Monday, January 10, 2005 9:23 amWednesday, January 8, 201455 Comments

“After signing a peace treaty eight years ago, the friendly rivalry between Apple Computer’s Steve Jobs and Microsoft’s Bill Gates is suddenly not so friendly anymore. During this week’s MacWorld trade show, Jobs is expected to unveil a low-cost Mac pre-installed with a word processor and other office software – a direct assault on Microsoft’s core business. Online rumors say the new G4 machines will cost about $500, but will lack a monitor,” Mary Huhn reports for The New York Post.

“Along with low-cost flash-memory iPods and an iPod-compatible Motorola cellphone, it’s also rumored Jobs will introduce iWork ’05, an upgrade to its own AppleWorks productivity suite which would compete with Microsoft’s Mac Office 2004,” Huhn reports. “Now with Apple’s update to its aging AppleWorks, it gives home consumers one less reason to buy Microsoft Word for Mac. The software could cut deeply into Office for Mac sales, said Joe Wilcox, a senior analyst with Jupiter Research. ‘Consumers aren’t interested in productivity suites. They only want word processing.'”

Huhn reports, “The on-again, off-again rivalry is one for the record books. ‘Apple and Microsoft have an unusual relationship,’ Wilcox said. ‘Microsoft is the largest Mac developer and had its first application success on Mac with Word and Excel.’ Even after the relationship derailed two years ago, Microsoft and Apple ‘kissed and made up again’ Wilcox said. But, now the dust storm has kicked up again. ‘The musical deal is definitely a thorn for Microsoft,’ said Wilcox, who explains Microsoft had the infrastructure in place to make a move in musical market place when iTunes and iPod came from out of nowhere. ‘Consumers went to iPod and Apple doesn’t want to share,’ Wilcox said.”

Full article here.

MacDailyNews Take: As we have always said, even as many short-sightedly waved (and continue to wave) the white flag, the war is not over. And, yes, we shall prevail. For the naysayers: In 1929, Ford held just over 61% of the U.S. market for automobiles. GM’s market share stood at just 12%. Ford was thought to be invincible, with GM regarded as a niche auto maker. Probably, some analyst at the time said, “The reality is, long term, GM will always be a niche player.” But, in 1936, just seven years later, Ford held just 22% of the market for new automobiles while General Motors held a 43% share. No company is invincible. Not even Microsoft.

Related MacDailyNews articles:
Apple Computer will own the living room, not Microsoft – January 10, 2005
Cringely predicts $249 Macintosh, would make Apple the world’s number one PC company – January 10, 2005

55 Comments

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1. 
   Ton Palmans

   Tuesday, January 11, 2005 at 12:22 am

   MCCFR,

   Sorry, but I find your arguments not convincing.

   I agree with you with on the technology integration argument as key to Apple’s succes, for a large part indeed due the MacOS. But only because it leads to Apple hardware sales. This does not destroy my argument at all. Even if Apple quadruppled it’s OS and iLife sales, this would do nothing for them. They have very low margins on these.

   For instance, when Apple licensed the MacOS tot 3rd parties, they ate away Apple marketshare instead of broadening the customer base. These 3rd party Macs were a lot cheaper than Apple’s Macs – as they didn’t need big R&D budgets – and made MacOS computers a lot more affordable. But overall marketshare didn’t increase, and sales of high margin Macs plummeted. Steve Jobs rightly killed the MacOS licensing as soon as he got back. Apple needs decent to high hardware margins in the markets they operate in, to be able to keep innovating based on big R&D budgets.

   And yes, succesfull high end companies in the hifi market like you name, are this also because of great technology integration. Do you see them chasing after ‘market share’ with cheap, low margin products?

   One cannot use the iPod succes as a pricepoint indication for Apple’s computer line, as they are in totally different markets with a largely non-overlapping customer base.

   In fact, like Apple”s computers, the iPod is relatively expensive with not to much fetaures. It’s selling point is not its price, but (indeed) the technology integration with the ITunes Music Store and great ease of use. And further key to success: porting iTunes to Windows, where the bulk of iPodders come from, combined with keeping the music store closed for other hardware manufacturers.
   So Apple’s succes with iPod should not be subscrided to a low pricepoint (which it doesn’t have) but to tapping into a new market alltogether, where Windows-users are the main customers. On the MacOS-computer side, this is not an option.

   Also, I don’t see how an eMac – a fine machine with decent margin – could lead to an xMac without monitor for $499. I can’t believe the CRT costs Apple more than $50 or so. More featues need to be downgraded, or the profit margin needs to be lowered. I don’t believe that increasing OS and software profits would compensate for this.

   A better option for an xMac to me would still be the Home entertainment, media centre road. Exploring new markets all together’ like with the iPod. But that maybe wishfull thinking…

   To be clear, if a xMac strategy within their computer range like you adhere to would be succesfull, fine with me. But if Apple remains succesfull with its current niche strategy for their computers, and exploring new markets with new products otherwise, fine with me too. I happen to believe the latter.

   Finally, it is beyond me why you keep maintaining that ‘elitist’ vibe when confronted with other opinions on marketshare strategy than your have, when these other opinions have rational merit on their own. One may not agree with them, but there is no reason to interweave these with some personal bad experiences on the path of life or some bad tasting aubergines. That is indeed quite irrational.

   BTW A performa 5200 was my first Mac.. ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

2. 
   yomama

   Tuesday, January 11, 2005 at 1:07 am

   it’s viruses…not virii

3. 
   rogozhin

   Tuesday, January 11, 2005 at 1:59 am

   yomama,

   There’s a tenuous truce around here right now between the ‘virii’/’viruses’ camps. PLEASE don’t be the one to start THAT battle again… ” width=”19″ height=”19″ alt=”cheese” style=”border:0;” />

   (for the record, I, too, am on the English grammarian side, not the Latin abuser side. But at the end of the day, it has no real bearing on my life, so I just let it slide. Check out this Wikipedia page that deals with this wonderful debate.)

4. 
   MCCFR

   Tuesday, January 11, 2005 at 7:00 am

   I will continue this debate with you at some point today (probably later in the evening) as I have to visit a customer who pays me to lecture them in my slightly dismissive, self-opinionated manner ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

   Enjoying the intellectual mind-trip so far, it’s a shame it’ll be academic for one of us by about 8pm GMT tomorrow.

   BTW, aubergines are good vegetables and I have nothing against them as a group or against any indiviudal aubergine. Asparagus, now that’s a different matter�

5. 
   Ton Palmans

   Tuesday, January 11, 2005 at 7:00 pm

   MCCFR,

   Well, congratulations! You – like many others – are right on the strategy that Apple has chosen to take. Not a totally surprise to me though, because ThinkSecrets trackrecord did get me worried, as you may have noticed… ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

   Kudos to TS by the way for keeping to publish rumors after their close encounter with the Appel Legal kind, they have some balls.

   Time will tell if the Mac Mini will do for marketshare what it is intended for. But there are some encouraging elements that I did not realize or read about before.
   The Mini is unbelievably small, I read somewhere that the box it is in is smaller than the one for the iPod. That opens up some possibilities in usage. Also, it is beautifull, it may get some cool-factor going for it. They did some serious R&D for this design – one of my worries that did came through – but I guess it’s good that it is not a cheap knock-off of a decapitated eMac. A daring strategy for sure, but in this way it does have a chance of taking off via the coolness road. I do like it when Apple makes a bold descision.
   Also, the iWork with Pages (which has .doc import and export functionality) can be a main selling point. I hope Apple includes it.
   I wonder if a bunch of Mini’s can be made into a cluster, with X-Grid?

   I’m wondering that it maybe very important to get the Min in retail stores, not just Apple Stores. Alongside iPods.

   I hope it sells well, but I feel a bit sorry for the eMac, because its sales will hurt. I got one a year ago for my 75-year old father, and he couldn’t be happier with it. I feel it is – even within parts of the Mac crowd – an underrated Mac with nice design and great all-in-one ease of use.

   On the bright side: the Mini will slash some serious dents in the prices of second hand Macs. At least where I live (The Netherlands) these are way too high.

   Thanks for the discussion, at least we did agree – and were eager so – for Apple to succeed. And as a non-native English speaker it’s a good excercise, though it does take some toll on me if it gets lengthy and stressed. Nothing like a fierce discussion though to juice up foreign language skills.

   But I’m afraid I will be deep asleep when you return here in the evening (some serious time difference). I enjoyed it last night, but I went on till almost 5 AM. But did manage to be only half an hour late on work. Can’t afford that tomorrow though…

   We will meet here again somewhere in the future I’m sure.

   In the meantime: enjoy. ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

6. 
   MCCFR

   Tuesday, January 11, 2005 at 8:04 pm

   Good debating with you, and I hope you’re not too disappointed with the ultimate result which actually looks like a really neatly packaged box to me.

   In reality, your vision wins as well: stick VNC on this box and you have a great little home media server that can be used with Elgato’s EyeTV or iTunes.

   And my target “customer” gets what she needs: a 63-year old grandmother (my childhood friend’s mother) who occasionally picks up e-mail and books flights to Portugal gets a machine that she can understand and that won’t slow up under a hail of Windoze crapware.

   The great thing about the Macintosh community is we care passionately about the success of the platform and are willing to debate the issues. Can anyone imagine that kind of commitment to the Windows platform?

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