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Apple
Gets Bruised
by John Virata
jvirata@digitalmedianet.com
Sept. 29, 2000
A lot has happened in the news for the digital producer this
past week; Macromedia countersues
Adobe, Microsoft's antitrust case
goes to Court of Appeal, and probably the most stunning news,
the $9 billion drop in value of Apple Computer, arguably the
most widely religionized computer hardware and software company
in history.
When the company reported
on Thursday that it would not meet analyst expectations for
the third quarter, a massive after hours sell off of the company's
stock took place, bruising Apple to 1997 (pre-second coming
of JOBS) levels. The company reported revenues hovering around
$1.85 and $1.90 billion, with earnings forecast between 30 and
33 cents per share. Analysts on Wall Street projected the PC
maker's earnings would be around 45 cents per share, based on
expected revenues of about $2.05 billion.
So what happened? Here's my take.
Apple Computer has enjoyed wild success since Steve Jobs returned
to the helm as iCEO, and finally, as CEO. The company has been
revitalized by Jobs, and the outrageous work of his chief designer,
Jonathan Ives. When Jobs came back on board, the popularity
of the Internet was beginning to soar, but the folks in America
weren't readily logging on, so to speak. Be it because of technophobia
or lack of interest, the number of folks using the Internet
daily was still pretty minimal. Apple Computer helped to change
that with the iMac. At first it was just one model, then a few
sprouted on the tree. The Bondi Blue G3 hit the streets and
content creators were enamored. A color computer, in a sleek
case to boot. Color computers were nothing new. The former Intergraph
Computer Systems started building blue/purple (Blurple) boxes
around 1997-98, and Acer America was selling a black 486 as
far back as 1992-93. But the key with Apple's success was its
ease-of-use and set-up with the iMac. It couldn't have been
more simple than a power cord and a phone line, Jobs thought,
and the iMac was born. It was so simple to get connected that
my mother could set it up, right out of the box.
 The
iMac, and Apple's creative advertising helped bring a PC into
the homes where there previously wasn't a computer before, and
that PC was a Mac. I read somewhere on the Internet that since
the initial release of the iMac, more than 23 million iMacs
were reported to have been sold. That is a lot of computers.
Before Jobs came on board, Apple suffered from model bloat,
there were just too many models to choose from. Three years
later, there are five models of iMac to choose from (four are
new models, and the fifth is the original model that you can
buy at Costco for $700-$800). iMac, iMac DV, iMac DV+, and iMac
DV Special Edition. I think that for a company to offer so many
models of what is essentially an entry-level computer is just
too confusing. My sister wants to get a computer, and when I
told her to buy an iMac, she didn't know which one because there
were too many in too many colors. She didn't understand why
the white (Apple's Snow color) one was more expensive than the
green one, and she liked the white one. Sure an Apple lover
would pay more for the computer if it was in the color he/she
liked, but a first time computer user? They just wouldn't understand,
and the iMac is targeted at the first time computer user. My
sister still hasn't bought that iMac. I can imagine that this
is going on all across the markets that Apple serves. Apple
needs to reduce that confusion and cut a model or two out of
the equation, and make all colors available on all models.
The PowerMac G4 is currently the top-of-the-line Mac on Apple's
tree, but again, Apple pulled a fast one when it introduced
dual processor models before it shipped an OS that can take
advantage of dual processors. It is the year 2000 and the MacOS
is still only single processor aware. Windows NT has been multiple
processor aware since what, 1995?
You can buy the original single processor G4 400 machine online
for $1299. The single processor 400 with gigabit Ethernet goes
for $1599, the dual G4 450 is $2499, and the dual G4 500 is
$3499. You can still buy the single processor 450 and 500 in
some places. So what do we have here, six models of G4 (not
counting the G4 Cube) currently available for purchase somewhere.
Again, too many models available. Granted the older models are
being phased out, but still, there are too many models. Why
did Apple ship a dual processor model with a single processor
OS? Was it because the PC folk were winning the speed wars and
Apple had to ship a computer that was respectable in Photoshop
tests? Or was it because Jobs needed to boost the bottom line
with yet another flashy, media induced roll-out? While applications
that support dual processors like Photoshop and Cinema4D are
available, is the value there right now to buy that dual processor
system?
I have been wanting to buy a new Mac for a while and the dual
processor model is looking pretty good. I want it mainly for
Photoshop use. But is it the right model at the right time?
DMN's own Creative
Mac guru Dave Nagel told me that the dual processor model
was the best value, then a month or two later he waffled, saying
that with OS X delayed at least until 2001, the 400MHz single
processor model would be a better value right now. Confusing,
yeah? I can buy the dual processor model now and utilize that
second processor right now with Photoshop, or I can wait until
OS X, (and by that time, pray the 500MHz dual G4s will have
faster busses and will be the entry-level dual processor model).
The PowerMac G4 Cube is a cute and ingenious piece of technology,
but are people buying it? According to Apple in its press
release that stated its lowered earnings forecast, people
aren't. It seems the Cube shipped mushy, and nobody wants to
buy a mushy Apple. The Cube has a nice form factor and its cute,
but the functionality is just not there. In my eyes, the Cube
is just Steve Jobs' desire to make something cool. When the
iMac came out, it was very cool, and it still is. But the lowest
common denominator for the iMac is that it is functional. And
the Cube is not really that functional. The Cube is really just
a $1799 iMac G4 without the monitor. I will buy function over
form any day, and most consumers probably will too. Yes, Apple
got hammered yesterday, but it will regain its composure. After
all, it will earn money and not lose money, like a lot of new
technology companies of today.
Read Digital Media Net Producer Charlie
White's take on Apple's woes here
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