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Steve's Scribbles...

It's a Market, not an Ecosystem

and other observations

Tuesday, September 9, 1997

Where to begin?

First off, yes it has been a bit since my last Scribble; been occupied with the beginning-of-academic-year workload, don't you know. Also, situations in the Macintosh world have become extremely volatile over the last few months, making it hard to plant a stake, exclaim "This is what I have to say," and expect it to be applicable for more than a day or three.

Here goes anyway.


A number of Apple officials have recently been justifying surprising business moves by claiming that the changes in policy are in the best interest of the "Macintosh ecosystem".

Sorry, but that phrase is double-plus ungood doublespeak, a.k.a. utter horsehockey.

The Mac OS is not part of any "ecosystem"; it is an extremely important product in a market. You know, the place where things cost money. The place where if a product does what people need at a price they consider attractive, people will buy it.

If the Mac continues to offer advantages over Wintel machines at a price we are willing to pay, we will continue to buy them. If it stops being an attractive option, people will stop buying them. It's as simple as that.

Calling it an ecosystem simply seems like an attempt to obscure the fact that Apple needs to make money. Don't apologize for it or try to obscure it; you're a company, and companies need to make money.

Just call it the Macintosh market, because that's what it is.

The Power Buyout and Stolen Apple Sales

Maybe I'm soft-headed, but I'm slowly coming around to the point of view that the buyout of Power is not necessarily the horrid thing that I initially thought it was. I mean, sure, they made cheaper boxes (this web server is a PowerCenter 604/132, which I've been very happy with), sure they had more configuration options, sure they made powerful products in our school's price range when Apple didn't, but in the, wait, why were they so horrible? Oh yes, it's because they were taking sales away from Apple.

Yes, 99% of Power's sales were definitely boxes that Apple could have sold, because as everyone knows, Apple always has computers in stock and ready to ship because Apple is so good at estimating demand. Apple prices its computers attractively. Apple goes out of its way to make sure people who want its products can get them as easily as possible.

No, wait, that was this dream I had the other night...

In truth, Apple sometimes goes out of its way to make things hard for people who want Macs. Don't believe me? I work at a university. We can't buy an Apple-brand Macintosh computer from anyone but an authorized campus reseller. We can't buy them from MacMall, MacWarehouse, MacZone, etc. because Apple has rules.

So a while back we were finishing up our budget year and our campus computer store told us they couldn't get any more PowerMac 7200/90s, which was the best fit for our remaining dollars. Silly me, I thought I should have been able to just call up a catalog vendor and buy one from there instead, but NO, we're an educational customer so they couldn't sell one to us. In the end, a new 7200 was bought from MacMall by a private citizen and then resold at the same price to the University. The private citizen will remain nameless for her/his protection from the Apple Education Sales Police.

And demand estimation? Don't get me started. Sure it's a superficially impressive thing to say that Mac OS 8 sales were exceeding expectations fourfold, but someone somewhere inside Apple ought to be tracking down where that estimate came from and asking very pointed questions about where such thoroughly bad data came from.

Apple is legendary for running out of inventory on its hot products. Every time I hear about another shortage or 'sales exceeding expectations', I keep thinking of someone inside Apple saying "Gosh, you mean people actually want to buy our products?"

It's funny in a way, but not in a good way. Markets (there's that word) tend to punish companies which can't deliver the products they advertise. "Ecosystems" don't enter into it. Power took some of that pressure off Apple and now it's gone.

Where was I? Oh yes, Lost Apple Sales

Getting back to the question of 'stolen Apple sales', let me describe my experience in our school.

I'm in a position to recommend purchases for around 20 Mac-using people. Our staff and faculty tend to trust my opinion on things Apple-related and nearly always follow my recommendations.

On numerous occasions in the past two years I've recommended Power Computing machines instead of Apples. In fact, I can't remember recommending an Apple box since the first PowerTower came out, primarily because Apple's prices were so much higher. Apple's argument is that the cloners had an unfair pricing advantage; so far, so good as far as that argument goes. The faculty who bought mid-range Power machines probably would have bought Apples instead if they had no choice.

However, several of our purchases are for low-end clones, in price ranges where Apple does not have a competing product; in fact, we're about to buy three UMAX C500s for $1095 each. I'll be bumping up their RAM and cache, which will put them around $1350, still not a price at which Apple sells a desktop machine today.

The question is, without the UMAX option, would we have bought an Apple?

No, and here's why: the school as a whole is moving to Windows-based administrative software, and the staff members in question were potentially going to be getting Windows-based PCs. For the budgeted amount of $1500 each they would have gotten a capable Pentium box INCLUDING A NEW MONITOR. Instead, they can keep their preferred OS at their desk and run Windows programs via VirtualPC ($150) for the same total amount. Luckily they already have monitors, otherwise even the clone option would not have fit in our budget and we would have gone to Windows on every one of their desks, because that's all we can afford.

This is a market, and that's how markets work.

If not for the clones (not just UMAX; I could have chosen APS or Power Computing and still made this work) Apple would have lost those sales completely; this way it keeps 3 more desktops Mac OS-based and gets 3 license fees.

Not every clone sale is a cannibalization; my belief is that because of scenarios like this, cloning has kept the Macintosh market from shrinking any faster than it has.

Surely someone at Apple has taken this scenario into account already, so to me this begs the question: is cannibalization of Apple sales really what's behind the licensing changes? Or is it part of some other, bigger plan?

And how are we supposed to plan our purchases without knowing what the plan is?

We Read Rumors!

I won't go into listing examples of the rumors swirling around regarding Apple's next moves. One just has to look around the major sites (MacCentral, MacinTouch, MacWeek, MacHeaven, MacAroni, MacDriveThru, etc...) to see plenty of them.

Based on what they hear, some developers are announcing boycotts of the Mac OS. More and more vocal customers who have Web soapboxes are expressing their intent to switch (resignedly) to Windows. Many who don't have soapboxes are surely making the same move.

Apple Recon judges this to be "hysteria", but in the face of what little information we the Mac-using marketplace are being given from Apple, these decisions are rational to the people who are making them.

Given that the company responsible for the MacOS platform is taking pains to reverse itself on numerous commitments (CHRP, licensing, the Newton spinoff, licensing, OpenDoc, licensing, and on and on), why should anyone be spending their resources (money or development time) on anything Macintosh-related? In two weeks we could see the cancellation of Allegro in favor of an NC/Rhapsody-only strategy for all we know!

(Note, that is NOT a rumor I've read, that's just something I made up. It is NOT TRUE as far as I know. But how many of you thought, even for a split second, that Apple would actually be capricious and two-faced enough to do it? Frightening, isn't it? There is no longer any peace of mind for Mac OS users because we don't know what Apple is up to.)

Apple, you could fix so much of this if you would just speak up! Tell us more about the Big Plan behind all these confusing moves. Tell us why we, your customers, should be happy about what you're doing! Because until you do, all we have to go on is rumors! And given the plethora of rumors that look like [even more] apparently stupid or suicidal moves are on their way, why should we continue to buy your products?

Tell us the real story so we can start making decisions based on truth. Many of our decisions can't wait much longer.

And Mr. Jobs, treating Ric Ford of MacinTouch with the disrespect you did just makes you look like a jerk. The questions he asks are ones that I certainly would like answers to, as would plenty (dare I say MOST) of your customers. How about some semblance of an answer to Mr. Ford's questions instead of an ad hominem attack?

I certainly don't expect a personal response, as I'm too small a fish to bother with, but you really ought to re-think how you treat people who go to bat for the Mac OS (and make no mistake, Mr. Ford provides an invaluable service to the Mac market on a daily basis).

Apple needs to cultivate friends, not condescend to its customers in such a flippant manner.

And your customers deserve some answers to his questions.

Is it time for me to quit?

I'm not leaving the 'Apple family' myself; I still get my work done fastest by far on my Macs (one at home, four in my office at work), and I'm going to stick with using Macintoshes until that changes. But that doesn't mean I have to silently and blindly consider every move Apple makes to be right.

I'm still subscribed to the EvangeList newsletter, but I'm more and more uncomfortable with the constant assumption the posters seem to make that anyone who publicly disagrees with Apple's policy shifts is at best misguided, at worst a traitor who must be discredited. There's room for civilized disagreement here, people!

Best stop now...

I always get peeved at editorials that take screens and screens to get through, so my apologies for the length of this one; once one starts opining about Apple it's hard to stop. As I'm sure many of you know from experience.

Thanks for reading, especially if you're employed at Apple.

As always, for more news, pointers & commentary, see Steve Bogart's home page.

Handy Official Disclaimer: Steve's Scribbles are my own personal work and not meant to be taken as official Olin School of Business pronouncements. They are, however, © Steve Bogart (original publication date is at the top of each Scribble).
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