Apple Needs to Seize the Moment
June 22nd, 2006A lot of opportunities in life involve choices. Pick the wrong path, and it all turns out badly. Right now, the forces seemed to have coalesced for Apple to gain more market share than it has had in years, if only it makes the right decisions.
First let’s look at the current marketplace.
Although some might put a different spin on these matters, I think Microsoft is in trouble. The decision of Bill Gates to step aside from his daily duties, and spend more time as a philanthropist than a Chief Software Architect, is telling. Over the past few months, the company he co-founded has also engaged in some executive musical chairs, and companies don’t do this to change the titles on business cards. Clearly there are deeper problems.
Some might want to blame the ongoing delays of Windows Vista and the rough shape of the current beta on Jim Alchin, outgoing Group Program Manager for Platforms, who is the executive in charge of the whole mess. If you subscribe to the “buck stops here concept,” as I do, you can even place the blame foursquare in the hands of CEO Steve Ballmer, for letting Vista careen out of control. Sure, it may indeed be released to manufacturing in the next four or five months, according to current schedule. It may even be reasonably stable, at least enough to survive release, although I wouldn’t be surprised if there were a bunch of early release patches to cure the worst ills.
Whatever happens, this year Apple has a lot of the market to itself in terms of promotional opportunities. Microsoft’s huge marketing machine can sell all the Xboxes it wants, but Macs will be afforded the opportunity to shine in a way that hasn’t happened in years. The “Get a Mac” campaign that has blanketed the airwaves on TV is a worthy start, even though some might feel a greater connection with the actor who portrays the PC nerd.
At the same time, Apple needs to recognize that most people who buy a PC don’t base the decision just on a few flashy features. They consider such products to be essentially the same, other than the name on the case and a few minor appearance elements. While features and performance might be examined, the real purchase decision is based largely on price. Yes, Macs are comparably priced to a PC with the very same standard and/or optional equipment, but it still requires careful attention to detail for a salesperson to explain all that to the skeptical customer.
Sure Apple’s own retail outlets do garner a healthy number of sales to Windows switchers, but the chain doesn’t blanket the U.S., let alone the rest of the world. Most people who buy Macs still make the purchases at independent resellers, where the experience can be decidedly mixed. Many superstores don’t have Macs at all. Now I understand Apple needs to make sure its products are given the right presentation. The iPod sells itself, really, but a Mac requires a whole lot more, and if the salesperson isn’t carefully trained and given the right level of performance monitoring and cash incentives, the sale might go to Gateway or HP.
In the U.S., the Best Buy chain is again considering adding Macs to its in-store lineup. There’s a pilot program in place that’ll be used to determine whether to expand the products to the entire chain. But Macs can’t just be placed on shelves or against the walls right next to other computers. Many people will still look at the price tag, declare them too expensive and move on. Properly labeled signs and unique displays will help. Maybe some knockout videos on a conveniently placed plasma TV would manage to convey the message. But the customer will then ask to speak to a salesperson, at which time all bets are usually off.
Although Apple chooses to remain above the battle, I do think it has to consider delivering some entry-level products shorn of a few frills. I mean, do you all need a Webcam, and another remote control to misplace? Together, we’re talking of a potential price reduction of more than $100 on most models, and a MacBook at $999 seems far more enticing to some than one at $1,099.
As much as you want to see Apple earn great profits, what would happen if they give up another $50 or $100 in profit margins for each unit, just to move product? Maybe just give a dealer a better quantity discount, and encourage price wars.
I’m really shooting from the hip here. I don’t pretend to be a marketing expert, but there are loads of opportunities for Apple to expand its market as Microsoft struggles to regain its footing. But don’t get me wrong: Microsoft is still an extremely tough competitor, even if it survives on sheer inertia. No matter how bad Vista might be when it is finally released, or how many more features must be shed, Microsoft will remain dominant in the PC industry for many years to come.
But Apple can get a much larger piece of the pie with the right moves. Perhaps the marketing experts in our audience can come up with some neat ideas. I’m curious.
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Well how about actually spending some advertising money in Europe? There are no TV ads of Apple here. There are no newspaper ads. There is no billboard campagne. There are no school programs. It’s as if Apple does not exist. The only advertise -a bit- in the graphic designers magazines. But these people already know how great Apple is. There are just some local Apple centres that advertise with some products. I think it’s a damn shame. ‘Regular’ people don’t even know OSX runs MS Office.
I’m not convinced that $100 or $200 difference would do it. If the Mac Mini didn’t do it, then $100 or $200 more won’t do it, either. Do you really want customers who would revert to Windows for $100 or $200? You don’t get and keep customers based on price; you need quality over a long period of time to do that, and that’s what Apple does. In fact, the quest for “lowest price” leads to fast-talking salesmen, fine print, shady deals, and poor service. Dell’s gone that route. I don’t think that we want Apple to become like Dell, do we?
There’s a large number of gamers (roughy $10 billion in sales per year) And they shop for availability of certain games and it’s performance on a machine. They are looking at real application or gaming benchmarks (not the ones that Apple tries to fool you with). If a particular game isnt available or runs much slower in OSX they won’t buy. Obviously you can use bootcamp and XP but this is a hassle to do (plus you’re not exactly switching to a Mac if you’re running XP all the time). MacMall does an interesting thing by bundling WinXP preinstalled. That makes it more appealing to get something that works (in either OS) right out of the box.
Another thing that will greatly help is to have an application exchange service. When switching to a Mac, turn in your windows version of certain applications in exchange for a Mac version (at reasonable price of course).
As much as I like the Mac commercials, I feel that if Apple were to do something along the lines of Microsofts commercials it would be much better. I think the Microsoft commercials showing a kid pretending to conduct an orchestra with the line animations showing an audience and piano etc, or the young woman riding the subway with the animations showing ideas for hats as she contemplates a hat making business, these commercials are quite compelling. They show what can be “done with applications which run on Windows”. We here reading this column know that all this can be done much easier and better on a Mac. (I’m biased, but it’s true). I would love for Apple to create a campaign tapping into the dreams and desires of people by showing what can be done with applications which run on Mac OSX.
Apple is all about features and performance. Their products, Macintosh and Mac OS X, are all about features and performance. They need to direct their marketing toward people that care about features exclusive to Apple. They try to do that.
Clearly, less than 100% of the computer market cares about the features exclusive to Apple products. My high school teachers used to complain about “the lousy 2%” in a different context.
Interrupt. Apple is about one other thing – innovation. Macs were the computers to buy when you wanted a one year lead over your competition. This advantage has been dwindling as computers have matured, with innovations appearing less frequently. /Interrupt.
Those hoping that Apple can double or triple its market share, are hoping that 10% or more of the market cares about the exclusive bits that only Apples provide. The job of Apple marketing is to convince more people to care, and to reach the people that do care.
Apple brags about how they ignited the personal computer market with the Apple ][, and re-ignited the market time and time again. It’s about time for them to do it again.
Woz,
Do you actually live in Europe? Perhaps not the part known as the UK…
I see Apple ads on TV all the time. Perhaps you only watch the non prime-time television, as it appears Apple likes to advertise alongside American programming that shows up on ITV/etc here. Definitely Apple ads – I’ve already seen several of the ‘Get a Mac’ ads on TV.
Add to this the iPod posters. Last time I was in Paris I saw these all over the place. I’ve seen them in Amsterdam, Germany, Ireland, Italy.
Probably not the blanket coverage they have in the US, but they have started to advertise here. I think they need better physical presence, however. Good start here in the UK (was in the London store yesterday – nicer than any of the ones I’ve been to in the US, including the one in San Fran). They need to get stores into Roma, Milano, Paris, hell, even Moscow. There are some prime retail locations in Europe just crying for an Apple-run location. I understand why they haven’t done it yet – it is extremely complex and difficult to manage operations in foreign language markets – between translations, labour laws, communications, etc.
Hopefully, as they start to build up market share in these other markets due to iPod penetration this will allow them to invest further outside of the US and recognize some real growth. They’ve had a nice turnaround in Japan lately, and I think Europe is a natural next best bet.
As it relates to lowering prices (as per the article) by removing features, I’m with Apple on this one. Initial prices have been higher because they’ve gone with high end chips. The built in camera and remote are cheap, and actually very compelling differentiators when you see the product in person. Saw Front Row the other day, and I swear, it had me drooling. That and the built in cam are the only reason’s I’m even considering buying a new Mac (well, and a faster chip so I can play Civ IV when it is released). I expect that prices will fall as Intel reduces its chip prices to try to get competitive with AMD (good for Apple, good for Apple customers) and to coincide with the holiday shopping season. I also think prices were a little higher out of the gate so they could reap maximum profit on the initial pent-up demand while they build up production volume.
I like the new ads. They are undertstated and tasteful, yet touch on concrete Mac advantages.
On a technical note, OS X gets better all the time. I do not expect Vista to be substantively different from XP.
The shift to Intel has gone WAY better than I expected, and we no longer depend on fuzzy-headed execs at MOT and IBM who believe they are in the Cell Phone or “service” businesses, respectively, instead oI focussing on the chip. Intel understands what business it is in. They have a mission ststement, and a real roadmap.
The assault on Windows has begun. I look forward to seeing CPU sales numbers in the last two quarters of ’06. So far, it looks like the iPod halo has been helping Apple somewhat, but the effect does not look like it is convincing outside the “error bars” yet.
Regarding the Cam, I think Apple is really trying to gets its customer to use the iChat AV application.
I have an old (12/2003) iMac G4, and I was pissed because I wasn’t able to use my old Logitech webcam with it correctly (and not at all with iChat).
Apple is all in the Audio (iTunes and GarageBand) and Visual (iPhoto, iMovie, iDVD and iChat AV) AND by GIVING customers the webcam for free (almost) they will get more users on iChat AV. And once your hooked …. Did you know that Apple has submitted to the patent office a demand for a petent for centered webcam in monitors ??? The next versions of the Apple Cinema Displays will include the webcam right in the middle of the display, you will be looking right in the eyes of your Chat Friends, great ! (Can’t wait for it !!)
Apple is innovating all the time and getting the devices to us with ease of use. The only other company I can think of that is trying to do this with each product is Bang & Olufsen !! By the way, products from both companies interacts pretty well …
i think applematters chris howard has the apple pricing&marketshare problem pretty much nailed with his wally-paradigm.
in short the mac is like percetage calculation, 90% of the people don’t understand it and the other half dosen’t care about it.
http://www.applematters.com/index.php/section/comments/fixing-mac-pricing/
@Michael:
What part of Europe? I live about an hour from Amsterdam. (You know, where they decided to create what is now the European Union in 1948). And overhere, apart from iPod posters, there is no advertising campagne. Nada. It’s a damn shame. Apple could also try advertising a bit in PC magazines. It’s all Dell, HP, and what not in there.
Well, in Brazil we dont even see iPod adds, we cant even find a decent Apple Store!
Ok, the marketing part. I think Apple should first maintain its uber position, always on the top of the chain. Its the smartest thing to do, unless they want to see that bright Apple behind the MacBook LCD rot.
Why? The product is a pioneer itself (Al Ries says that). How many computers ofers you that? Full integrated hardware and software? Would you buy a Dell with Lisa/Linux on it? Why not!? But why, if Apple was the first computer created, people dont think Apple as theyre first choice in personal computing??
Because IBM CLAIMS IT FOR ITSELF!! Ok, we can get thru IBM, they only provide software now, but we need to show the truth to people, Apple created (ok stealed from Xerox) the user interface and mouse!! Nobody knows that. Then whe have the place (store); the Apple stores are perfect, it offers the right service in the right place, 24 hours a day (in NY)!! Thats perfect.
But what abou the mega retail stores? People who work at the official Apple Stores should work inside the Targets and Best Buys…in that fancy stands, higher thant all the others, putting Apple on over all that silly pc´s.
C´mon it offers you everything!! ITS THE ULTIMATE MACHINE!! WHY DONT YOU BUY IT?!
“Because i dont need it…”
Well, you dont need it now…but its lightyears ahead of those black boxes. And its not black (well the MacBook can be but its soooo nice…)!! And Its diferent! Everybody wants to be diferent these days!!
But unfortunatly people have some avertion to that kind of diferent stuff. Theyre afraid of not doing things right. Or not doing things! (iPod Is so simple….)
Service is the word. Apple must focus on service. I´ve read loads of reviews reporting of not having an answer, or not having the right solution, or simply being holding on the line for minutes.
Service is the key for revolutionary brands and products. People cant have a bit of concern, a bit of doubt, people cant be afraid of trying and missing and not making it coming back!!
Service is the key….
Sorry if i cant make myself clear, but i was in a rush of thoughts and it just went out…please try to catch the line and connect the points!! =)
PS.: The president of Vonpar (Coca Cola distribution company in Brazil) uses Macs, and he said something courious once, “i use Macs because they´re for dumb people, it do it all for you…you dont have to think…!!”