Apple Still Won’t Play the Game — Well, Mostly
June 11th, 2009It’s fair to say that the fairly decent price reductions of the MacBook Pro series will have an impact. People who complain that Macs are too costly will have less ammunition to assert their case. Microsoft will have to recast its lame laptop buyer spots to recognize the new reality. Or maybe not.
While not unexpected, it’s encouraging to see Apple keep the 8GB iPhone 3G in the lineup, for just $99. Former Apple hardware executive Jon Rubenstein, who now heads Palm, is going to be under severe pressure to somehow match that price cut with the new Palm Pre, and it’s not as if Palm is in terribly great shape these days.
Regardless, I suppose some of you will feel Apple listened to those Microsoft spots, and the price reductions will spark a trend, that Apple will soon do precisely the same with its desktop line. Cheap Macs — what a concept!
However, Apple doesn’t always exist in the same universe as the rest of the PC industry. You see, PC makers are by and large taking the same commodity hardware and competing with each other for every single sale. With netbooks, selling sometimes for less than $300, they are making do with paltry profits in the hope that they will make it up on volume, or perhaps by getting you to customize your tiny new box with high-profit extras.
In fact, you can already see this expansion trend in the netbook space. More and more makers are building in larger keyboards, some extremely close to full size, along with larger displays. True, these products will still be saddled with slower processors, and less memory, but for many normal tasks for a home or small business, that’s just fine. I can think of email, Web browsing and basic word processing, for example. Microsoft is even allegedly fine-tuning Windows 7 to run in acceptable form on these low-end note-books.
In the end, the netbook will be little more than a slightly cheaper entry-level product, offering most of the capabilities of the full-fledged note-book. For most people, I rather suspect the differences will become extremely difficult to discern in the real world unless you are doing chores that require a more powerful processor or graphics chip.
As far as Apple is concerned, the jury is still out as to whether they have any desire to enter that business. Certainly cutthroat pricing is not their cup of tea. Even at the lower prices, the MacBook Pros will still earn Apple healthy profits. They are benefiting from the lower cost of raw materials and higher production runs to compensate for all or most of the difference. Nothing Apple builds is designed to sell for a low profit. The possible exceptions are the App Store and iTunes, both of which serve to boost sales of hardware. So if they break even, it’s still a plus.
In contrast, the PC industry doesn’t seem to understand how to do things of that sort. Certainly Microsoft can’t imagine how to match Apple’s ecosystem, although the whole arrangement seems to make perfect sense to most anyone.
Looking again at Snow Leopard, it’s clear to me that Apple can make a perfectly decent profit for all its efforts even at $29. I expect lots of Leopard users with Intel-based Macs will upgrade right away, since the fee is so low, and assuming the original 10.6 doesn’t have any significant show stoppers.
Having a larger portion of the Mac user base on a single operating system also makes it cheaper for Apple to handle support and quality control. Ditching the PowerPC will encourage more people to buy new Macs, even if their older hardware seems to have a long useful life ahead of it.
That said, if you have, say, an iMac G5 with Leopard, it will continue to be supported and run great even if you can’t take advantage of the enhancements in Snow Leopard, which are largely performance based. Maybe the Finder will be slower, maybe apps will take longer to launch, but you will still have a solid computer that is more than capable of handling a lot of tasks.
Just the other day, in fact, I upgraded a client’s G5 with Leopard. First I had to boost his RAM allotment from the standard 512MB to 2GB for maximum performance. Even before the Leopard installation began, the improvement was almost startling. The initial startup process and basic app functions were so much faster, it almost seemed as if he’d purchased an all-new computer.
Upgrading to Leopard 10.5.7 didn’t hurt performance. He will gain the benefit of all the new features, and be able to get the latest and greatest software.
Except for the growing number of apps that are Intel only. That’s the next migration that’s coming on full force. Apple’s move to Snow Leopard will only accelerate that change. They’ll sell more hardware, all without having to keep cutting prices. That assumes, of course, that the economy will cooperate, and that is a question nobody, not even the so-called experts on Wall Street and Washington, D.C., can answer.
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Apple also sells the same commodity hardware, only running a nicer and better OS. From the super-fast Mac Pro to the feather-light MacBook Air, there is no hardware advantage with Apple gear. Its high-end no doubt, but there are many high-end models in the PC world, some of which are cheaper and some are more expensive.
Whenever Apple puts out new Macs, I read the reviews. Besides the usual ones from Mac sites like Macworld I would check in the PC sites. The PC ones do a fairly good job sizing up the new Macs, but I also read the comments from readers. There you would get a different outlook. It was one complaint after another about Apple’s pricing or hardware. There are a lot of bitter PC users. In their world, regardless of hardware makers, the experience of using a PC is the same. On the Mac side, the hardware may be similar yet the experience is different.
From my own perspective of 15+ years of PCs and 10+ years of Macs, I chose Macs for home use. Apple’s hardware have always been expensive. The first PowerBook I bought 11 years ago sporting a whopping 4GB hard drive and 64MB of RAM was more than three times the cost of today’s MacBook. There was never any buyer’s remorse. It was very pleasant to use over the years. One of the first software I added was an anti-virus due to working with a PC. The only virus caught came on a diskette from work. That turned out to be waste of money because the virus only affected a PC.
“In the end, the netbook will be little more than a slightly cheaper entry-level product, offering most of the capabilities of the full-fledged notebook. For most people, I rather suspect the differences will become extremely difficult to discern in the real world unless you are doing chores that require a more powerful processor or graphics chip.”
And what if 80% of the market finds it good enough? What if that market segment likes it for the portability and constant access? What if content consumers like carrier subsidized portables for constant connectivity? A perfect down payment and installment plan system for the credit crippled in economic distress. Oh, and you thought the monthly fee covered the wireless access? This is going to be the summer of carrier subsidized netbooks as a dress rehearsal for LTE and WiMax in a couple of years. Witness the Mifi router phenomenon. Carriers would like nothing less to run end around land lines (cable, FioS or DSL), become the new defacto ISP, with cell phone like data plans (read that as capping), and young consumers remembering nothing of what a real computer was like. We’ll see what happens, however the digital collision between phones and computers may create a catergory that hardware manufacturers may be ill equipped for. I expect that Apple will try some sort of tablety-netbookish thing just because it is better to redefine the space than not participate or participate on me-too terms. Of course carrier subsidized netbooks may be a total flop and Apple can just ignore the fiasco. I do think because the profits of captive consumers is so juicy, the carriers will take multiple stabs at it if the first effort fizzles.
@ Yacko: Fascinating about the what ifs? But it seems that sales of netbooks are faltering, coming in below expectations in the last month or so. Maybe it was all a flash in the pan. Fascinating.
Peace,
Gene
I am fascinated by the different point of view about computers between the Mac Users and the Mac Critics from the PC side. The Users focus on the experience of the computer, the Critics focus on the bill of materials used to build it. This difference of perspective seems to be rooted in different values. The Users do not care what is under the hood as long as it gets the job done. This is a reasonable attitude when the user experience, to a first approximation, has remained constant through three very different families of CPUs. The Users want the Mac experience. The Critics seem to be enamored of lists, they focus on a list of parts, they want a list of features. The one property not on those lists might be called fit and finish. The Critics seem offended that the Users do not share their values or see their wisdom. The Critics seem to reflect the values of Microsoft, a company Jobs has characterized as having no taste.
Andrew said:
“Apple also sells the same commodity hardware, only running a nicer and better OS. From the super-fast Mac Pro to the feather-light MacBook Air, there is no hardware advantage with Apple gear.”
But, there are hardware advantages with Apple. Because Apple doesn’t squeeze the last penny out of a design, there are major improvements in quality. This means that Apple has fewer support issues and its customer satisfaction ratings are the highest in the industry.
Apple may use the same parts as competing PC’s and produce them in the same factories, but it designs its own boards. And it chooses third party equipment which has a higher mean time to repair. This is much of the reason that Apple charges more. Apple hardware lasts longer than PC’s, so Mac users can keep a Mac for four to six years before trading it in, rather than an average of two years for a PC. This leads to a Total Cost of Ownership for a Mac which Gardner says is a third of supporting a PC for four years. You get what you pay for with honest companies.
Anecdotal: Friend bought netbook. Raved for a week. Returned after two weeks. Screen too small. Keyboard too small. Slow net performance.
Hi Gene,
It’s fascinating, to me to see where Apple is going with this. I like the lower prices for the laptops, but I never saw any necessity for Apple to do that. Apple was doing well at the higher prices. Mac sales were still growing slightly when the PC market was down 6% world wide.
The threat of price inflation coming next year seemed to militate against any price change. But, Apple seems to handling its finances well during these topsy turvy times.
The price reductions will never satisfy the PC critics though; all they want is cheap, cheap, cheap. They never understand or appreciate the ease of use issues with a Mac or the underlying robustness of Mac OSX.
The Windows OS is a bad design. It is a stand alone operating system which was never designed to be multi-user or to face the threats on the internet, so it causes its users constant headaches from malware.
It would take Microsoft seven to ten years of development hell to put a new robust UNIX foundation under Windows. Microsoft saw how hard it was to convert the Mac OS to Mac OSX and Apple had a modern OS it could buy: NeXT’s Openstep. Since this change over to a real OS would cost MS much of its market share, it is unlikely to want to go down that road. But, if it doesn’t do that, Windows will become as impossible to design for as Longhorn became. There is a limit to how much longer that Microsoft can keep the Windows OS tottering along.
http://rixstep.com/2/20090601,00.shtml
Leopard already has good foundations; it is a modern, multi user, modular REAL operating system. Most PC advocates do not understand these distinctions; they keep looking at superficialities. They keep judging Apple in Microsoft’s terms.
Snow Leopard is Apple anteing up the computer game. It is placing a bet that Microsoft cannot reply to.
Snow Leopard has few new features because its foundational changes require that developers take advantage of them. Within a year, almost every application on the Mac will be a 64 bit Cocoa application while Microsoft will have a devil of a time getting its users interested in 64 bit. Apple’s 64 bit OS will take advantage of the increased number of registers in Intel’s 64 bit Core 2 processors. There will be a speed up from that.
Then, Grand Central Dispatch will make it easier for developers to use the multiple core in the Intel Core 2 processors. This will enable Intel to give us 8, 16 and 32 cores as soon as possible. And only Apple and Linux will be able to take advantage of them. I don’t believe that Apple has forgotten about Sun’s Zettabyte File System. I just don’t see any necessity for it, yet, except for servers over the next few years. Five years from now is when ZFS will come into its own on the desktop. OpenCL will allow better utilization of the GPU, but we don’t know what use the developers will make of it, yet.
Then, we have an operating system in Snow Leopard which Apple says it has gone through line by line to optimize and stream line. Snow Leopard cuts its bulk to 40% of Leopard 10.5s, so it should be faster.
Many people claim that this reduction is merely from taking out the PowerPC code, but they forget that remaking the OS into Cocoa API’s and converting to a 64 bit kernel as well as adding in Grand Central and Open CL must add in much more code. An optimized Operating System will cause fewer vulnerabilities to exploit and 64 bit security is going to be much harder for hackers to spoof. Apple will be including all the designs which Microsoft has made to protect its periphery, but Apple has much safer foundations.
The recent brouhaha about Apple touting its improved security in Snow leopard misses the point. Apple doesn’t have to promise 100% security at its periphery like Windows, because its foundations are so much more secure. It will be foolish to buy Antivirus for Snow leopard, but Apple cannot say that. If you need the protection of belts and suspenders, then buy antivirus. Most Mac users will not.
Snow Leopard will give improvement in speed to even those people, like me, who don’t have the NVEDIA 9400 GPU’s in their computers. It is well worth the $29. Remember, too, that 92% of Mac Users have already converted to Leopard since it was introduced 19 months ago.
Snow Leopard is a spring board for the future, but much of its benefits must be created by the developers. It is to Apple’s advantage to induce the users to upgrade and thus, to force the developers to recompile their applications in 64 bit. Those developers programing in 32 bit Carbon API’s or using cross platform development tools, like Adobe, had better get onto XCode and Objective C or they will lose market share to the developers who do.
Louis Wheeler wrote:
I agree with everything you said, but that level of quality is not exclusive to Apple. Lenovo ThinkPads and Panasonic Toughbooks are also premium quality computers that take the same commodity parts as the rest of the industry (Apple included) and like Apple, puts them into very high-quality cases with excellent fit and finish. Those systems, of course, cost about the same as Apple’s systems, as well they should.
I’m not saying Apple is premium gear, it is, and that is why I buy it. But to say that Apple is the only company that makes premium gear is simply misguided. Many brands even offer multiple models in a variety of price ranges with the same components inside. Look at a Dell Inspiron (budget system) and a Dell Latitude business system), they may have the same processor and video card, but there is a world of difference in the build quality and reliability between the two, along with a corresponding difference in price.
Believe me, I’m not criticizing Apple here. My law office is almost all Mac, with one Windows server and one laptop PCs next to an iMac, a Mac Mini, three MacBooks, a Mac Pro, a Power Mac G5 and a MacBook Air. The Macs are all outstanding, but so are the PCs, which are also premium models purchased at premium prices.
Andrew, I was talking about Apple’s hardware advantages, not anyone else’s. I was saying that Apple may cost more and be worth more. Unlike most computer companies, Apple doesn’t make low end computers. So, why should a Mac be compared to them?
I didn’t say that everything else is crap. There are other quality computers out there, but they aren’t cheap. Often, they cost more than a Mac. The PC market is so wide that hardware quality can go from top notch to junk. It takes expertise to tell the difference between hardware which has the same specs and chips. Most people can’t tell where the quality resides, so they buy a brand name and hope that the quality goes in because it cost more.
I was complaining that, too often, a Mac is erroneously compared to computers which are not in its quality class. Price is not the only criteria when choosing a computer: Quality, durability, power, ease of use, availability of software and warranty all matter.
The greatest asset that Apple has is Mac OSX, but the build quality of its hardware matters, too. Cutting a penny off the price of a computer board can sometimes sabotage its reliability. I’d rather not have that happen to my computer. So I’ll pay more if I can prevent it. My time in getting it repaired is worth something. Buying cheap is rarely cost effective.
Hi Gene,
I was running 10.5.6 on my MDD 867 and when I updated to 10.5.7 I noticed a huge performance boost. A few days later I was at Low End Mac and Dan Knight had bench marks showing the boost the .7 update made on his MDD. This was the most notable increase I have ever saw on a Mac OS update and Dan has numbers to support my impression. I was so inspired I used my Family Pack to put Leopard on my daughter’s DA 733. The DA is now pretty impressive for an old daug, ( was running 10.4.11) and before Leopard it was getting slow enough that I wanted to retire it. I think the PPC just got a Snow Leopard of it’s own. Take a look at Dan’s performance test.
Gene writes ” Ditching the PowerPC will encourage more people to buy new Macs, even if their older hardware seems to have a long useful life ahead of it.” As a (very small-time) AAPL stockholder I can only stand up and cheer. But I have a couple of niggling doubts. In the first place, if you consider the sad history of General Motors, its adoption of the Planned Obsolesence policy marks an important milestone in its death spiral. It’s a good policy in the short run, maybe not so good in the long. Second, we are currently being bombarded by propaganda about ”green” computers. Well, the greenest computer of them all is the one takes the longest to find its way into the landfill. We consumers have been conditioned to accept a three-year life cycle, which is not very green at all, and maybe we should have higher expectations. It’s worth remembering that the G5 was only end-of-lifed in August 2006. If we’re going to get serious about green, then the best way to build a computer is the way that allows the most upgrading and retrofitting, so that it isn’t left behind so quickly. Here I am at the moment, rather cheesed to find out that the GPU in my first gen. Mac Pro won’t support Open CL. Either I’m going to have to replace it with one that will, or if there is some more basic reason that Open CL won’t work on my Mac I’m going to have to live without. Darned if I’m going to walk away from an otherwise perfectly good Intel Mac so quickly.
dfs said:
“In the first place, if you consider the sad history of General Motors, its adoption of the Planned Obsolescence policy marks an important milestone in its death spiral. ”
Planned obsolescence is a rather strange, anti-capitalist, 1960s hippy concept: It rewards the status quo; It assumes that change has an evil intent. It assumes that companies have the power to force people to buy what they don’t need. Microsoft proved that not to be true with Vista.
Snow leopard does not force anyone to upgrade. What it does is encourage people to do so by providing improvements in technology which includes better speed because it better utilizes the Intel and NVEDIA hardware. Furthermore, the move to 64 bit applications opens up many more speed improvements.
You also assume that the owners of PowerPC computers are hurt by this change. Did they have a contract with Apple saying that they would not be obsolesced? No. It was inevitable that, as soon as Apple started making computers with Intel processors, that the software for the PowerPC would be left behind. The PowerPC community is small; 92% of Mac computers are now on Intel processors. The only valid complaint of the PowerPC community is that the last G5 PowerPC computers were sold three years ago.
This complaint is viable only because Mac users keep their computers so long. If the PowerPC computers were a Windows machine they would have been in a landfill, last year. I kept my last 800 MHz flat screen iMac for six years. I gave it to a friend who will be using it for another three to four. This is typical of Macs. If you want to complain about being anti-green then talk about Wintel which has planned obsolescence through bad design and poor quality.
You also introduce a Luddite quality to these webpages. Apple is in no death spiral. It has gone though hardware and software changes before when it migrated from Motorola 68000 series to PowerPC and the classic Mac OS to Mac OSX. Change is the price of progress.
Apple, in Snow leopard, will increase the speed of even older Mac Pro’s. You are not forced to upgrade or buy new. You come off as being rather self absorbed.
You come off as anti-progress because, at the moment, you are unwilling to take advantage of the improvements in Snow leopard.
I am in the same situation as you, but I don’t bemoan this fact. I purchased a 24 inch iMac, last year, which does not use the NVEDIA 9400 GPU, so some of these improvements do not apply to me, yet.
I have a simple rule: I expect change, but don’t move until it is advantageous. I don’t upgrade until the new computers are, at least, four times faster than my current one. This usually means that I buy a new computer every three to five years. I will, then, sell the Mac on Ebay or give it to a friend so that they can continue to use it for another three to five years. Thus, the Apple market share continually increases. What are your Environmentalist concerns about that?
PS. It was the United Auto Workers who are responsible for GM’s death spiral.
There is also the dilemma to consider: Should Apple not add certain features, because older Macs might not be able to take full advantage of them? That would only hinder progress. Consider Snow Leopard as the start, and as more and more Mac users upgrade, or buy Macs with 10.6’s successors in the next few years, such questions will not need to be asked anymore.
Peace,
Gene
It’s how they catch monkeys, Gene. They tie a gourd to a tree and place a treat inside. The monkey reaches in and grasps, then can’t get his fist out. But, he won’t let go of the prize to free itself, either.
It is always the case, if we want something better, we must be willing to give up the past. So quibbling about being left behind is petty. Your current computer is not the last one you will own.
You deny yourself the future when you obsess about the past.
I think I’ll stand by what I said. a.) I’m no fan of the UAW, but loss of the terrific consumer confidence GM once enjoyed has hurt GM even more than the unions, and Planned Obsolence was the first of a number of things they did to undermine it. My point is that it is not inconceivable that the same thing could happen in the computer industry. b.) This acceptance of a relatively short-life cycle for computers (the rule of thumb for where I work seems to be three years) is to a certain extent an example of conditioned thinking. If users (especially purchasers for govt. and large corporations) insisted on it, surely it would be possible to design computers that could be upgraded/retrofitted to a greater extent than present ones, which would extend their life-cycle without impeding the march of forward progress we all want to see. I don’t see how anybody can call this expectation Luddite. Case in point, since I already mentioned this, is OpenCL on a 1st gen. Mac Pro (and I don’t think I’m being unduly self-centered here, since I’m not the only guy in the world who still uses one of those boxes – no doubt our number, as they say, is legion). If I wanted to be paranoid about this, I could point that NVIDIA used to make an upgrade kit which would let users put a GeForce 8800 GT in first gen. Mac Pros, but that this appears to have been discontinued (I’m checking this out with NVIDIA) and I could suggest that this was by special arrangement with Apple to keep users from being able to use OpenCL on these Macs, a corporate strategy for making them obsolescent. I don’t happen to be that paranoid myself, but I bet that as soon as Snow Leopard is released this accusation is going to surface. And this brings us back to the issue of consumer confidence in a corporation. I am sure that if this card has indeed been discontinued, it was for some other reason, but it would be great p. r. for Apple to encourage them to rethink this decision.
Yes, dfs, but General Motors wasn’t innovating; It was introducing FASHION. There was no substantial reason to trade your car in, early. What does this have to do with a long life cycle product like the Mac?
Snow Leopard cleans up the Mac OS for the future; It optimizes for Intel Core 2 processors and NVEDIA GPU’s. It introduces new technologies which will be partly useful to you, now, but will be beneficial tomorrow. Computers are a consumption item, so long as we have technological improvements.
A technical sea change is coming. The computers we will have five years from now will be nothing like our current ones.
The computers with the short life cycle have always been the Wintels. It is the very cheap computers, which Apple does not sell, which have the shortest lives.
Some of this short life cycle was because of an ever higher push for Megahertz. Apple didn’t create the game, but they had to scurry to keep up. They were embarrassingly stuck at 250 MHz for almost two years while Intel went above 600 MHz. Some of the reason for the change to Intel processors was that the PowerPC chips couldn’t keep up because the AIM partners had different needs. Apple needed Megahertz to compete with Intel, Motorola specialized in embedded processors and IBM was indifferent to both with its CELL computer chip.
The Luddite part is a resistance to change which has already occurred and is being played out. The hand writing was on the wall, long ago. It became inevitable that PowerPC hardware and software would left behind, just as soon as Apple said that it would be converting to Intel. A year ago, Apple said that it would be leaving Carbon applications behind because it wouldn’t support 64 bit Carbon API’s. Adobe took that very hard. Sometimes, we must go with the flow. Sometimes, we must leave old technologies behind.
You are displaying a prejudicial, and adversarial, attitude here. It is almost a paranoid position.
There are advantages for going with NVEDIA. Those of us who bought earlier computers will have to wait until their computers approach their useful life. That is another three years for me. I will sell the 24 inch iMac, I have, on Ebay and it will still be useful for someone else for many years. Macs have a long life.
PS. The reason General Motors got in trouble was that it’s cars were selling well, but it was taking an 8 thousand dollar loss on each one. The reason for the loss was not in manufacturing them. It was the pension and medical overhead for its workers. A straight bankruptcy would have trimmed those expenses back, so that GM could make money again. But the government intervened on the UAW’s side. Consequently, GM will be going down the tubes within five years.
I suggest you look into British Leyland. The current administration is following the same pattern.
http://www.nytimes.com/2008/11/18/business/economy/18car.html