The Circuits and the Bizarre

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By Pixated
March 5, 2001

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 A few thoughts on "Just In Time" inventories, the OS, and Market Share.

Recently I've been reading articles proclaiming the fallacy of the previous market hype of Just In Time inventories: The theory of the now long-gone 90s that JITs, or Just In Time inventories, would magically save manufacturers from a downturn. Dell was often touted as the example of how low inventories and high turns allowed huge return on capital. Surely, this was the road to glory.

Under the expert guidance of Tim Cooke, Apple reduced inventory-carrying levels below even Dell's, and continues to do so. The thing is, stuff has to sell. The benefits of low inventory and high turns only occur when stuff is selling. Well, duh. That seems so obvious now, but it in the ever-expanding world of Dell in the 90s it seemed not to be a problem. Growth was a given.

After all, there wasn't just growth, there was the rate of growth of that growth. And that growth was a given. I can't help imagining that growth on my body somewhere. One that looks like a wart or something, which is really sort of scary if that growth were malignant. That growth might need to be surgically removed.

Ouch, that might hurt. There could be pain. I think there is. That growth is one of expectations. Dr. Greenspan strokes his chin and declares, "A Trim."

He chooses carefully from the tools on a gleaming stainless tray -- the Black and Decker electric hedge trimmer. He's thinking financial markets ought to carve out like a trained seal with a ball balanced on its nose. He saw that in a hedge at Disneyland once and liked it.

Appeals Court Judges are juggernauting toward a reprieve for Microsoft based on the notion that as "their monopoly was not credibly threatened" it therefore follows that any attacks were based on paranoid delusions, not defense of the monopoly.

I assume this is the first anti-trust trial that will find a major American Corporation "innocent, by reason of insanity." The Redmond Campus will be the first facility for the Criminally Insane Corporation. Bill's compound may end up a retreat where top execs go to talk out their fears.

"Hi, my name is Bill and I'm a paranoid delusional monopolist. I haven't used illegal business practices for four days."

"Hi, my name is Steve, I'm a paranoid delusional monopolist and I have a confession to make: Yesterday new numbers came in showing Palm increasing its market share in the handheld market. I called Sony and suggested that they might lose access to the Windows operating system if they didn't decide to switch to Windows CE for handhelds. They agreed this morning to move all handhelds to the Windows CE platform. I haven't used illegal business practices for two hours. I'm feeling much better about myself. I'm really making progress."

Standabove is worried that Apple isn't reducing its prices to compete with the glut of PCs in the present market. This is someone that used to crow about Apple's margins even as I was concerned they maybe ought to trim them to gain market share.

Now is not the time to drop prices. Apple has cleared the channel to manageable levels of old inventory, but there is still old inventory out there. This can and should be the low-priced stuff. Standabove, you yourself are saying you would buy a refurb to save a few bucks. That's great, but there is always a premium for "brand new" in any market. Cars lose at least $1,000 in value as soon as they are driven off the lot. To suggest that Apple's new stuff should even attempt to compete with this market is ridiculous.

Then there's the PC price wars issue. Unlike Apple, Compaq and other PC vendors have vast amounts of inventory to clear and a slow market.

With extremely low prices, PC vendors will very likely steal some customers from Apple. Nonetheless, Just In Time inventory of Apple products selling at a profit to Mac loyalists is the right move for now.

This is what's best for Apple even though it's at the expense of both revenue and market share. Market share that is going to Windows. What this does point out is the real reason why Apple should make OS X cross-platform.

There will always be a new e-Machines start-up selling for below cost and hoping to make it up in volume. If that's the case so long as Windows is the only OS on these losers we're losing market share to Microsoft on the OS front.

If OS X were available on Intel hardware some are concerned that Apple hardware couldn't compete. The comparison is always made to "The Clones." The difference is that at that time we were talking about building a market, not selling into a preexisting market. That's a big difference.

Then there is the Apple hardware. It's my gut feeling that there is a market for iMacs and TiBooks running Windows. I know we all believe that the greatest thing about Apple hardware is that it runs the clearly superior OS, and we're right. The thing is I can't help but feel there would be a load more people buying Apple hardware for the cool factor, if it just ran Windows.

So why couldn't Apple do both? Why couldn't Apple hedge by building Windows boxes that are cooler than anyone else and selling the best OS across platforms? Starting with Sun and the new Blade $1000 3D graphics workstation. Solaris is Unix, Cocoa is Java 2. If Apple is to succeed at being the BMW or Harley Davidson of computers it can't compete on price. That's a given.

SGI built specialized high-end workstations and charged whatever for them. When NT systems suddenly entered their market, boom!, they were toast. So SGI tried to build NT systems, but they weren't used to having to compete with PCs. Unlike SGI, Apple has always had to compete with cheap PCs.

So my question is, if Apple were to port OS X to Intel, would Microsoft license the Windows XPerience to run on Apple boxes?

And if all this happened could Apple actually grow market share perhaps on two fronts simultaneously? After all it seems to me that presently the only people buying Apple hardware are people who prefer both Apple hardware and the Mac OS. Wouldn't it be nice to sell OS X to "build your own boxers" and sell the iMac to the fashion-conscious who want a simple, stylish machine, but whose IT department will only allow Windows on the LAN?