It's 2002 or never for Apple
I have been following Apple since the introduction of the iMac. I think it's about time for us to realize that if Apple doesn't do something big in the near future, then they simply don't have any real plan to grow marketshare. I am not simply trolling here and I will give several ideas that I think might lead to some real growth . And it's not necessarily bad if Apple stays in the 2.5% to 4% worldwide marketshare range as long as I can always buy a Mac even if it does cost a bit more. But you can only say "Wait til next year" for so long until you have to give up. If Apple does not have a concrete plan to get new customers and a little bit of success by the end of this year then I think we should just stop talking about it completely until it happens. I am posting this just to give a long range perspective of Apple's growth outlook. I know we live in a world that can't remember past last week's headlines, but your opinion about the future should be based on the trends of the past.
Let's review history. When the iMac originally came out, we thought that would be the thing to get new customers. And it did get a few, but mainly because it was the first really affordable Mac. Apple's marketshare went up to a high of 4%, but when the iMac's specs became anemic, marketshare went down below 3% again. No permanent gain.
So then we said OS X would be the big thing. Then when OS X came, we said that the growth wouldn't happen until all the applications were there. Well they basically are now and few people are buying Macs just for OS X. The sales numbers don't show it. And this is mainly why I believe it's now or never. OS X is finished and it is the basis of whatever Apple's plans might be. Steve Jobs has had five years to construct a plan. OS X can be moved to other platforms or put on internet appliances or game consoles or cellphones. Whatever the plan is, there's no reason to not do it right now.
And so then we said the Apple retail stores would be the thing to spread Apple's message. But some stores have been open for 8 to 10 months and we have no real evidence of converting Wintel users. You can always say it takes a couple of years for stores to get popular but I don't see it that way. If the Apple stores were capable of swaying Wintel users, it should be happening right now in a big way. It can still happen, but it would have been nice to see something big right away instead of waiting for slow growth in popularity. We also said the iPod and the iApps would bring in growth. But 400,000 iPods a year, mostly to Mac users, doesn't mean much for Mac sales.
Now I am going to give my opinion of what I think might lead to new Mac users. But first, for those of you who might mistakenly believe from the headlines that Apple is currently growing, here are there sales numbers for the last few years. These are numbers of Macs sold per quarter in 1000s.
Year 2000 Q1 1,043K Q2 1,016K Q3 1,122K Q4 659K = 3,840,000 Macs
Year 2001 Q1 751K Q2 827K Q3 850K Q4 746K = 3,174,000 Macs
Year 2002 Q1 813K
Apple sold over 4 million Macs in 1999. They might be able to get close to 4 million this year on the strength of the iMac. So we see no real gains, just treading water.
So what does Apple need to do to get a few more million people to come to the Mac? Here are some things that I think could do it. I know these things are not easy, but in business you can't find more success without taking risks.
The first thing would be putting Aqua and the iApps on the Playstation or Gamecube. If Apple could find some stealth way of getting millions of people familiar with the Aqua interface, they would be much more likely to buy a Mac. It's the fear that comes from lack of familiarity that holds people back from trying something else other than Windows.
The second thing would be StarOffice. Right now if you want Word and Excel for the Mac, you have to pay $459. When you buy a PC, you can get them for $100 with a Dell. This is a huge price differential that keeps Macs from having 6% - 8% marketshare. If you look at sales statistics, Macs sell well when they are price competitive with PCs and poorly when they aren't. When the iMac had specs that the market wanted, marketshare was around 3.5%. When the specs became really weak (15 inch CRT, no CD-ROM burner when they were getting hot) marketshare went down to just above 2.5%. The majority of Mac buyers are not diehard Mac fans. They compare Macs to PCs and make a choice. The extra cost of Office has always been a large hindrance to people buying Macs. If StarOffice became mainstream, this would greatly help Mac sales.
Another thing would be porting OS X to x86, but only Apple made machines. Many people don't consider buying a Mac because it doesn't run the games they want. Give them Windows to run their games and OS X for everything else. Now you might being saying that OS X and Windows are bitter enemies. But look at how Apple is getting Unix users to buy Macs for the first time. No one ever dreamed of Unix users buying a Mac. But Apple gave them everything they were used to and expected, plus what Apple has to offer. Why not do the same thing for Windows users? What would Joe User have to lose by trying an Apple PC if he knew it could run Windows programs in addition to Mac programs.
And the last way to get customers I can think of is by selling things like the iPod or a high end cellphone/PDA to Windows users. Once they have used an Apple product and they know what Apple stands for, they will be much more likely to consider experimenting with a Mac.
So IMO, if we don't see some major development in the next 8 months, we should just assume it isn't coming. I can only wait for Godot for so long. And don't even mention the G5. Processor speed is not going to convert people from Windows and we have no idea when the G5 is coming out or how competitive it will be. We might as well be calling it the Godot5.
[ 04-18-2002: Message edited by: spindler ]</p>
Let's review history. When the iMac originally came out, we thought that would be the thing to get new customers. And it did get a few, but mainly because it was the first really affordable Mac. Apple's marketshare went up to a high of 4%, but when the iMac's specs became anemic, marketshare went down below 3% again. No permanent gain.
So then we said OS X would be the big thing. Then when OS X came, we said that the growth wouldn't happen until all the applications were there. Well they basically are now and few people are buying Macs just for OS X. The sales numbers don't show it. And this is mainly why I believe it's now or never. OS X is finished and it is the basis of whatever Apple's plans might be. Steve Jobs has had five years to construct a plan. OS X can be moved to other platforms or put on internet appliances or game consoles or cellphones. Whatever the plan is, there's no reason to not do it right now.
And so then we said the Apple retail stores would be the thing to spread Apple's message. But some stores have been open for 8 to 10 months and we have no real evidence of converting Wintel users. You can always say it takes a couple of years for stores to get popular but I don't see it that way. If the Apple stores were capable of swaying Wintel users, it should be happening right now in a big way. It can still happen, but it would have been nice to see something big right away instead of waiting for slow growth in popularity. We also said the iPod and the iApps would bring in growth. But 400,000 iPods a year, mostly to Mac users, doesn't mean much for Mac sales.
Now I am going to give my opinion of what I think might lead to new Mac users. But first, for those of you who might mistakenly believe from the headlines that Apple is currently growing, here are there sales numbers for the last few years. These are numbers of Macs sold per quarter in 1000s.
Year 2000 Q1 1,043K Q2 1,016K Q3 1,122K Q4 659K = 3,840,000 Macs
Year 2001 Q1 751K Q2 827K Q3 850K Q4 746K = 3,174,000 Macs
Year 2002 Q1 813K
Apple sold over 4 million Macs in 1999. They might be able to get close to 4 million this year on the strength of the iMac. So we see no real gains, just treading water.
So what does Apple need to do to get a few more million people to come to the Mac? Here are some things that I think could do it. I know these things are not easy, but in business you can't find more success without taking risks.
The first thing would be putting Aqua and the iApps on the Playstation or Gamecube. If Apple could find some stealth way of getting millions of people familiar with the Aqua interface, they would be much more likely to buy a Mac. It's the fear that comes from lack of familiarity that holds people back from trying something else other than Windows.
The second thing would be StarOffice. Right now if you want Word and Excel for the Mac, you have to pay $459. When you buy a PC, you can get them for $100 with a Dell. This is a huge price differential that keeps Macs from having 6% - 8% marketshare. If you look at sales statistics, Macs sell well when they are price competitive with PCs and poorly when they aren't. When the iMac had specs that the market wanted, marketshare was around 3.5%. When the specs became really weak (15 inch CRT, no CD-ROM burner when they were getting hot) marketshare went down to just above 2.5%. The majority of Mac buyers are not diehard Mac fans. They compare Macs to PCs and make a choice. The extra cost of Office has always been a large hindrance to people buying Macs. If StarOffice became mainstream, this would greatly help Mac sales.
Another thing would be porting OS X to x86, but only Apple made machines. Many people don't consider buying a Mac because it doesn't run the games they want. Give them Windows to run their games and OS X for everything else. Now you might being saying that OS X and Windows are bitter enemies. But look at how Apple is getting Unix users to buy Macs for the first time. No one ever dreamed of Unix users buying a Mac. But Apple gave them everything they were used to and expected, plus what Apple has to offer. Why not do the same thing for Windows users? What would Joe User have to lose by trying an Apple PC if he knew it could run Windows programs in addition to Mac programs.
And the last way to get customers I can think of is by selling things like the iPod or a high end cellphone/PDA to Windows users. Once they have used an Apple product and they know what Apple stands for, they will be much more likely to consider experimenting with a Mac.
So IMO, if we don't see some major development in the next 8 months, we should just assume it isn't coming. I can only wait for Godot for so long. And don't even mention the G5. Processor speed is not going to convert people from Windows and we have no idea when the G5 is coming out or how competitive it will be. We might as well be calling it the Godot5.
[ 04-18-2002: Message edited by: spindler ]</p>
Comments
"It's 2001 or never for Apple"
"It's 2000 or never for Apple"
...
It's MWNY or never,
It's WWDC or never,
It's MWSF or never...
etc...
Jeff
Apple will be apple. Since the DOJ wouldn't have to think twice about slamming MS if there were no Apple, I don't think Apple will die anytime soon.
[ 04-19-2002: Message edited by: Splinemodel ]</p>
when almost every home has a computer or two, apple can have 1% of the market and be doing great....every year they sell more computers, and every year they keep plugging along while pc makers eat each other alive....who do you think will be the next company to go under, apple, gateway or compaq??? g
Concerning the original iMac. The Biondi Blue model did not sell as well as the new Flat Panel. It wasn't until the "fruity colors" arrived did the iMac take off. And then the consumer was bombarded with see-through fruit flavored products. Talk about a sugar rush.
If there were a potential with a billion computers, Apple would sell 10 million (for 1% market share.) Apple sells about 4 million a year for 4% so that's about a 100 million computer sales/year market we're in. If the computer industry grew by a factor of ten, Apple could have a quarter of its current market share and still sell 2.5 times more computers per year.
But in such a (hypothetical) market A LOT of devs would no longer find it worthwhile to put effort into mac products (hardware, software, drivers, INTERNET SUPPORT). Why? Simply because there is a HUGE (990 million plus) base of users to exploit on the other side. At some point it could be more profitable to be a bit player on the WinXP side than being a major player on the mac side. If the market breaks down to 99% windows and 1% mac, then you only have to sell to about 1% of the win market to make the same money you'd make selling to 99% of the mac market. Any dev worthy enough will surely sell to between 5-10% of the windows market where they would make exponentially more cash than they would selling to mac exclusively, or at all.
If enough devs leave, any agressive mac dev could snap up sales in the support vacuum. That'll keep devs and support around. But at the same time it would surely (if slowly) transform them to second rate.
There is a market for software development there.
Quitcher bellyachin.
Apple's at 35 million, give or take. By this metric, and regardless of market share, Apple can reach a point where their market is big enough to stand on its own. At ~4 million Macs a year (40% to first-time Mac owners, at least in the Apple retail stores) it'll take a while.
At least Apple is no longer hampered by the manufacturing capacities of their own plants. Back in the Beige G3 days there was a hard limit on sales of around 650,000 Macs per quarter, because that's all that Apple could crank out on its own.
I agree that the pricing of Office - and the fact that it's not bundled - isn't helping much. Out-of-the-box compatibility is crucial to Apple if they want to really take off in the consumer space.