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  • Apple Needs to Seize the Moment

    June 22nd, 2006

    A lot of opportunities in life involve choices. Pick the wrong path, and it all turns out badly. Right now, the forces seemed to have coalesced for Apple to gain more market share than it has had in years, if only it makes the right decisions.

    First let’s look at the current marketplace.

    Although some might put a different spin on these matters, I think Microsoft is in trouble. The decision of Bill Gates to step aside from his daily duties, and spend more time as a philanthropist than a Chief Software Architect, is telling. Over the past few months, the company he co-founded has also engaged in some executive musical chairs, and companies don’t do this to change the titles on business cards. Clearly there are deeper problems.

    Some might want to blame the ongoing delays of Windows Vista and the rough shape of the current beta on Jim Alchin, outgoing Group Program Manager for Platforms, who is the executive in charge of the whole mess. If you subscribe to the “buck stops here concept,” as I do, you can even place the blame foursquare in the hands of CEO Steve Ballmer, for letting Vista careen out of control. Sure, it may indeed be released to manufacturing in the next four or five months, according to current schedule. It may even be reasonably stable, at least enough to survive release, although I wouldn’t be surprised if there were a bunch of early release patches to cure the worst ills.

    Whatever happens, this year Apple has a lot of the market to itself in terms of promotional opportunities. Microsoft’s huge marketing machine can sell all the Xboxes it wants, but Macs will be afforded the opportunity to shine in a way that hasn’t happened in years. The “Get a Mac” campaign that has blanketed the airwaves on TV is a worthy start, even though some might feel a greater connection with the actor who portrays the PC nerd.

    At the same time, Apple needs to recognize that most people who buy a PC don’t base the decision just on a few flashy features. They consider such products to be essentially the same, other than the name on the case and a few minor appearance elements. While features and performance might be examined, the real purchase decision is based largely on price. Yes, Macs are comparably priced to a PC with the very same standard and/or optional equipment, but it still requires careful attention to detail for a salesperson to explain all that to the skeptical customer.

    Sure Apple’s own retail outlets do garner a healthy number of sales to Windows switchers, but the chain doesn’t blanket the U.S., let alone the rest of the world. Most people who buy Macs still make the purchases at independent resellers, where the experience can be decidedly mixed. Many superstores don’t have Macs at all. Now I understand Apple needs to make sure its products are given the right presentation. The iPod sells itself, really, but a Mac requires a whole lot more, and if the salesperson isn’t carefully trained and given the right level of performance monitoring and cash incentives, the sale might go to Gateway or HP.

    In the U.S., the Best Buy chain is again considering adding Macs to its in-store lineup. There’s a pilot program in place that’ll be used to determine whether to expand the products to the entire chain. But Macs can’t just be placed on shelves or against the walls right next to other computers. Many people will still look at the price tag, declare them too expensive and move on. Properly labeled signs and unique displays will help. Maybe some knockout videos on a conveniently placed plasma TV would manage to convey the message. But the customer will then ask to speak to a salesperson, at which time all bets are usually off.

    Although Apple chooses to remain above the battle, I do think it has to consider delivering some entry-level products shorn of a few frills. I mean, do you all need a Webcam, and another remote control to misplace? Together, we’re talking of a potential price reduction of more than $100 on most models, and a MacBook at $999 seems far more enticing to some than one at $1,099.

    As much as you want to see Apple earn great profits, what would happen if they give up another $50 or $100 in profit margins for each unit, just to move product? Maybe just give a dealer a better quantity discount, and encourage price wars.

    I’m really shooting from the hip here. I don’t pretend to be a marketing expert, but there are loads of opportunities for Apple to expand its market as Microsoft struggles to regain its footing. But don’t get me wrong: Microsoft is still an extremely tough competitor, even if it survives on sheer inertia. No matter how bad Vista might be when it is finally released, or how many more features must be shed, Microsoft will remain dominant in the PC industry for many years to come.

    But Apple can get a much larger piece of the pie with the right moves. Perhaps the marketing experts in our audience can come up with some neat ideas. I’m curious.

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