Apple Lives in Another Universe!

October 21st, 2009

So far, just about everything Apple has done ends up confounding the skeptics. So when they were admonished to cut prices sharply, they sort of responded with the MacBook Pro, but this week introduced new iMacs, a new MacBook and Mac mini lineup, and kept the prices at the same level as their predecessors.

How can Apple be so foolish as PC makers are fighting to dominate the bottom of the market with cheap gear?

I suppose Apple could have simply retained their existing product lineup and shaved $200 off each model, and they would have been praised to the skies for their foresight. Instead, they added additional value to the products by offering more powerful processors, more memory, and loads of new features while not raising any prices. So if you wanted the old iMac, it’s no doubt the new iMac will be a far more attractive proposition.

Indeed, I’m beginning to wonder whether the iMac isn’t going to cannibalize more sales from the Mac Pro, now that there is a quad-core processor option fpr the high-end version. There’s also the ability to add up to four memory modules. All right, 4GB sticks are still quite expensive, even from third-party vendors, but you could get an 8GB iMac from Apple for just $200 more than the standard versions.

This isn’t to say there’s no market left for a Mac Pro. If you don’t need a display and require the ability to plug in even more memory and extra internal drives, you have no choice. Apple still doesn’t see a fit for a midrange minitower, in the tradition of the compact IIcx of years ago. Since desktop sales continue to decline, I can see why Apple has no incentive to expand the product lineup. At best, the new models may smooth the sales dip, but possibly not eliminate the onward migration to note-books.

As far as I’m concerned, I still prefer my Mac Pro for most computing chores, but I can see the day where mobile quad-core processors will be nearly as powerful, and sufficiently energy efficient not to reduce battery life substantially. That, and perhaps adding two ExpressCard slots for people who really want to use them, will further reduce the need for a hefty desktop computer. It may happen in the next two or three years, in fact, and Apple might well end up discontinuing all of its desktops except perhaps the Mac Pro for users who still crave the ultimate in processing power regardless of cost.

The critics and far too many tech companies don’t see the benefits of long-term strategy, however. They are always focusing on the current quarter and perhaps the next, without seeing the larger picture. Here’s where Apple has a demonstrated advantage. Aside from the note-book price cuts earlier this year, which doesn’t seem to have seriously hurt their profit margins, Apple didn’t pay much heed to the current global economic situation. Instead, they say they plan to continue to innovate their way out of the recession, which is something that the competition fails to realize.

All the good news from Apple comes at an interesting time. Microsoft is still reeling from the failure of its Sidekick servers, where an untold number of customers of this fashionable but low-selling smartphone lost all their data as a result of that notorious server outage. Officially, T-Mobile is now telling customers that they have deployed a recovery tool at their Web site to help you recover your stuff. How successful this scheme will be in the real world is anyone’s guess. After all the aggravation customers suffered, even if all or most of the lost data is restored, it won’t be much compensation for folks who endured days and days of agony wondering if anything would ever be recovered.

In any case, Microsoft is still moving full steam towards this week’s rollout of Windows 7. There are those silly house parties, ads showing that six-year-old girls love the new operating system, and lots and lots of hype. Indeed, Windows 7 has gotten some pretty good reviews too, even though it may well be that some of the compliments we made simply because it’s not Vista. But at the end of the day, and despite the fake impressions created by Microsoft and its legions of fellow travelers, Microsoft’s “System 7” is not all new, nor anything close to a major upgrade.

In fact, it’s largely a cleanup of Vista, with some visual eye candy to convey the impression of major change. This is much the same scheme that Microsoft has traditionally employed with other products and services. Take a shave and a haircut and devise a new name, and try to convince people that everything has changed. The same stunt was pulled with their search engine, rebranded as Bing, but still no more successful in grabbing market share against Google than its predecessor — whatever that was called.

As I write this, Apple’s market cap has exceeded that of Google. If the stock price keeps soaring I can foresee the day when they beat Microsoft too. From crazy Steve Ballmer’s standpoint, that would be the unkindest cut of all.

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11 Responses to “Apple Lives in Another Universe!”

  1. Dave Barnes says:

    “but I can see the day where mobile quad-core processors will be nearly as powerful”

    Except that it appears that the new iMacs use the desktop versions of the i5 and i7.

  2. DaveD says:

    I like to see Apple maintain the desktop lines. It would be a showcase of their most powerful Macs, a combination of beauty and brawn. These Macs are for users who do processor intensive tasks at home or at the office. The Mac notebooks are for all the other more casual users. My intensive task is generally the Secure Empty Trash. When I unleash it on thousands of files, the fan in my one-year-old “white” MacBook spin up to maximum trying to get rid of the heat. It can take several minutes or more to complete and the MacBook gets uncomfortably warm. With notebooks, heat is an issue.

    Apple has learned from its past. It is not solely focus on market share, but on making a profit. It has shown it by building an ecosystem of hardware/software products that have beauty, quality, work seamlessly together with ease-of-use, and provide good customer support. Many, many customers would appreciate and pay for good products/services of value. A number of companies have increased their market share by lowering prices only to lose it to another company than can undercut such as Acer pushing Dell to number three.

    The Windows PC market is a race to the bottom, a dog-eat-dog scenario.

  3. Blad_Rnr says:

    Agree, Gene. In fact, Win7 should have been a $29 upgrade for Vista users like Apple’s SL. But MSFT couldn’t do that because they only sell the software and that’s where they have to make their money. It’s atrocious, really. Paying twice for something you should have got the first time around. And some versions are even more expensive than Leopard when it came out.

    MSFT also has financial earnings to report tomorrow. Wonder why they are rolling out Win7 before the report? 😉 I predict another quarterly drop in revenue. That would be three in a row.

    And one last point: with Apple getting 90% of the revenue for PCs costing over $1000, MSFT is in a quandary. They have created a model that pits HP against Dell and forces PCs to be cheap. So there is less and less room to tack on an expensive OS. Therefore I predict Win7 may sell a lot more PCs, but it will not really do much for MSFT’s financials, or for HP or Dell. In fact, doesn’t Win7 on Netbooks only get MSFT something like $10?

    Apple is the king of PC profits and it will not end anytime soon.


  4. Riverside_Guy says:

    On the money Gene, they DO live in another universe! No matter how valid the issues we take with Apple, they ALWAYS win with their way. Hell, in a few years, we’re probably going to be seeing 40% GMs… this is astounding!

    I’d bet you very soon we will see the huge towers simply go away. One of it’s draws has always been on the video side… but with these iMacs, we see an ability to do pretty much what was restricted to the towers. AND much the same with RAM, the all-in-ones have options to install far more RAM than they used to.

    So realistically, all that is really left for the towers is an ability to load up on drive space internally AND add a eSATA card for more external expansion. BUT, put an eSATA port on an iMac and that advantage is gone.

    Now, they COULD decide to keep them around… but the ONLY market would be shops doing video rendering all day long. Tons of cores, the hottest Intel processors, yeah that market would love such machines. BUT, being very low volume, they will get stratospherically priced.

    Maybe we can HOPE they eventually DO deliver a mid-sized tower (put a eSATA port on an iMac, give it a matte screen and I’d have no need for a tower any more)? I really don’t have a whole lot of hope of that happening, I do think the tablet (Newton 2.0) will come out and I think they’ll sell TONS of them.

  5. John Dingler says:

    Hi Gene,
    l don’t remember whether or not your past articles were written this prosaically. Pleasure reading it.

  6. Constable Odo says:

    I’ve always been a fan of the Mac Pro line of desktops where you could add cards and more drives as new models came out, but I honestly don’t think that’s what most users need. Especially the type of non-tech savvy people that Apple is targeting. Give them a computer that’s like a toaster or refrigerator that has decent specs to begin with, looks good and is easy to use. I know so many people that had Windows PCs that were easily upgradeable, but they never bothered opening up the cases to replace memory or drives or add in extra cards. These people I’m talking about basically knew nothing about the insides of a computers and were rather averse to adding things they were unfamiliar with. I’d recommend anyone to purchase a Mac for more money and get AppleCare so they don’t have to do anything except sit back and enjoy their computer experience without worry.

    Me, I’d fill up all my drive bays and fill all my card slots. Man, I must have been really keeping my electricity bills high. It’s great fun for a tinkerer, but that’s just me. I’m not the average computer user since I basically did hardware and software upgrades in IT.

    Now that I’m older, I want to get a new 27″ iMac and a BTO MacMini. I’ll use them with a multiple drive low-power NAS or if necessary use a FW800 raid solution. I might want an 8-core Nehalem Mac Pro, but I don’t need it and I’m glad the BTO option iMac offers a Core i7 quad-core solution. I spent some time at the iFixit site, looking at the disassembly of the new iMac and it’s a work of art. Those high-end iMacs are about as much as any normal user would ever need and should last for years. Apple is trying to make things simple for the average user but the high-tech users are always getting upset because they think everyone’s computer needs six drive bays and six card slots, but hardly anyone does with terabyte drives and external drive solutions. I know people are unhappy about all-in-one’s since they don’t want to pay for a monitor and would rather have their own choice. That’s just the breaks. You win some and you lose some.

    Yes, Apple computers are more expensive but their quality is good and their customer support is very good and there’ll always be people that will appreciate paying for it. Nearly 100% of the people that I know that have switched from Windows PCs to Macs are very happy with their choice. They love getting training and feel relaxed talking with Apple retail support help. It makes them feel more confident about using a computer.

    I’m not a Windows hater at all. I’ve used Windows XP for years and was very satisfied with it. I’ll probably upgrade one of my VMWare Fusion virtual drives to test-drive Windows 7. I’ll see if it is much better than Vista which I wasn’t happy with at all. People use what they’re comfortable with and we should all have choices. I want OSX to grab more market share solely on the basis that I’m a long-term Apple investor and it might mean more money for me, otherwise Windows OS can remain the dominant desktop OS for all I care.

  7. MichaelT says:

    It’s funny how Windows 7 has been painted as a major upgrade and Snow Leopard as a service pack release, when it’s almost exactly the opposite.

    Win7, as you said, is Vista with new clothes on. SL is a new engine in the same model of car, with a few visual updates.

  8. ken h says:

    Towers: I read an article once, years ago, about an attempt by an early computer make to make “small” computers.

    They failed. I wish I could remember the circumstances better. But what I remember is that when they took the same internals and put them in a bigger case, they were successful. Bigger meant more power.

    Perception becomes reality.

    I am a teacher. We have mostly Windows XP and about 20% Mac Mini’s. In schools, what is the perception problem of the Mini vs. the XP tower?

    Exactly; Size equals power. The perception is, (I have asked dozens of middle and high school computer geeks) the Mini is a weak computer. Why? The XP machine is physically 10 or 20 times the size.

    I am deadly serious. Granted, most of the people who are interested in computers are teenage male gamers. Definitely not the sharpest tacks on the board. But it is true.

    Keep the big desktops (even though I have been clamshell then iBook, then Macbook for 10 years. I can show them what my Macbook can do. Cognitive dissonance; even if they see it they can’t process it. Therefore it is not real.

  9. Kaleberg says:

    Way back when airplane designers still used wind tunnels, someone set up a chart showing how much computer power would be needed to solve the Navier-Stokes equation for various aviation problems. There were all sorts of problems to be solved: a single wing, an entire aircraft, a propeller, a hypersonic aircraft, a helicopter. The fastest computers in the world were almost able to deal with a single wing. The exercise was called “sizing”, estimating the size of the computer that could solve a particular problem. Nowadays you can probably do most of these on a Mac Pro, maybe even on a MacBook, no sweat. (My MacBook Pro has over ten times the floating point engine of a Cray 1 without counting the graphics chips.)

    If you do a similar sizing exercise with more ordinary computing problems, like managing an IMAP connection, emulating a VT100, drawing a web page, editing audio, synthesizing audio, rendering 3D images, editing video and so on, you’ll see that more and more work can be done on smaller machines. Just as you don’t need a room full of supercomputer to model an aircraft wing anymore, you don’t need a desktop tower to edit video. The processor speeds may have been stalled around 3GHz for a while now, but more cores can be added, each taking less power to run. Memory bus speeds and cache speeds have been rising consistently, and graphics processors are getting drafted for more and more computation. Apple started that latter trend with its Core Graphics, Audio and Video APIs, but now they’ve extended the idea in Snow Leopard.

    I don’t think the tower form factor is going to vanish, but I do think that people are mentally readjusting their expectations. If you’ve grown up needing a tower to run Final Cut Pro, it will take a while to get used to running it on your iPhone 7G in 2015.

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