December 19, 1983: 1984 Nearly Killed

Okay, let me rephrase: because of their STUPID, GREEDY, SHORT-SIGHTED pricing policy for the Mac at that time.

@ annon (#2) says that apple had a “STUPID, GREEDY, SHORT-SIGHTED pricing policy for the Mac at that time.”

the poster is confusing the pricing policy at the launch of the mac in 1984 with the subsequent positioning after in later years.

the marketing goal at the inception of the mac was to have a machine that cost in the $2000 range (and it was a long struggle to get to that goal).

but that pricepoint was not gouging in any way.

subsequently after Jobs was forced out of apple, degasse (head of r&d;) did persue a corporate policy of maintaining artificially high margins in order to support his large & ambitious r&d;expenditures (ahh, those were the days when apple was still committed to investing in new breakthrough technologies - which is but a distant memory under Jobs 2.0 :-(

in any case, let is remember the context:

1) when the Lisa was introduced as the most poweful business machine in the world it was sold to beat the compettion - which was $15,000 single-function wordprocessors (eg Wang) as well as the $70,000 _ensemble_ pricing of the xerox STAR (which included server, printer plus workstation).

yet despite its price & its performance advatnages, the Lisa only sold modestly (maybe 50K units - cant recall exactly) .... one reason is that apple made the mistake of crippling its own innovative software in order to try & jumpstart the ISV market: with the result that the Lisa had an aenemic range of apps.

2) the Mac had always been conceived as a the consumer product, junior to the business class Lisa (so it was priced accordingly).

however, when the Lisa was cancelled, apple was suddenly faced with trying to get the mac to perform double-duty as a business machine as well.

it took several years until the end of the 80’s, but apple did eventually grow out the ‘baby’ mac into a somewhat upgradeable workstation: the Mac II (which was a big box with lots of slots, reasonable memory, accelerated colour graphics, and a proper cpu - ie an mmu, an fpu, full 32bit-ness). These were $5000+ machine - which was a fair price for doing production work.

apple kept the iconically classic AIO-style of mac for consumers; and yes it took longer than it should have for the AOI to be priced & featured in a way that could withstand the (unlawful) competion from wintel.

Conclusion: i think the poster confuses two different periods when he attacks apple’s pricing and value propositions - the 80’s (not so bad) and the 90’s (irrational).
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A Digression ...

Some people think that apple’s choice under Jobs 2.0 to stop developing its own hardware technology has been essential to its renewed sucess; commodity parts allow apple to focus its energy on delivering superior integration and better industrial design.

The success of apple’s commodity platforms seems to be “prove” this asssumption.

However, the dominant reason behind the switch to commodity parts has been a function of the bountiful pricing of an out-sourced supply chain: when your competitors do not have to absorb ANY fixed costs (for technology) then it the *size* of apple’s own fixed costs (in hardware design & plant) does become a stregic issue—ine hat leaves apple no choice but to select a commodity business model, in the absense of any REAL product innovation that could segment out discrete components of apple’s fixed costs into distincy and novel product categories. However, the itouch and appletv are steps in this direction (in the same way that the airport is not!)

However this is a razor-thin game apple is playing!

It is like trying to escape the cluthches of your persuing enemy ... while running on a treadmill! Yes, you might be able to do it but you must rely more on your competitors mistakes than on your own ingenuity.

Apple has chosen to play a brilliant defensive game of living inside the box (as compared to its previous commitment to creating breakthrough technologies).

The open question is whether ‘he who lives by the commoditized platform will die by it’?

At what point will it become *easy* for commodity players to add just enough value as to undermine large sections of the room for *growth* in apple’s markets?

example: HTC has a (poor) clone of the iphone ... but for many market segments it might be just “good enough”.

This aspect of technology cloning is a new phenomenon in the computer world: the cloners of the IBM PC were trying to go down market; now, 25 years later with nowhere else left to go, the cloners of the Apple mac-based products are left with nowhere else to go but up!

Apple is used to having the premium end of the market to itself because nobody else wanted to compete there; 5 or 10 years from now - after the current momentum that apple has captured from the failures at micrsoft has disappaited - it will be an interesting question to see how apple will maintain its strategic advantage when the rest of the industry devotes its energies to imitiating apple not ignoring it! ...

today, the cupboards at apple are bare ... here are 4 examples:

* Jobs killed the first PDA (Newton); then he realized what a collosal strategic error that was so he tried to buy Palm - and was rejected; then he had to gear up for the iphone ..... the result is a decade of competitive advanage was lost—

now the iphone must succeed by exogenous factors not by being a brilliant pioneer ... apple gets to harbest the pent of demand created by the stupidity of the cell phone carriers as well as the inferior devices from the handset manufactuers (obviously it is a relatively easy to have a blow-out user experience if you are running an advanced desktop operating system - osx - on a mobile device ... the dumbed down emedded operating systems just cant compete with a generalized solution).

if apple had spent the last decade in arational product plan - evolving the breakthrough PDA into a smartphone - it would not being playing catch up today (it will be probably get 20% marketshare but it might have had 40%!).

lesson: if you dont make the current strategic investments then your are forced to leave money on the table!

* Jobs is (still) playing catch-up with Quicktime ... multimedia is critical for the success at apple, yet apple has been NOWHERE to be found for a decade when it comes to MPEG7 (smart media).

* Jobs orphaned firewire (which has tried to limp along anyways- next year merchant chip vendors will introduce silicon 3200 Mbps - five years late). Jobs made the bet the wifi would scale up (nonetheless, it would have been shrewd to have had a Plan B!)

* Jobs has abandoned agents and agent-based languages ... apple was a pioneer in this reserach and now there is almost not a single scrap of AI anywhere in os/x (the only exception is the LSA - latent semantic analysis - engine used for the spotlight search system ... and even that is based on legacy technology from the mid 90’s).

—- think here is the simplest way to think about the distinction between - and the importance of - ‘objects’ vs ‘agents’: an object is passive (it only responds to an event, and even the highest amount of introspection only makes that process better NOT actually different); whereas, an agent is active (it posses autonomy so it can adapt itself to its environment in persuit of a goal).

- objects emerged in the 70’s and apple commercialized them with half measures in the 80’s ...

- agents emerged in the 80’s and apple started to embrace them in the 90’s ...

in the interim the industry has seen two attempts at co-ordination:

first, CORBA tried in the 90’s to make distributed objects interoperate (eventually this became confined only to vertical applications; wide-spread horizontal integration of object standards dies when apple & ibm killed off opendoc). The emphasis was on having clear specifications for object methods (an interface definition language) - but binary compatibility (on the wire) proved elusive.

second, SOA (and WSDL specifically) is trying now (a decade later) to create interoperable web services. These are based having a clear specification based on a well-defined data language—XML. This data-driven approach might succeed where the method-driven did not.

The upshot is that apple has not made any really built an value-added network platform (let alone actually contributed intellectual property!) to either CORBA or WSDL!——-

compare: notice how apple totally ‘missed’ he whole social networking revolution! (not only did apple fail to develop breathrough SNS cocoa/webobjects frameworks to drive sales on its server 5 years ago, it could not even see the obvious potential of SNS for its own closed portals - iTunes & dotNET - so stuff like YouTube or Facebook emerged as category-creators to fill the vacuum created by the lack of strategic planning by Jobs et al).

Apple’s missing the boat on SNS (as a product/platform/user-experience) is just a *SYMPTOM* of what happens when apple does not have any DEEP investment in network technology (whether that be consumer-oriented web services in WSDL or its business-oriented object servives in CORBA).

But being caught flat-footed with social networking (not being able to tie together its own industry-leading assets) is just a blip on the radar compared to what is in next store for apple!

Because without any REAL nexgen technology in development, apple is poorly positioned to deal with the next paradigm shift which will define the next 25 years of computing: namely, semantc web.

Crucial knowledge representation stuff like DAML+OIL and KIF is _totally_ out of reach for apple because Jobs killed off Apple’s investment in agent technology.

Bottom Line: these four issues (pda, quicktime, firewire, agents) were all important developments at apple in the 90’s—and Jobs orphaned, ignored or killed them off without any other long-term plan for strategic advantage.

Pig Picture: it is not possible to talk about the pricing of apple products without taking into consideration the context of costs (manufacturing methods), the positioning of the competition, and the internal re-investment in value-added technology (both of these are classic ‘buy or build’ issues).

So I think the poster over-generalized his complaint about a certain (middle) period inthe history of apple when prices were (too) high.