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Grim Macintosh Market Share Forebodes Crisis
ARTICLE DATE: 12.28.04 The Mac platform is essentially stagnant. That becomes obvious when you look at the declining market share numbers—not from research firms, but from the W3C, which monitors online activity. As of December 2004, the Mac share as measured by online activity is 2.7 percent (Linux is 3.1), with all the rest going to various flavors of Windows. I'm now convinced that this stems mostly from Apple's inability to make the Mac a commodity computer by pricing it to compete with PCs made inexpensively in China and selling with razor-thin margins. Here are the reasons Apple can't sustain its position. ADVERTISEMENT The company figures it has certain market niches locked down. This includes computer users in advertising agencies, news bureaus, and various professional organizations as well as creative artists and writers. I also count an odd, die-hard faction of true believers, but these people are inconsequential except in online forums, where they make a fuss whenever anyone discusses the Mac. They probably hurt the Mac community more than anyone by creating an unfair crackpot image that gets associated with the machine.
CEO Steve Jobs' star persona makes the situation worse. His attention to the Apple flagship has been eroded by the success of Pixar, and more recently, by the iPod and iTunes initiatives. None of these has anything to do with the Macintosh. Keeping it on track is a full-time task—Jobs cannot be in the computer business, the movie business, and the music business and make them all successful. You see the results. Market share for the Mac is crap. Much of the problem arises from the psychology created by the overpriced iPod. And Mac users who buy the players contribute to the problem by encouraging the company to maintain its high-margin death march. Apple, seeing it can still use strong marketing to sell high–margin, high-status items, will continue to think it can do so with the Macintosh. What goes on at Apple planning sessions when market-share issues come up? Some executives probably proclaim that three percent of this market is "huge!!" Others nod their heads in agreement. And indeed, three percent is huge. But at some point (which may have been reached already), declining market share creates a relative lack of interest, and eventually, discontinuance. The Amiga fell prey to this. I've been thinking about this marketing dilemma ever since seeing those w3C numbers, and I've concluded that the real problem with Mac marketing is a weird logical inconsistency that can only worsen the product's market situation. In fact, unless something changes drastically, I can't see the circumstances improving. Ironically, this logical inconsistency is also what makes the Mac great. There's a conundrum in choosing to go with simplicity versus complexity. Simply put, the ease-of-use and simplicity of the platform is killing it, because people cannot perceive that simplicity is ever worth MORE than complexity. Simpler should be cheaper. I made this argument years ago regarding the bloating of Microsoft code. It goes like this: Say you have two identical products on the market—word processors, for example. For the sake of argument, let's make these two, X and Y, almost exactly the same. But product X is written in tight assembly language, fits on a floppy disk, and takes up 30K of memory. Product Y is written in some high-level language, comes on a CD-ROM, and takes up 500 megabytes on your hard drive. Which will outsell the other? I argue that the packed CD-ROM always will, because the public will perceive it as a greater value. You're getting more for your money. I would go so far as to argue that the CD-ROM product could even run slower (which obviously would be the case), and you'd still have more people buying it. The 30K program could compete only by being cheaper! Now imagine the 30K product has tight, fast, bug-free code, but is more expensive. What would be the result? I'm guessing three percent market share. This is the dilemma Apple faces, and there is no way around it. The long-term consequences are obvious. Apple is the easy-to-use, less complex platform. Thus it should be cheaper, not more expensive. It's that simple. And why can't it be cheaper? Perhaps that's the question its users should ask.
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