Apple's faster, cheaper PCs take a bite out of Microsoft
THE past six months have been unusually pleasant for the world's 20-million-plus Macintosh computer users. Apple has returned to profit, sales of new models are breaking records, and the latest version of the operating system, MacOS 8, has been a hit. This reversal is only modest, but it comes after several years of falling market share and profits.
Apple's decline is usually blamed on its failure to license out its operating system MacOS, as Microsoft did with DOS and then Windows.
But the recovery seems to be the result largely of the launch of new computers that are faster than similarly priced machines running Windows.
The new hardware is a range of computers based on the G3 chip made by IBM and Motorola. Independently designed tests suggest G3-based computers are almost twice as fast as similarly priced Pentium-based computers. This has allowed Apple to abandon its soft-sell approach and replace it with advertisements that directly compare MacOS with Windows 95.
Enough customers are being persuaded to buy G3 computers for the model range to have been the fastest seller of any Apple launch in the company's 21-year history. New laptops (called Powerbooks) launched in May should allow Apple to claim a speed advantage of up to four times on similarly priced Pentium-based laptops.
Not surprisingly, Apple's share price doubled in the first quarter of 1998 at a time when other PC-makers warned profits were being hit by lower prices.
Much of the credit for the change must go to Steve Jobs, one of the company's founders and, since July last year, "interim chief executive".
Jobs quickly demonstrated his determination to do away with many of the strategies adopted by the three chief executives who had held top spot at Apple since he left the first time.
There is still a long way to go before Apple recaptures its former glory, and there are two areas in which Apple clearly lags behind the Windows world.
One is the sheer range of hardware available. There are no sub-notebooks running MacOS to compete with Windows CE, for example. The nearest is the Powerbook 2400, made by IBM and sold largely in Japan.
The other is the near invisibility of Macs and Mac software in shops. In the US, Apple has done a deal with one of the biggest retailers - CompUSA - to the exclusion of almost all others. CompUSA now has Apple "stores-within-stores" at its various outlets.
The company has also gone into Internet shopping. The on-line Apple Store allows people to design their own computers, picking, for example, how much memory, what kind of screen and how powerful a microprocessor they want. Lively interest is reported in the recently launched Apple Store in the UK (web site: www.apple.com/ukstore). Similar ventures are planned for other European countries.
Jobs had another recent surprise: in a significant move into the consumer market, he unveiled iMac - "a radically designed Internet computer, aimed at home and educational users . . . it is the Internet-age computer for the rest of us", he said.
Features of the iMac include a translucent design, easy Internet access and PowerPC G3 performance. It will be launched next month at $1 299. "We've brought romance and innovation back into the industry," claims Jobs. "iMac reminds everyone of what Apple stands for."
There is, however, one further factor that may yet hinder Apple's recovery. The Mac is popular in creative industries such as advertising and the media, but for general business users it suffers from an image problem that even Apple is hesitant to admit.
When shown the recently launched Powerbooks, one transatlantic management consultancy, a long-term Mac user, said its main concern was the Apple logo was "too big". And a UK telecoms industry customer with several thousand Powerbooks does not want its name publicised. There used to be a saying in business that no one got sacked for buying an IBM computer. Today, "Windows" has replaced "IBM".
Apple is fighting back through sheer computing power and energetic marketing. But IBM's dominance lasted for more than 30 years, and Apple may have to increase the performance gap a lot further before reclaiming lost ground. - Financial Times.