There are many problems with the Macintosh consumer market. There are two weaknesses in particular that I see as very pressing, yet neither has gotten much attention from the Mac world. With all the controversy surrounding Apple in the last 18 months, the Mac industry is in danger of being blind sided by the effects of this tunnel vision. Both of these issues will be addressed in a two part series, beginning with the first, The Retail Misconception.
There is a misconception throughout the Mac community that does as much damage to the platform as all the ramblings of Walt Mossberg and the rest of the idiot savant press combined. The misconception is that everyone knows that the majority of Mac software and hardware is sold through catalog/direct sales. While this sales statistic is in fact the hard cruel truth, everybody does NOT in fact know it. You know it. I know it. My boss at Webintosh knows it. Dr. Amelio knows it. The person who does not know it is Johnny Consumer. Johnny C. knows that when he walks into his local Computer Mega-Big Store he sees 20 rows of software. He sees that:
1/2 a row is for Mac Games
1 row is Mac kids software
1 row is Mac DTP software utilities (Johnny C. is not going to buy a copy of PageMaker)
2 rows are Wintel utilities
1 row is PC versions of Microsoft Word
The other 14 1/2 rows are PC games
Johnny C. might also see the two or three Apple systems squeezed in amongst the twenty or so PC systems from at least four different vendors. What he will not see is a salesman who knows what a "Finder" is.
People who are buying their first computer do not call MacMall (or any other Mac mail order house) to get the best deal on a computer. They sheen on down to their local computer superstore like sheep to buy what their kids tell them to buy. The whole problem is a classic vicious circle. Retailers don't stock Macs or Mac software because consumers don't buy them. Consumers don't buy them because of the low availability and high prices. Manufacturers don't think about retail because Mac people don't shop there, and software developers don't make Mac software because nobody wants it.
Whenever I think about the problem, this is the point where I usually start screaming and flailing my arms about, frustrated by the buffoonery. The scenario I have imagined reminds me of an Abbott and Costello skit.
A: "Who sells Macs?"
C: "No, Who buys Macs."
A:"I'm not asking who buys Macs, I wanna know who's selling Macs!"
C: "Nobody's selling Macs."
A: "Somebody's selling Macs!"
C: "Somebody fixes Macs, Nobody sells Macs, and Who buys Macs."
A: "Who buys Macs?"
C: "Right. That's what I'm telling you, Who buys Macs while Nobody sells Macs."
A:"That's what I want to know! Who sells Macs!?!?!?"
Lest there be any misunderstanding, there is only one reason why retail stores do not stock much Mac merchandise. The reason is that they don't sell any. Remember that most Mac stuff is sold through catalog/direct sales. Despite all appearances, there is not (much of) an anti-Mac conspiracy. If retailers can make money at it, they will stock as much as they can sell.
A key part of Apple's turnaround will have to be an increase in the amount of retail shelf space devoted to Mac products. This week, at the Worldwide Developer's Conference in San Jose, there is a lot of talk and excitement surrounding Rhapsody, and to a lesser extent, Mac OS 8. All this excitement is an example of not seeing the forest through the trees. It seems clear that these two operating systems will do much to increase market share for the Mac OS. They represent an enormous leap in technology for the entire computing world, but convincing Johnny C. of this will be difficult if he does not see it. Without a significant increase in retail shelf-space, attracting new customers will be very difficult.
The complete lack of attention for this situation stems from a combination of different factors. For one thing, it is easy to overlook the lack of Mac-savvy store clerks when you are trying to save a multi billion dollar company from ruin. However, Apple's K-12 division has implemented a program where "mystery shoppers" will reward knowledgeable clerks with a cash bonus. This is an excellent step forward. More programs such as this would be an excellent idea.
Another factor is the realities present in the PC world. We see Dell, Compaq, and Gateway 2000 making money hand over fist. The direct sales aspect of the PC market is supported by a host of other factors. Without those other aspects, the world would be a very different place.
While the manufacturers focusing on the retail market (IBM, Hewlett-Packard, Acer) are also making a lot of money, their margins are much lower than their direct sales counter parts. Who wants to emulate the lower performance companies? So far, every Mac clone vendor entering the market wants to follow the direct sales model. Power Computing made a brief foray into the retail market that was quickly abandoned, and no one else has yet to venture into that territory.
Another aspect of the PC infrastructure that indirectly supports the direct sales model are some 1,500 Mom and Pop shops flourishing across the country. These small operations are making PC clones out of garages and in the back of stores. They cater to the kind of customer who wants to get personal service from a face instead of a voice. This customer also wants to be able to drive to the place where he bought his PC and get his motherboard replaced quickly (a very common occurrence in the PC world I will address in a future column). While not contributing directly to the bottom line at Gateway 2000, these store front manufacturers help propagate the everwhere-ness of PCs. There is no corresponding Mac sub-culture.
In a growing trend, America has seen the rise of flea market style events often known as "Saturday Sales." Sometimes starting as early as 12:01 a.m. on Saturday mornings, these shows might have over 100 vendors offering new and used parts, computers, software and all other manner of merchandise. If you have the knowledge to put it together, and the time to sort through the junk, you can buy the parts for a brand new PC running at top speeds for as little as $500. While there may be Macintosh hardware or software for sale, it will not be in the variety or quantity of its PC counterparts for one obvious reason; it simply does not exist. Once again, this outlet for PCs supports the existence of PC direct sellers by filling a niche. With all of those niches being filled by many different participants, everyone is able to focus on one or two things. This particular do-it-yourself niche is empty in the Mac world.
Those of us who live and breath Apple and Macintosh are all aware of the remarkable break-throughs in price and performance. A healthy level of competition has arisen that benefits everybody. Mac faithful see the way it mirrors the PC market. Cheap clones and abundant choices proliferate in a way that we are comfortable with. It makes sense, fits our preconceptions and makes us feel good. If time were not an issue, we would eventually see market pressures steering some new and existing Mac clone vendors into the retail market. Just as with the retailers, if a manufacturer can make money in a market they will fill it.
I am not criticizing the decision of Mac clone vendors to follow the Dell model. It is a good thing to seek the highest profit possible while still offering an excellent product and great customer service. I am also not suggesting that "somebody" sacrifice themselves for the good of the Mac and try and fill a market where they can not make money. I am suggesting that Apple focus on this problem, and devote the same kind of resources used to change the name of Mac OS 7.7 to Mac OS 8 toward solving it. The retail market must be addressed by more than one big player and Apple will have to be a participant. Perhaps manufacturer rebates or rebates to the manufacturers from Apple might be a solution. Whatever the case, all Mac parties must stop relying on the knowledge that catalog/direct sales are strong. Retail sales must be just as strong and this will not happen until retailers and manufacturers make money at it.
What do you think? Let me hear your opinions.
