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by Wes George
 Apple,

Finances,

Money,

and Trading.

Mmmmmmm...... Good




Demand A Recount Of Those PC Crashes, Apple Is The People's Choice!
November 22nd, 2000

Last week news broke that Apple is going to open a 6,500 sq. ft. retail outlet in Palo Alto California, probably as a prototype for a chain of Apple Stores across the country. Everyone views this as a good thing, except possibly Apple's army of resellers. Although, if the new bricks-and-mortar Apple Stores are carefully grafted to the reseller infrastructure, it should augment and energize the Mac retail and service network rather than merely sap sales away from preexisting outlets.

Just as importantly, Apple retail stores could rehumanize Apple's too-cool image after years of elitist advertising aimed at well-heeled, arty types.

Apple has abandoned the middle class to the seductive, if ludicrous, "People Rule" bandwagon hype of Gateway and the pragmatic Dell strategy of touting lots of value-added services. (BTW, watch a Dell or Gateway TV commercial. Notice how they cleverly focus on anything — dogs, cute kids, overpriced services, deflating and burning E's — anything but the mediocre beige Wintel amalgam you are ultimately stuck with in the end.)

Interestingly, Apple's stock actually declined on the news of the Palo Alto store, perhaps because everyone is glued to CNN watching the political battle rage in that banana republic we call Florida. So much for the buffoons who would mislead the American public into believing the election stalemate is having no effect on the stock markets or anything else for that matter.

The BMW versus Ford analogy

The best case scenario is that Apple will spend a small portion of its moldering billions to build a chain of populist, people-friendly Apple outlets wherever they are needed throughout the Americas, Europe and the Pacific rim nations. Worst case scenario foresees the company erecting vain and expensive uber-fashion galleries only in places like Rodeo Drive, the Ginza and 5th Avenue.

Somewhere in the past decade, Macintosh, "the computer for the rest of us", morphed into the computer for the best of us.

People who drive Fords know that BMWs are technically superior automobiles and more fashionable too. However, everyone knows a Ford will get you from point A to point B just as well as a BMW and Fords are less expensive to buy and maintain. People who buy BMWs usually do so to project an image of success and stylishness. Few people own BMWs solely for the engineering experience, even if many may claim that's the reason. This is where the auto analogy breaks down. Mac users really are more attracted to the superior engineering aspects of Apple products than they are into using Macs to project some sort of personal image of success or style.

Most importantly, Wintel PCs do NOT get you from point A to point B as efficiently as Macs do! Let's elaborate on this point.

Time equals money

How much is an hour of your time worth?

Walt Mossberg of the Wall Street Journal is perhaps the most highly regarded PC tech writer in the U.S. and though he was wowed by the G4 Cube, he's not in the least biased towards the Macintosh. Nevertheless, in October of 1999 he penned a distraught column where he confessed that "…during a typical week of use, I recorded 23 crashes, freezes or incidents of unexpected or puzzling behavior." Mr. Mossberg wasn't talking about his Macs.

Personally, I was quite upset by Mr. Mossberg's revelation. I mean, the dude has been a tech guru for at least a decade and he's just now breaking the story that Windows is a frustratingly unstable, Soviet-quality, piece of junk?

I point to Mr. Mossberg's admission that Windows crashes much more often than the Mac OS because — unlike the partisans who expect the Republicans to trust a Democrat-led hand recount of the vote — I don't expect you to believe me, a card carrying Macocrat, when I say the Mac OS is more stable than Windows.

Let's do the math, it'll be fuzzy, but we'll be at least as fair as they are in Florida — no taped-over punch holes or unexplained piles of chad on the counting room floor.

If your Wintel PC crashes approximately half as much as Mr. Mossberg's, that's still 520 crashes a year. At an estimated productivity loss of 15 minutes per crash that means you'll spend 130 hours-per-year rebooting, fiddling with and losing your work flow due to the crummy codesmanship of the Windows operating system. Note that we aren't talking about training or regular maintenance, just unexpected crash or freeze time.

How much is your time worth? The average hourly wage in the U.S. is about $15 per hour — multiplied by 130 hours-per-year of downtime that comes to $1950 worth of time out of the average PC user's pocket. And that's just one year. If you've been suffering through Windows for the past 5 years you have unwittingly squandered $9,750 worth of time from your life or 81 eight-hour work days!

The drain on the economy, which is highly dependent on Wintel PC worker productivity, makes the PC user's personal loss pale in comparison. Every million business users of Windows cost the economy approximately 65,000 work-years of lost productivity every year! Assuming there are at least 25 million business users of the Windows OS, that's a staggering productivity loss of 1,625,000 work-years per year. The average length of an ice age is only about 15,000 years. Or if the average PC worker makes $30,000 per year, then Windows bleeds the economy of $28.75 billion per year for every 25 million PC workers in lost time. No wonder the US is experiencing record levels of employment, hundreds of thousands of virtual workers are doing little more than rebooting PCs and salvaging data.

Even if these numbers are off by an order of a magnitude the waste is shocking. If an IT person ever tells you that PCs are a more fiscally responsible capital investment in business or private life because they retail for less-per-megahertz than Macs, just laugh in his or her ignorant face. If Macs ruled the business world instead of PCs, old Greenspan would have raised interest rates another quarter point at the last FOMC meeting because productivity and GNP growth would be several hundred basis points per year higher than they are now and our red hot economy would show no signs of slowing.

In fact, as the economy slows and perhaps even tips into a recession, the 65,000 work-years of productivity loss each year due to the Windows monocrop should be recognized as a significant contributing factor. I truly believe that David Boies and OJ Simpson's ambulance chasers are wasting their time in Florida while a huge class action suit against the negligence wrought by Redmond's monopoly lurks in this nation's lost worker productivity numbers.

BTW, don't bother with e-mails informing me that the Mac OS crashes too, at least until OS X's protected memory arrives. I know it does, the point is that the Mac OS doesn't crash nearly as much as Windows. Need more proof? The University of Texas has one maintenance techie for every 120 Macs, while on the Windows side the ratio is closer to one techie for every 20 PCs.

But let's try to wrap this article up so I can get back to obsessing about the fiasco in Florida and flaming CNN and the New York Times for their highly biased reporting. (BTW, I didn't vote for the Marlboro Man or the wannabe-Kennedy, so the theatre of the absurd going on in Florida seems a horrible affirmation of my own worst fears.)

Think Real

Apple has promoted the Mac platform as if it were a BMW — so cool it sends a chill down the spine of middle America who instead run to the warm udder of people-friendly Gateway in Pavlovian herds.

The sad irony is that Macs are far more warm and friendly and much less expensive than any Wintel PC brand can ever be once you incorporate the full cost of owning a computer into your analysis! It's simply not true that Windows is a better or even equal platform for non-geeks than Macintosh.

Moreover, Apple's attempt to sell Macs as a purely fashion/image statement doesn't work as reliably as it does for the auto or clothing industries because you can't drive your Cube to a ball or wear a Cinema Display to the opera. So Apple needs to get a clue and go back to selling their visionary designs by the basics — sheer utility, true value and ease of use.

The Mac really is the PC for the rest of us. But the rest of us have little in common with 75-foot tall images of towering geniuses or with twirling iMacs in wordlessly backgrounds of pure white light. Cupertino's sparse and demodé advertising strategy goes largely overlooked in most analyses of Apple's business since it is hard to accurately quantify advertising's effect on sales, but it's an important part of the mix and at least part of the problem in the recent sales slowdown.

Apple needs to hawk these machines on their true merits now that the hip image is securely emblazoned upon the public's mind. The Jeff Goldblum iMovie commercial is a step in the right direction, but it doesn't go far enough. iMovie may be compellingly cool, but it isn't going to significantly grow the user base on its own.

Let's hope the future Apple retail outlets represent Cupertino's earnest attempt to reconnect with the middle-class and are accompanied by a massive new advertising campaign that focuses on the superior utilitarian value of the Mac rather than yet more image building fashion statements.

I'd be more assured Apple was on the right track if the prototype Mac shop was planned for Cleveland, Ohio instead of jaded Palo Alto in Steve Job's backyard. Apple already owns the hearts and minds of the artistic and binhex literati and that alone isn't growing market share.

Apple has relied on its almost mystic appeal to the Mac Faithful, who have done the corporation's promotional trench work for far too long. As a shareholder I want to hear Apple explain why a hurried housewife, a suburban dweller, a small business, a regular dude, a high school lab, a college student, a bus driver or a kid into PC games ought to go Macintosh instead of Wintel. I want to see iMacs, Cubes and iBooks on every billboard and on every TV channel. It's time for Cupertino to aggressively hard sell the Mac to the average PC user and focus on market share building.

Your comments are welcomed.


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Wes George writes about the financial side of being a Mac nut. Wes has followed Apple's finances for the last 7 years and comes to The Mac Observer every Monday to tell all about his opinions. He is, in his own words, "inordinately fond of money." If you would like to write Wes, make it nice. Someday you might own a company that has something to do with Apple, and Wes will probably still be writing for The Mac Observer...... On the other hand, Mr. George is known to love a rousing, hair-raising debate, so send him your worst!

Disclaimer: This column is for informational and entertainment purposes. While Mr. George may be sage indeed, his writings can not be construed as a solicitation to buy, nor an offering to sell any particular stock. As with any trading in the financial markets, you must use your own judgment to make the best trades that you can. Neither The Mac Observer nor Wes George may be held accountable for trading advice.



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