DealsOnTheWeb Daily Deal: 80GB iPod Classic: $209 Delivered
The Back Page - Dvorak: Mac Platform Stagnant; Cheap Mac Needed
by - December 29th, 2004
John C. Dvorak has a new column about Apple in which he said "the Mac platform is essentially stagnant." The problem, according to Mr. Dvorak, is "Apple's inability to make the Mac a commodity computer by pricing it to compete with PCs made inexpensively in China and selling with razor-thin margins." In other words, Mr. Dvorak is making the case for a cheap Mac.
In his column, Mr. Dvorak laid out his case by pointing out that the Mac platform currently accounts for some 2.7% of global online activity according to W3Schools, an online tutorial site that focuses on teaching people to develop Web sites for Internet Explorer. The organization tracks global usage, though its methodology is not publicize, and has published stats for global browser and operating system usage back to 2002 and 2003 respectively.
W3Schools' data, therefore, measures market share in terms of actual usage and not in terms of sales of new computers. Looking at that data, Mr. Dvorak found that Windows usage is above 90%, while Linux usage is up to 3.1% and Mac usage is now at 2.7%, third in the pack.
That measure, according to the column, indicates that things are going poorly for the Mac platform, and it all comes down to Apple's refusal to make a cheap Mac.
According to Mr. Dvorak, that refusal is being fueled, in part, by the success of the iPod which simply reinforces Apple's quaint thought that it can sell high-margin items at a premium.
Mr. Dvorak wrote: "What goes on at Apple planning sessions when market-share issues come up? Some executives probably proclaim that three percent of this market is 'huge!!' Others nod their heads in agreement. And indeed, three percent is huge. But at some point (which may have been reached already), declining market share creates a relative lack of interest, and eventually, discontinuance. The Amiga fell prey to this."
Ironically, however, he strategically leaves out one very important piece of information, as I did when setting up Mr. Dvorak's premise. That piece of information is that while W3Schools does indeed say that the Mac platform accounts for 2.7% of Internet activity, the organization's data shows that said usage has grown to 2.7%, up from 1.8% in March of 2003.
I don't know where the organization gets its data, but the trend that data shows is clear: The Mac platform is growing. That might indicate that Apple can, indeed, sell Macs at a premium.
That's not to say that Apple couldn't grow market share from offering a cheap, headless Mac. It would be ideal for capturing new sales from iPod users, the vaunted and oft-touted iPod Halo Effect, looking to move to the Mac platform.
Be that as it may, however, you can't look to W3School's data to back up the notion that the Mac platform is "essentially stagnant."
I would like to point out, however, that this is not a slam on John C. Dvorak's column. In this piece, he is offering a fairly honest assessment of the Mac platform and Apple's ability to grow market share, and it's not his normal "rile up the Mac masses" stuff he so often writes. His means at arriving at his conclusion may have been flawed, but the rest of his ideas at least merit consideration.
began using Apple computers in 1983 in a high school BASIC programming class. He started using Macs in 1990 when the Kinko's guy taught him how to use Aldus PageMaker, finally buying a Power Computing Power 100 in 1995. Today, Bryan is the Editor of The Mac Observer, and has contributed to the print versions of MacAddict and MacFormat (UK).
You can send your comments directly to him, or you can also post your comments below.
Most Recent Columns From The Back Page
- $5 WiFi Routers...With a Catch - June 27th
- Boot Camp Means More Mac Users - April 13th
- Rob "Wrong Again" Enderle Peers Into Apple's Windows Future - April 12th
The Back Page Archives
Observer Comments
Wed Dec 29, 2004 8:58 am Subject: Maybe he spoke too soon
http://www.theregister.co.uk/2004/12/29/sub-500_imac/
Only a rumour, but this may be what I've been wanting to do with my eMac, though if it has what I want I'd prefer to buy ready made from Apple.
QuoteGuest wrote:
Think Secret, a very reliable rumor site, is reporting that a $499 iMac will be unveiled at MWSF. They usually are correct although the details may be subject to change.
It will NEVER happen. The cost of componenets alone make a $499 Mac impossible. Heck, even the 2-year old G4 eMac can't achieve anything close to this price point, and it is as "cheaped" down and you can get.
I wouldn't put my faith in the predictions of rumor sites.
Um didn't the giant international long time computer maker IBM decide the commodoity computer market sucks SO MUCH that it was going to get rid of the division altogether? But hey Mr. John C. Dvorak apparently thinks its a good space to be in, so it must be. Stupid Apple and here they are being one of the only computer manufacturers that is actually profitable. But hey why would something like profitability be important to a company? Perhaps Mr. John C. Dvorak could become the new CEO of Apple. Genius. Pure genius!
Much as I usually want someone to slap the hell out of Dvorak, I agree that Apple will never gain market share without a cheaper, headless entry level machine. Right now that machine costs $1500, and is way more power than ma or pa need to surf the web and do some online banking.
I believe the installed base of Mac users is larger than the 2.7% people throw around, but still, think what a few points of market share would do for the mindshare they currently have going for them. It would be a missed opportunity not to try and exploit the success they have going right now.
Once these ewitchers get hooked on OS X, there's no going back to windoze baby.
Wed Dec 29, 2004 1:39 pm Subject: Apple Store in Mall of America
I was at the Apple Store in the Mall of America yesterday actually, and I have NEVER seen it so busy as it was! People were all over the place... it really was a packed house. People looking at the iMacs, iPods, G5 towers, cameras and everythnig else. Really a neat thing to see.
Granted it is after Christmas, and kids are on break, but it was overwhelming I thought. When I was leaving a G5 tower was leaving at the same time, not with me though... so there are a lot of big purchasesgoing on too!
Wed Dec 29, 2004 1:49 pm Subject: Ever heard of a loss leader?
A headless Mac *as a loss leader* is certainly not out of the question. Certainly in a "switcher" context where the user already has a monitor from their PC it makes a great deal of sense. Or for the curious as a second computer.
A headless Mac for $499 isn't terribly outrageous. Consider the eMac at $799. What can we lose? Ok, the CRT for starters. That might save $100. Change the case design to be a low rounded (pretty) box, might save some there, and be creative in the materials used...call it $25.
Reduce the margin from 25% to 5%--FOR THIS MODEL ONLY.
So what have we got? $574, -20% is $459!
Say they give away OS/X (0 cost to them) and throw in a couple of goodies like iTunes (also 0 cost). Sounds to me that if they could produce the machine for $450 (not outrageous) they could meet Dell head on *AND* still offer something that's 95% of the Mac experience. Without savaging their higher end stuff.
Of course it could hurt iPod sales. Consider, an iPod for $399 or a computer for $499... 
Voila! Instant market share loss leader. Simple.
QuoteIt will NEVER happen. The cost of componenets alone make a $499 Mac impossible. Heck, even the 2-year old G4 eMac can't achieve anything close to this price point, and it is as "cheaped" down and you can get.
I wouldn't put my faith in the predictions of rumor sites.
They also said Dashboard would NEVER happen. They also said iPod would NEVER happen. They all say don't put faith in rumor sites, and all-too-often the rumor sites turn out to be right.
The headless iMac is coming, count on it.
http://www.thinksecret.com/news/0412expo2.html
http://www.appleinsider.com/article.php?id=802
Wed Dec 29, 2004 3:14 pm Subject: Apple needs to move from Mac to Phone/PocketPC rival
If they do make one then I agree with the assessment that it will be more aimed at the media/living room PC market with an emphasis on "media".
If that is the case then PLEASE PLEASE PLEASE make it a code-free DVD player inside!
and S-video/RCA or Scart connectors/adapters would be necessary 
Wed Dec 29, 2004 3:54 pm Subject: It's bare bones
That's the key. For BTO options look at what is available for the 12" iBook and you get an idea of how you can "upgrade" it. This will definitely follow the KISS principle.
Throw in one more surprise - 15" and 17" wide screen displays that will match the new Mac (probably white) at a reasonable price as well as a "Package" offer for both the Mac and display.
Wed Dec 29, 2004 4:03 pm Subject: The world of HDTV
Perhaps what Apple is hoping to take advantage of is the huge numbers of large-screen, high resolution TVs now flooding the market. Microsoft is working hard to market the concept of their MediaCenter software, but even though they're up to version 3, it's still being savaged by reviewers. With iPhoto, iTunes and DVD Player already built in to OS X, it isn't that much of a stretch to create an HDTV-compatible box that emphasizes those applications. (If it really is under $500, that's a low enough price to be sold as an iPod peripheral!) If they license (or replicate) software like EyeTV that lets the machine works a personal video recorder, you have a pretty compelling media center box that would beat the socks off any MediaCenter machine out there in terms of price and usability.
QuoteI believe you will find what you are looking for here:Guest wrote:
I am a long term Mac user and once owned a Newton. I bought a XDA phone/Pocket PC device with camera (from o2 in the UK) which is photo moblogging heaven. I would prefer an Apple, sold in a phone store or Apple shop and would pay a premium - why? because it could be Hypertext that wonder software that back(s) the Mac, the Newton and the Palm devices. What an interface! And technology has moved on so much since Newton, with phones and Bluetooth, that the time has come. I no longer need a computer with the XDA... what market share is that?
http://webster.commnet.edu/grammar/
QuoteChutaiko wrote:
If that is the case then PLEASE PLEASE PLEASE make it a code-free DVD player inside!
Ain't going to happen...
The DVD specs say the region codes have to be there and the DVD-ROM drive makers can't use the DVD name and logo if the DVD forum finds they are producing region-free drives. I doubt Apple would want to drop 'DVD' from the specs, so don't expect them to change anything either.
There are cracks available to disable region codes (particularly for many DVD-ROM drives), so they are mostly a non issue for most people who want to be able to play DVDs from any region.
Unfortuantely, the media companies like the region code system so they can charge different prices in different parts of the world for the same thing, so expect them to be in HD DVD and Blu Ray as well (probably in a way that will take a bit longer to crack (say 2 days instead of 1
).
Wed Dec 29, 2004 4:29 pm Subject: John C. Dvorak is statistically impaired
Is John C. Dvorak statistically impaired? According to W3C data, online Mac activity is 1.8% in Mar 03 and increases steadily to 2.7% in Dec 04. He called that declining?
$499 headless iMac is highly possible. So is a 200 GBytes entertainment server as reported by Merrill Lynch.
eMac is selling at $799. Forget about the 25% profit margin, becomes $599. Remove the CRT, one firewire port and third party software would reduce it to $499. So, this iMac is a zero profit cost-recovery iMac.
I think we're missing the point here. Apple has never been able to increase marketshare. Even with the life saving vaunted gumdrop imac!!! Headless macs (remember the cube), pricing, marketing, better retail prescence are no-brainer solutions to apple's marketshare problems. The question we should ask is,"Does apple think marketshare is important to its survival?". Presently Steve Jobs doesn't think so. I beg to differ.
Wed Dec 29, 2004 9:13 pm Subject: what people think
The problem anyway is what people think about the Mac... even if Apple finally rolls out a cheap headless Mac that can compare with PC models people will find a way to turn it down.
It'll be the "lack " of software or the "difficult and different" interface. Or even that they don't know if a Mac can do qhat they do on their ugly PC (mostly surf for porn and get viruses)..
Believe me.. I never converted people to the Mac just talking and using prices even when competitive... but always putting them in front of my Mac and demonstrating that it's a viable alternative... So any price tag they might put on a new product will not change a thing.
Apple should change their AD campaign and start to drill into peoples thick skull that Mac is as good as any PC or even better..
Cheers
Thu Dec 30, 2004 12:53 am Subject: Mac market share as reported via browser stats: Wrong
I'm a little skeptical of any market share percentages reported by looking at browser stats. The reason is twofold:
First, as a sysadmin of a Mac office (a whole whoppin' 6 Macs + 2 Mac servers + 3 employee owned Macs I'm expected to support), I'm in contact with several other Mac techs in similar situations. After a whole discussion of how to deal with user complaints that they couldn't see or use certain websites because they supposedly don't support the Mac, I decided to follow their suggestion and add a user agent plugin to Mozilla on all the Macs. Now there are 9 Macs besides my own that show up as MSIE on WinXP just from my little company alone, three more among my family and friends, and I know from our discussion that there are quite a few others, corporate or not, that do the same thing as a matter of course. So, how many Macs are out there simply masquerading as Winboxen just to view sites that want to discriminate against the Mac?
Second, what about dev Macs not connected to the internet for security reasons? How do they get counted?
I know these are very small numbers, but the smaller the market share the more significant they are. An extra tenth of a percentage point here or there does make a difference.
If your gonna sell a $499 loss leader computer, you need also to have something to sell up to. In other words BTO computers in the $500 to $700 price range, not in Apple's business model nor do I think their manufacturing is set up to do it.
All of this to pursue the dubious notion of a cheap Mac increasing Apple's market share. Dell did not achieve their market share selling $499 retail computers, 80% of their business is corporate. Think of Apple's future as Xserve>corporate desktop>consumer desktop.
^^
All good points.
I think we all fear that Apple will eat into iMac sales with this kind of plan, but I think the numbers matter more.
Like, what if they sell 500,000 fewer iMacs than they otherwise would, but then sell 1 million of these cheap machines? Well, that's more Mac users overall. If you can get a first-time Mac user to buy a $600 machine now, maybe they'll like it and get an actual iMac next year.
I dunno, I don't think any of us can know those numbers and that's what matters most. IF Apple has reason to believe that a machine at the price would sell far more units than it would take away from other Macs...well then it's a good idea. If it won't...then bad idea.
I have no clue which is true. Hopefully Apple knows.