MEME 1.03

PRE-RAMBLE

I had originally intended to write about Newt Gingrich and the Unabomber in this issue of Meme, but, unexpectedly, Meme 1.02 on Windows '95 created an infectious mini-plague which turned around and sent me off to another course. My thoughts on Windows '95 and the Whole Computer paradigm were quoted in the August 28 issue of Inter@active Week and this led to a stream of surprising email -- people bemoaning the supposed death of Apple in this new world, asking me what I thought about Apple. So this issue of Meme is dedicated to debunking:

The Myth that Apple Could Have Been a Contender.

The popular press is awash with eulogies for Apple Computer. These eulogies come up all the time: with the IBM-PC in 1981; the mutant Lisa in 1983; the arrival of Windows 3.0 in 1990; the Newton fiasco in 1992; Windows '95 in, well, 1995. The weird thing about these eulogies is that they often have more to do with the mood of the writer at the keyboard than the facts. Since most writers use Macintoshes, it is no surprise that they are especially depressed about the ever increasing marginalization of Apple. I share in that frustration as well, since it means fewer and fewer software products come out for my cranky Mac IIcx (how it sags these days). But sentimentality aside, the facts are that Apple never, ever, had a chance to be the "industry standard" for personal computers. Not in 1979, 1980, 1981, 1982, 1983, 1984 (I can count) to 1995. Not ever. So if there is zero chance of ever dominating the entire industry with your standard, what do you do? This is the question Steve Jobs and Steve Wozniak and later John Sculley all faced all day, every day. And you know what? They played the game beautifully, nearly every step of the way.

A little bit of theory first.

Making computers is a really weird business. It's weird because the whole industry sits on top of a giant wobbling-bowl of jello. The jello is the uncertainty created by the relentless advance in microprocessor technology. Every 18 months the core thing which makes a computer a computer halves in price and doubles in speed. That's a lot of instability because it means your computer is constantly facing supposed "obsolescence." From our point of view, as people buying these things, the microprocessor march is both exciting and disturbing. Exciting because we get to do new things with our ever more powerful computers -- like play Doom in the office. Disturbing because whatever sits on your desk and cost a bundle is never right. It's never really good enough. It's never state-of-the-art. It's always somehow slightly deficient. We surreptitiously paw through the computer ads in the paper, getting frissons of megahertz envy, fantasizing about having a machine "expandable to 768MB of RAM" (the PowerMac 9500/132, yours for $5,200).

Thanks to the microprocessor things get so much more powerful so quickly that there is a real fear of not being "backwards compatible", meaning the files from 1982 should still somehow run in the word-processor from 1982, even if it is 1995. This kind of uncertainty scares people with really big pockets, people who have thousands of employees and can spend thousands on one order. From day one those people were just *not* going to spend money on a company called Apple best known for a machine built in a garage by two hackers, a machine that kids loved because of the video games. We seem to forget those days.

A little bit of history.

In 1981 IBM launched its first personal computer, the aptly named Personal Computer. Back then there was only one kind of personal computer -- the video game machine. You had three choices: Atari, Apple and Commodore. Weirdoes who liked monochrome bought TRS-80s (aka the "trash eighty") from Radio Shack with an audio-cassette tape drive. In this kind of universe, you're Apple and you're thinking "how are we going to convince companies that a personal computer belongs in their offices?" The answer is, you're not. No way. Not Apple. Not Atari. Not anyone but IBM is ever going to convince corporate America to buy this thing called a PC. So Apple, rightfully, walked away from a market they never were a contender in; and from 1981 to 1994 the office market drove the expansion of personal computer industry.

From 1981 on Apple had only one choice -- create a formidable niche everywhere outside of the office. And that's exactly what it did. What's the payoff? Apple made fantastic margins on its products. Apple sold everything it shipped out the door. Apple became the largest personal computer maker in the world. Apple became the most profitable personal computer maker in the world. Apple did this by targeting one niche after another, and totally taking it over. With the Macintosh in 1984, Apple set out to take over education, and did. It took over graphic design and publishing in 1987. It took over the home computer market until 1990. Then Apple actually made inroads into the office market, with the success of the PowerBook line. But in the end, Apple remained what it had set out to be from day one -- a niche player outside the office. So what's all this bunk about Apple massively blowing its lead and fumbling itself into obscurity?

Here and now.

The real problem Apple now faces is not that it failed some great opportunity to trounce the IBM-clone/Windows universe. It faces the same problem everyone else does -- the end of the Personal Computer Era. In this new universe, where does Apple stand? Where does Windows '95, the World Wide Web, E-mail and so on leave the Macintosh? Any attempts by Apple to boost their market share by licensing their operating system, allowing clone Macintoshes, or retooling their operating system to run on PC-clones is destined to fail. None of this will raise Apple's market share of the personal computer industry. That's a good thing. Why would it want to go from 8.9% of the PC market to say, a whopping 15%, when that market is headed the same way as the dodo bird? Apple knows this. That's why these Mac clone still are not here. That's why the Power PC alliance started with great fanfare 3 years ago went nowhere. No. Apple is getting its fingers into other pies. juicier pies.

In Japan you can buy this strange mutant Macintosh called a Pippin (a Pippin, I am told, is kind of apple). The Pippin costs under $500 and it is a video- game player, based on a PowerPC 603 chip, a CD-ROM drive, and lots of ports to hook the box into the TV, computer monitor, modem, even external hard- drives. Like its mutant ancestor, Lisa, Pippin marks a transition point between two species of computer.

The Pippin is part of a project with Bandai, a Japanese game company known for its effluvium of Saturday morning cartoons, video games, and other brain candy for kids. The logic goes like this. As computers become household commodities, like consumer electronics, Apple stands heads above the other PC makers as the only one with any concept of design, marketing and the shopper's impulse -- the kind of stuff Walkmen, Swatches and GameBoys are made of. With the increasing popularity of the Internet, the demand for cheap household computers will dovetail nicely with the demand for ever more immersive video-game machines. Who else but Apple has the skill to enter this market? Who? If Apple is lucky they will forge an alliance with Sony and build these $300 hybrid PC/video-game/Internet gateways together. Could you imagine how many they would sell at Christmas? Tons. (For more information on the convergence between consumer electronics and computer companies, read the full text of my June 1995 Marketing Computers article, Beasts from the East

Apple played the game right so far. They're in business and profitable. It's a long road from Wozniak's garage to here, and there is good reason to think that Apple stands a fair chance at the next niche -- the consumer electronics computer. Unlike the video-game niche created by the Apple II, Atari and Commodore, this niche is destined for monstrous mainstream dominance, like the PC market today.

Of course, there's a good chance that someone in some garage somewhere is tinkering while everyone else dawdles. But either way, Apple is not dead. Yet.

A PEEK AT MEME 1.04

This issue coincides with my trip to Paris, France. How's the Minitel doing, France's closed network that reaches 1 of 3 French homes? Apparently the Internet is making inroads there. What will happen when Net meets Minitel? Find out in the next Meme, scheduled for incubation in the newly opened Internet Cafe by the Seine (no kidding). Croissants and T-1s. Vive la difference!

Meme 1.01 and its contents copyright 1995 by David S. Bennahum. First spawned by Into The Matrix at http://www.reach.com/matrix/welcome.html. Pass me along all you want, just include this signature file at the end.

Direct comments, bugs and so on to me at davidsol@panix.com.