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  • The Crazy Demands of Apple’s Critics

    January 14th, 2009

    You know if a tech pundit or financial analyst was fully capable of running a multinational corporation with over 30,000 employees and sales of tens of billions of dollars a year, they wouldn’t be working for peanuts at their present jobs. They’d be raking in hundreds of millions of dollars with some company demonstrating their incredible management skills.

    That, however, doesn’t stop us from criticizing a company when we feel they can do something better. Of course, when it comes to Apple, they listen to customer complaints, at least sometimes, and media demands tend to roll off their backs.

    Recently, for example, I’ve read rumors suggesting Apple is about to release a 4GB version if the iPhone, primarily for overseas markets where paying the present retail price is difficult.

    Should such a product appear, it would be the same iPhone 3G that we all know and love, except for a memory chip with less capacity. Period. Supposedly that would allow Apple to arrange for carriers to offer it for $99 or even less. Now in case you’ve forgotten, the original iPhone did come in a 4GB version, one that didn’t sell very well, so Apple phased it out quickly.

    This isn’t to say that 4GB is insufficient when it comes to storage space. In other words, the product would be identical to its larger cousins. The other alternative would be for the mobile carriers to offer the 8GB version for half the price and “eat” the profits, or make some sort of revised subsidy deal with Apple to share the loss.

    I just don’t see it. However, a “nano” version might fit as far as a tinier, cheaper alternative is concerned. My main concern, however, is just how small the screen can be made before it becomes unusable. As it is now, some of you no doubt feel that today’s iPhone and iPod nano provide insufficient display size. So unless this tinier iPhone is meant to offer reduced screen functionality — which is, frankly, one of its main attractions — it fails my logic test.

    But again what do I know? I’m not capable of running a multinational corporation or even a national one!

    The other silly proposition, voiced again recently, is that Apple should be loosening the licensing of Mac OS X and sell boxed copies that will run on any PC meeting some basic hardware requirements. Before I respond to this in any detail, I suggest the scribes who are touting this misbegotten scheme ought to take out their calculators.

    If you look over Apple’s balance sheets, you’ll see they make a heavy proportion of their income from the sale of hardware. Sure, they provide vertically integrated solutions, meaning that the hardware and software is designed to work almost flawlessly together. But hardware sales drive the company.

    If Apple allows you to officially use Mac OS X on a regular PC, they will gut their income, big time. Consider what happened in the mid-1990s, when Apple did have an official Mac OS licensing program. Third party companies put Apple approved motherboards into cheaply-made PC cases, and sold them at rock-bottom prices.

    Now Apple hoped that cloning would help them reach markets that had previously rejected Macs. Instead, gutsy startups such as Power Computing aggressively went after Apple’s core customers with a vengeance. Content creators loaded up on PowerTower Pros and other Power Computing models, and this sort of thing, plus other missteps, nearly killed Apple.

    Even if Apple could somehow limit its licensing to product segments they don’t presently address, they’d have to increase their Q&A budget big time to make sure Mac OS X worked properly on tens of thousands of PC hardware variations. Microsoft, with much greater resources, is barely able to cope with that state of affairs with Windows.

    So I don’t think it’s going to happen. I also believe Apple will be victorious in its lawsuit against that would-be cloner, Psystar, and that will put other companies on notice that they can’t get away with violating Apple’s user licenses. By the way, I would not doubt that Psystar is actually a stalking horse for a larger PC maker, who is financing their operations and legal bills in order to see if they can somehow induce the courts to allow this sort of behavior. If they were to win, the floodgates for cloners would be opened, and Apple would be in a heap of trouble.

    You will also read ongoing demands that Apple cut the prices, to move more hardware in the middle of the great recession, or whatever label you care to place on the current financial crisis.

    Lest they forget, Apple has over $25 billion earning interest in the bank. They can well afford to weather the storm, and suffer a short-term sales slowdown. Sure, maybe they will do a little price cutting here and there, or just add more value to their products. But Apple doesn’t march to the beat of the media and financial community.

    What’s more, what they have done in recent years is to confound the skeptics and succeed beyond most anyone’s wildest dreams.



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