Stardate 20020719.1159

(Captain's log): In the aftermath of the Jobs MacNote, I've been getting feedback about my post from last week. Bob Therieau writes:

You'll recall the vitriol directed towards your post about Apple's shortcomings about a week ago. Well, MacWorld is this week and it seems that your prediction of a meltdown was spot-on. I love my Macs for the utility they provide my household and burgeoning freelance business, but it seems that Apple would like for us to fail.

In the end, we're not rich. We picked the platform for ease of use, and compatibility with graphic applications we use in the publishing business. Apple's new policies are going to dash us to bits on the jagged rocks below (if it doesn't get them first).

Apple needs a continuous stream of revenue; it can't live on "installed base" but needs revenue from new sales. It's living off the first derivative.

Despite all the optimism, there won't be a massive movement of PC users to the Mac and there really aren't any new markets to open up. The great expansion phase of the desktop computer industry is over, and we've moved into consolidation and competition. Whether or not Apple's products have any attraction, for most PC users the barrier to switching is too great, in the form of expense to replace applications, and conversion of data.

Apple's primary business model has for a long time mainly been oriented around repeat sales. While they've made attempts to expand the user base, their primary revenue stream is from existing customers, by convincing them to buy something new.

The best way to do that would be to create new machines which were compelling which convinced existing Mac users to upgrade on a regular basis. Among PC users, a three year old machine is ludicrously underpowered and badly in need of replacement. Mac fans often boast about how a five year old Mac is still very competitive. What they don't understand is that to Apple, that is a bad thing.

The key to a quicker replacement cycle is faster processors. Three years ago in the PC industry, a 450 MHz Pentium 2 was the top of the line. Modern PCs are at least five times as powerful, and there have been other advances, too, such as adoption of faster standards for hard disks (ATA-133, SCSI-160) and faster memory. The PC industry can sustain a 2-3 year replacement cycle because the hardware value has been increasing.

But the core of that is faster CPUs; it's the linchpin. That's been Apple's Achilles Heel: Moto can't deliver. The company is in deep trouble, and its semiconductor group is its worst problem. It was widely expected that there would be a speed bump announced this time, and as we now know there wasn't one. It surely wasn't because Apple didn't want it, or because it wasn't desired by the customers. None of that matters if Motorola can't deliver faster processors.

Apple has been doing its best to try to play down their deficit in CPU power, with cooked demos and with muttering about "Megahertz Myth", but that has to some extent backfired on them. While it had the positive effect of minimizing defections from the Mac platform to the PC and even encouraging some PC users to switch to the Mac, it also encourages existing Mac users to keep their existing computers for longer, and thus lengthens the replacement cycle and decreases Apple's revenue.

Apple is doing the best it can to create compelling machines for upgrade by playing with case designs. That, at least, it can control. But at the end of the day all you have is a new paint job on the same old stuff inside, and despite the hooplah about it, what a computer looks like really doesn't matter. One doesn't cruise with one's compute to pick up babes.

That's why the LCD iMac wasn't a success. It's a radical change in physical packaging, but inside was the same old relatively slow PPC with 100 MHz RAM and a slow HD and an underpowered graphics chip, all being sold at a premium price. It looks cool. It photographs well. But it's not a good value proposition, and sales have been disappointing.

So with few prospects for a massive burst of first-time buyers (which means PC users switching) and with an industry-high replacement cycle length (which is bad), in combination with a general decline in sales of desktop computers, Apple's hardware revenues are declining.

Which means that one of the few ways that they can now increase revenue is to charge for services and for software upgrades to be run on existing machines. It's the only way that they can get money from people who won't buy new hardware.

Another way is to force existing customers to upgrade by making their machines obsolete. There's a good reason why Apple is not making much of an effort to make OSX work on older Macs; they want their customers to buy new machines.

If anyone who uses the Mac thinks that they're part of a team, and that Apple cares about them as if they were in some sort of team, they're in for a rude surprise. They're customers, and Apple thinks of them as wallets that need to be opened.

And in that, Apple is no different than any other business. The goal of all businesses is sales. Everything else, such as customer satisfaction and loyalty, quality, reputation, innovation; these are all means to the sole goal of increasing sales.

A satisfied and loyal customer who doesn't give you any more money is a waste of time.

Brian Tiemann laments about the fact that most of the comments to which I linked after that post were intensely hostile to the Mac. I would like to say that it is not my habit to only link to posts which agree with me; I link to what I discover (mostly by watching my referers, or because someone has mailed me to tell me they've linked to me) when I think that what they're saying is substantive and cogent, whether it agrees with me or not. Sometimes nearly everything I link to is critical of me (for instance, this post).

So it's not the case that most of the responses I linked to were Mac-hostile because I was selecting for Mac-hostility. It's because I didn't find anything else (except for Brian's own post).

It was the sheer vehemence of the response which surprised Brian:

Not just negative-- pathological. They joke about Mac users drinking Steve's Kool-aid; they link to that stupid iToilet spoof; they ridicule the fruity colors, which they still think are current; they call it "MAC", as in "I wouldn't switch to MAC if Steve Jobs himself came to my house and gave me a hummer"; they poke fun at the IT administrators in the "Switch" ads (who obviously are incompetent and not long for their jobs if they're willing to admit that they use a Mac at home); they dismiss the entire platform for not having all the hottest games; they snidely ask about whether the Mac OS "still displays the bomb" when it crashes, or whether Macs can be networked; they even dismiss UNIX as being some obscure, dead-end, geeky discipline that only freaks with masking tape on their glasses would want to know about.

I talked about this in my previous post. This is the fruit that the Mac faithful have harvested from fifteen years of hyperbole and exaggeration. For most PC users, a Mac advocate's credibility about the value of the Mac approaches (from below) that of a used car salesman talking about that little gem he's got out in the parking lot that would be just perfect for you.

In fact, the reactions are similar. When anyone is excessively enthusiastic about anything, there's a tendency to assume that they're either deluded or lying, and regardless of which to distrust their message.

Non-Mac-users would, I think, be far more inclined to believe Mac users when they point to something that actually is good about the Mac if it weren't for the fact that Mac users lie about all the things which are blatantly obviously bad about it. (For instance, how about a moratorium on "Megahertz Myth" blathering, OK? How about admitting that the Mac is slower because Motorola is being outpaced by Intel and AMD? How about ceasing to insult my intelligence with rigged demos based on carefully selected Photoshop filters run against a deliberately crippled PC running a buggy version of the program?)

Jobs is a showman. His style plays well with the Faithful. And it turns off outsiders; his manner and style (and message!) are nearly indistinguishable from such notables as Jimmy Swaggart. (And his fans come across like religious cultists, or at least enough of them do so as to poison the soup for everyone else.)

Brian says:

What I find really distressing is that nobody seems to be pointing out what I think is the real reason to back Apple, the one that I've been writing reams about here for months now: innovation. Apple makes its livelihood on innovation-- explicitly so, right up front, as the primary product.

Brian isn't going to like this, but innovation isn't important. Or rather, it is, but not as important as other factors.

Innovation is important during the expansion phase of a market, before the products become mature and while new uses are being found. But we're past that now, and other factors are more critical for the majority of users.

And because the products truly have matured, most of Apple's innovation now looks either totally useless and cosmetic (e.g. the LCD iMac Luxo-Junior case design) or at the fringes (e.g. Aqua eye-candy). Of the rest, most is at best transient and doesn't represent innovation so much as the result of a forced march.

For instance, he trumpets shipment of DVD-burners by Apple. Well, Apple was first, but not by much; they were available for PCs very soon thereafter. And Apple didn't invent the DVD-burner; it's just the first company to reach the market with a computer containing one after they became available from other vendors.

Brian is entranced by how cool the Mac is. He's not alone in that; it's a common reaction among Mac fans. But this is a product, a tool, and in a lot of cases the reason for selecting a tool is really quite prosaic.

The two biggest advantages that the PC has over the Mac are network effect and familiarity. Users of minority platforms routinely underestimate the value of network effect, but it can be the biggest factor in some decisions. And with respect to familiarity, the hidden cost of retraining to switch from a known platform to a different one should not be underestimated.

And yet nobody mentions it. PC people don't mention it because they've never used a Mac since some friend's Performa running OS 7.6.1 or something, and Mac people don't mention it because they're either too focused on deflecting the PC users' barbs, or they're so unfamiliar themselves with what's available for Windows that the iApps don't seem like anything out of the ordinary.

I'm telling you, this stuff is phenomenal. It deserves kudos. It represents more hard, thankless work and more disciplined design thought to make one iApp than it does to put together an entire OS based on sliding sub-windows, mouse-over effects gone amok, and the technicolor-yawn that is the Windows logo.

But I don't buy products based on merit, or kudos. I don't reward companies for good tries, or coolness. I buy products for my own selfish reasons, because they solve my problems in a fashion I like, for a price I'm willing to pay.

People aren't talking about those things because they don't matter. If this were a sporting event, the Computer Sports League, I'd be in there rooting for Apple too. Alas, it isn't, and no amount of coolness can overcome the dramatic advantages of network effect and familiarity that the PC has for me.

Look, I agree that the Mac zealot world needs work. Apple's marketing needs to come to understand how to appeal to the other side rather than to please its own followers. And we all need to figure out how to present the case in a way that people don't find threatening or freakish.

I'm afraid Brian needs to start with himself, because the message he has been delivering is one PC users don't really care about. It may be true, but it isn't important.

It's not just that the presentation of the case needs to change. The case itself is the wrong one. Changing the way in which you describe it won't help.

Here's the key: stop talking about "insanely great". Talk about "good enough".