John Gruber’s analysis of the current state of Windows really struck a chord with me, because it reminded me of an article I read a long time ago about Wal-Mart. (I blogged about it in 2006.) Gruber’s writing about Microsoft’s declining revenue and the recent news that Apple now holds 91% of the retail market for laptops that cost more than $1,000.
Here’s the key bit:
Microsoft is no longer ignoring Apple’s market share gains and successful “Get a Mac” ad campaign. But the crux of these ads from Apple is that Macs are better; Microsoft’s response is a message that everyone already knows — that Windows PCs are cheaper. Their marketing and retail executives publicly espouse the opinion that, now that everyone sees Apple computers as cool, Microsoft has Apple right where they want them.
They’re a software company whose primary platform no longer appeals to people who like computers the most. Their executives are either in denial of, or do not perceive, that there has emerged a consensus — not just among nerds but among a growing number of regular just-plain users — that Windows PCs are second-rate. They still dominate in terms of unit-sale market share, yes, but not because people don’t recognize Windows as second-rate, but because they don’t care, in the same way millions of people buy metric tons of second-rate products from Wal-Mart every hour of every day.
The older article explains why high-end lawnmower manufacturer Snapper stopped selling its products at Wal-Mart. Here’s Snapper’s then-CEO explaining why it was ending the relationship:
“As I look at the three years Snapper has been with you,” he told the vice president, “every year the price has come down. Every year the content of the product has gone up. We’re at a position where, first, it’s still priced where it doesn’t meet the needs of your clientele. For Wal-Mart, it’s still too high-priced. I think you’d agree with that.
“Now, at the price I’m selling to you today, I’m not making any money on it. And if we do what you want next year, I’ll lose money. I could do that and not go out of business. But we have this independent-dealer channel. And 80% of our business is over here with them. And I can’t put them at a competitive disadvantage. If I do that, I lose everything. So this just isn’t a compatible fit.”
The bottom line is that Snapper could not maintain their high quality or their reputation for high quality in a market where price was the main factor in purchase decisions. It doesn’t surprise me that Microsoft’s current Chief Operating Officer came from Wal-Mart.
As I side note, I just went to Apple’s online store and saw that the 17″ MacBook Pro costs $2,499. Then I went to dell.com and built a Dell Precision Workstation M6400 with nearly identical specs — the total was $2,864.
Apple vs my preconceived notions
Anil argues that Apple’s current practices are unethical, and I could not agree more. Apple’s relationship with iPhone developers is completely dysfunctional. The ground rules for what sorts of applications will be accepted are secret and are subject to change at any time, without notice. To be honest, I don’t see how Apple’s treatment of iPhone developers is even legal.
Anil also argues that Apple’s attempts to exercise total control over its messaging are antiquated and unsustainable. The larger trend across nearly every industry has certainly been in the opposite direction. As he points out, both Google and Barack Obama have built their brands by taking almost entirely the opposite course. And companies that were once thought of as the most monolithic in the computer industry are now in important ways the most transparent. Employees at IBM and Microsoft blog about their work and engage with the public on Twitter and in other places.
Apple violates every theory of communication that I believe in, but I can’t ignore the fact that what Apple is doing is working. Embracing transparency may work far better for them, but Apple has been incredibly successful over the past decade. Geeks (like me) who hate the company’s public persona absolutely love their products. The features of the iPhone and the opportunity to make buckets of money in a short time draw developers to the platform even though Apple treats them like crap.
In one scenario, this is a bubble of sorts. Apple may be doing OK now, but they’re headed for a big crash when people get sick of their behavior. In another scenario — one that I think is, sadly, more likely, Apple continues as they are, adjusting when it must to address reality, but only in the most minimal way.
Apple will have to become more transparent in its review policy for iPhone applications soon. They’re facing a revolt among developers — Apple crossed the Rubicon when it refused to take questions after a session on publishing on the app store at WWDC this summer. And unceremoniously booting every application that works with Google Voice from the application store, ostensibly because they duplicate built-in iPhone functionality, has been too much.
As Anil points out, there have been other cases where Apple has opened the curtain a bit in order to placate its critics, but none of them have yet led to a fundamental rethinking of its relationship with its customers and the public.
I’m reminded of the predictions that were made about China in particular and authoritarian governments in general during the rapid rise of the Web. I certainly believed that given the huge array of information available on the Internet and the difficulty in censoring it, these types of states would be forced to radically change in the face of protests from a better-informed public. I thought that the liberating tendency of the Internet would not be suppressed. Turns out I was wrong. China’s government has changed over the years, but certainly not in the ways or to the degree that I wished for and expected.
In my ideal world, Apple would take heed of arguments like Anil’s and do the right thing. The way they operate now is a massive blemish on a company that produces really great products. Failing that, I’d hope that Apple will be forced to radically change in order to make it in the modern world. But experience tells me that’s not the case. Apple may well be done in at some point, but probably not because it’s the Burma of US corporations.