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On The Flip Side
by Michael Munger




The Cube Experience, Apple's Hard-Learned Lesson
February 12th, 2001

In any sphere, there are motives that dictate people's behavior. There is also the reality that power corrupts, as the old saying goes, and that success can go to someone's head. In addition, one of the most important values that lead to success is the ability to learn from past mistakes to become wiser and have better judgment.

In hard times, people learn. They have to face the harsh truth that makes our world what it is, and they have to struggle in order to survive or, for the luckier ones, to be more successful.

Apple can probably understand this process. In the middle of the 1990's, Apple had to fight quite a battle against itself and against competition to continue to exist and to enjoy success again. Apple learned, Apple fought and Apple managed to stage a comeback. That comeback was bloody and spectacular.

Bloody because Steve Jobs got his hands dirty and fired many people at the top of Apple's food chain to clean the mess and have everything his way. Spectacular because Apple, from the end of 1997 to 2000, went from bleeding huge amounts of money to 11 straight profitable quarters, many of them above the US$100-million mark, and one of them as high as US$233 million. This is probably lunch money to many people who spend their lives around Wall Street. If you consider Apple's reality, such numbers were decent.

One would think that after returning to profitability and learning a few hard lessons of making technology, Apple would stay away from dumb mistakes... right? Of course not. Not only did Apple become more arrogant, it managed to tried a risky stunt at MACWORLD NY 2000.

Before I go there, let me emphasize the arrogance. The center of this aspect is not necessarily the condescension with [its different types of] customers, although it does count. The big puzzle piece is overconfidence.

On the road to success, the first victories can lead to a sentiment of superiority. If you allow me to make an analogy with hockey - I am Canadian, alright? - let me take you through what goes in a player's mind at times.

After going through a slump, a player can get back in shape and gain some confidence again. He will score a few goals and feel that he is in better control of his game again. Then, for a 10-game period, he will become the hottest player in the NHL, start a scoring streak and frighten the hell out of all goaltenders. He can easily become overconfident and take it easy at practice. He could take success for granted. He will get away with it for a few games because he is on top of his game, but he will end up having trouble eventually. If you neglect hard work, considerations, cautiousness or plain common sense, you beg for it.

Apply all of this to Apple. Apple went through hard times (the slump), fought back and returned to profitability (the scoring streak). Then, it may have taken a few things for granted. What things? How about the idea that any product they release will be a success? Enter the Power Macintosh G4 Cube.

As beautiful as it is, as cleverly placed as the slot-loading DVD is, and as small as it is, the Cube would never be worth its ludicrous introductory price of US$1799. Consider that you could get more power (gigabit Ethernet in particular) and expansion capabilities for US$1599 at the time of its introduction with a full-fledged G4 tower in July 2000. Think until your head hurts and you may come to the conclusion that there was a US$200 premium for style and economy of space. Wait, the premium also gave you less hardware potential. It was comical!

In today's world, few people wish to pay more for less when fully aware of all the deals they can get. One can argue that it is acceptable to pay a premium for style, and I partly agree. The example of the SoundSticks is excellent. You can get an equally good pair of speakers for less, but most of us will pay a few more bucks for the nice appearance that they offer. It becomes more than a tradeoff, though, when it costs a few hundred bucks for less.

Apple seemingly thought that it could get away with it too, but cubes sales never really took off and the company saw inventory for the product build up to larger levels than anticipated. Currently, the beefed-up G4 costs US$1699 and the low end Cube is available for $1499. Isn't that more reasonable?

I would never wish failure to the company that manufactures my favorite computer platform, but I am happy that the Cube experience delivered the hard knock that might prevent more serious screw-ups at Apple in the future. It was a relatively cheap lesson!

I have the impression that before MACWORLD NY 2000, Apple got overconfident and believed that it could sell an overpriced product. The correction seems harsh and the Cube brought one of those hard-learned lessons, but I think that it could be a healthy lesson. One that forces Apple to have second thoughts before going ahead with a project if some of its characteristics are dubious or weak.

Michael Munger is a French Canadian living in Montreal. He discovered the Mac in 1994 while studying journalism, the profession he loves and practices. He also studied history and communications. In addition to his work at The Mac Observer, he authors the iBasics tutorial column at Low End Mac, and cofounded MacSoldiers in 1998.

You can find more about him at his personal Web site.

You are welcome to send me your comments or you can post them below.

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