no direction, failed OS transitions, missed opportunities - are now haunting Microsoft. If Apple can stay nimble and be more open, maybe we’re at the beginning of a natural turning point?

[Javier]

You don't seem to factor the economy of the situation. Apple is becoming more profitable all the time. Marketshare doesn't tell the whole story, as with computers, sales have increased greatly, so with the same marketshare they now make a lot more money. Besides they have the highest profit margin by far, and sell to the upper segment of the market.
From a business perspective, lowering the price of their computers is a mistake in the situation they are. They have to keep their prices as high as acceptable to their customers, i.e on par with the top brands.
During the clone wars, licensees reduced the price of the computers that could run Mac OS proving you wrong. They sold more computers than Apple almost putting it out of business, but to the same customers, that like all of us wanted to buy Mac capable computers for less. But marketshare for Mac OS did not grow despite the price reduction. Windows users want a cheaper PC, not a cheaper Mac, the same as Mac users do not want a cheap Wintel.

It is not in the hands of Apple to drive a massive conversion from Windows. Steve Jobs knows the System war was lost long time ago. However it is in the hands of Microsoft to drive people out of Windows and often it looks like they are doing just that. Apple just needs to do what it is doing.

[ocracokewaves]

Things are far different than when Apple licensed its OS. If Apple doesn't grow its market share from the current level, Apple will become irrelevant. Waiting for your competitor to screw up, isn't exactly a great business strategy.

You might want to read this article-

"How Apple Could Mess Up, Again"

http://www.businessweek.com/technology/content/jan2006/tc20060109_432937.htm

[Javier]

Thanks Ocracokewaves,

I read that article and I think it is full of holes as many comments point out. The "Apple will become irrelevant if it doesn't grow its marketshare" is like a mantra, but repeating it doesn't make it any more true. Of course it all rests in your definition of irrelevancy. Apple has never had a great marketshare, yet it is still going strong after over 20 years, while many of its competitors have either left the business or bitten the dust. If you think that companies that sell bucketloads of el cheapo computers for a paltry margin are more relevant than Apple, I would disagree. Those companies are at a much higher risk of some other company finding the way to sell cheaper and going belly up (Gateway?).

Don't assume Apple plan is to wait for the competition to fail. Their business plan probably is to continue making good hardware and software that keep their customers coming back for more and help them gain new customers. For the last 8 years their customer base has been increasing, meaning that more people is coming to their platform that is leaving it. The stores are succesful, the music division also helps a little the platform and a lot the corporate image and the finances. You don't find that good enough that is probably your problem not Apple's.

[Johannes]

The "Marketshare myth" is actually a myth on top of a myth on top of a myth.

Myth #1: Marketshare is the core issue in ALL business models.

Myth #2: Apple really does care about marketshare.

Myth #3: Personal computing is a commodity business.

This lie that the Mac is DOOMED unless Apple boosts marketshare is just getting so old, and so fast.

Get off the marketshare fixation. Apple doesn't want the zillions of unwashed masses who don't have a pot to pee in for their computer purchasing. Let them eat $299 eMachines boxes; or save for an iPod (which is, after all, an Apple computer)......

[Nathan D]

Steve Jobs likes to point out that the Mac's market share in computers is as good as any two of Lexus, BMW, and Mercedes in cars. And, since Apple has made very conscious decisions to not even try to be a business computer, seems that if you want to understand Apple's impact you need to look at home computer sales only and then probably only "premium computers" (similar to how cars are segmented, for instance).

[milo]

No offense man, but you is crazy! Marketshare doesn't matter. Especially when you consider that ten years ago most PC sales were for the home, and today most PC sales are for businesses, a market where Apple doesn't really try to play. Compare only personal consumer sales and Apple's marketshare is much higher.

Plus, in real numbers Apple sells a staggeringly higher number of units now then they did ten years ago. Real sales have outpaced both population growth and inflation; they just haven't outpaced the overall growth of computer sales, again because of all the business sales.

But the hard numbers matter. Staggering growth in unit sales, and consistently high (industry-leading) profit margins has led to staggeringly large profits. Apple is a corporation; it has an ethical duty to make as much money as it can. And in the last ten years it's done extremely well in that regard. They makes piles of cash from a small-but-profitable niche, and their niche is all but unassailable.

Don't try to enlist Apple to fight your war against Windows, cuz Apple doesn't want to do it.

[ocracokewaves]

Guys I hate to say it, market share matters.

Check this url out and tell me that market share doesn't matter.

http://www.macworld.com/news/2006/04/25/americasarmy/index.php?lsrc=mwrss

By the way, I used the car metaphor lots when I was at Apple. It doesn't hold water.

Cars go up in price every year. The average car costs over $20,000 dollars. Dealerships make a tremendous amount of money on service. Computers cost a lot less and go down in price. Computer service isn't very profitable. Computers to a certain extent have become disposable items, and often even Apple ones last only three or four years.

The vast majority of cars take readily available fuels not proprietary ones.

There are some interesting parallels to the early days of MS-DOS in this new Apple platform migration. The hardware was all very similar, but it required specialized software for each manufacturers' system. It didn't work for long.

Apple has been very relevant over the years as I said in the early part of my post. I'm curious as to the last significant advance that people believe Apple has brought to the computing masses.

Certainly "Bootcamp" doesn't qualify and bringing OS X to Intel doesn't qualify either since you have to buy a Mac to get it.

To qualify this has to be a breakthrough technology that Apple developed and it has gone on to be popularized by Apple and other vendors. The last one that I can think of is Bonjour.

[Johannes]

Ocracokewaves, silly boy...

HBS stiffs have been preaching 'Apple is irrelevant' or ‘Apple is going to be irrelevant’ since Windows 95 debuted. Pretty interesting irrelevancy for the past 11 years. IT pundits are now falling all over themselves to state how UBERRELEVANT Apple is now.

Perhaps you remember the second similar mantra spewed on ZDNet Talkback, CNET, & other online message boards back in the day: "Apple is going to die."

I'll pose to you an iteration of the challenge I did to all those anti-Apple mobs who guaranteed Apple's death in the 90s: Pledge $500 to your favorite local charity if Apple is STILL RELEVANT after losing MORE marketshare. You name the marketshare percentage starting point. You post the eventual marketshare percentage loss. You even define the ‘relevancy’ criteria. Your favorite charity awaits you pointing your money where your mouth is....

Last, you’d be aghast at what qualifies as a ‘personal computer’ in all of those so-called ‘PC marketshare reports’ (like the PCs that sit underneath Taco Bell counters to pass junk food orders to those deep-frying in the back). Perhaps iPods should be considered personal computers, which is, after all, what they are.

[ocracokewaves]

Again you miss the point, I'm not arguing that Apple hasn't been relevant over the years, I listed things in this post and others that Apple has brought to the computing industry.

I just don't see Apple being as relevant now that they're using Intel components. I would be happy for them to prove me wrong and bring out the next generation of personal computing.

Apple's relevancy has been tied to its innovation, but if there is no real innovation going foward and Apple's computer share continues to drop, things will not be as rosy for Apple.

If Apple doesn't provide new exciting things for the computer world that really differentiates their products from other Intel products, then in five years we will be wondering what has happened to Apple.

Still no one has answered the question of the most recent real advance in computing that Apple has delivered. Might that be because just putting Intel components in Mac skins doesn't qualify as real innovation?

To qualify this has to be a breakthrough technology that Apple developed and it has to have gone on to be popularized by Apple and other vendors. The last one that I can think of is Bonjour.

iTunes on a phone doesn't count either. I haven't seen the innovation symbolized by iPhoto or iMovie out of Apple's computer division in a while. Are there no more cool things that we can do with a computer other than control music in your living room.

If Apple just sits on its cash horde, opens a few stores each year with the result that a smaller percentage of the overall computer market buys Macs there will be consequences just like "Taps sounds for Mac version of America's Army"

http://www.macworld.com/news/2006/04/25/americasarmy/index.php?lsrc=mwrss

[Louis Wheeler]

Might I suggest to you that repositioning yourself for success often temporarily costs you market share. I, for one, am waiting to buy; I don't buy version one hardware. And I usually wait for a new Mac to get at least four times faster than my old one. By that criteria, I should have replaced my four year old iMac 800 MHz flat-screen a year ago, but the move to Intel happened, so I held off. Interesting designs are in the offing. Right now, I am waiting for an iMac with the Conroe processor chip, running leopard 10.5.

I consider the Conroe chip a version 2 upgrade since it uses a motherboard with the same pin-outs and chip-sets. But the Conroe chip is much improved in speed over the Core Duo chip. I suspect there are plenty of people, like me, who are waiting six months or so before buying.

It's not as though Apple isn't growing rapidly, but the move to Intel is a hiccup that it has to get over. Boot Camp should help Apple greatly in the education market. Dual Booting is something that the schools will find to be flexible and cost effective and it's a feature that Dell can't compete against.

Apple has mostly given up on the commercial market, except SOHO; none of its strengths, which are so effective in the consumer market, work there. It hardly matters to the commercial market that Vista is late. I've read IT professionals who say that they won't be installing Vista until a couple of years after it comes out, because they don't want to disturb their work-flows. Nor does it matter to them how good Mac OSX gets because Windows-XP sp2 is good enough for their needs.

I do not expect Apple to release Mac OSX into the wild. What I do expect is for the low end market to take off. Much of the world doesn't use computers now. MIT's plans for a 100 dollar computer running Linux seems the coming thing, because the cost of components keeps getting cheaper. We can expect India and China to spend billions fleshing out the Linux Desktop. So, large amounts of Microsoft's lower market share will slip away.

Meanwhile, Apple will be stealing away much of the upper quarter-- the most profitable part of computing. Apple will cater to those who want cool design, innovation, flexibility and ease of use. This will always be a minority, but it can be a very large minority. Apple is in no danger. It is running much faster than it's competitors. We needn't worry about its market share or whether it is 5%, 15% or 25%. Apple will still have influence because it is leading the pack. Microsoft and the commodity computer manufacturers need someone to copy new innovations from.

[Johannes]

“I just don't see Apple being as relevant now that they're using Intel components. I would be happy for them to prove me wrong and bring out the next generation of personal computing.”

Hmmm...there have been serious U.S. Patent Office hints that Apple will produce an in-your-face videoteleconferencing screen display technology. Imagine talking to someone’s live image/face, DIRECTLY into your computer screen, just like it was on the Jetson’s. The screen not only a display but a camera too. No video cam off to the side or above. Imagine your conversation being dynamically affected because you are conversing amidst realtime facial cues, with both conversants looking straight into each other’s eyes. Sound..uh..relevant??

And would you or anyone be willing to bet AGAINST Apple coming out with the integrated home media center GOLD STANDARD we have all been dreaming about?? If Apple comes out with the first true, viable Internet VoIP phone, like they came out with the first true, viable MP3 player, would you state that that’s not relevant because Apple didn’t completely innovate that technology??

Sure Rendezvous (aka Bonjour) is innovative. But so is the MagSafe power adapter, the iMac all-in-one slab forgodsakes, the ambient light laptop keyboards, FireWire 400 & 800, magnetic laptop latches, PCI Express, AirTunes streaming & iPhoto sharing, their pioneering touchpad technology, and the nanoification of the iPod. iWeb & GarageBand are undeniably trailblazing. I’ve seen NOTHING like them, from ANY other platform, from ANY other tech vendor.

Sure, switching to Intel CPUs may not make it to the Innovationistas Top Ten List. But what about Rosetta Stone, the not-in-your-face technology that let’s a Mac user BARELY NOTICE their (non-Photoshop) legacy PowerPC apps running in emulation, running just as fast on their Mactels as was on their PowerPCs?? Does innovation have to smack one in the face to be relevant??

So, running Windows XP/Vista virtualization, at Core Duo native speeds. Clicking on that four-windowed icon in the Dock and, boom!, immediately there’s your Windows. Will you just shrug and say ‘Boooooring...’ I’ll tell ya, Michael Dell will be having a distinctly different reaction when that arrives.

“If Apple just sits on its cash horde, opens a few stores each year with the result that a smaller percentage of the overall computer market buys Macs there will be consequences just like ‘Taps sounds for Mac version of America's Army’”

Oooooooh, some game maker ends the Mac port of his Army game. Stop the presses! There goes more market share! Apple’s going down the tubes for sure! Gimme a break.

Apple’s got some BIG PAYMENTS to make to Yoko & the ex-Beatles, their estates, and the City of Cupertino. No sitting on hordes of cash for them.

And you’re missing TRUE APPLE INNOVATION if you ignore what’s going on INSIDE the Apple Stores that keep opening up: extensive classes & seminars & computer camps for teenagers, Macs in beanbag corners for children to use Macs (always got kids all over ‘em when I’m at an Apple Store), on-hand Apple technical expertise (largely for FREE!). Walk into the Apple Stores here in the Bay Area, and you are entering budding COMMUNITIES. Go watch: customers talking to customers, local digital artists showing their works, and telling how they made them, to rookie audiences. Wanna learn iMovie? Screw the ‘..for Dummies’ books. Just show up at a free seminar at any Apple Store! And get referred to the Apple Consultant Network for post-Apple Store needs. Try finding that kind of INNOVATION at a CompUSA or Best Buy.

Apple’s continued innovation and relevance is right under your nose. Just put down the joystick, lift the defeatist Dark Side veil, and you’ll see it for yourself........

[ocracokewaves]

You've had way too much of the Kool-Aid. You're far too close to Cupertino to be objective.

Firewire is old news and by the way they forgot Firewire 800 on the new MacBook Pro 15".

Apple wasn't first to the party with PCI Express. A magnetic laptop latch and power connector is your idea of real innovation. My Sony camera docking station has a very effective safety breakaway. Big deal.

iWeb is one of the worst blogging apps that I have seen. So how is Rosetta Stone going to impact anyone but Mac users? Gargage band is a niche product if I've ever seen one. It has never lived up to its hype. It certainly hasn't pulled lots of folks to the Mac.

There are far better ways to do photo sharing than iPhoto, and I've seen some pretty innovative music sharing hardware from others besides Apple.

Beyond the iPod and music, I don't see much from Apple.

As for your San Francisco area stores, most of us don't live in San Francisco, so unfortunately we'll have to pass on the rapture inside Apple stores which are close to Cupertino.

If you want to see some real innovation, check out some of what Web 2.0 companies are delivering. The unbelievable software functionality they've created works no matter what hardware or OS you run.

Actually their products and services may make it easier for Apple to survive since a lot of software functionality is going to the web.

[ocracokewaves]

Johannes I did not post your last comment because I don't see the need of us having a public debate.

I did draft a long email and respond to your comment. It did bounce since your email doesn't seem to exsist.

So if you want an answer to your comment you need to send me your real email address.

You can send it to:

sobotta@macosx.com

I promise not to make it public.

[ocracokewaves]

Johannes if you want to pass on a dialogue by hiding by behind a non-existent email address, that's fine with me. Are your opinions something you can only express by using a pseudonym with no real identity behind it?

When a blog becomes just a debate between two people with strongly held opinions, then it usually doesn't benefit the general audience so it's my choice to not post your comment just as it is your choice to not take the email that I spent time writing you.

Perhaps you have an apple.com address?

I sure no one would be surprised at your response to anything that I say.

By the way, I don't need to bet in order to give to charities. Maybe you should check out Steve's record on charity giving or set up a bet with him.

[running idiot]

I know it's odd to reply on more than a half year old blogpost, but I want to say, that I've heard that Apple is selling most Mac's ever.

And I don't know any good site, where can I compare real market share, so I don't if Apple's share is sinking or rising.