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Apple, IDG World Expo Play Hardball Over Macworld Expo

Would Macworld Expo be the same without Apple? That’s the question Mac users and vendors are asking themselves as Apple and conference organizer IDG World Expo publicly trade barbs about Apple’s participation in upcoming trade shows.

The brouhaha erupted late last week, when IDG World Expo announced that the 2004 East Coast expo would move from New York City, where the event has been held since 1998, to the show’s original East Coast venue, Boston. The announcement was the culmination of weeks of negotiations between IDG World Expo and representatives of both cities to see which could provide the best deal for one of the largest high-tech conferences in the country. (According to comments by IDG World Expo CEO Charlie Greco, the last Boston show in 1997 brought in $42 million for the city.)

However, later that same day Apple released the following statement: "Today IDG World Expo announced plans to move Macworld from New York to Boston in July of 2004. Apple disagrees with this decision, and will not be participating in Macworld Boston. Since IDG World Expo is no longer investing in New York, we now need to re-evaluate our participation in Macworld New York 2003. Apple will continue to participate in Macworld San Francisco in January."

The following day, IDG World Expo reiterated its plans to put on both shows, with or without Apple. Then, in a public salvo delivered over the weekend, Greco suggested in a Boston Globe interview that IDG World Expo might consider banning Apple from this January’s San Francisco show, as well as from its events held in Tokyo and Paris.

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Apple hasn’t responded publicly to Greco’s threat, though it now appears that private discussions may be making progress. IDG World Expo told MacCentral (both companies are owned by IDG) today that Apple would be participating in the upcoming Macworld Expo in San Francisco in January. But there’s still no word about what will happen with the East Coast events, and it’s clear that both sides are putting on a show of force to see who will back down. Why all the fuss? Although money is definitely a major factor, there are other possible explanations.

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East Expo Expense — Moving Macworld to Boston will be a great financial boon to IDG World Expo. Boston beat out New York by offering incentives such as reduced hotel rates, use of some city buildings for Macworld functions, steep discounts for exhibitor services, and a great rate for Boston’s new convention center, which is scheduled to be completed by 2004 and will be large enough to house the expo (previous Boston expos required splitting the show between two venues, forcing awkward bus trips between the two).

However, as an exhibitor, Apple doesn’t share in all the financial savings. According to Greco, Apple typically spends $4 million to $5 million at an expo for equipment and supplies, plus travel and lodging for hundreds of employees, along with the not insignificant costs of Steve Jobs’s dramatic keynote addresses. Apple may have more than $4 billion in the bank, but as the overall technology market continues to falter, the company no doubt wants to put its money where it will have the most impact.

An Expo in Every Mall — That impact is increasingly being met by Apple’s retail stores (currently 53 locations either open or announced). Unlike Macworld Expo, where people can order products only from Apple’s online store, Apple Stores are designed to make the purchasing process easy. Plus, although Macworld Expo may draw 50,000 or more people, Apple announced that 2.25 million people visited an Apple Store in the last three months.

Also worth considering is the fact that Macworld Expo attendees are for the most part already Apple customers, whereas people who wander into an Apple Store are more likely to be new to the platform. Call us cynical, but Apple may believe that marketing to existing customers simply isn’t all that necessary; that could also account for why Apple advertises little in Macintosh publications.

Equally important is the fact that Apple Stores control the customer experience on an almost one-to-one basis. Rather than watch thousands of gawkers stream through the expo booth and fight to be heard among the loudspeakers and crowd noise, Apple can dictate how a customer’s visit occurs from the moment he or she walks through the door. Since Steve Jobs’s return to the company, Apple has been obsessed with controlling the Macintosh experience, whether by engineering Mac OS X so that developers have less leeway to adjust the operating system’s look and feel, or by maintaining a tight lid on new products until Apple is ready to unveil them at a time and place of Apple’s choosing.

In fact, you could argue that having a booth and hardware to display has become something of a formality for Apple. In the company’s eyes, Macworld Expo is less about connecting with users or vendors, and more about generating the massive amount of press coverage that the show, and especially the keynote, can draw. Macworld Expo isn’t a trade show for a niche computer manufacturer, it’s an Event that receives worldwide media attention. If you’re skeptical, consider the way the recent iMac redesign became a Time cover story (timed to coincide with the keynote so that attendees received a free copy, purchased by Apple, on their way out).

But Apple can’t keep up the pace. After years of releasing new machines and software in January and July, it’s become more difficult for Apple to live up to expectations by having "just one more thing" ready in the wings. At the last New York show, Jobs was rumored to be furious because delays in finishing Jaguar meant that the new line of Power Mac G4s weren’t ready to be announced. The result was a greater emphasis on software that was on the verge of shipping (Jaguar), or not ready (iCal and the still-beta iSync).

The big announcement pattern has its destructive aspect too, as sales of existing products tend to drop off in the weeks leading up to the show; the current wisdom being that it’s foolish to buy new hardware late in the year (during the important holiday retail season), because there’s likely to be a computer processor speed bump or some completely different product at the show in January. To buck the trend, Apple has made several significant announcements, such as the release of the iPod and the newly redesigned iBook, during invitation-only press conferences at Apple’s corporate campus throughout the year.

Apple’s statement following the Boston announcement suggests that the company may be looking to concentrate on the January expo in San Francisco, which doesn’t require nearly as much in the way of travel expenses but still results in huge media coverage. By dropping out of an East Coast show in July or August, Apple could more easily release products on a less predictable schedule and save millions of dollars.

Timing Is Everything — According to reports, Apple’s statement was a surprise to IDG World Expo, despite frequent contact between the two companies during the time IDG World Expo was talking to New York and Boston about the change of venue. It’s hard to believe that the announcement was a complete surprise, though, especially considering Greco’s comments to the Boston Globe indicating that he suspected months ago that Jobs was looking to reduce Apple’s slate of shows. Instead, it sounds as if IDG World Expo assumed Apple would follow the expo wherever it ended up, so IDG World Expo forged ahead anyway. Apple – or more realistically, Jobs – took advantage of IDG’s gaffe and dropped the bomb of pulling out of Boston and possibly New York at the point when IDG World Expo would be most vulnerable – and therefore most willing to negotiate in Apple’s favor.

As a result, IDG World Expo finds itself fighting the perception that it didn’t adequately communicate with its star attraction, while also needing to placate the cities of Boston and New York, with whom it no doubt has contractual obligations. And in an ugly step, Greco has taken the power struggle public, vowing to keep the other shows alive no matter what the cost.

Greco may have taken the debate to the press to force Apple’s hand, but angering Steve Jobs by making Apple look bad doesn’t seem like a recipe for success. It’s equally disappointing to see Apple stick to the our-way-or-the-highway approach, but the fact is that a Macworld Expo without Apple would be a very different kettle of fish. Without Apple, attendance would undoubtedly slump and much of the press would skip the show entirely, both of which would reduce the visibility vendors receive for the significant expense of exhibiting. A domino effect could result, with Apple’s exit causing the larger vendors to bow out, and making it even harder for smaller developers to justify spending marketing dollars to attend.

In such a situation, IDG World Expo could change the show to compensate, charging less for vendors to exhibit, concentrating more on the conference sessions, or giving away exhibit floor passes. But would such changes result in the kind of Macworld Expo users and vendors alike would want to attend? We hope Apple and IDG World Expo can stop their posturing and work out a compromise that keeps Apple involved in the Macworld Expos under terms acceptable to both companies and the rest of the Macintosh industry.

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