Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.

MacbookSwitcher

macrumors 6502
Original poster
Mar 13, 2007
299
1
http://www.marketwatch.com/news/sto...4395-8A8E-B94C1B480D4A}&siteid=yhoo&dist=yhoo

JOHN DVORAK'S SECOND OPINION

Apple should pull the plug on the iPhone

Commentary: Company risks its reputation in competitive business

By John C. Dvorak
Last Update: 7:18 PM ET Mar 28, 2007

BERKELEY (MarketWatch) -- The hype over the unreleased iPhone has actually increased over the past month despite the fact that nobody has seen or used the device. This, if nothing else, proves the power of branding and especially the power of brand loyalty.

It's the loyalists who keep promoting this device as if it is going to be anything other than another phone in a crowded market. And it's exactly the crowded-market aspect of this that analysts seem to be ignoring.

Apple Inc.'s past successes have been in markets that were emerging or moribund. Its biggest hit has been the iPod. But let's examine what happened here.

First the MP3 player business was segmented and unfocused with numerous players making a lot of cheap junk and not doing much to market any of it.

Apple does what? Advertise. Gosh, what a concept.

Then there was the online music distribution business, again unfocused and out-of-control with little marketing and a lot of incompatible technologies. So Apple comes in with a reasonable solution, links it to the heavily promoted iPod and bingo. A winner.

It advertises on TV, on billboards and on the Internet. Within no time the company takes over the business that would probably still be languishing without Apple.

Thus Apple does what it does best. It produces a jazzy product and promotes it like any good business should do. And in the process manages to get a high margin.

This is nothing more than the fundamentals.

Now compare that effort and overlay the mobile handset business. This is not an emerging business. In fact it's gone so far that it's in the process of consolidation with probably two players dominating everything, Nokia Corp. and Motorola Inc.

During this phase of a market margins are incredibly thin so that the small fry cannot compete without losing a lot of money.

As for advertising and expensive marketing this is nothing like Apple has ever stepped into. It's a buzz saw waiting to chop up newbies.

The problem here is that while Apple can play the fashion game as well as any company, there is no evidence that it can play it fast enough. These phones go in and out of style so fast that unless Apple has half a dozen variants in the pipeline, its phone, even if immediately successful, will be passé within 3 months.

There is no likelihood that Apple can be successful in a business this competitive. Even in the business where it is a clear pioneer, the personal computer, it had to compete with Microsoft and can only sustain a 5% market share.

And its survival in the computer business relies on good margins. Those margins cannot exist in the mobile handset business for more than 15 minutes.
And note that the Microsoft Corp. versus Apple battles are laughable compared to the frenzied marketing mania in the handset business. Even Microsoft itself has troubles with its attempts to get into a small sub segment of the handset business with its operating system.

What Apple risks here is its reputation as a hot company that can do no wrong. If it's smart it will call the iPhone a "reference design" and pass it to some suckers to build with someone else's marketing budget. Then it can wash its hands of any marketplace failures.

It should do that immediately before it's too late. Samsung Electronics Ltd. might be a candidate. Otherwise I'd advise you to cover your eyes. You're not going to like what you'll see.
 
Yeah.
Dave Winer said:
I was talking with Dvorak [21MB .mov] at the Vloggercon party this evening, and he started telling a story about how he deliberately pisses Mac users off to get flow for his stories, and I said, hold a minute, I want to record this, and **** if he didn't stop and repeat it for me and my video camera.

Dvorak said:
There's a formula for pissing off Macintosh users and getting a lot of the links or attention. And this has been deconstructed but never accurately. I'm going to give you the deconstruction.

First I'll write something that would be semi-innocuous with just enough insulting stuff to get a lot of attention from the Macintosh community. So then they would write in—and by the way it was always—it's always done in such a way that I had outs, in other words I would write in kind of a weasely way, that gave me one column with a lot of numbers.

Then I would get a lot of hate mail, and lots of weird Macintosh reaction. And then, I would react to it as though I was flabbergasted that everybody misinterpreted me, and that they hated it, and I don't get it, what's wrong with these people, which would piss them off even more. So I'd get like a huge hit.
…
Then I'd let it simmer down for a while, and whatever position I took originally, I would change the position to exactly the opposite, and tell the Macintosh people I was completely wrong and they were right all along, and the numbers would go through the ceiling!
 
I am always baffled at the complete and utter nonsense that leaves his brain. Simply amazing. :eek:

Edit: Even the stuff where he isn't deliberately trying to piss Mac users off is just incredibly weak.
 
i see sense in this... if you look, apple is not really competing with anybody on anything... aside from maybe their prof creative softwares... but that's not the kind of competition happening with the mobile phone market

macs dont directly compete with PC, OS X certainly doesn't compete with Windows

ipod is such a market leader now that iPod™ sometimes is recognized as the generic name for mp3 player.

"hey, i want an ipod"
"what brand? wanna try the apple one?"
"sure, the apple kind"
"oh, here you go"

(just like in some region, Coke™ is the generic name for all soda)

display? well, let's just say ACD is not the most popular LCD monitor out there.
 
So, when did John Dvorak start worrying about Apple's reputation?

I really liked the line, "Even Microsoft itself has troubles with its attempts to get into a small sub segment of the handset business with its operating system."

Hey, John! Haven't you noticed that Microsoft has trouble getting into any market that they weren't essentially born dominating?
 
I often enjoy Dvorak's sensationalist diatribes over Apple. Hopefully Apple can find some foothold into the cellular phone market that's already stable and dominated by big players.
 
I think he has a point, Im not gonna swoon over the iPhone. Right now it is all hype, for all we know the thing could tank.
 
So, when did John Dvorak start worrying about Apple's reputation?

I really liked the line, "Even Microsoft itself has troubles with its attempts to get into a small sub segment of the handset business with its operating system."

Hey, John! Haven't you noticed that Microsoft has trouble getting into any market that they weren't essentially born dominating?

No one is "born into" any market. Markets are gained and won.
 
That was a good video, this guy is a freakin genius and loser at the same time. Instead of actually taking a solid position on a topic hes just spinning it to get more attention and readers. He doesn't care about the topics he's writing about, he's just trying to draw attention to himself. Give it 3 months, he'll be reading his hatemail on his new iPhone.
 
That was a good video, this guy is a freakin genius and loser at the same time. Instead of actually taking a solid position on a topic hes just spinning it to get more attention and readers. He doesn't care about the topics he's writing about, he's just trying to draw attention to himself. Give it 3 months, he'll be reading his hatemail on his new iPhone.
o rly?
 
I agree that it's going to be tough for Apple to break in to the mobile handset market, but that's no reason to throw in the towel.

I realize he says most of what he says to get a rise out of Mac users, but when he says things like that it just makes him sound like a fool.

By his reasoning, Microsoft should have given up on the Zune long ago. Of course, they should give up on the Zune, but that's not the point. ;)

I think my favorite line was when he said the iPod only succeeded because Apple advertised. Oh, and it's the best player out there too, but that's not important. :)
 
No one is "born into" any market. Markets are gained and won.

Really? Microsoft had market dominance dumped into their laps. Their main expertise since has been in exploiting it. The vast majority of their other projects have been money losers. That is why I find Dvorak's "even Microsoft" remark so humorous.
 
I don't know who this guy is, but he contends the iPhone's buzz is only from brand loyalty.

Well, if Apple had shown off the Motrola ROKR at Macworld instead of the iPhone there would not be the buzz there is now.

Yes, people haven't seen an iPhone in person, but the buzz is in large part from what they have seen and heard about the iPhone--namely its really cool UI. It's not just because it's Apple loyalists are creating buzz for no reason. I don't think many Apple loyalists were apologists for the lameness of the Apple/Motorola ROKR fiasco?????
 
The buzz if from rumors and hype, its all good marketing from Apple but until real people get their hands on the phone will we know how good of a device this will be. It all hinges on if people like it. There are a lot of unknowns about the iPhone and until the public puts it to use know body knows if it will succeed, it is all a gamble at this point.
 
Dvorak is telling Apple to pull the plug on the iPhone? All I want to know is how much Microsoft stock Dvorak is holding. ATandT reports they've got ONE MILLION inquiries about the iPhone?

Dvorak is just playing scrooge. Weird. I want to know -- why?
 
Dvorak is telling Apple to pull the plug on the iPhone? All I want to know is how much Microsoft stock Dvorak is holding. ATandT reports they've got ONE MILLION inquiries about the iPhone?

Dvorak is just playing scrooge. Weird. I want to know -- why?

1 million inquiries does not mean the iPhone will be a success. Because not a single one of those 1 million people has used the device to know how good or bad it might be.

The Motorola Q has a 50% return rate, and Motorola has alot of experience in phones. Apple has none, and making a smartphone is hard. So I think it's a valid point (not that I don't think Apple should make the phone).
 
I think my favorite line was when he said the iPod only succeeded because Apple advertised. Oh, and it's the best player out there too, but that's not important. :)

Maybe I am forgetting something, but I do not remember any sort of aggressive advertising on the iPod's part until it found its way to Windows users.

It was advertised at the beginning, to be sure, but not like what Dvorak is claiming.
 
The Motorola Q has a 50% return rate, and Motorola has alot of experience in phones. Apple has none, and making a smartphone is hard. So I think it's a valid point (not that I don't think Apple should make the phone).

Though Motorola may have a lot of experience in making phones, they also have a lot of experience in making failures. I can't remember the last time Motorola launched a new phone line that wasn't immediately successful, then a couple months down the road everyone saying how much they hated their phone and how big of a piece of crap it is...

That sounds like what Steve was saying when the iPhone was announced...how much people hated their phones. Hmmmmmm....Maybe Apple is on to something???
 
Though Motorola may have a lot of experience in making phones, they also have a lot of experience in making failures. I can't remember the last time Motorola launched a new phone line that wasn't immediately successful, then a couple months down the road everyone saying how much they hated their phone and how big of a piece of crap it is...

That sounds like what Steve was saying when the iPhone was announced...how much people hated their phones. Hmmmmmm....Maybe Apple is on to something???
Unless a couple of months after the iPhone people say the same thing about how bad the thing is.
 
Though Motorola may have a lot of experience in making phones, they also have a lot of experience in making failures. I can't remember the last time Motorola launched a new phone line that wasn't immediately successful, then a couple months down the road everyone saying how much they hated their phone and how big of a piece of crap it is...

That sounds like what Steve was saying when the iPhone was announced...how much people hated their phones. Hmmmmmm....Maybe Apple is on to something???

Saying that people don't like their current phones does not by any means guarantee that Apple will make a successful phone. Making an obvious statement is alot easier than making a great product, especially a technically difficult product in a space with tons of competition already (the iPod is not technically difficult).
 
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.