PART THREE
remember don't shoot the messenger. I for one am long AAPL at 17 3/4, and am holding on.
It's the software, stupid
Want to play Ultima Online, Electronic Art's
groundbreaking multiplayer, online dungeon crawl?
Better have a PC. Interested in the new voice
recognition software? Too bad if you own an Apple.
Dragon NaturallySpeaking won't run on it, nor will any
of IBM's top-notch speech recognition products. (Click here
for more about speech recognition software.)
Fact is, if you want to use your computer for much of anything
beyond word processing, number crunching or surfing the
web, having an Apple computer is an enormous liability. And
getting worse.
As recently as the beginning of this month, well into Apple's
so-called turnaround, Inuit Inc. (INTU) still wasn't planning to
release the next version of Quicken, the leading personal
finance program, for the Macintosh. Only after intense
discussions between Jobs and Intuit CEO William Campbell
(who is an Apple board member) did Mountain View,
Calif.-based Intuit change its mind. But it was a close call and
an embarrassment for Apple.
Apple's lead is slipping even in areas that it has traditionally
dominated, like graphic design and desktop publishing. Adobe
Systems (ADBE), makers of Photoshop, now earns more, in
terms of revenues, from Windows programs than from the
Mac. (Click here to read what Adobe Systems' CEO John E.
Warnock has to say about Adobe's big switch.)
Who cares if Apple still has the
slickest, easiest-to-use operating
system if no one else is using it?
And who can blame the software developers? With a market
share below 5%, only the very biggest software hits stand a
chance of making money on the Apple. Worse, in the
networked economy that we live in, a substantial part of a
product's value derives from compatibility--the ability to
seamlessly exchange data with others using the same system.
Who cares if Apple still has the slickest, easiest-to-use
operating system if no one else is using it?
And Apple's stylish operating system, Mac OS, no longer
enjoys much of an advantage over Microsoft's products. The
announcement last week of the latest version of the Mac
OS--christened Mac OS X--doesn't offer much hope for the
future either. An evolutionary tune-up to be released towards
the end of next year, Mac OS X will offer things like better
multitasking and memory management. Not exactly the stuff
that makes one want to run out and buy an Apple.
At the core, Steve Jobs simply misunderstands the nature of
Apple Computer. Apple is not--or should not--be in the
hardware business. Hardware has long since become a brutally
competitive commodity business. But to the exclusion of all
external evidence, Jobs has focused on hardware. He quickly
pulled the licenses from Apple clone makers like
PowerComputing and Umax, and has treated the introduction
of a cheap, consumer desktop--the iMac--as if it was the
second-coming.
The real value of Apple Computer is in its software,
specifically the Mac OS, which even now is ahead of the
competition. But to get anywhere, Apple needs to quickly
remake its OS to run PC software and license its hardware to
anyone willing to make it. Only then will Apple have any
future. Only then could it possibly justify a stock price near
$30 a share. |
