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July 14, 1999

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Subject: Re: Going Portal ...?
Author: nigelh

Hi B*Mann

Just got round to reading this thread up-to-date. Seems you are (were?) still left with some unresolved concerns, if I read it right?

First, I'd sort of suggest reading a book by Michael Porter, called "Competitive Advantage". He's rather long-winded and repetitive for me, but one of his main themes is (and don't shoot me down here!) that there are really only two main strategies to choose from when it comes to marketing and selling your product: the lowest-cost route and the value-added, quality route.

Now, we all know that AAPL has to be a niche player. Don't we? Too small to do otherwise, right now - maybe it'll change in time, but now, too small. So...... that leaves differentiated, value-added, high(er) quality route. Right?

Now, it's true that Apple "screwed up", starting around ten years ago - that's history. However, don't you think it's jumping to a false conclusion if we assume that happened purely (or even partially) because of the product marketing strategy? Doesn't it seem likely with hindsight that there were maybe one or two other teensy factors in that particular equation? Perhaps?

Like, for example:

- ineffective senior management, who didn't understand the product;

- an R&D operation that was totally out of control, spending millions of dollars, inventing hundreds of things that never stood a chance of getting to market;

- a system model range so large it confused the hell out of everyone (except those with a postgrad degree in Apple system products, that is) - oh, and it also meant that development and production at Apple were woefully under-optimised;

- all this followed by a period in which suddenly the "quality" seemed to evaporate (sometimes apparently, sometimes really, as in exploding PB batteries), all triggered no doubt by a lack of focus in the R&D engineering effort;

- all this while Apple was trying to continue seeing itself as a "corporate" or, at least, an "industrial" sector system supplier, despite the Wintel bandwagon's inroads towards domination of that sector (even if Apple have still retained some nice niche's there).

Well - I could go on, but I'm sure you get my point. They're all reasons why the things Steve's done since his return have succeeded in "saving" Apple for the rest of us.

Don't forget, also, there's a substantial "downside" to these cheap or even free PCs too. I saw a cartoon yesterday, in which a guy with one of them had a problem in the first frame and decides to call the support line. In the second frame, he's holding on the phone, with the balloon (from the phone) saying: "thank you for calling, your call is in a call queueing system, your estimated queueing time is 18 hours, 47 minutes"!

Yeah - I know - drole, innit? But a large grain of truth there too, I reckon. We all know the PC (running Windows) NEEDS far more support and technically competent intervention on a regular basis to keep it running.

I've got over 20 years of working with systems from IBM mainframes thru UNIX and proprietary minis to PCs and Macs. Take the PC I use at my client's site (please! - I got no choice!) - I can only keep it running by making almost continuous use of Norton Utilities on it (and, BTW, have you ever SEEN the PC version of Norton, guys? Wow, talk about proof of an overblown, overly complex kludge of a system!)

On the other hand, this post is currently being written on my trusty 9500, under 8.1 (haven't had time to upgrade it yet, but I've got 8.6 on my G3 PB). The 8.1 has been running for a year now - and I don't even have NUM installed on it! Never had a problem (except Netscape sometimes crashes after it's been running for a week or so!) - otherwise, problems are so rare that NUM is likely to cause as many problems as it might find to fix!

Now, if I can't run a PC (a CPQ, BTW) without needing LOTS of help from Norton (and judicious use of my not slight experience, I dare say), what chance then will those 10-year old Pinto owners stand? What'll happen to them the first time they want to "uninstall" something, or install an upgrade (they don't all go smoothly!) or (heaven forbid) if they get told they "need to re-install the system"! (Who said, where have all my settings gone?) (Don't forget, they probably never installed the system in the first place, so they have ZERO experience with that particular heap of fun!)

Nah! As I've said before, Mac isn't (yet!) perfect, but in terms of ease of maintenance and reliability, it's a darn sight closer to it than certain other brands (as UK TV advertising would put it). THAT'S the differentiation that Apple has to offer and which creates the added-value that makes it worth a punter paying $1000 for a system, rather than $299 (or whatever - I even saw a reference to a Linux system for $199 yesterday!).

In addition to the "unreliability" of the PC, which necessitates the provison of BETTER support, let's also remember that running effective support operations COSTS! Bundles of moolah! Even larger amounts than Blue dreams of making from his AAPL call options!!!!

So..... where's the money gonna come from to pay for it? Out of the ISP fees? Nah - don't think so! Out of the profits made by the cheap (or free) PC maker? Nah - WHAT profits? Out of the pocket of the poor, unsuspecting punter who signed up for the deal in the first place? You BETCHA! Got it in three!!! (Just check the small print in the agreement guys and you tell mne if I'm wrong, but I'm sure there'll be a disclaimer saying that the ISP, or whoever provided the "free" PC, has no liability for ensuring the "good operation" of said PC.)

For sure, there ARE ways to make giving away a free PC a part of a sensible, proftable marketing strategy. Unfortunately for many of those who will buy-in to this particular "deal of a lifetime", they'll discover only too painfully that there really ain't no free lunches, because most of the guys putting these deals together DO NOT UNDERSTAND SUCH MARKETING STRATEGIES AND WHAT IT TAKES TO MAKE THEM WORK.

So, maybe Apple should start up a "charity" offering to "buy" people out of their misguided contracts, if only they'll sign the deal to buy an iMac on "terms" - as Blue has already eloquently pointed out, there's a lot of spare margin in that for Apple, so they could probably afford to do it. Now THAT would be what I'd call a successfully differentiated marketing strategy!

As seems to be the trend now, I'll apologise for the length of this post - though I'm not sure why. After all, I took the time to write it and each of you can choose to ignore it if you want!!!! ;-)