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Is Apple irrelevant?

Apple has just released a "Blueprint for the Decade," which talks about the future of system 7, enterprise computing, object-oriented development tools, and RISC architectures. Are these the right initiatives to help Apple recover its momentum in the marketplace?

Like most hardware companies, Apple suffers from the delusion that end users care deeply about operating system technology. The truth is, users care much more about the quality of applications software. And that's where there's a huge hole in Apple's blueprint. Until about two years ago, leading-edge applications almost invariably appeared first on the Macintosh. Today, most of the interesting stuff (except in a few niche markets like multimedia) appears first on Windows-based platforms. As a result, users perceive--perhaps correctly--that Windows has become the more important software environment.

Aren't developers targeting Windows because they believe it represents a larger market?

Yes, and it's a mystery to us why Apple can't make a better case that the Macintosh--with five million active users--still represents a relevant market opportunity. John Sculley brags about Apple's advanced technology and Bill Gates promises millions of eager Windows software customers. Not surprisingly, the Microsoft pitch is the one that creates a feeding frenzy among developers.

Yet Apple has always put a lot of effort into evangelism. why hasn't that effort paid off?

All too often, Apple has tried to manipulate third-party developers in ways that brought short-term benefits to Apple but were profoundly destructive to the Mac software community. Take pricing: To keep the overall cost of a mac system competitive, Apple hammered its early developers to hold software prices under $150--a price point that crippled the growth of Mac software revenues. (Even today, the top Mac word processors--Microsoft Word, $395; MacWrite II, $249; Write/Now, $199--sell at prices that are well below their DOS counterparts.)

At the same time, Apple's obsession with low-cost, mass-market applications has helped drive away developers of high-end, workstation-class titles (which "don't sell enough hardware"). Largely because of Apple's self-serving evangelism, Mac software now tends to be underpowered, underdistributed, and underprofitable.

Will the Apple-IBM alliance strengthen Apple's software position?

Probably not. Lately, perhaps inspired by a recent Harvard Business Review article that suggests hardware companies should think more like software companies, Sculley seems determined to transform Apple into a Microsoft clone. Trouble is, operating systems typically generate about as much revenue per copy as low-end utilities--$30-$50--so the business isn't very interesting unless a company happens to control a market of perhaps ten million machines a year (as Microsoft does). We don't see any scenario that will give Apple either the volume or the pricing it needs to make system software a lucrative business.

The fact is, when Apple acts like a hardware company, it hits home runs like the Laserwriter, the Classic, the new Powerbooks. When Apple tries to act like a software company, the results--hypercard, System 7, Truetype, even Claris--have been pretty marginal. Seems to us there's a pretty explicit message here.
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:impact analysis of Apple Computer's recent position paper, 'Blueprint for the Decade'
Date:Dec 15, 1991
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