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by Wes George
 Apple,

Finances,

Money,

and Trading.

Mmmmmmm...... Good




How Windows Costs The World Economy Billions In Lost Productivity Each Year
October 11th, 1999 

"I did not buy a computer to learn computing anymore than I bought a refrigerator to learn refrigeration."
Dick Rumage

This week is the one-year anniversary of the Apple Trader column, and I'm confused. I'm not sure how to handle Apple's newfound success in the stock market, or with the media. I'm used to defending Apple on all sides from a constant onslaught of Wintel-centric nonsense. As an Apple user and investor I have felt besieged for years. Somewhat like an oppressed minority, Mac users have come to know what it means to be the underdog.

Things have changed since last October. Apple is no longer referred to as the "beleaguered computer manufacturer from Cupertino." The iMac proved to be the best-selling computer in Apple's history, much to the chagrin of its early detractors. Apple's stock developed a serious case of momentum until demand exceeded supply to the detriment of overly ambitious earnings estimates. Nowadays the press regularly raves about what a well-managed company Apple is, and ponders the limits to Steve Job's ingenuity.

With five killer new products on the market, Apple is set to have a record breaking first quarter. The approaching Christmas season is likely to be frenetically fueled by much higher than usual consumer spending due to the roaring economy. Digital and Internet-based consumer electronics such as DVcameras, Rios, PalmPilots, Game Stations, iMacs and iBooks promise to be the hot items this Y2K Christmas. Sales will disproportionately favor Apple over the rest of the PC pack, most of which are still in denial over the emerging threat Apple products present to their dull as mud business models.

Wake up and smell the coffee

Last week, Jesse Berst, a typical pro-Wintel editor for ZDNet, who's never liked Macs, said, "…increasingly, I hate Windows even more. Its constant crashes. Its inconsistent interfaces. Its lack of new innovative software. Meanwhile, Apple is on a roll."

I don't trust this PC Borg. Looks like a set-up to me, a lame attempt at some sort of ironic humor at the expense of Apple's dignity. If it is, then his question, "Should Jesse switch to an iMac?", posted so readers can vote at the click of a mouse, has backfired. So far 83% of the vote is for Mr. Berst to switch. I suspect that his next column will be titled, "Just Kidding."

See? There I go again. I'm just not ready for a world where the benefits of owning a Mac are clearly recognized by a majority. I still carry the heavy baggage of a siege mentality.

The Wall Street Journal tech columnist, Walter Mossberg, is also no Mac fanatic. Although some of his articles actually mention Mac products by name, indicating he is aware of their existence. Mr. Mossberg, like Mr. Berst, is fed up with Windows, too. In a recent column he claims that "…during a typical week of use, I recorded 23 crashes, freezes or incidents of unexpected or puzzling behavior." Mr. Mossberg was flooded with e-mail from similarly distraught Windows users. Some of this spontaneous outpouring of angst, according to Mr. Mossberg, "..recommended I drop Windows in favor of alternate systems." Old Mossberg can't even bring himself to say the words. Come on, Walt, repeat after me, O…. S…. Nine. Very good, see that wasn't so hard was it?

My gentle wife says I need to develop my sense of charity and forgiveness. Even if Mossberg and Berst are complete morons, we should still welcome whatever belated support Apple's superior products can attract from these self appointed guardians of Mr. Gate's jewels. I guess I won't be invited to join the welcoming committee.

I mean, for crissakes, it's 1999 and these supposed technology gurus are just now noticing that Windows is an unstable, Soviet-style-quality, piece of junk. If Mossberg's beige PC box "typically" crashes on average 23 times a week, that's 1,196 crashes a year! He's just now getting fed up? That's outrageous slapstick comedy! Oh, no Mr. Bill, not again!

Consider that 1,196 crashes a year, at a conservatively underestimated productivity loss of 15 minutes per crash, means Mr. Mossberg spends 299 hours of company time rebooting and salvaging files every year! That's 37 days per year of lost productivity! For every million users of Windows that's approximately 123,000 worker/years of lost productivity every year! The average length of an ice age is only about 15,000 years. No wonder the US is experiencing record levels of employment, tens of thousands of workers are doing little more than rebooting PCs.

Just to be fair, let's assume that Mr. Mossberg is technically incompetent, and as such doesn't represent the average worker. Let's assume the average worker only wastes half as much time as Mr. Mossberg does fiddling with the Blue Screen of Death. The cost to the economy in lost productivity is still an astounding $1,500,000,000 per million Windows users each year, providing the average worker makes $25,000 per year.

I think I'm going to get sick.

Let's look at the bright side. If the world can ever extract itself from the nightmare of Windows, the increase in productivity will make a Dow 32,000 by the year 2010 look like a walk in the park. If not, the continued ubiquity of Windows alone might be enough to drive the world economy into recession.

In an age of massive class action suits against gun makers, tobacco companies and HMOs, the negligence and damage that the Microsoft monopoly has foisted upon--mostly involuntary--users of Windows makes it the next natural target of liability litigation. In fact, maybe someone ought to sue Berst and Mossberg for years of blatant misinformation about the utility of Windows over those "alternate systems".

Of course, Macs crash too, but not nearly as often. I'll admit I've had a Mac crash on me 23 times in a week. Once. The Mac OS is far from perfect, Macs aren't as reliable as your refrigerator. Still, a Mac crashing 23 times a week is far from typical nor is it a condition that Mac users grow to tolerate. An ill Mac can usually be restored to proper functioning without system or software reloading by a few well-known tricks that require no special knowledge of any command-line language.

Hey, but I'm preaching to the choir, aren't I?

Last week's new iMac Model roll out

Steve Job's speech in Cupertino was packed full of good news. Apple's software and hardware is moving forward rapidly. As Steve said, "Apple is firing on all cylinders". The evolution of the Mac is clearly leaving the Wintel pack in the dust.

The best news is the clever marketing move to expand the iMac line. Now there is a model for everyone's needs and pocketbook size. One version of the iMac selling for $999 can be had for $599 if you sign an Internet deal with CompuServe. This plugs the hole in Apple's low-end marketing strategy that some investors had been fretting over for months. It's unexpected news that Apple's management has reacted so decisively to the cheap PC threat. At the other end of the scale, the Graphite iMac DV Special Edition caters to those who can afford a bit of luxury.

The redesign of the iMac is a surprising mix of structural, form, and hardware features that aren't usually associated with a product upgrade in the PC world. A computer upgrade has traditionally meant a mere litany of new specs--courtesy of Moore's Law-- all wrapped in the same beige box. The catalog pictures were hardly necessary.

The iMac and the iBook represent a revolution in the way PCs are marketed. The actual physical design of the computer is an important element of Apple's new hardware strategy. The visionless critics who dissed the iMac as merely a fad-ist exercise in "cosmetics" are as dead wrong as they would be if they suggested all automobiles should be styled as beige Ford LTDs. The emphasis on "form follows function" will open the door to a universe of unimagined possibilities. Apple has added an entirely new dimension to the design of computers.

The iMac has morphed in ways that a General Motors design executive would instantly recognize and approve. They became more streamlined, colors were added, doors were made more ergonomic, unnecessary weight was dropped, and the sound and CD loading systems were improved. Are we in Detroit or Cupertino? Apple moves yet another step further beyond the 20th century world of beige PCs, while Dell and Gateway have yet to take their first baby steps into the new design/marketing regime Apple is so boldly and profitably pioneering.

In the past, Apple has often been too far ahead of the actual market conditions to profit on their innovations. Remember the Newton? Witness the PalmPilot. But this time, Apple is right on the money. 1998-2002 will be remembered as the years when everyday people realized that computers are central to their personal lives, not just machines they use at work. The Internet is the obvious killer app driving this trend toward digital lifestyles, so platform dominance is increasingly irrelevant. Apple alone, among the PC manufacturers, is creating beautiful, user-friendly machines that take advantage of this emerging paradigm.

Then again, Apple alone, among the PC manufacturers, isn't saddled with an operating system that never should have been. Thank your lucky stars that Microsoft didn't make your refrigerator.

Your comments are welcomed.


Check out the Apple Trader Forum in the new Mac Observer Forum section! Talk about Apple's stock, the markets, or give your best stock tips, just come on in!

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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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