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  • A Reality Check on the Latest Predictions of the Mac’s Success

    March 26th, 2005

    You’ve got to feel great. Apple is on a roll, and Wall Street is predicting a doubling of market share in the next year and then some. It’s been a long time since Macs held more than 5% of the market, but the erosion ended for the most part last year, but the pace is quickening.

    For most of you who have used Macs for a while, being recognized as being on the right side of the argument for once may seem a relief. No more excuses. Everyone loves the Mac mini, and Apple is still finding it difficult to keep the things in stock. On average, you can expect to wait a week to get one into your sweaty hands, although some dealers might actually have a few ready to go. You only hope that prospective buyers won’t give up in frustration because they have to get on the waiting list, although a waiting list is, itself, a reason to jump aboard. Why let others have all the fun?

    The logic about Apple’s resurgence sure makes plenty of sense. iPod owners who use Windows are fed up with malware. Having to clean up a computer every few weeks is a chore you look upon with dread. Some home users just shove the things into the closest and forget about it, until the kids want to exchange instant messages with their friends of course. Everyone has to play IT manager when a Windows box malfunctions, and there must be a better way.

    But there’s only one problem when you try to take Wall Street estimates seriously. For years, they said that Apple was essentially dead and buried, and it just needed to recognize the inevitable and go away. Macs were irrelevant. Microsoft won the operating system wars years ago, and there can be only one. Of course, the public thought otherwise, for Apple, after nearly self-destructing in the mid-1990s, recovered and no longer needed life support. It took a while for sales to get off dead center, but you could see a trend.

    Sure, I’d like to see market share figures of 10%, 20% and even more. How could people use Windows when such a superior product is available? It’s not as if it’s a secret. Nearly every technology writer who has put his or her hands on a Mac mini praises it to the skies. This is, at last, an affordable way to ditch Windows and discover the joys of the Mac OS and all those great digital life applications.

    It’s also nice to see Wall Street on the right side of the argument at last, although market estimates are usually no better than today’s closing stock prices. And those financial analysts are downright fickle. It’s like this: Virtually every time a new music player appears from a major company, such as Dell or Sony, it is pronounced the “iPod killer.” Of course, the use of the word killer is, itself, often a death knell. The products fail to gain a foothold, and Wall Street retreats, at least until the next iPod killer appears.

    Ditto for music services. Napster To Go might be the one to unseat Apple, because it is the only subscription service, at least for now, that allows you to download your tracks to a music player. Of course there aren’t many players to choose from, and none, of course, have the Apple logo on them. But this has to be the way to go. Besides, isn’t Napster a famous name? Can’t miss, even if the TV ads are just plain awful. It’s the substance, not the form.

    Of course, they usually don’t tell you that not all of the songs are available to subscribers. Because of licensing constraints, some songs can only be bought, not rented. And you won’t know in advance which is which until you try to download the wrong song. Pity.

    In any case, the sad fact is that these Wall Street analysts quite often get it wrong. Do you recall when they were telling you to buy stocks when dot.com companies were failing left and right, and a recession was in progress. How many of you lost the bulk of your retirement savings as a result? A member of my family faced just this situation.

    So if you can’t depend on those analysts when they say Apple is going to fail, how can you believe them when they say Apple is going to succeed? The information comes from the very same sources, and you can’t judge reliability on whether the predictions fulfill your hopes and dreams.

    Of course, you need someone to examine technology companies and pronounce them fit or otherwise. But it would be nice to see a disclaimer when these market analysis reports appear, such as the fact that they are usually only 45% accurate or whatever. You expect a publicly traded company to follow the straight and narrow when it comes to handling its finances, but what is the standard by which a Wall Street analyst is judged? Do they, like baseball players, list a batting average, how often they get it right? No, they don’t, but it sounds like a plan to me.

    Now as an observer of the computing industry for far too long, I can tell you that I don’t take any of my predictions seriously, not a one. Sure, I got it right, more or less, when I said it would be good for Apple to make a cheap Mac. But Apple didn’t listen to me; never has, never will. Instead, their bean counters said the time had arrived to go for the mass market. The idea didn’t come from Wall Street.



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