Saturday, September 15, 2007

Steven Jobs loves you

That's why he hits you

Let us all give thanks that Apple introduced its Macintosh personal computer in 1984. Despite its tiny memory (128K) and sealed case (don't you dare mess with the innards of your own computer!), it was a breakthrough. The Xerox Palo Alto Research Center had invented the future of computing, but the company neglected to market it. Someone had to do it, and that someone was Steve Jobs (along with a gang of people with the talent to do the actual programming and design, once they had seen Xerox PARC's prototype of a bit-mapped graphical user interface controlled by a mouse). Bill Gates at Microsoft knew a good thing when he saw it and quickly tagged along (although not as quickly as he might have liked).

Apple's products are important and influential, but for some reason the company has never gotten the hang of mass marketing. Its share of the U.S. personal computer market is only about 5%. While 5% of so large a market is nothing to sneeze at, it pales in comparison with the market shares of Dell (28%), Hewlett-Packard (26%), Gateway (7.7%), and Toshiba (5.4%). Nevertheless, Apple has considerably more “mind share” than market share. That's probably because the other vendors are all under the umbrella of the Microsoft Windows operating system, setting up a perfect David versus Goliath image that Apple likes to exploit. The only two competitors are thus Microsoft Windows and the Macintosh OS. As we all know, Windows is corporate and clunky (as well as uptight and button-down) while the Mac OS is cool and sleek (as well as laid back and perhaps a bit stoned). Apple works that angle in its advertising and deftly defends its marketing niche. Everyone is happy.

That includes Apple's loyal and much-abused customer base. Apple has a long history of beating up on its clients, but the Apple aficionados keep coming back for more. The sacrifice is worth it—or so it seems—and the customers know it's their own fault. If only they hadn't upset Steve Jobs, he wouldn't have been forced to beat them up. It's the battered spouse syndrome as marketing campaign. And it works! To a degree, anyway.

Frankly, Apple ought to control the personal computing universe while Microsoft subsists on crumbs from the banquet table, but the greatness of Apple products is severely offset by the corporation's casual cruelty to its customer base. Is Microsoft dull and corporate, its enormous success driven by mastery of market-share tactics? Yes. Is Apple clever and innovative, its commercial success held back by its callous and insensitive leadership? Oh, yes!

These claims are based on both ancient and current history. Microsoft got its hooks into personal computing operating systems early and never let go, managing the transition from MS-DOS to Windows deftly (for all that Windows itself was not particularly deft, especially the early releases) and building a monopolistic presence in the corporate world. Microsoft's success with the corporate world was driven by its early alliance with IBM. Microsoft's success in the home market was drive by its willingness to sell lots of units inexpensively. You could get MS-DOS for any cheap PC clone. A million flowers bloomed. Today Windows is readily available on dozens (hundreds?) of different platforms.

Apple, by contrast, jealously guarded its family jewels and did not license its superior operating system for the clone market (except for that brief experimental period when Jobs decamped for a dalliance with NeXT computers). The first Macs were more proof-of-concept machines than usable workstations. Memory resources were so low that only short documents (up to 10 pages, if you're lucky, assuming minimal use of graphics) could be composed on a Mac. It has no hard drive and Apple did not offer one (or even the interface for one). Computer magazines quickly began to publish articles on ways to pop open the Mac chassis and stuff it with additional RAM chips. The modifications voided your Apple warranty, of course, and were sanctioned by the company only after it released the 512K Fat Mac (as most people called it at the time) and then only if you had it done by an authorized (and high-priced) Apple dealer. Apple has always preferred the small-market/high-margin approach to selling its products. It has fostered that approach with proprietary solutions and single-source marketing (Apple being the single source, naturally).

Can you hear me now?

Today Apple is enjoying the success of its new iPhone venture, which looks to be similar to that of the market-dominating iPod. (The success of iPod has even had the effect of buoying the sales of the Macintosh, bringing more customers into the Apple ranks.) Two of my colleagues are early adopters of the iPhone. I often see them playing with (excuse me, I mean “using”) their iPhones. During this month's faculty senate meeting, one of them was browsing his e-mail, his course enrollment rosters, and (for no reason that I could see) viewing his list of contacts. At least he wasn't playing any games. He had also spent a few bucks on an iPhone condom (you know, one of those rubberized sleeves; “for protection,” he said).

Both of my colleagues had bought their machines at the initial price, before Apple startlingly announced a $200 price cut. Apple also discontinued the lower-priced iPhone model less than two months after its release. That's taking planned obsolescence to a new level! Only the act of driving a brand-new car off the dealer's lot can be compared for the abruptness of depreciation. My faculty senate buddy was somewhat miffed about so big a price drop right after his purchase, but he was slightly mollified by Apple's sudden afterthought (in the face of consumer complaints) in offering a $100 credit (for Apple products only, naturally) to early adopters. The grudging rebate is also hedged about with limitations.

Why didn't Apple anticipate the reaction of its customers to the kick-in-the-shins price move? It's probably because Apple has always been remarkably callous about gouging its base and the base has traditionally been quite docile. The company knows its products are really good and that people will generally put up with the abuse. They have in the past, you know. It would have taken only a little foresight for Steve Jobs to have scored a marketing coup with the announcement of the new iPhone pricing. Had he extended the $100 rebate offer to first adopters at the same time that he revealed the $200 price cut, he could have graciously thanked the early adopters for launching the product so successfully, commented that they had no doubt reaped great benefits from having the product before other purchasers, but then noted that Apple was sharing its success with the early adopters by retroactively wiping out half the difference between the original price and the new one. Thanks and thanks again! The loyal customers would have swooned.

But Steve Jobs and Apple never even thought of it.


Kristjan Wager said...

I think it's worth mentioning the Wikipedia entry on Reality Distortion Field.

Personally, I am not a great fan of Apple - they take propertarian software, and even hardware, to an extreme degree. And I say this, as someone who works only with MS technologies. They also have some shady business practices (Mother Jones had an article about how iPod batteries lasted for a shorter period than would be expected with todays technology).

Lifewish said...

As a Linux fanboy, I feel your pain. Why do people not realise how much freedom they're discarding when they buy locked-in systems?

On the phone front, I'm just waiting for the mass-market version of the OpenMoko Neo1973 to be released (slated for October, apparently). It's about as far away from the iPhone's lockdown as you can get. The developer version comes with a frickin' screwdriver* to make it easier to open the casing up.

* With frickin' lasers on? The product specs don't say.