welcome to the mainstream, Apple. The colorful ride is over.
Apple’s announcement Thursday that it will slash the prices of its low-end computers and introduce another consumer-oriented machine will be greeted with great enthusiasm in most circles. Home computer buyers, stockholders, and most Apple employees will undoubtedly benefit from this strategy. But the benefit — and the attendant joy — will almost certainly be short-lived.
The announcement comes on the heels of Wednesday’s surprise $25 million quarterly profit report, though the two are clearly not directly related; no company can move that fast, even a trimmer Apple.
When a company reduces prices on its products, profit margins fall, and overall profits usually follow. With lower profits, you can all but bet that Apple will further reduce spending in areas where it thinks it can afford to do so. One of those areas will almost certainly be research and development.
And therein lies the rub.
Because Macintoshes are not part of the mainstream of corporate and home computing, they need something marketing people call a Unique Selling Proposition (USP). People need a justifiable reason for stepping outside the comfortable box of Microsoft and Windows, particularly in corporate America. Until fairly recently, the Macintosh’s primary selling point was ease of use, not just at the system level but also at the application level.
From the beginning, the true genius of the Mac has been its wonderful standardization. A study done a few years ago found that after you’d learned your first reasonably robust Macintosh program, you knew at least 75 percent of what you’d need to know to run any Macintosh program. On Windows 3.x, the figure was more like 40 percent.
In recent years, particularly with the emergence of Windows 95 (which largely copied the system-level interface of the Macintosh), that advantage has diminished. But it has not yet vanished.
Apple’s next-generation operating system, which would appear to be capable of increasing its usability advantage once again, is so far behind schedule that the company no longer talks about it as a new OS but rather as a series of new technologies dribbled out over time — like a recalcitrant child’s inheritance controlled by a stingy parent. Reducing R&D spending will exacerbate that situation.
Without a unique selling point, the Macintosh will have to compete on even terms with Windows machines — and that will inevitably further blur the lines of demarcation between things Macintosh and things Windows. The net result, given Apple’s relatively inept manufacturing and marketing ability and the Mac clone market’s concentration on the high end, will be tremendous pressure towards the homogenization of computers.
That will be an unfortunate outcome for everyone.
Consumers will find themselves with lots of vanilla and no chocolate. Prices will be attractive, but the general market for personal computers will be in the gray flannel portion of the color spectrum.
Shareholders and employees will find that Apple cannot continue to compete in the price-conscious, blood-letting personal computer wars without still more price cuts, leading to stock value reduction and further job loss.
Developers, who have been abandoning the Mac in droves anyway, will no longer do so grudgingly (if indeed they still are feeling that way as they embrace Windows) but gleefully. The consequence: new programs not only won’t appear first on the Mac, we’ll be lucky if they appear there at all.
The only potential winner in this: Jean-Louis Gassee, the former Apple VP who founded Be Labs and has begun shipping a blazing-hot, next-generation OS machine called, simply, Be. He has The Next Cool Thing; meanwhile, Apple will just be one of the gang.
Quote of the day
Wish you were here
“I’m not in the least bit frustrated. This is a wonderful experience.”
Elizabeth Dole, asked on ABC’s “Good Morning America,” about her husband’s poor showing in the polls, especially with women voters. (Quoted Monday in a
Reuters new agency story.)
the World Wide Web Browser Wars, not content with gracing the cover of Time this week, opened a new front at Seybold San Francisco this week — and this particular dust-up between Microsoft and Netscape may well have revealed the long-term victor.
It was advertised as a debate. But Netscape, apparently refusing to appear unless the two companies’ presentations were separate, deprived an overflow audience at the Seybold keynote of a head-to-head clash. As it turned out, that was probably just as well; a debate would have been far too one-sided.
Microsoft, facing an audience with anti-Windows venom coursing through its Apple-rainbow-colored veins, wowed the crowd — while Netscape, which has had the (low- to no-profit) World Wide Web browser “market” to itself for most of the past two years, did little to advance its cause. It was one of the finest examples in recent history of a company snatching defeat from the jaws of victory.
You might have expected Microsoft, a relative Billy-come-lately to the Web and a company steeped in stodgy corporate sales despite its little-guy beginnings, to plod through a checklist of why its Internet Explorer is better than Netscape Navigator. And you might have predicted that Netscape — an upstart startup with a massively disproportionate price-equity ratio, launched on the basis of genuinely cool software done by college folks — would sizzle and rock and roll.
Instead, the two companies reversed roles. Marc Andreesen, founder and Senior VP of Technology of Netscape, plodded monotonously through a series of static slides explaining Netscape’s strategy with all of the excitement of a… well, a Microsoft salesman selling Windows NT to a Boston bank.
On the other hand, Brad Chase, Microsoft’s VP of Internet Platform & Tools, started with an upbeat video featuring a take-off on the old Petula Clark hit, “Downtown,” called “Online.” The lyrics were witty and savvy, the production values first-rate, and the impression left was that Microsoft “got it.”
If the Browser Wars are being fought on the battlefield of public perception (and they are, in part), and if the Seybold audience was an important group to influence, Netscape could just fold up its telescope and go home. But, of course, this war is not quite so shallow.
Still, if you listened carefully to both presentations and to Jonathan Seybold’s barbed-tongued questions for the principals, the outcome of the war seems inescapable. Netscape leads in the near term, but within six to nine months, that lead will disappear. And within 18 months, Netscape could become the subject of a bunch of really annoying trivia questions for the next generation of computerphiles.
Ironically, Microsoft is likely to win the war in the long term by out-Netscaping Netscape — in much the same way the Democrats will win the White House this fall by out-Republicaning the Republicans. The Seybold presentations suggest that:
- Netscape’s primary marketing and technology focus will be on corporate “Intranet” sales, a mistake of gargantuan proportions. Microsoft owns corporate computing. Fighting this battle on their turf is the kind of tactical error that would make Sun Tzu giddy at the prospect of enemy annihilation.
- Microsoft not only understands the critical importance of integrating users’ desktops with the Web and the Internet, it is uniquely positioned to create that integration. Indeed, when Chase gave the audience a glimpse of Microsoft Internet Explorer 4.0′s “Active Desktop,” one self-described Macintosh die-hard called it “totally awesome, and the only reason I’ve seen to think about switching platforms.” Netscape cannot even attempt this level of integration — for the simple reason that it doesn’t own the operating system’s source code the way Microsoft does.
- Netscape has been known for supporting — and in some cases leading — the open standards that have allowed the Web to grow so fast. But now it has allowed Microsoft to leapfrog it: While Netscape has declined (at least so far) to embrace a new Hypertext Markup Language (HTML) 3.2 feature called “cascading style sheets,” Microsoft has not only adopted the feature but implemented it elegantly. (It’s not really clear that style sheets are useful, let alone important — but they are part of the standard.)
Couple these observations with Seybold’s remark to attendees, “I’ve never seen Microsoft make such a 90-degree strategic shift so quickly and so completely as it has with the Internet,” and toss in the fact that Microsoft has won virtually every magazine’s browser shoot-out in recent weeks, and one can only conclude that Netscape is in deep yogurt.
For Netscape to respond to this troubled scenario by attacking its enemy where it’s strongest — ownership of the corporate desktop — is simple suicide. Unless Netscape returns to its positioning as the open-standards-based browser consumers prefer by giving those consumers a reason to choose Navigator over Explorer, the company’s heyday may be one of the shortest-lived in the history of a particularly volatile industry.
Quote of the day
Gentlemen’s Disagreement
“He’s using them and they’re using him. It sounds like a political and advertising peep show, especially since it’s all off the record. [The New Yorker reporters are] just being used as window-dressing for the advertisers. It’s in poor taste.”
– Harper’s Magazine publisher John R. MacArthur, commenting on a breakfast meeting the New Yorker arranged for its advertisers to hear its reporters interview Dick Morris.
“He’s such a little trust-fund brat. Grow up. What’s he looking for, the tooth fairy?”
– New Yorker president Thomas A. Florio, responding to MacArthur. Both quotes from Friday’s New York Times.
