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Doing the Numbers with Jobs

At the beginning of his keynote address at Macworld Expo in San Francisco, Steve Jobs spent about five minutes going over Apple’s numbers, primarily those garnered from market research. These carefully chosen statistics aren’t necessarily dry economic figures but rather reflect how Apple is justifying the company’s current strategies and directions. Follow along as I look at what the numbers mean to the Mac community and why Jobs wanted to share these particular results.

First though, for those that wondered about this emphasis on statistics at Macworld, remember that the keynote address is heavily attended by the mainstream media, and Jobs understands the power of speaking to that audience. Put bluntly, numbers are easy to write down and remember, so mainstream journalists can easily assemble a quick story around them. Jobs’s careful presentation of positive results before anything else in the keynote was clearly aimed at generating positive press. Only a couple years ago mainstream media regularly shredded Apple in print; Jobs wants to ensure a solid footing with the press, and there’s no better way to do that than feed journalists good numbers in a forum where they can’t even ask questions.

Portable & Consumer Popularity — Jobs focused first on the iBook and the PowerBook, which together garnered 11 percent of the U.S. retail market share in November. Although he didn’t split out the iBook’s numbers specifically at the time, Jobs did comment that according to PC Data, the iBook was the top-selling portable in the U.S. retail market in both October and November. Stating the numbers in this way met two goals – it emphasized the popularity of the iBook (in the face of the now-rote criticism heaped on the iBook for its curvaceous looks and moderate specifications) and gave a nod to the continuing strength of the eight-month old PowerBook line, perhaps as a jab at the widespread rumors that new PowerBooks would be introduced at the show.

Also aimed at answering iBook criticism was Apple’s research showing that 56 percent of iBooks purchased were the first portable computer in the home. That number helps support Apple’s approach of making a consumer-level laptop, a market whose needs computer makers – including Apple – haven’t previously addressed.

With the numbers released last week in Apple’s quarterly report, we can see even more of where Apple’s business is heading. Apple shipped nearly 1,377,000 Macs in its first fiscal quarter of 2000; of those, 700,000 were iMacs and 235,000 were iBooks. That’s a total of 935,000 candy-colored Macs, or about 68 percent of total sales, which shows that the lion’s share of Apple’s business is coming from consumer-oriented systems. Of course, Apple’s professional-level Power Macintosh G4 line has suffered from supply problems (Jobs shared no research numbers regarding the G4s), and the current PowerBook G3 had to fight both being the oldest member of the Mac line and those rumors of imminent replacement. Perhaps next quarter’s results will show movement back toward the professional line. Still, it’s hard to argue with Apple’s continued focus on the consumer market that brought the company back to profitability and still sustains it.


New to the Mac — Next, Jobs turned his attention to who is buying iBooks and iMacs. First-time computer buyers made up 11 percent of iBook buyers, and 17 percent switched from Windows-based PCs. The numbers for the iMac were even higher, with 30 percent first-time computer buyers and 14 percent Windows PC converts. That makes more than a quarter of iBook buyers and almost half of iMac buyers converts to the Mac platform, which Apple likes to highlight. Plus, Apple claimed that 67 percent of iMac buyers never considered another computer.

Many media reports characterized Apple’s recovery initially as coming entirely from pent-up demand from the Macintosh faithful, but with this large percentage of iBook and iMac buyers coming from outside the fold, Apple can show that although existing Macintosh owners are remaining loyal to the platform, the iMac and iBook are responsible for bringing hundreds of thousands of new users to the Macintosh. That growth in customer base is significant in numerous ways: it plays well with the stock analyst crowd; it makes for a good story for the mass media (and hints that additional Macintosh coverage might be worthwhile); it encourages developers to support the Macintosh; and it reassures existing Macintosh owners that they’re by no means alone.

What They’re Using — Jobs then focused on Apple’s high-profile hardware features: AirPort wireless networking and the digital video capabilities in the iMac DV. Sixteen percent of iBook owners have installed AirPort cards, which strikes me as high, given that AirPort cards are only useful either in multiple iBook situations or in conjunction with AirPort Base Stations. Despite the ease of networking the Macintosh in the past, Apple has never done much to promote features like LocalTalk or Personal File Sharing, so it’s good to see them emphasizing AirPort. Tonya and I have been using an iBook with an AirPort Base Station for several weeks, and I have to say that wireless networking is utterly addictive, despite some annoying problems with the current AirPort software.

On the other hand, Jobs said that 10 percent of iMac DV owners have made a digital movie, and another 22 percent say that they plan to do so. He obviously thought these numbers were impressive enough to share, although I’m somewhat surprised, since they feel low to me given the emphasis Apple has placed on digital video and the price of the iMac DV. If nothing else, the fact that Jobs had to mention the iMac DV owners who planned to use iMovie indicates that even Apple may be bothered that only 10 percent actually have used iMovie for real.

Given the overwhelming interest in digital video in the TidBITS poll on the topic (where 75 percent of respondents said they found digital video moderately or very appealing) and the related discussion on TidBITS Talk, I would have expected the number of iMac DV owners who had already made a movie to be larger.




Why the low numbers? Despite iMovie’s ease of use, it requires an expensive digital camcorder, and people who already have traditional camcorders may have difficulty justifying the purchase of a new camcorder as well as the iMac DV. And even then, messing around with digital video requires that most precious commodity: time. For example, we have an elderly JVC camcorder that uses VHS-C tapes. As new parents, Tonya and I find this setup more useful than digital video in some ways, since we can just videotape Tristan and then send the videotape to relatives to share amongst themselves. The process is fast and simple, and although we could produce better quality movies with iMovie, we barely have time to upload digital stills of Tristan to the Web, much less edit digital movies of him. At least Apple’s iDisk and QuickTime-streaming-capable HomePage iTool will go a long way toward eliminating the other significant limitation of large QuickTime movies: distribution.

iT’s the iNternet — Jobs next reeled off several numbers aimed at justifying the Internet focus of the iBooks and iMacs, saying that 90 percent of iBook owners were on the Internet and a full 70 percent had purchased goods and services online. The comparable iMac numbers were slightly different, with 93 percent on the Internet – 62 percent having connected on the first day of ownership – and 57 percent purchasing on the Internet. I suspect the lower percentage of iMac owners purchasing online has to do with iMacs attracting users with less elastic wallets and less previous experience with the Internet. After all, 11 percent of iBook buyers are new to computers, whereas 30 percent of iMac buyers purchased the iMac as their first computer.

In short, these statistics about Internet use and purchasing say that not only are iBook and iMac owners almost certain to get on the Internet, they also spend money on the Internet. That might help identify Apple as a "dot com" company to Wall Street analysts, and the research might also encourage large Web sites to design for Mac users as well as Windows users. I still periodically receive email from people asking for Macintosh/Internet usage statistics to help convince their Web designers to make a site more accessible for Mac users- hopefully these numbers will help.

Finally, Jobs also noted that the online Apple Store did $300 million in sales in the last quarter, giving it a $1 billion annual sales rate. Since overall revenues for the quarter were $2.34 billion, that means about 13 percent of Apple’s business comes directly through the Internet. I’d be interested to hear how many first-time iMac and iBook buyers purchased through the Apple Store, and what the comparable numbers were for PC-converts.

The Message Is the Message — Dirty secret time. Many companies, especially large ones that devote significant resources to their marketing efforts, create "marketing messages" to go along with product launches or other marketing efforts. In meetings with the press and in subsequent public presentations to customers, the goal is not so much to show the product, but to instill the marketing message so deeply that it becomes "the word" on that product, both in the media and among users. I’ve been in numerous press briefings where I just wanted to interrupt the oh-so-earnest presentation and say, "Yes, I understand that your goal is to provide a best-of-class product that meets the needs of today’s users and supports all of Apple’s latest technologies in a variety of candy-coated colors. That’s true for everyone. Now can we talk about your program’s new features?"

The problem with this approach is that good journalists and thoughtful users like to make up their own minds and dislike feeling manipulated. But it doesn’t have to work that way. A skillful marketer – and that describes Steve Jobs if it describes anyone – understands that a better approach is to provide carefully selected raw materials to let people form their own opinions. By providing more detailed results than is common, Jobs managed to guide opinion in a positive direction while avoiding the heavy-handed marketing message approach. It seems to have worked – Apple has received positive press and word of mouth in abundance since Jobs’s keynote.

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