A Window of Opportunity for Macs, Soon to Close
IF you’re the owner of a Windows PC who is looking for a replacement computer, the choices are grim. You can step into the world of hurt that is Vista, the latest version of Microsoft Windows that was released in January. Or you can seek out a new machine that still comes loaded with the comparatively ancient Windows XP.
Maybe, you might say, the moment has arrived to take a look at the Mac. You can easily order one online, of course. But if you’d like to take a test-drive before you commit, odds are that you’ll have to look far and wide for a store that sells it. The Mac’s presence in the retail world remains limited, a shame given the rare opportunity for Apple to gain market share that opened up when Vista arrived.
The Mac’s worldwide market share was 3 percent as of June 2007, according to Roger L. Kay, president of Endpoint Technologies Associates, a consulting firm in Wayland, Mass. That forlorn number looks even worse compared with Apple’s peak worldwide share of 14 percent in 1984, the year the Macintosh was introduced and sales of Apple II computers were the company’s mainstay.
Mr. Kay noted that Apple’s share was as low as 2 percent as recently as early 2004. He said the increase to 3 percent may be a result of the “halo effect” produced by the success of the iPod. It could also just as easily be attributed to Apple’s simply offering better products at more competitive prices, he added.
Steven P. Jobs, Apple’s co-founder and chief executive, can hardly be satisfied with a 3 percent share after more than 20 years of selling the Mac. Consider whether Mr. Jobs would be able to deem the iPod a success if it had gained only 3 percent of the market for portable players. After all, he gave Microsoft’s poor Zune exactly one month to succeed before he mocked the Zune’s 2 percent market share at the Macworld conference in January.
The best time for gaining market share is when your main competitor stumbles while introducing an entirely new version of its core product. Thanks to Microsoft’s lumbering pace, Mr. Jobs had six years to look forward to the moment when XP would be replaced by Vista.
When the long-awaited moment arrived, Vista turned out to be in as sorry a state of semicompletion as Mr. Jobs could have hoped for. Many pieces of hardware that customers already owned, like printers, turned out to be incompatible with the new Vista models.
The spectacle of Microsoft’s customers scrambling to avoid buying machines with Vista was a sight to be savored for those watching from Apple’s offices in Cupertino, Calif. Dell had to retract its initial all-Vista policy and reintroduce an XP option to appease distraught customers.
The Mac was seemingly well positioned for the moment in many ways. The transition to Intel microprocessors was complete. The OS X Tiger was a sleek, feature-rich, polished operating system. (Leopard, the next iteration, is scheduled to be released in October.)
The I’m-a-Mac/I’m-a-PC commercials that began in 2006 found endless ways to draw entertaining comparisons between the joys of owning a Mac and the hassles of owning a PC. The evolution of the software industry also worked in the Mac’s favor: users spent far more time within a browser, insulated from operating system-specific software, and the Mac’s new Intel foundation made it easy to run Windows applications speedily on a Mac.
The official line from Apple is that all has gone swimmingly. The company said it shipped 1.52 million Macs in the first quarter of this year, up 35 percent from the year-ago quarter. In the second quarter through June 30, it shipped 1.76 million Macs, up 32 percent from a year ago, an all-time quarterly record.
Funny thing, though: based on the ratio of Windows and Macs actually in use, no gains can be seen for Apple.
The Mac’s share of personal computers has actually edged a bit lower since Vista’s release in January, and the various flavors of Windows a bit higher, according to Net Applications, a firm in Aliso Viejo, Calif., that monitors the operating systems among visitors to 40,000 customer Web sites.
To try to win over customers when Vista appeared, Mr. Jobs and his managers did not enlist resellers for the Mac with the same enthusiasm that they showed in building Apple’s own network of retail stores. In the war for operating system share, there’s no substitute for boots on the ground to retake territory, shelf by shelf.
Hewlett-Packard, the world’s largest PC company, sells its computers in 23,000 retail stores in the United States alone. (An Apple spokesman said that the company did not release the number of its resellers in the United States, but the company said it operated 185 Apple stores.)
Matthew H. Kather, senior technology analyst at W. R. Hambrecht & Company, said, “You could grow your share a lot faster if you could get your Mac retail presence up.”
APPLE was organized in a way that was bound to lead to neglect of the Mac and the retail channel. The 10 members of the company’s executive team include a senior vice president who is responsible for the iPod and nothing else. Another is in charge of only the stores Apple owns. No one’s sole responsibility is the Mac. The Mac’s sales are under the purview of the chief operating officer, Timothy D. Cook, who has other things on his plate, like running the entire company.
Apple began working with the retail chain Best Buy in spring 2006 on a pilot project to obtain shelf space for Macs. Given Apple’s long, tempestuous history with many retail chains, restoring trust has been tough. (Best Buy dropped the Mac in 1999 when Apple continued to ship models and colors that pleased itself, and not those ordered by Best Buy).
The six-store pilot with Best Buy was expanded to 50 stores by the end of 2006. There are now 200 stores, with plans to expand to 300 this fall. Best Buy, however, has not yet agreed to place the Mac in all 872 stores. If Apple had begun wooing Best Buy two years ago, and perhaps appointed an ambassador to look after the relationships with the chain and other resellers, the Mac would have been much better off.
Apple has not even begun to try to re-enter another domain from which it had withdrawn its Mac sales teams: large corporations. Given such strategic decisions, the Mac has limited room to expand.
However, the opportunity for Apple that has been opened by Vista’s introduction is temporary. Mr. Kay, of Endpoint, described a Microsoft operating system and its thousands of certified supporting hardware vendors and the two million device drivers as forming an enormous flywheel.
“It takes a lot of energy to spin it up,” he said, “but once it gets going, it’s virtually unstoppable.”