MS/Apple: Can this marriage be saved? (I doubt it)
By David Coursey, AnchorDesk
July 18, 2002 9:00 PM PT
MACWORLD, NY--For the life of me, I can't explain why otherwise apparently normal men and women would line up for a quarter-mile or so to see a keynote at a computer show. I've been to lots of these speeches, and have never seen anything worth standing in line for. But this is Macworld, and there are lots of things Mac that can't be understood by outsiders. dg> Sounds like a Grateful Dead concert!
What the true believers got in return for their fealty was a nearly two-hour-long product pitch, in which Apple CEO Steve Jobs introduced some new iPods (including a Windows model), some new software, and pitched his new operating system, OS X 10.2, due in stores Aug. 24. And there was .Mac, which Steve called "Web services for the rest of us." (Actually, it's more like "Web services from a company with no enterprise strategy.") Only brief mention was given to the new 17-inch iMac, a steal at $1,999.
FROM A PURELY product perspective, Steve's keynote was, for the most part, a snooze. Despite Apple's secrecy fetish, all the really interesting stuff was well known before Steve stepped onstage. But if they read between the lines, I think the Mac faithful got some big news from the computer industry's last rock star.
At first, Steve's audience cheered wildly with each announcement. Their enthusiasm flagged as the keynote ran past the first hour and began feeling like an all-day revival meeting. But one of Steve's announcements was met with cold silence; another probably would have received the same frosty reception if the audience had really understood what Jobs was telling them. From a long-term perspective, those two were probably the most significant points of the whole ordeal.
The announcement the audience seemed to miss was when Steve said there'd be no discount for current users when they upgrade to OS X 10.2--that everyone would pay the same $129.
PRESUMABLY, EVERYONE who wanted OS X in the first place has already upgraded from OS 9 (and earlier) versions of the Mac OS. So the 10.2 upgrade is targeted primarily at current OS X users. For buyers who've either purchased their machines in the past few months--and got OS X preinstalled--or for those who paid over $100 to move from OS 9.x to OS X, that $129 price probably seems high. For them, the OS X experience, with the new upgrade, will have set them back $250 in only 18 months or so.
By contrast, the audience seemed to understand quite clearly what Jobs meant when he said the new .Mac service--which will replace the free iTools--will cost $99 a year. (Current iTools account holders get an introductory $49 rate for the first year.)
The current iTools service gives users a .Mac e-mail address, 10MB of online storage space, and the ability to post photos and/or a personal Web site online. The new .Mac keeps the e-mail and personal Web pages, increases the storage to 100MB, and adds online backup tools and antivirus protection.
Despite the additions, Steve's audience sat on their hands when he spilled those beans late in the keynote. Dead silence, which gives you some idea of how people feel about paying $100 a year for something they now get for free.
DO THE MATH: What Steve told the faithful is that over the next two months--with the Aug. 24 ship date for OS X 10.2 and the Sept. 30 shutdown of iTools in favor of .Mac--it will cost somewhere around $200 to remain a MacHead in good standing.
That's a lot of potential revenue for Apple, especially when you consider that .Mac is meant to be a platform for offering paid services to the Macintosh community. Can downloadable pay-for-play music be far behind? What else does Cupertino have up its sleeve?
Apple execs point out that paying $129 for the "new" OS means that each of the 150 "major innovations" included cost less than $1 apiece. A skeptic would also point out that some of the "innovations" are things painfully absent from earlier releases and more along the lines of finishing the work of making OS X a complete operating system.
But look at it this way: With OS X 10.2, Apple may be distancing itself from reliance on Microsoft Office as its customers' primary productivity apps. With a significantly improved e-mail client, contact list, and a new calendar, called iCal, many Mac users will forgo Microsoft's Entourage (think Outlook for OS X but without Exchange server support) for what Apple is providing essentially for free.
APPLE IS ALSO providing a synchronization product, iSync, to link Palm devices, iPods (now with calendar as well as contact list support), and select wireless devices with the desktop. Apple is also giving away its AppleWorks desktop suite with Mac hardware, meaning that with the new mail and calendar features, a Mac user doesn't really need Microsoft Office.
The fact is, Apple is doing more with its own software than Microsoft does with its Mac applications. The new Mac OS X 10.2 mail client includes what appears to be fairly innovative anti-spam technology (which I'll review one of these days). And iCal does things (such as shared and Web-publishable calendars) that Microsoft doesn't really seem to have thought of yet--at least not for its Mac clients.
With the new mail features, iCal, and iSync, Apple is competing directly with Mac Office--and winning. If Apple spends time making AppleWorks more competitive, the thought of Macintosh without Mac Office might not only become thinkable but, perhaps, even a good deal.
PUT ALL THESE threads together, and it appears that Apple is shifting strategy towards becoming a software company--admittedly, a software company that depends upon its own hardware. In the future, I expect to see more software from Apple, and for more of it to be sold as an upgrade to what users already own, or delivered as a paid service of some sort.
The $129 new OS and $99 .Mac may be Apple's way of taxing the faithful to attract new customers from Windows and declare its independence from Microsoft. At the same time Apple has launched its "switch" campaign--its most aggressive attempt ever to lure Windows users to Macintosh--the company is also positioning itself for a very unhappy reaction, perhaps the end of Microsoft's support for the Mac.
The way I add it up: By lowering hardware prices, Apple is making the Mac more attractive to switchers. By raising software prices and adding the .Mac service business, the company is making up for lost hardware revenue. And with its new and improved iApps, Apple is preparing for life without Microsoft.
Or so it seems. |
