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  • Apple Rises as the PC Industry Stagnates

    August 9th, 2011

    There’s a report this week that pegs growth in the PC industry as roughly 4%, a lot less than the good old days. Although PC purchases by businesses are said to be increasing at a decent clip, consumers are sitting on the sidelines. Or are many buying iPads and Macs. Can you guess which?

    Take the tablet market; well, make that the iPad market. HP is already staging fire sales on their new WebOS-based tablet, the TouchPad, just a short time after the thing was introduced. In the space of a single week, there were three price cuts, including a $50 rebate program. When a company is forced to do that to a product that’s just released, you have to think they are desperate to control flagging sales.

    Now some in the media what to think this maneuver, which smacks of desperation, means that the tablet market is going to be more competitive. But it really seems that the industry is already littered with previous failures, and they are struggling to move the millions of devices they’ve foisted onto their dealers into the homes and businesses of customers.

    Is it going to make a difference?

    I suppose if some are avoiding an iPad because it’s too expensive, maybe a cheaper HP TouchPad will gain some traction. But when people start to use the thing and realize that there are pathetically few apps available, they might change their tune. Consider that returns of the iPad wannabes are reported to be unusually high. Meantime, Apple continues to sell as many iPads as they can build.

    High returns, for example, forced Logitech to shave several hundred dollars from the retail price of their Google TV set top box, the Revue. According to published reports, most customers have actually returned them. Dumping Revues in the marketplace, or selling them at discount outlets that carry remainder merchandise, does little to validate Google TV. The Revue was meant to be a flagship product that would set the standard. Clearly it’s a standard the public doesn’t care about.

    Now it’s not that Apple always succeeds, but they are quick to pull the plug on products that do not realize their potential. One big example is the Power Mac G4 Cube, a stunner of a design, but one that had serious flaws and failed in the marketplace. Unlike Microsoft and other companies, Apple doesn’t put vast amounts of money into products that fail. Even Apple TV, which hasn’t set the world afire, appears to at least earn a small profit, and Apple is still experimenting on finding a hardware and software combo that will soar. But remember that Apple doesn’t sell products at a loss. If the Apple TV was a money loser, it would disappear real fast.

    In the PC industry, I wonder if anyone can name a single interesting new model in years. Most of the products out there these days are simply the same old cases with newer internal workings. Sure, Apple will leverage a design through several revisions, but will, after a while, change things. The MacBook Air is surely a major example, particularly since the PC makers are having a whale of a time figuring out how to build similarly tiny note-books with comparable specs at equal or lower prices.

    That turns the Apple-is-overpriced meme on its ear.

    This doesn’t mean that Apple is necessarily immune from competition. There are still more Android OS smartphones out there than iPhones, but it’s largely because there are loads of models from a number of manufacturers, many sold for next to nothing with the usual wireless contract. But surveys have shown a surprising number of Android smartphone owners are actually considering iPhones when their contracts are up. Google’s platform clearly isn’t getting quite as favorable a response. That Google and/or their licensees might confront royalty fees from patent holders may also make the platform less compelling. In that event, many of them might consider Microsoft Windows Phone 7, even though that platform has yet to gain traction. Or maybe roll their own, which will make the smartphone market even more fragmented than it already is.

    And how is Microsoft coping with flagging PC sales? Well, they are paying lip service to the mobile/desktop integration scheme with Windows 8. It will sport interface elements lifted from Windows Phone 7, perhaps to mimic what Apple has done with OS X Lion. But Microsoft’s concept of a tablet is still a PC that runs Windows and Office. They’ve tried that approach for years without much success, but Microsoft still believes that throwing more and more money at a problem must inevitably produce a solution. There’s little if any evidence such a thing works, which means that PC makers, and, of course, Microsoft, may have a rude awakening if Windows 8 fails to power a successful line of tablets.

    At this point, the biggest danger to Apple’s success may well be Apple. A serious misstep could cause problems, but right now they remain on a roll.



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