The Mac Market Share Solution

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The Mac Market Share Solution

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What is the solution to Apple’s low market share?

Well, in my first ‘Mac Market Share’ article, I talked about the real Mac market share myth – that market share doesn’t matter. In the follow-up article, I said that the root cause of the market share problem was an Apple fixation on aesthetics to the exclusion (I do not say detriment) of most other considerations.

There are caveats to both those assertions; the positions are not quite that simplistic; read the articles themselves if you have not already.

But expand Apple must, or it will wither, die, or become something that, 10 years from now, we will not recognize as Apple.

And there is a solution that does not demand a change in Steve Jobs’ aesthetic vision.

What’s the solution?

Well, let’s restate the problem briefly: a rigid focus on aesthetics and intangibles means high prices means too few Macs being sold means too few apps being developed means declining market share over the long term means the eventual death or inconsequentiality of Apple and the MacOS (X).

Case in point: my father. 70 years old, he’s had an iMac for years. Last month he bought a PC. Why? He’s an investor, and the financial and stock-tracking app he needed was not available on Mac OS X. Second why? Buying a PC is so cheap it’s an easy, no-brainer decision. Buy a coffee, pick up a budget PC.

(Well, that’s pushing it!)

But how can Apple get more product out there cheaply, thus increasing the size of both the user and developer pools, and thus increasing the likelihood that any significant apps are at least cross-platform WITHOUT alienating the current Mac user base, who are used to:

  • quality (read: non-cheap) hardware
  • tight integration between OS and hardware
  • tight integration between apps on the machine
  • a high degree of usability
  • a aesthetically satisfying ‘look and feel’ of software (and also hardware)
  • the santimonious feeling of being ‘one of the few’ who ‘get it’ and who aren’t ‘Redmond sheep’

I think the answer is simple: back to clones.

The objections are obvious: Tried that before. Didn’t work. Apple’s a hardware company; they’d lose their shirts.

But I don’t mean doing it the way they did it before. I mean pulling a Palm. Sort of.

Closing in on two years ago, Palm decided to split into two companies: hardware and software. PalmSource would handle the software side of the business; PalmOne would manufacture the hardware.

This is NOT what I’m recommending for Apple.

But what the hardware company, PalmOne did, is re-organize their product lines. Tunsten became the high-end; Zire was the low-end. People who valued the power, sophistication, and simple beauty of Palm’s high-end lines could (and did) continue to buy the Tungsten. (Just the name invokes a somewhat exotic, clean-lined strength.) People who wanted a Palm but were short on coin – and perhaps didn’t care as much about an expensive brushed-metal skin – bought a Zire. (The name suggests something just short of cheap.)

This IS what I’m recommending for Apple.

Apple should continue as is, software and hardware together. It should continue to build the incredible Mac OS X, and the incredible hardware that has won rave reviews from all corners, and the incredible integration between the two.

This is what much of the existing Mac-using world would continue to buy.

Apple should also create a wholly-owned subsidiary that would make and market, for lack of another term, ‘budget Macs.’ They would NOT be called Macs, nor would they be marketed through Apple’s regular channels, webstore, or bricks & mortar stores.

They would be referred to as Mac-compatible, and would come in a variety of cheap configurations, some headless (no monitor), in beige or charcoal cases (or whatever color-du-jour is popular for PCs). They would be bundled with cheap CRT and LCD monitors. They would meet current PC standards for hard drive size, amount of bundled RAM, processor speed, and options, but would NOT be built to Apple standards of quality and workmanship.

And they would be priced at or just above Dell/eMachines/HP prices.

A new brand, a la Zire, would have to be created for them, and they would never be marketed as Apples or Macintoshes or anything similar to them.

They would be stickered ‘Mac compatible,’ however, and would have the latest Apple operating system. They might be differentiated from the Apple brands in other ways (by not including iLife, for instance) but should be feature-for-feature comparable to existing new PC packages in terms of software as well as hardware.

This would give much great reach to Apple, and a lower cost of entry for those who wish to try the Mac experience. A second computer could be a ‘Mac-compatible’ without remortgaging the house, and a future computer might actually be a Mac. An enterprise can purchase a secure, stable, and flexible stable of computers without the IT department thinking they are over-spending, and without giving the shareholders conniptions.

As the user community expands, and as developers can pick up cheap machines easily, the call for and provision of Mac-compatible software would increase.

As all of these virtuous circles coincide, Apple’s market share would increase. Operating system revenue from upgrades would shoot up, with nice software/Microsoft-like margins. Revenue from iApps and other Apple-built software solutions would increase.

And best of all, the Mac ecosystem would be a much bigger, healthier, vibrant place to live.

Doing this, and doing it agressively, would I think be Apple’s best hope of a long and productive future.

As it stands right now, Apple has virtually abandoned the low end (the eMac alone does not cut it), and this is cutting Apple off at the knees in the education world and in the real world of real people with too many needs and too few dollars.

Many people, including me, want to see Apple remain and grow as a real contender in the technology world. This will not be done by standing on useless principle and an elitist attitude.


Gottfried Barthel

May 5, 2004at 2:07 pm

Just a few thoughts from someone in Southern Germany:

I quite agree with your ideas; in fact, I have been thinking of such a thing since some time. I wonder why Apple so far did not make any move in that direction — we will never know if they thought about it and rejected the idea for some reason. “BudgetMacs” would certainly eat up some of Apple’s sales at the low end (with lower margins), but making these lower margin “BudgetMac” makers an Apple-owned company would mean that losses on the low end Macs would be compensated by revenues. To be usable “out of the box”, however, these “BudgetMac” computers should not be “naked” (just hardware and OS), but come with a reasonable collection of pre-installed basic software for web browsing, e-mail, and “office” use, comparable to what you get (apparently) “for free” with any budget PC.

To me, the idea seems to make good sense, but I am not an economist, so there might be really good reasons to reject it. On the other hand, I think that Apple should be interested in increasing the Mac OS user basis — in my opinion, that “BMW of computers” attitude is not helpful.

Johnathan Grant

May 5, 2004at 9:28 pm

I would like this idea, but I do think that the budget computers really ought to include at least iTunes & iPhoto. I could see iMovie & iDVD as a $30-40 upgrade available at the time of purchase, or sell a regular iLife pack to the budgetMac user later on.
Perhaps something along the lines of ThinkFree Office, AppleWorks, or even OpenOffice could be offered with these machines.

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