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  • Apple’s Success: The Vultures Are Circling

    December 10th, 2007

    Let me lay my cards on the table: First and foremost, I am not an Apple apologist, nor do I play one on the radio or TV. Those of you who have kept up to date on my commentaries over the years know full well that I am not averse to criticizing Apple when it has bad products or bad policies. My ongoing Mac OS X wish lists, for example, are designed to show where the operating system needs to be improved.

    In saying that, though, I will not make up or exaggerate a problem just to make a headline and get more hits for this site. I got here, for better or worse, by trying to be fair to all viewpoints. I think you’ll see that in evidence in our Comments section, where I let you tell me off, if that’s what you want. At the same time, I’ll act in kind when I think it’s appropriate.

    From time to time, however, financial and tech writers seem to be hell bent on finding bad news about Apple where it simply doesn’t exist. Again, this is a headline-grabbing maneuver, and quite often they make up stories or exaggerate known facts to make a point that, in reality, lacks a factual basis.

    One example is an article I read recently that cited chapter and verse as to why Apple’s closed ecosystem cannot possibly succeed. You want the link? Well, I think the fellow who wrote that article is just looking for attention, and thus I won’t provide it. But his tall tales are typical of what the naysayers have written over the years, but the latest rant is so off-base, it’s worth mentioning.

    Over the years, the critics have said Apple is making a huge mistake not letting outsiders in when it comes to allowing the Mac OS to run on other PCs, or you to use your iPod with other music services, such as Zune, Napster and all the rest. Now it’s true that Microsoft has succeeded big time in letting any old PC maker buy millions of OEM copies to install on their boxes. However, none of the other music services have succeeded. In fact — and this particular author forgets this — Microsoft created its closed Zune environment to emulate Apple’s success. It’s a case of the pot calling the kettle black.

    Besides, how many people, other than a handful of so-called PC power users, are begging Apple to let them run Mac OS X on their Dells? Most people just want a computer that works, regardless of operating system.

    The critic complains, moreover, that Apple is somehow missing the boat by not offering music subscriptions, as if that’s the way of the future. Yet none of those subscription services has gained traction against iTunes, so where’s the example of success to show the way?

    Steve Jobs is absolutely right when he says you want to own your music. You don’t want to depend on a service that, if it disappears or if you forget to update your credit card information in time, will render your music unlistenable just like that. Long after iTunes is gone — should it disappear — you’ll be able to continue to play the songs you bought. And with the new DRM-free versions, you can play them today on any music player you want that supports the AAC format. You aren’t tethered to the iPod, and that doesn’t seem to be hurting Apple’s sales.

    Of course, the critic in question seems unaware of any of this.

    The other complaint is one of style over substance, that Apple somehow charges a higher price for its products, and people pay them because they’re fashionable. We are reminded that other PC makers are discovering that pretty boxes sell faster than ugly boxes, but that argument totally ignores the operating system. He also is under the age-old illusion that a Mac is more expensive than a comparably-equipped PC, a myth that has been shattered over and over again.

    The same complaint is being made about the iPod, that it is somehow premium-priced above music players from other makers. But, again, when you examine the standard equipment, you’ll find that this claim doesn’t necessarily pan out. Even Microsoft, which has been known to undercut competitors big time, has managed to merely duplicate Apple’s pricing on its Zune players. Sure, the Zune adds an FM radio and Wi-Fi in its imitation of the iPod Classic, but it lacks features that are present on the iPod, so we’ll call the price a wash.

    Then there’s the iPhone, where our critic repeats old and tired inaccuracies and fails to understand the actual facts. Somehow he thinks the iPhone was suffering from a major failure because it didn’t duplicate the original sales of 270,000 units on the first weekend of its release over the ensuing weeks and months. Such conclusions are nonsensical, since the initial sales were based on a pent-up demand that had been building for months.

    Yes, as the critic states, Apple did cut the price by $200, and, yes, Steve Jobs was rather too cavalier about explaining the reasoning behind the price drop. Indeed, many Mac users were upset, and Apple had to do a little spin control and give $100 back to the early adopters to sooth their shattered nerves.

    But if the iPhone’s price hadn’t been reduced, it would still have attained Apple’s one million sales goal by the end of the September quarter. In fact, sales reached that level only days after the price cut went into effect, which means that it only had a minimal effect on the results.

    There is no indication that iPhone sales are tanking. In fact, industry analysts continue to claim that the sales rate is quite good, and that the iPhone will exceed Apple’s estimates both at the end of the holiday quarter and through the end of 2008. Sure, the other cell phone makers are building competitive products, but lets not forget that the iPhone is more than just a touch screen.

    Well, this particular critic clearly is clueless about the impact of operating systems.

    Worse, these critics will just keep repeating the same old garbage, the facts be damned.

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