Apple falls from grace

The once-visionary company is joining the ranks of the grey flannel suits

By Dan Shafer

Published October 21, 1996 7:27PM (EDT)

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
new agency story.)

Dan Shafer

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