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rebscb
Jan 15, 2003, 11:47 AM
http://maccentral.macworld.com/news/0301/15.haddad.php

Thougts on this analysis of Apple's business model....

The notation of Apple under Scully's leadership is a bit unwarranted in my opinion....

Ambrose Chapel
Jan 15, 2003, 12:16 PM
I don't see Apple 03 as the same as Apple 93 - the product line is well differentiated (with the exception of the eMac vs iMac. I'd rather see the eMac go back to schools only, keeping the OS 9 boot option, while pointing regular consumers to the iMac G4). The availability of the iPod isn't going to make people suddenly unable to decide what Mac to get, and the Burton jacket is just a nifty toy for people with a ton of money; it's not vital to Apple's bottom line.

OK I don't want to get into a point by point thing with the column...back to work! :D

rainman::|:|
Jan 15, 2003, 03:31 PM
Yeah the Burton jacket, being limited in production as well as a special-order item, is really just a celebration of the iPod, a unique and high-end accessory to reward those Apple consumers who demand the best :)

i don't ski very often, but i want one, just because. But i think i'll keep saving for that new system.

pnw

lmalave
Jan 15, 2003, 03:39 PM
Yeah, I don't see what the big deal is with new PowerBook sizes - it's not like it's a whole new product line, just different options on the same line. I mean, when I walk into an Apple Store I'm not overwhelmed with choices. Apple still has a very lean product line by any computer maker's standards, and their products are well differentiated. Basically, you have all-in-one CRTs (eMac), all-in-one Flat-panels (iMac), sleek-looking "pro" notebooks (PowerBooks), and "fun" looking consumer notebooks (iBook). The Apple Store in SoHo really doesn't feature PowerMacs at all, if I remember correctly (more evidence that the retail stores are aimed at switchers). The software and the other electronic gadgets for sale (iPod, 3rd party cameras, etc.) really don't distract attention from the computers.

Same with the Apple online store, I'm not overwhelmed with choices. I mean, go to Dell or any othe site. How the heck do you tell the machines apart? You basically have to look at the detailed specs anyway (and you better be an informed consumer). Contrast with Apple: despite the talk on these forums of products cannibalizing each other, for a "switcher" they won't because Apple does a good job of making sure the machines look different and are priced differently. Thus, for a "fun" computer: iBook, iMac, or even eMac. For an "ultimate" computer: PowerBook (I'm again assuming not very many switchers buy PowerMacs, especially now).

iShater
Jan 15, 2003, 04:01 PM
Originally posted by lmalave
Same with the Apple online store, I'm not overwhelmed with choices. I mean, go to Dell or any othe site. How the heck do you tell the machines apart? You basically have to look at the detailed specs anyway (and you better be an informed consumer).

Excellent point. I usually go there to compare their machines Macs, and it takes me forever just to be able to tell what the heck each machine is aimed at. I mean, I can't even tell why they have 4 different choices for just home, office, etc, when many of the machine are almost the same.

Look at Sony's website, check the laptops, and see if you can tell the difference between the machines without diving into the details.

brad
Jan 15, 2003, 05:18 PM
Couldn't agree more with Alex's comments in his article. Apples core mission has always been to produce different product innovatively. It's move toward a 'digital lifestyle' is interesting but outside its original vision, and with many other tech. co.'s whom are marketing themselves toward this lifestyle will mean only one or two will survive this point of difference (I have a Moby song in my head now from a competitors ad but cannot remember the co. name - "....people they come together....")

Apples core focus is product innovation catering for a specialist market. 'Switching' over into the PC world is a nice move to keep the co. moving forward with quirking products such as the iPod and iMac, but at the end of the day these markets are well established by co.'s like MS and aspects such as pricing and core H/ware points of differences are still contentious issues. Oh, and of course, cross-promoting with Burtan to produce a ski jacket - c'mon, it's uncool for Apple to prove it is cool.

New product lines and extensions to current ones are all good, but as long as Apple continues to focus on its core vision and philosophy. Ever see Coca-Cola produce a line of product under its own brand name which is outside the cola beverage!

Although the faithful may hope - Apple will never tap the PC market successfully.

Apple must think innovatively and strategically rather than trying to position itself for the PC market - DO WHAT YOU DO BEST APPLE!

The latest Quarter results again reflect Apples problems



(For more refer to thread: Happy Birthday AAPL???)

lmalave
Jan 15, 2003, 10:12 PM
Originally posted by brad
Apple must think innovatively and strategically rather than trying to position itself for the PC market - DO WHAT YOU DO BEST APPLE!

The latest Quarter results again reflect Apples problems


The problem is that computers are a "standards" based industry, and right now Microsoft and Intel are setting the standards. I mean, it's not like the auto industry where the government sets standards in terms of safety, road-legality, etc. And 2% or 3% is just NOT a sustainable market share. Apple MUST gain market share and also hope that Linux gains market share, so that Microsoft is forced to adopt open standards. Only if Microsoft adopts open standards can Apple hope to compete.

Kid Red
Jan 16, 2003, 08:43 AM
Originally posted by brad
Couldn't agree more with Alex's comments in his article. Apples core mission has always been to produce different product innovatively. It's move toward a 'digital lifestyle' is interesting but outside its original vision, and with many other tech. co.'s whom are marketing themselves toward this lifestyle will mean only one or two will survive this point of difference (I have a Moby song in my head now from a competitors ad but cannot remember the co. name - "....people they come together....")

Apples core focus is product innovation catering for a specialist market. 'Switching' over into the PC world is a nice move to keep the co. moving forward with quirking products such as the iPod and iMac, but at the end of the day these markets are well established by co.'s like MS and aspects such as pricing and core H/ware points of differences are still contentious issues. Oh, and of course, cross-promoting with Burtan to produce a ski jacket - c'mon, it's uncool for Apple to prove it is cool.

New product lines and extensions to current ones are all good, but as long as Apple continues to focus on its core vision and philosophy. Ever see Coca-Cola produce a line of product under its own brand name which is outside the cola beverage!

Although the faithful may hope - Apple will never tap the PC market successfully.

Apple must think innovatively and strategically rather than trying to position itself for the PC market - DO WHAT YOU DO BEST APPLE!

The latest Quarter results again reflect Apples problems



(For more refer to thread: Happy Birthday AAPL???)

Yes Apple's new direction is outside it's original vision, it's called adapting. This is not the 80s, or 90s, it's a new millenium and it's been 3 years of recession. Dell is the only other computer company making money. Gateway is about to go bye bye, HP and Compaq merged because Compaq was on the way down. Apple will never the tap the PC market? Please, they are getting more PC switchers everyday. That's tapping to me. As for your claim about PC companies with low pricing/hardware specs, well, it only works for Dell because they sell so many. The last 3-4 years had the nastiest price wars in my lifetime and look how many computer makers are left standing...not many. So the PC makers can keep duking it out, they are only killing each other off. Meanwhile Apple keeps winning design awards. The iPod helped get the Apple brand out into the general public, and the stores give the public something up close to see and experience (unlike the broken macs at compusa prior to last year) Yea, a ski jacket, come on. Who would want a ski jacket with iPod controls on the fricking sleeve?? How fricking cool is that. If I had an iPod and skie/snow boarded, your'e damn right I'd want one. While you're asking stupid questiosn, why is Apple even making MP3 players? That's not very cool. Even tho it's the top selling mp3 player and owns the market in Japa, Apple is just plain uncool :rolleyes:

As for your Coca Cola reference, um dude, how many computer companies have split into sperate companies under them? Thought so. That's why Apple hasn't and won't.

As for your "The latest Quarter results again reflect Apples problems" you are completely showing your ignorance. We are in the mist of a 3 year recession, largest rate of unemployment in 2 decades IIRC, pending war, sky rocketing gas prices which may go higher, 3 major coroporate scandals where people lost millions, bubble birsting on WallStreet and no other PC maker but Dell making any kind of cash what so ever and Apple looses $8 million but keeping in mind "Excluding $17 million in restructuring costs and $2 million in other non-recurring charges, the company made a net profit of $11 million, or $.03 per share".

So you have no basis for your arguement. Apple is doing fine. Apple is gaining ground. Apple is innovating. Apple has fewer problems then the MAJORITY of pc companies out there. They are opening more stores while Gateway is closing them left and right, yet according to you, they have problems.

Good thing you have nothing to do with the management of Apple, or I hope any other company.

patrick0brien
Jan 16, 2003, 04:48 PM
"And 2% or 3% is just NOT a sustainable market share."

Y'know, normaly I'm not one to complain, but that old argument about market share has lost it's relevance. A classic example of "Lies, Damn Lies, and Statistics".

Let's dissect what "Market Share" is, and why it no longer applies here.

Market is defined in an open market society as those who are have the means and motivation to purchase a particular good or service. Share is how said market is divided.

Ok, so we're back in school. Please bear with me. It'll help we Mac-heads to argue with the uninformed.

Let's think about this, and let's use the numbers quoted: 3%.

So only 3% of the Market are buying Macs. Fine. That's probably very true (I think we're closer to 4.3% actually). But consider this: Macs have twice the design lifetime than that of a Windows PC. 5 years versus 2.5 - don't kill the messenger here, research is available.

So this means that there will, in a perfectly balanced world, always be twice as many Windows PC's bought than Macs because the consuming public tends to need to buy them twice as often. This translates to twice the Market Share. So translating this "perfectly balanced world" into numbers, you'll get 66% market share in PC's and 33% in Macs (not including other OS's).

This is the more accurate way to look at the Computer market because Personal Computers have become a commodity and the Market itself has reached the inevitable plateau. Also, don't forget that Apple is the #1 Personal Computer manufacturer with an 11.6% installed base (I think HP/Compaq is #2 with around 10.3%). Sure the Computer is the OS, but that ain't too shabby - oh, and notice how often the detractors use that statistic. Never. Dosen't serve their needs. The Market Share Myth does.

Gotta love spin.

About Dell, I read somewhere that they are cannibalizing their profits with buybacks, they can only do this for so long before those profits vanish, and their margins are at the bone - they are very close to the tipping point.

As a marketer (yeah, I confess), another term was 'Mind Share'. How many folks know who you are, and what you sell, and of those, who has a positive view. Apple is doing gangbusters in this arena. Even the most stoic lawers I know, including my CIO are commenting positively about them. I wish I could find this number.

I'll leave you here with just this perspective as you fellas are intelligent to form your own judgements.

lmalave
Jan 16, 2003, 05:19 PM
Originally posted by patrick0brien
So only 3% of the Market are buying Macs. Fine. That's probably very true (I think we're closer to 4.3% actually). But consider this: Macs have twice the design lifetime than that of a Windows PC. 5 years versus 2.5 - don't kill the messenger here, research is available.


Bzzzzzzzz! Wrong! How would you estimate how many Macs vs. PCs are in active use? You can use estimates, like how many have been sold vs. the expected lifetime of the computer, but that's just pure speculation. There's only one metric that I've found satisfactory, and that is the combined web logs for the major internet sites (Amazon.com, CNN, etc.). And studies of these web logs consistently have consistently shown no more than 5% or so share for Mac OS since the studies began (in 1996 or so). Unless you can come up with a statistic that there is a much higher percentage of internet-connected PCs vs. internet-connected Macs, I think these numbers are pretty reliable.

I'll stand by my statement that Apple needs to raise its market share to be sustainable. Apple needs software to be produced by 3rd parties, and 3% market share is right at the edge of obsolescence. There will be niche players that will be willing to produce software for the Mac, but the danger is that the major software makers won't find it economically viable to do a time-consuming Mac port. With less and less software, Apple would continue in a downward market share spiral as it has been since the initial success of the original iMac.

I would definitely like to see Apple's market share comfortable over 5% - ideally at about 10% or so.

brad
Jan 16, 2003, 09:21 PM
well, well, well, debate - this is good!

KID RED
Firstly I take offence to your comments, this is a forum for rumors, news, discussions, debate, etc. - not for personal attacks. Stop seeing red.

I stand by my comments for the following reasons:

Market adaption is a good thing, adapting to a market which is outside your core mission and product offerings is a shakey move, Apple, as you rightly point out has ridden this wave succesfully. The iPod and the iMac are of course interesting lines and position themselves nicely within each particular category and their product design have of course opened Apples exposure. The only problem is, is that a lower priced item requires larger volumes of sales to make money. Without checking figures (perhaps you could do this for me in your rebuttle) I'd like to see a contrast of Apples overall performance based on the iMac compared to other PC models at that level. While we're on the subject, I'd like to see an analysis between sales of Apples iPod and other .mp3 manufacturers, compared against costs, return and profit - leading a market does not necessarily mean you are making money.

Apples previous mission has been to produce professional level computers for the creative industries. Since realising the iMac etc. their focus has wandered from one market level to another, the retail level computers (iMac & eMac) performing well yet were idle for a long time because of an unsure market. My arguement is, whilst Apple has attempted to break further with their retail products through the iMac and the follow-up 'switch' campaign they need to do something large to truely crack the PC market, whether it be a new line, pricing, or whatever, the time is now b4 the tech. momentum begins to take off, or alternatively they need more ammo to fight if the market continues to remain stagnate, but it all must have a core focus of being true to the brands reputation and image - to offer what we have come to expect from Apple, whatever that may be.

What governs your argument about a PC 'switcher'?
A switch a day may make the doctor go away, but in reality a dozen 'switchers' won't add value to the bottomline. Again show me stats. and I'll get off my soap box. Every computer user is 'switching' to a digital lifestyle, or (at least that's what manufacturers want you to do) and of course Apples line from iPod to iMac demonstrates a good offering for the PC user to switch to Apples lifestyle, this is 'innovation and strategy' which I have pointed out b4, which Apple needs to do more of. My argument is, is that Apple needs to continue to innovate to increase performance. They need to be 2 steps ahead not one step fwd. and one back. A good example is the introduction of OSX and the "i" problem. OSX has been too slow to take off or at least the OS 9 platform should have been cut sooner. The "i" problem, a good name strategy but it is fast becoming a 'generic term' which has the potential to backfire on the brand.

Which brings me onto price:
Pricing again is a contentious issue. When Apple competes with a PC at a price difference which is almost two-fold to a competitor they are automatically ruling out opportunities in the market. Of course thay need to make money and I am unsure of Apples mark-up, but if they were to capture a bigger slice of the pie, costs such as manufacture may need to be looked at to reduce prices which are passed on to the end-user. Of course a price war has been happenning over the past few years, and an over inflated tech. industry hasn't helped, but tell me which market has not had a price war since free "markets" have been established. The difference is, is that if Apple is trying to 'switch' PC users they must meet them on middle ground - they are missing some of the P's from their marketing plan - notably PRICE. Yes, we all want a Ferrari (and the die-hards will purchase one) but at the end of the day its all economies of scale.


The Burton issue, yes I wear Apple on my sleeve too, and yes an iPod on the sleeve is a nifty idea, but again this is open to who may purchase one. The point is, is that Apples brand alone, its product design, and its offerings are already cool, why try to 'appear' to be cool or offer something which doesn't add value to the bottomline? Yes it is different, but it really only serves Burtons brand, and in time will become a gimmick.


Coca-Cola - I'm unsure of your argument. Coca-Cola is a Masterbrand company. All aspects of the brand affect the company and vice versa. The performance of a holding company such as Simplot for example, is generally affected by their brands at a retail level. Corporate movements and overall company performance affect the companys stock price. A Masterbrand company such as Coca-Cola and Apple are affected by both the positive and negative consumer sentiment of their brands at both corporate and retail brand levels.

The point is, is why go outside this umbrella and risk upsetting the Apple cart - yeah dude its cool, but I thought a FlowerPower iMac was cool for the first 5 seconds as well. If a brand image is to last, why flower it up with gimmicks which MAY serve to hurt the brand one day, oh and I wonder how sales of the FlowerPower model affected sales performance?


Oh, and .03 percent return compared to .11percent a year ago is a good thing?

I wonder what the restructuring costs were for. In business as I'm sure you are aware, hindsight and 'would have beens' are for the birds. I just hope it's another blip in an upwardly moving graph, not one which will lay flat for a while as it has over the past 6 months.


PATRICK
I see and equally agree with your market share points, but you can only justify a stat so much.

The ATO (Australian Taxation Office) rules that the effective life for a laptop is 3 yrs. whilst a desktop is 4. Yes, Apples life is longer than this, but technology has no life. A laptop which is 3 yrs. old and doubled gives it 6 years of life - with technology moving so fast the only thing I will be doing with a 6 yr. old Mac is to use it as a boat anchor (sorry I am a Mac loyalist too u know but the classics don't make money).

Yes you're right, Apples 'Mind Share' is large, but I hope you're not basing your argument on Interbrands MVBrands surveys. Apple needs more than 'Mind Share' to be profitable, they need to instill the correct values based on the marketing P's to the 'switchers.'



YES, Apple as a company is sustainable and a survivor and its brand presence is extremely strong. But we have seen the tech. boom and crash, now its a level playing field, and Apple needs to position itself now to not only leverage performance but to create shareholder value.



Oh, and one more thing on a personal note: Kid Red I won't even entertain the thought of answering your question or asking what you do for a living.


Ahhh, it's all conjecture don't you love it - settle down now and stop seeing Red, you're only Kidding yourself.


PS - I just can't wait to get my 17" PowerBook.


Oh, one more thing I'm tired, that's the last thing I have to say. Alex, are u there...?

:)