Apple Gets Aggressive
There has long been an air of the 97-pound weakling in Apple Computer; the sense that no matter how well-designed, reliable, and downright elegant the company’s products, an ill-mannered beefer like Dell would come along to kick sand in Apple’s face. Even Apple’s mockingly talky Switchers ads, no matter how successful or necessary they may have been, tried to be persuasive, convincing. "The Mac is better," they said, "so you should really think about switching."
But Apple’s announcements of the iPod shuffle and the Mac mini (despite their annoying lack of capitalization) mark a sea change in Apple’s demeanor. You could sense the glee in Steve Jobs’s voice as he introduced the iPod shuffle by showing first the iPod’s market share in 2003 (about 31 percent, compared to the 62 percent share of the less-expensive flash-based MP3 players), and then the iPod’s market share today (about 65 percent, compared to the 29 percent share of the flash-based MP3 players). In short, the iPod’s market share doubled in 2004, almost entirely at the expense of the flash-based MP3 players, and with the iPod shuffle, Apple is basically saying, "The rest of the MP3 player market? We’ll be taking that next." Apple’s employee benefit plan must have gotten a bulk discount on the Charles Atlas muscle-building course from the back of an old comic book.
Apple’s desire to own the MP3 player market may be tough talk, but it’s not false bravado, given that the iPod sold 4.5 million units in the last three months of 2004 alone, not far from half of the total of 10 million iPods sold so far. That’s an insanely steep growth curve (and if Apple had trouble producing enough for the holiday season, they can be excused some small timidity in not predicting the need for that kind of inventory).
Though Jobs introduced the Mac mini before the iPod shuffle during his Macworld keynote, and despite the fact that he spent a surprisingly small amount of time presenting it to the audience, seen in context of the iPod sales numbers, the Mac mini is clearly Apple testing its new-found muscle. Only occasionally in the history of the company has Apple seriously attempted to compete with PC vendors on price, and those attempts were at best half-hearted, weak-willed efforts that resulted in such abominations as the Power Mac 4400, possibly the worst Macintosh ever built. With the $500 Mac mini, which is $100 cheaper than a 60 GB iPhoto photo, Apple is again entering the low-cost market.
But I’ve used a Power Mac 4400, and the Mac mini is no Power Mac 4400. Despite the professional skepticism of a journalist, I can quibble seriously with only one configuration choice – the decision to equip the base configuration with only 256 MB of RAM, a laughably small amount that hobbles Mac OS X. Otherwise, the Mac mini makes only the kind of compromises that were required by its form factor and the desire to keep the price down. As such, AirPort Extreme and Bluetooth are available only as build-to-order options, and even RAM isn’t easily user-installable. Interestingly, although using a 2.5-inch laptop drive might have seemed unnecessarily expensive, the word is that by the time Apple calculated the total cost of the less-expensive but larger 3.5-inch drives, the diminutive laptop drives turned out to be an overall cheaper approach. Apple also reportedly chose, when picking components, to avoid the least expensive ones because the cost of component failure ends up being greater than the extra component cost (not to mention that customers end up happier).
For a truly amusing thought, check out Robert X. Cringely’s 2005 predictions column, in which he suggests that Apple use some of its $6 billion in cash to lose – intentionally – lots of money on the Mac mini as a way of selling millions upon millions of the little boxes. It’s just crazy enough that it makes some sense.
The Floor Effect — Overall, Apple’s new demeanor and overall success spilled over to the Macworld Expo show floor. IDG World Expo wisely chose to use only the South Hall of the Moscone Convention Center this year, in contrast to last year, when booths in both the South and North Halls were surrounded by tightly drawn-in curtains that hid the cavernous empty spaces… at least if you were at ground level. Looking down on the show last year from the mezzanine was downright depressing, given the amount of unused floor space. By filling the South Hall entirely this year, IDG World Expo eliminated that sense of deception ("Pay no attention to those acres of bare concrete behind the curtain!"). According to the company, this year also saw 20 more exhibitors (280 versus 260 last year) and the amount of occupied floor space was greater than last year as well. Last year’s attendance numbers, which were among the first to be counted correctly and audited by an outside firm, were 32,409, and although it will take several months for the auditing process this year, IDG World Expo is predicting a strong increase, with estimates I heard in the 35,000 to 40,000 range.
(As an aside, until the last few years, IDG World Expo used a commonplace counting mechanism that exaggerated wildly the actual attendance by counting people every time they entered the show floor. That strategy increased attendance numbers hugely for those of us who attend on multiple days, and particularly for those who come and go multiple times throughout the day. All such nonsense is gone, and the new head of IDG World Expo has insisted on an accurate count of the number of individuals who actually attended, whether for one day or four days.)
If there was a downside on the Macworld Expo show floor to the iPod’s success and Apple’s newfound aggressiveness, it came in the form of a ludicrous number of iPod accessory vendors. Walking the floor, I counted 14 companies selling iPod cases, another 13 selling some sort of audio- or speaker-released accessory (like kits to install an iPod in your car or living room wall), and 5 more whose iPod accessories didn’t fit either of the previous two categories. That’s 32 companies total, most of whom didn’t make Macintosh products at all, from a total of 280. So, more than 10 percent of the exhibitors at Macworld weren’t even selling Macintosh products. If we set aside for now the people who feel the need to coordinate their iPod cases with their outfits, the number of different cases available for sale bordered on the ridiculous. I jokingly commented to Dan Frakes, who writes for Mac Publishing’s Playlist magazine, that I hadn’t seen a hand-carved wooden case yet, only to have him tell me that although he hadn’t seen one yet, there were hand-carved wooden iPod dock covers available. (Dan and Chris Breen, also of Playlist magazine, had been to the CES electronics show the previous week, where iPod accessories were equally preponderant.) In the Expo wrap-up panel I did with Macworld Editor-in-Chief Jason Snell on Shawn King’s Your Mac Life radio show, Jason proposed the possibility that next year could bring so many iPod vendors that the North Hall would be dedicated to iPod vendors, with Macintosh vendors retaining the South Hall.
But aside from thoroughly botched logistics that relegated many people in the media to an overflow room during Steve Jobs’s keynote, and that nit-picking complaint about feeling overwhelmed by nearly identical iPod accessories, Macworld Expo this year was a success. Attendance was high, vendors were happy with both the number of people they saw and with sales, attendees were buzzing with energy, and there were plenty of new and interesting products to see. (For that, read our traditional Macworld Superlatives article later in this issue.)
The remaining question is, "Whither Macworld Boston?" Last year’s return to Boston was successful on many levels, but the numbers of exhibitors and attendees were both far below this show, making Boston’s show roughly a quarter the size of this one. It’s possible that Macworld Boston will grow back towards being a full-fledged sibling to Macworld San Francisco, but it’s also possible that IDG World Expo will take the opposite direction. The company is developing "Macworld On Tour," a series of smaller, shorter shows held in a variety of cities throughout the country. Such an approach could work better for attracting people in those areas who would happily attend for a day or so, but for whom a week-long trip to San Francisco is unlikely. It’s a nice idea for attendees, though there may be backlash from exhibitors who would feel pressured to keep employees constantly on the road.