From rags to niches

It's now official. We, the Macintosh community, are a niche market. If there was ever any doubt about this in recent years, it was dispelled during Steve Jobs' Macworld Expo keynote address delivered Tuesday morning in San Francisco.

Our market nichiness was signified not by anything Jobs said, but by everything he did not say.

We heard plenty of encouraging words, plenty of the usual Jobsian rah-rah that will give this week's expo a positive glow: Apple made a profit of $45 million on sales of $1.57 billion in its first fiscal 1998 quarter. Apple has sold 130,000 G3s in only 51 days, which is a 1,000,000-unit run rate for the year if the company can sustain it. Apple's CPU sales share at CompUSA's Apple store-within-a-store has grown from a dismal 3 percent to a respectable 14 percent in just two months, with all the CompUSA Apple stores to be in operation by February. Apple is releasing the improved and faster Mac OS 8.1, along with QuickTime 3.0. Apple is benefiting from its deal with Microsoft with the imminent release of the excellent Microsoft Office 98 for the Macintosh. And Apple is Thinking Different to make all this happen.

Fair enough, as far as it went. But it did not go very far, and that's why it's clear that the New Apple is satisfied with being the Niche Apple.

But what about ...
What Jobs did not address was how Apple plans to go forward, strategically. Jobs did not announce a new Apple CEO. He did not announce new Power Macs beyond the current G3s, nor the Apple implementation plans for hot hardware technologies such as DVD-ROM, FireWire and USB. Although Apple did mention HDTV and DV during the QuickTime 3.0 demo, the strategic directions Apple would take with these technologies was not revealed (assuming such strategies exist, of course).

Jobs did not announce a radical pricing structure to compete with the $799 Wintel machines now hitting the market (machines that will seriously challenge any future Mac Network Computer). Jobs did not announce any plans to get rid of Apple's tremendous backlog of overpriced and unsold 603 and 604-based machines. Jobs did not announce strategies for dealing with the serious erosion of Apple's core markets (education and content creation), especially the immediate threat of Windows NT, which is making a big splash at this expo.

I could go on, but I will spare you. In short, Jobs told us a very simplistic story of Apple that leaves us with more questions than answers. Because Jobs did not address longer-term strategic issues, it's still unclear how Apple expects to re-create itself, beyond the Think Different slogan and the promise of "more advertising this quarter."

The focus of Jobs' remarks can be boiled down to this: We're remaking Apple by selling to the Mac faithful, and we think we can keep this up for some time as we get more efficient at it. Nothing in Jobs presentation would be compelling to non-Mac audiences, I'm afraid.

Consider that many of the ancillary presentations that accompanied Jobs' main theme were for products that are neither Mac-only, nor Mac-first (Riven, Dreamweaver and Oracle's Web client) and have much bigger sales in the Wintel world. If that weren't enough, you know you've been niched when the Microsoft Office 98 for Macintosh presentation is the most compelling software demonstration that Apple can mount in a Macworld Expo keynote. There's nothing wrong with Office 98, which is an excellent product, but the Mac-first, Mac-only products that Guy Kawasaki used to feature during his expo presentations simply don't exist anymore. All of them now also run (or only run) on Windows. And there are far fewer new Mac software products overall (about 50 at this show, down from the 150-plus level of just a year ago).

Send in the clones
All of which leaves me with the observation that I was wrong about Apple killing its most aggressive Mac OS cloners. While this strategy may have saved Apple in the short term by allowing it to recover sales lost to the cloners, it only saved Apple as a niche company, one whose niches are shrinking. The excitement that the active cloners such as Power Computing and Motorola were bringing to the Mac community is missing from this year's expo because those cloners are gone. UMAX, good intentions notwithstanding, is just not helping Apple innovate the platform the way that Power Computing and Motorola did. It's sad that something couldn't have been done to keep those cloners without them taking all their food from Apple's plate.

None of Apple's nichiness is unfixable, however. The company could become a lot more than it currently aspires to be. But it's going to take a permanent CEO, a permanent marketing chief and some innovative strategies -- none of which are evident from Apple. At least not at the San Francisco Macworld Expo in January 1998.