Apple Gaining Ground

I agree with Henry Blodget that the Apple is gaining ground in computers. The reasons go beyond the ones he states -- that the "network effect" of Microsoft is waning due to the increasing number of applications like mail and Google docs based on the Web. (I noted in comments on his site, Silicon Alley Insider, that a number of apps, even Web based ones like the Netflix movie viewer, some sports event media viewing over the Internet and a bunch of business software still require Windows and/or Windows Media to run. (Fortunately for the new Apples, they can run Windows, though I've found the process of loading it a bit cumbersome -- and expensive, potentially.)

Some more reasons I see Apple gaining ground, largely from my own experience running a small business, but also working in a lot of larger corporate environments:

- The machines, as their marketing says, just plain work. I've got friends and acquaintances and professional relationships with PC technicians, and so by now I'm pretty familiar with the ins and outs of getting around a Windows-based machine to make it work, anything from defragging to dumping programs that are hogging memory, to adding more memory and other things -- but I find that even my tech friends are often stumped as to what is making a PC belch or hiccup. (One of my Windows laptops is being wiped clean and reloaded with the basic software as I type this because it's too onerous to figure out what the heck is wrong. Spyware? System glitch?) I've paid tech support at both Best Buy and Circuit City, but they're not as responsive and don't give the thorough answers and elbow grease effort of guys at the Mac store, where I've bought Apple Care and OnetoOne lessons. If you have a tech dept that you can hand your computer over too for a couple hours every day of the week whenever something's wrong, PCs might be better. But for ...
- An increasing number of people who are on their own in one way or another and can't afford to spend so much of our time hassling with tech issues. The small business economy is growing (job growth in small outpaces large) and don't have big tech depts. We need things that just work.
- The Apples and the software we put on them just work in many instances because things are tested and approved and can generally just plug in and make something run. There are fewer options with Apple -- they only sell, maybe, a half-dozen laptop models, for example -- but that control has the "up" side of consistency. They Apple folks basically know what to look for with whatever malfunction there might be, can figure out how to make programs work across machines and operating systems, and can give clear rather than ambiguous answers. Yes, you CAN run that monitor off that computer, or NO, we don't support three monitors on one machine. It might not have as much ability to manipulate in multiple ways, but for someone like me simplicity helps.
- Software, too tends to work generally the same way no matter the application. Similar commands, a lot of the same utility.
- Plus, a lot of software comes loaded on the Mac. Sure, Apple might cost $1000 compared to a PC that costs $300 or $400, but when you add up the software you get -- legitimately -- Apple comes through very strong. Movie editing, sound editing, picture grabbing, and so on. And their version of Office, iWorks, comes with perfectly good programs that in some cases make things very easy, for example converting a text document to a PDF. And it's cheaper than Microsoft Office.
- The new Apple stores are a great support system. For $99 per year, I can go in there every week and throw questions at a dedicated person for an hour, then spend 20 minutes with a "genius" to ask more pointed tech questions. They try really hard to solve the issues I've had (everything from Entourage -- the Microsoft version of Outlook for the Mac -- not synching properly to issues with slowness booting up. It's not perfect, and there have been glitches, but compared to what I could get from Windows lapstops I bought at Circuit City and Best Buy, there's no comparison. CC, in fact, gave me the runaround when they Acer they sold me died (twice) and always kept trying to charge me more to do things like defrag my disk, back up the hard drive and so on.
- The commercials are funny partly becuase there's truth to them. Now, I don't have a half-beard, and I think my persona is more a Bill Gates than a Steve Jobs (look at my nerdy pants and shirts, and pocket protector), but I want something that works easily and well.
- The Apple Stores are a stroke of genius. There's a consistency to them, if not perfection, which is unlike anywhere else for retail computer service. Even if buy computer and all software from the one store -- which virtually impossible -- with Windows, I could never get so many people to attack a problem knowledgeably. Where could I, in one spot, get someone to both teach me how to network my computer, do complex word processing, help me synch my email, get a workaround the frustrating DRM restrictions on a video iPod, AND build a Web site -- all in one place. Many of the courses are even free.

In short (and I'm sorry for going on so long), Apple is building its own "network effect," people like me to evangelize, the stores that are much more than sales and therefore a stroke of genius for marketing and keeping people like me in the fold. They've put free apps on the computer like iChat that make it easy to talk to others with Apple, and make it easy for Apples to share calendars and files and other things over a .Mac account that costs $69/year.

Now, some dangers and downsides.
- The cultishness can be a downside. People at the Apple store seemed trained (or brainwashed?) to never say anything that would acknowledge any inferiority of an Apple product. If you point out something better than a PC they'll pile on. If you point out something you wish the Apple could do (like access certain Web sites noted above), they might just pretend you never said it. I have heard from more than one tech person or bizdev exec about Apple people's arrogance vs. Microsoft peole's eagerness to fix things.

For example, Leopard's got some problems. (One important reason I paid, I think, $69 for a yearly subscription to a .Mac internet access account was for the "Back to My Mac" function, mimicking the "Go to My PC" software that's supposed to let me access a computer from anywhere over the Internet. Only, it doesn't work. Leopard's also turned some peoples' computers into blue-screened bricks, and taken hours and hours of peoples' time.) If Apple works at lightning speed to ackonwoledge the issues and fix them, then it will keep picking up speed and market share.

- Lack of openness on the software side. The locked nature of the iPhone kept me and many other people from buying one. I like GSM networks because you can unlock a phone and use it on another GSM network. Only not iPhone -- not without voiding the warranty, anyway. Apple should open up, and also allow more developers to work on Apple.

- Money, cost, etc. While they're not as rapacious as the service desk at Circuit City -- asking me to give $60 to push a few buttons I could push myself -- they do seem to fairly frequently suggest I spend another $60, or $70 or $129 dollars, and sometimes that amount is for a yearly subscription of some sort, so they'll get a lot more out of me than the one purchase. OK, what do I expect, to get great service and product for free? And it is a STORE, right? But, still, I think there has to be a little softer on the "sell" for someone like me who's recently forked over thousands of dollars and a little harder on the "service."

Still, I wouldn't short Apple stock, and I wouldn't even be surprised, if they can find good fixes to Leopard and make sure it has all the networking and other capabilities it's supposed to have, if Apple starts to make inroads in the traditionally Microsoft-beholden corporate suites.


Anonymous said...


The tipping point for wide-ranging Apple adoption (if it comes) in the corporate world is still out in the hazy distance.

I own two Macs for home use and development. And have always owned a Mac since my first Mac 128k back in 1984.

I am part of a systems management team that is responsible for the management of over 175,000 desktops in my day-to-day work.

I know the relative breadth of tools that are available for large-scale systems management in the PC world. They have improved incrementally since the introduction of the PC in 1981. But I am still surprised at their failings on a regular basis.

Compare this to the near-zero availability of useful systems management platforms in the Mac market. The few that exist are weak by comparison to their PC counterparts--which isn't saying much.

As a corporate IT manager, I would be making a very poor business decision to introduce (in a large-scale) Macs into my network until this gap is suitably filled. (Dont' get me wrong, we do have several hundred Macs in various capacities, and we do support them, but they are still deployed for specific applications or functions. We don't use them as general-purpose desktops.)

Will the gap be filled? How you answer that will determine whether or not you should short AAPL.


Dorian Benkoil said...

Thanks very much for your intelligent comment.

Anonymous said...

While Apple may make some market share inroads into Microsofts essential monopoly in corporate desktops from outsiders, this is not Apple's plan.

Apple is a manufacturer of premium consumer electronics, planning for maximum profit margin, utilizing superior design and user experience. Of course, it has no objection to increasing market share, but is no threat to MS corporate dominance.

Apple has no desire to sell or compete in the games of lowest price and corporate deep quantity discounts. It has no desire to sell based on manufacturing and supporting a full line of corporate products with purchase tie-ins.

While Apple wants to make the best, it would like to make more profits, but while compared with MS, it does not compete directly. Microsoft is a Software Company. Apple is a hardware company who only provide software for their own products, to enhance the overall user experience (superiority?).

Apple can never compete in the corporate world against Microsofts complete line of corporate devices and support. Apple will never be accepted by corporate IT, where "nobody is ever fired for choosing Microsoft", nor the service and consulting business whose income depends on keeping Microsoft PC's repaired, serviced and integrated.

But if you are interested in future Apple market share (or gains) the college student sales this fall and Christmas. These consumers will determine future trends.