The New Apple

Last week we sat in the audience at the Apple MacWorld keynote.  It seemed the most logical place to complete our research for an Opinions piece we’ve been working on for a while on where Apple is, where they seem to be going, and why that might be interesting.

Whatever you do, don’t skip this issue on the theory that since Apple isn’t a corporate buy – and generally it isn’t – that you don’t want to read about it.  There’s a lot to learn here about both history and the future.

MACWORLD:  THE CLAN GATHERS

MacWorld, since its start, has always been a gathering of the clan.  An audience at an Apple event is not vendors chasing customers (although that is going on, too), but rather everyone together, celebrating our otherness, our cleverness at being different.  Apple events like MacWorld are at once the justification and the reward for identifying with that difference. 

(Disclaimer:  I once ran an Apple shop.  That is, from 1983, when I assisted Apple with its plans for the Macintosh launch, through 1995, when I frankly gave up and switched to Wintel my whole company ran on Apple Macs.  We made that change because all the new software I wanted to be using was always first and sometimes only on Windows – We tried everything new first or very early, attended every Apple event, usually as a speaker, and wrote about Apple not just as an industry analyst but as an enthusiastic user.  In case you don’t know, in the late 80’s and early 90’s, many analysts and press folks were Apple users.  It was THE platform for desktop publishing (we published our first newsletter on pre-Alpha Aldus software) and it created those really cool print-like reports and slides.)

This MacWorld had the same format as earlier ones (I’ve been to nearly al of them), but it wasn’t the same.  The crowds were smaller, whole segments of Apple’s market seemed to have vanished from the exhibit floor (where was education?  Legal?)  And many important vendors had decided that being at a MacWorld exhibit in July, 2001 wasn’t a major priority.  Large sections of the exhibit floor were simply empty; more telling were all the areas with thoughtfully provided chairs and tables (usually entirely missing) and extra wide aisles.

We would have overlooked all that, writing it off to the high tech fainting spell we’re all enduring just now, except for the Big Show.  MacWorld keynotes are legendary and at the center is Apple’s legendary founder and Showman-in-Chief Steve Jobs.   This year’s Jobs keynote met several traditional expectations:  it ran over its time slot, it featured new Apple hardware, and demonstrations of to-be-shipped-soon Apple and partner software.  It also (another Apple tradition) shared some Apple marketing videos – pre-opening and opening day videos of Apple’s new retail stores. 

But (you knew there was a “but” coming, didn’t you?) it was curiously lifeless.  There was nothing being announced that was going to change the world and the audience knew that. Perhaps it’s unfair to expect a vendor like Apple to come up with world-changing announcements twice a year, at every MacWorld.  But that is THEIR idea and so we sit with eager expectation, waiting for the thrill.  I would say the experience was pleasing, but not thrilling.  And therein lays the tale.

Apple seems to be having trouble deciding what kind of a company they are and who their target audience might be.  If they are a consumer products company, complete with lifestyle retail stores (two now, 25 planned by year-end), rainbow-hued products designed to appeal to individual consumers, and annual product line refreshes, then what are they doing with a conference like MacWorld, the kind of tradeshow which was intended to appeal to business customers, developers, and educators?  Consumer companies may hold developer events, but they don’t need to clutter them up with the expense of booths in New York’s Javits Center.

Apple claims they are mainly targeting consumers, graphics artists (in both specialty firms and in the graphics departments of larger organizations), and the education market. 

OS X IS REALLY IMPORTANT

We’d observe that the Macintosh always represented an excellent choice for consumers, especially on the basis of ease of use and ease of support.  But it’s not clear to us how easy it will be for individual users to make the transition from the 17 year old Macintosh Operating System (OS) to the new Mac OS X (say 10), which is actually a form of Unix, and is closely related to the NeXT operating system and interface Steve Jobs built when he left Apple in 1985 and subsequently sold to Apple prior to his return several years ago. 

This is not a criticism of Mac OS X which we have tried and find to be a smooth running, attractive environment.  What we don’t find is that it’s very much like former Mac environments.  This is not a software compatibility issue.  Apple has addressed this issue by making the latest version of Mac OS a part of the OS X environment so users may continue to run all of their old applications.  It is very much a user interface issue.  Everything looks different (in a nice way, mind you) and many things behave very differently.  We’re wondering how users find out just how that works (it took us seconds for some things, many minutes for others, and we’re still puzzling over a few). 

We’re not even sure we don’t want OS X – after all, it has features that Mac OS doesn’t have and badly needed, starting with the ability to terminate a single corrupted application without crashing everything you have open, always a problem for Mac users, since the system, within the limits of memory, clearly invited you to leave everything open and move easily between applications.  Those of you who are pure Windows users may be shrugging your shoulders at this, but when the Mac first did this it was very new and exciting.

Best of all, even though OS X has only been shipping for four months, in September it will be refreshed with an upgrade version, OS X Version 10.1 which will offer faster performance, better user control of the interface and personalization, and more and better arranged preferences.

Jobs knows that the success of OS X and Apple hinges on attracting developers and software.  At the keynote he showed 10 applications and described them as “Ten of the next 1,000 great applications.”  Jobs claims that more than 1,000 native Mac OS X applications are now shipping and that 29% of developers polled plan to release a Mac OS X application within three months and 55% within six months.  I guess we’d have to say that we haven’t seen all of those applications although I’d guess we have seen (or heard about) several hundred.

The ten previewed included an OS X version of Microsoft office, as well as new versions of Adobe and Quark products, FileMaker (already shipping), Connectiva’s Virtual PC, IBM’s Via Voice, the World Book (available now), two games from Blizzard and Aspyr, and 3-d software from Alias Wavefront Maya.

We’ve also looked at OS X software from Mac vendors including Corel (Bryce, with Procreate Painter coming), ThinkFree Office, Dartware’s Intermapper, Netopia’s Timbuktu Pro and NetOctopus, Tenon Intersystems Openwave Post.Office, and iTools for OS X and OS X Server,  RealTimeImage’s RealTimeProof, 4D WebSTAR Server Suite, Metrowerks’ CodeWarrior,  and Now Up-to-Date and Contact,.

The real story here is how Apple OS X is treated by the developer community.  Much of the initial software will be Mac OS software being ported to the OS X environment.  A few of the early products (for example, Microsoft Office for OS X) are being optimized for the OS X environment; this can be a mixed blessing, since it makes it impossible to support the new feature set on earlier systems, making backward compatibility an issue.  A real question is whether having a version of Unix as the OS will lure more developers to the platform.  Apple must have a broader variety of software if it is to attract a larger market share of customers.  Especially important would be ground breaking software in new categories, created first (or only) for the Mac OS X platform (like desktop publishing was in 1985, when it first came into the market and made the Macintosh something special and important, creating an industry). 

We’d guess this is less likely to happen now.  There are many distractions for developers these days.  Linux would be one example.  Also, web-based software is much more important and in that environment, the OS on the desktop is much less of an issue.  Developers write for the server and a user on any desktop, in fact on nearly any device, accesses the application from a browser.  Many developers are going down that path.  What is more likely to happen is that the additional robustness of the Mac OS X platform will attract some ported applications from Unix and NT developers and, of course, all of the active Macintosh developers will first port to OS X and then, over time, many of them will choose to optimize for the platform.

THE HARDWARE IS ALWAYS FLASHY

MacWorld would not be an Apple event without hardware announcements and there were some for each of Apple’s target desktop markets. (Laptops have been refreshed too recently and are doing far too well to require new announcements just yet  -- we’d expect some might occur at the January MacWorld against spring delivery dates.)  The themes here are cheaper, faster, better equipped for customers who do lots of applications which require lots of storage and processing (graphics, video, etc.).  Jobs announced three new consumer iMacs, ranging from $999 to $1,499 and 3 PowerMac G4’s, with a Power to Burn theme, ranging from $1,699 to $3,499.  The top two are equipped with SuperDrives which include Recordable CD (CD-R), and DVD-Read/DVD-Burner capability.  The high-end unit is a dual processor machine which supports two displays.

Apple went to great lengths, with scientific explanations (well done) and demonstrations to prove that their 867 MHz G4’s were significantly faster than Intel’s P4’s and Itaniums.  It’s hard for users to understand how the lower Mac MHz numbers aren’t the telling issue and Apple continues to try to figure out how to tell this story.

Apple also announced price breakthroughs for its flat panel displays, with 15, 17 and 22” displays at $599 to $2,499. 

The story here is amazing power at great prices.  This is a new story for Apple.  Had they told such a story ten or 15 years ago, there market share might be very different today, but in those days Apple opted for premium prices and higher margins.  To be fair, they were not alone. 

THE BOTTOM LINE

Now, the question is who will heed the story? 

--  Apple continues to sell to its faithful.  It may not be true that once an Apple user, always an Apple user, but it’s close.  Those who stray from the fold, always think wistfully of how much more fun it is to use an Apple than anything else! 

--  Apple gets a share of new users in the consumer market but it would have to double or triple that share to be a really important player in the marketplace.  That seems unlikely.

--  Apple is once again trying to refresh its ties to the education community, especially the K-12 portion.  But this group has been badly treated by Apple many times and when money pressured tends to retreat to the more price competitive Windows market.  And it isn’t just the price of hardware.  It’s the price of every accessory, every implementation, and the availability of software and services.  We’d say they can hold onto this market better than they have, but they’re unlikely to make it grow very much.

--  Graphics arts have always been a sweet spot for the Macintosh.  It’s just a better machine and the software developers have always been attracted to the platform.  This is still true (although many developers now also offer their software on Windows).  Apple can continue to grow here.  Although the market is limited in size it’s still growing and the Internet has given it a much bigger niche to play in. 

We think Apple has yet to play its best card.  A number of years ago a study was done that discovered that Apple’s name had incredible brand recognition worldwide.  It didn’t matter much WHAT it was attached to.  With it’s strong forays into the consumer market, maybe it’s time for Apple to try some pure (non-computer or at least non-visible-computer) products and see if it can’t get the promise of its brand established in a market which is less competitive and perhaps younger and more open than the personal computer market.  We’d love to see what they could do – and they don’t necessarily have to start in the U.S.

This will be the year we’ll all be watching to see if a new operating system was what was keeping Apple from living up to its promise.  If Macintoshes suddenly attract a new kind of developer attention, then anything is possible.  But we suspect this is more of a mid-life kicker than a fresh new start.