Apple and Intel

Posted by Thomas Sat, 04 Jun 2005 14:44:09 +0000

Ok, I can’t resist throwing my hat and my two cents into the ring on this one.

Let me list the big players, so that I don’t forget to mention anyone: Microsoft, Apple, Intel, AMD, and Dell. Oh, and Best Buy.

There has been an extremely large amount of buzz going on about the possibility of Apple ditching IBM for Intel. And it always seems to me that nobody ever can really figure out why the big dogs do what they do. When in reality, it shouldn’t be all that hard to figure out because they are operating by some really simple ground rules. Make more money than the other guy. Make better products than the other guy. Make them cheaper than the other guy. Make your margins bigger than the other guy. Sell more units than the other guy. Pretty simple, right? :)

Apple’s market share for Q4 2004 was about 2.88%. And their Mac mini has seemed to have helped their iMac/eMac sales numbers for Q1 2005, jumping from 217,000 for Q1 2004 to 467,000 for Q1 2005. Which doensn’t sound too shabby, at least to me, anyway. Jobs has been looking to double their market share for quite some time. But since that article was published in 2002, their share has actually dropped. What they’ve been doing obviously isn’t increasing their market share and when they have radical departures from the norm, they shine (e.g. the mini and the ipod).

So, if I was Apple, what would I be trying to do? Gain market share in markets that I’m not currently in. Like the cheap, primary desktop market. Which is why I mentioned Dell earlier. More and more people everyday are fed up with Windows. As the masses become more technology savvy, they understand better that Microsoft does a crappy job of security and most other things, with no real change in sight. Apple can deliver features right now that Microsoft probably has planned for Longhorn, which won’t be released for several years. I dare say that the time is finally ripe for the masses to move away from the Wintel architecture, and I’d bet that Apple wants in on that. Apple doesn’t want the Lintel platform to be the next big thing. They want the Mactel platform to be the top choice of ma and pa consumer. Apple should be marketing a device that’s stable, the “world’s most advanced operating system”. Finally, an elagant, secure, and stable OS. Run on the latest innovations. It just works. Surf the future — safely. Enjoy an elegant, uncluttered workspace. This is what people want. Or at least that’s what Apple is going to try to get everyone to believe.

When suggesting a new computer for my friends or family, I usually recommend to them a Dell. Why? Because they can get a $399 computer that is far more computer than they should ever need. Why then do they usually wind up buying some white box from Best Buy? Because they don’t want to have to ship the damn thing all the way to Austin to have it worked on. They want to be able to take it back to where they bought it and have it worked on in a timely manner. Now, whether or not Best Buy actually does work on it is something completely different. What works here is the perception that all someone has to do is bring to back to where they bought it, and it will be worked on there, with no shipping involved. I don’t know if this is true or not, since I don’t particularly need Best Buy to work on any of my machines, but the premise is what sells.

So, if Apple is trying to become the new Dell, how would they accomplish that? Well, first they have to compete on the price. $399. The $500 mac mini was a great start, since thier normally beastly priced G5′s sell for $3000. I can’t imagine them getting away from the market that they have loved for so long, but are simply trying to sell a larger audience what they want, at the price that they expect (cringely article). Hence the change to Intel. Dell has been wildly successfull using Intel in their computers and has flirted with the possibility of adding AMD chips to their line, but that marriage has never come to fruition. So, if Apple has based a lot of their marketing on the fact that their computers are in fact super computers, worthy of export restriction, then why would they make the decision to lower their standards to those of the generally lower performance of Intel? Because Intel has market share. Because Intel has the ability to pump out the chips like AMD apparently can only dream of. Because Intel can undercut AMD on the next generation of processors, the dual core guys . Apple shouldn’t be concerning themselves with the penultimate performance rating. They are concerned with perceived value and cost (Source: ExtremeTech). Which is a battle that Intel is currently winning.

So, then Apple already started selling Mac minis at Best Buy. All they have to do is start selling a cheap, stable, elegant, fast, and secure platform at Best Buy, and the world is their footstool.

Maybe the new alliance between Microsoft and IBM for their new PowerPC chips has chased Apple away from IBM. As Dan Knight says, “IBM can’t produce 3.0 GHz G5 processors for Apple – but for Microsoft they can reach 3.2 GHz? It just doesn’t make sense.” And I agree with him. That doesn’t make sense. Maybe Apple didn’t really care too much about upping the MHz because they werern’t interested in continuing the line in its current form.

Ok, I just ran across this article from Cringely. It says a bunch of what I am saying, but he said it A YEAR AGO! I guess that we differ in that he thought that Apple would only sell their macs in Apple retail locations, but I’m guessing that they’ll let some other companies do that, since I don’t believe that their Apple stores did all that well. Look for Apple to get out of the hardware business, in both ipods and macs and get into selling software and music and movies.

We’ll see how close I am to the mark at the end of the week.

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