• Newsletter Issue #277

    March 21st, 2005


    When it comes to a talk show, a little controversy never hurts. And in the spirit of provocative conversation, we paid another visit to “The David Bieny Zone” in our March 17th episode. David, you see, is a digital effects and multimedia expert who has lived in the Mac universe for years. He knows where the bodies are buried, and he makes no bones about revealing the locations when he visits the show.

    This time out, David railed against Quark Inc’s spotty customer service record over the years, and remains skeptical that things have changed much. He also told the tale of what happened when he and his ex-wife were staying in a hotel room adjacent to a Quark suite. They were separated by a thin wall and David couldn’t help but overhearing the discussions and arguments that occurred in the next room. No gossip columnist could have done any better.

    At the time, you see, the publisher of QuarkXPress was planning a killer image editing program called XPosure It never saw the light of day, and the discussions and outright arguments that David overheard clearly explained why. Was it right for David to eavesdrop? Probably not, but the story nevertheless is compelling as you’ll discover when you hear the show.

    We returned to a more conventional mode for the second hour, where we were joined by Ted Landau, founder of MacFixIt and author some of the best Mac troubleshooting books around.

    Oh yes, in case you haven’t heard, contests are back, and we’ve been running them pretty regularly in recent weeks. But stay tuned. The best is yet to come. On a future show, we’ll be giving away an iPod shuffle.

    If you haven’t heard the show, be sure to visit The Tech Night Owl LIVE
    Web site to listen to our archives. Enjoy.


    Delivering on the Promise of the Halo Effect: Way back when, as the iPod’s dominance of the digital music market was increasing, there were suggestions that Apple might be able leverage the success in order to sell new Macs. They theory went that once Windows users, who constitute the majority of iPod owners, got a taste of Apple technology, they’d be more inclined to give Macs a try.

    The halo effect didn’t come about right away, partly because of several myths about Macs, the most important of which is that they are perceived as being too expensive. When you see those irritating Dell ads for $499 PC, you can’t see how a $799 eMac might be comparable. It is, of course, if you bother to compare the features carefully, and add the appropriate options to the Windows box.

    Steve Jobs, in introducing the Mac mini in January, said that cute little thing would remove those objections; there were no more excuses. Now in fairness, the $499 Mac mini becomes a $599 product, at the minimum, if you must buy the display, keyboard and mouse as part of the package. If you already have them around, perhaps connected to your spyware-ridden Dell, you’re way ahead. You’ll be in computing heaven when you see the Mac OS X desktop on a monitor with a Dell label on it.

    Clearly the so-called financial experts on Wall Street are also starting to sense the winds of change. Last year, you and I heard that perhaps ten percent of iPod owners would become Mac switchers. Apple continued to boast that over 40% of new Macs purchased at its retail stores were new to the platform. And in case you’re wondering how they come to these figures, we hear that some buyers actually receive phone surveys shortly after the sale. It’s a simple as that.

    Meantime, that huge investment banker, Morgan Stanley, has come up with a 20% figure. If that holds true, consider that total iPod sales by the end of 2005 are expected to exceed 20 million. That’s four million new Mac sales, more than doubling Apple’s current annual sales figures.

    All eyes will be on Apple in April when it delivers the financial results for the quarter that will end on March 31st. Lots of Mac users are hoping that this is one Wall Street projection that will prevail in the real world.

    Apple Versus its Fans: The pros and cons of Apple’s lawsuits against three rumor sites have been debated over and over again. Unfortunately, even some mainstream technology writers have gotten it wrong. One commentary I read the other day suggested that the decision of Judge Kleinberg in favor of Apple would help put the nail in the coffin on whistleblowers. We’re talking about folks who spill the beans about a company’s secret information because it could affect our health and welfare.

    If they actually read Judge Kleinberg’s decision, they’d see that he makes a very strong distinction between public interest and public curiosity. Clearly, he felt that, in revealing some of Apple’s trade secrets about new products, the sites in question catered to the latter. I really get the strong impression, based on that decision, that if Apple were a tobacco company and that trade secret revealed previously unknown health hazards about cigarettes, Judge Kleinberg would have dismissed the lawsuit outright. Stories of that sort clearly serve the public interest, and reporters win awards for such things.

    This is one story that has no immediate conclusion, however. Decisions of this sort could go through an appeal process that could take many months or several years to complete. In the end, whatever is decided will set a precedent for future actions of this type.

    Should Apple get the right to subpoena a rumor site’s email files to ferret out the identity of the John or Jane Does who violated confidentiality agreements and revealed trade secrets to the press, it the matter may be moot. Those people might have long ago left the company, and Apple would have moved on to totally different product concepts.

    Of course, California’s legislature could, in the end, settle the matter simply by clarifying the terms of its trade secrets law in a way that, perhaps, sets a litmus test for serving the public interest. Of course, I rather expect such matters are far below the Governator’s radar.

    By the way, if you think Apple only goes after small Mac rumor sites, think again. When I talked with Ted Landau, MacFixIt’s founder, on The Tech Night Owl LIVE last week, he revealed two encounters with Apple’s legal staff. On one occasion, he innocently disclosed information on how to convert a Mac OS X update CD to an upgrade CD, to allow for clean installs. On the other occasion, he published something from an Apple Knowledge Base document that was later removed.

    Ted simply acquiesced to the request, no questions asked. If it happened to me, it would leave a bad taste in my mouth. After all, like Ted, I have had a long and cordial relationship with Apple, and a friendly phone call from someone in Apple’s corporate communications department explaining the company’s concerns would have probably yielded the same result. Now maybe contacts of that sort wouldn’t have any impact with a rumor site, but I still believe in using carrots, first, and the sticks only as a last resort.


    Before I go too far afield, let me make it perfectly clear that I am not talking about spotty service and poor customer service, both unfortunate hallmarks of the typical cell phone providers. I’m talking instead of subsidizing the purchase of hardware.

    Here’s what I mean: You see all those offers for free or nearly free phones. Clearly mobile phone manufacturers are not giving those things away. Instead, the carriers will give you a discount if you agree to a contract for a year or two. If you break the contract, you pay a “termination fee” that makes up for the amount lost and then some.

    What would a phone cost without that special inducement? Well, let’s take the LG Electronics VX6100 camera phone that I recently purchased for Grayson. I paid $69.99 with a two-year contract extension. That includes a $50.00 online rebate. If I opted for just one year, the price would increase to $169.99. Ala carte? Don’t ask, but you can see where I’m going.

    Now if you want to sign up with a satellite radio service, you have to buy the equipment, unless you’re lucky enough to have a car with a built-in satellite receiver of course. You pay the standard retail price, and when you bring home your new purchase, or have it installed in your car, you have to call the satellite company to activate your account. Now the economics of this business aren’t quite the same as mobile phones. The average cell phone bill these days exceeds $50. The monthly price for Sirius, for example, is $12.95 plus $6.99 for each additional receiver up to four. You can save if you buy an annual contract, and for $499.99 you can get service for the lifetime of your radio, and you have to hope it is at least four years to make sense. Worse, how much consumer electronics gear lasts that long these days?

    Of course subscriptions do not constitute the only income stream for Sirius or its larger rival, XM Radio. Although the music channels are commercial free, at least for now, talk and sports shows carry ads, just like any regular radio station. As subscriptions (and potential audiences) increase, ad revenue will increase as well, so it’s critical to sign up as many members as possible.

    Now what if you got a free basic satellite receiver, worth around $100 or so, with a two year contract? Would you be more inclined to give it a try? To be fair, Sirius, whose membership is way behind that of the market leader XM, already has a $30 main in rebate program if you agree to a one year contract. That’s a move in the right direction but, as you now, rebates are problematic. You wait weeks for your money, and sometimes it never arrives, unless you waste a lot of time following through with typically unhelpful customer support people.

    Don’t get me wrong. Satellite radio is absolutely wonderful. In addition to being able to listen to music without five loud car commercials in a row between every song, you can drive across the continental U.S. and listen to the very same station with hardly any interruption. Sound quality, while somewhat short of CD, is much better than FM.

    These days, I hardly listen to old fashioned radio stations anymore, and if the satellite radio networks give you a little more incentive to sign up, I’m sure you’ll be more inclined to come along for this exciting ride.


    The Mac Night Owl Newsletter is a weekly information service of Making The Impossible, Inc.

    Publisher/Editor: Gene Steinberg
    Managing Editor: Grayson Steinberg
    Marketing and Public Relations: Barbara Kaplan
    Worldwide Licensing and Marketing: Sharon Jarvis

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