Paul Krugman is (finally) wrong about something: Apple Macintosh

Paul Krugman is (finally) wrong about something: Apple Macintosh

Summary: Nobel-winning economist and New York Times opinionator Paul Krugman tries to put into context Steve Ballmer's exit announcement, the history of the Wintel industry and the rise of smart phones. What's hindering Krugman's analysis is that he's a typical Windows PC end-user.


In a Monday opinion piece in the New York Times, economist Paul Krugman started off saying he wasn't much of a "tech geek nor a management guru" when it came to Steve Ballmer's future departure from the top spot at Microsoft. But he apparently decided that he does have a deep understanding of IT tech markets and history.

Yet he is mistaken on a number of important points about the Apple and PC markets and their histories and intersections.

Krugman notes that in 2000, Microsoft's share price hit its peak and the company "seemed utterly dominant." Of course, he's even wrong there: there's no "seemed" about it, Microsoft was totally dominant.

The odd thing was that nobody seemed to like Microsoft’s products. By all accounts, Apple computers were better than PCs using Windows as their operating system. Yet the vast majority of desktop and laptop computers ran Windows. Why?

The answer, basically, is that everyone used Windows because everyone used Windows. If you had a Windows PC and wanted help, you could ask the guy in the next cubicle, or the tech people downstairs, and have a very good chance of getting the answer you needed. Software was designed to run on PCs; peripheral devices were designed to work with PCs.

This part Krugman has right. When a company has more than 95 percent of a market, its independent software developers, peripheral makers, and all the tiers of customers, from professionals to consumers, circle around the platform as the earth goes around the sun. But then he reveals his biases.

The story of how that state of affairs arose is tangled, but I don’t think it’s too unfair to say that Apple mistakenly believed that ordinary buyers would value its superior quality as much as its own people did. So it charged premium prices, and by the time it realized how many people were choosing cheaper machines that weren’t insanely great but did the job, Microsoft’s dominance was locked in.

Now, any such discussion brings out the Apple faithful, who insist that anything Windows can do Apple can do better and that only idiots buy PCs. They may be right. But it doesn’t matter, because there are many such idiots, myself included. And Windows still dominates the personal computer market.

Here Krugman makes two fundamental errors: He says that it was Mac faithful who said that PC users were the idiots; and that it was Apple's fault that the Mac platform declined in the 1990s. These are commonly held common wisdom among PC users but are mostly wrong.

Mac users have always known that the Macintosh is the superior platform, from its hardware to its highly-integrated operating system. And they've never been shy of telling this to their Windows-using colleagues, friends and family. Yes, it's annoying.

However, it was PC users, and then Windows users, who thought (and said) that Mac users were the crazy ones: for paying more than a commodity PC, for straying from the dominant Wintel platform, and going with a computing platform that had a smaller peripheral and software base. Recall that it was Steve Jobs himself who used this internalized emotion as the theme for Apple's famous adverb-killing Think Different ad campaign.

Check Out: Recalling a summer when Steve Jobs saved Apple and the Mac

Worse in my eyes is that Krugman blames Apple alone for the decline of its customer base in the 1990s. In the late 1980s, the Macintosh was still a mainstream business computer and the platform was supported by enterprise groupware vendors and other important applications. With its unique graphical interface and strong support for graphics, the Mac was very popular in the higher education, science and technology, and publishing segments. And others. While a reporter at MacWEEK in the early 1990s, I interviewed a number of customers in the government: at NASA and in various military intelligence departments.

The Mac was purchased in volume purchases by a number of enterprise customers in select markets. For example, I recall reporting on Apple's significant presence at database conferences.

However at that very time, the Mac platform came under tremendous pressure from a many-years-long sales and marketing campaign by Microsoft and Intel. These companies came to large educational sites and enterprises waving gifts of technology deals and IT perks, but only for sites that went for Wintel. The sales presentations specifically targeted Apple, saying the company and the Mac platform were doomed. Technology directors were given passes to a special insider IT conferences so that could be in the know for product roadmaps and strategies.

The result was government and business policies forbade Macintosh purchases. No matter that a department or site might have a large investment in Macs, that Macs were actually better for the task at hand, and that the end-users preferred doing their computing on the Mac, the site couldn't continue to use Macs or buy replacements.

In school districts, PC-using parents wanted their children to use the same machines in school, despite calls from teachers that the stand-alone Macs already in the classroom were more robust and required much less support, had familiar educational software and did the job.

No matter. Apple was a failing company, one misstep, one failed product and one quarter away from ruin.

Krugman has the PC viewpoint of the computer market: All computers are alike and the cheaper the better. There's no point in buying a more-expensive brand. Apple customers like their fancy industrial design and the eye candy. PC users know better.

Check Out: Apple delineates its ecosystem: The Mac's new advantage vs. Windows

That common wisdom was proved wrong. The Mac returned with its move to the Intel platform, better quality and a support organization. It helped that many Windows users began to see that Apple wasn't going to die in the next quarter. In addition, missteps by Microsoft in the development of new versions of Windows and the terrible lack of quality from even reputable PC vendors opened customers to the Mac opportunity.

Oh, and then there were the product halos from Apple's successes with iOS.

At this summer's Apple Worldwide Developer's Conference (WWDC), the company said that the Mac's installed base was some 72 million, up 100 percent in the past 5 years. This growth is from switchers from Windows.

So, it appears that a growing number of "ordinary buyers would value its [the Mac's] superior quality as much as its own people did." That's no mistake, Mr. K.

Topics: Apple, iOS, Microsoft, Operating Systems, Software

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  • There is no real superior quality

    In computers made by Apple. Most of the materials used aren't any different from your average Dell or HP box. One thing is for sure, in terms of support organisation, Apple is lightyears behind.

    Even with an Apple carepack and even with a correct diagnosis from my side, I still had to bring a 2500 USD Apple pro to the nearest Apple care center and have the user working on a laptop for a full week (and two days additional, because Apple didn't believe my diagnosis and insisted on repairing permissions and reinstalling the OS, before actually being allowed to bring it in the first place !).

    When there is an obvious hardware problem on a Dell, I get a mechanic on site that will fix the problem, free of charge. No need to bring it yourself and loose 7 working days in the process !
    • yes, fanboy

      Everything on Earth is made from the same materials.

      Yet, you and those whom you worship will claim their very own product is better than others. How is this possible?

      You don't understand why a personal computer by a company who has been making personal computers for decades is better than the "me too" stuff? That might explain your reasoning.

      Or is it possible for some stuff "made from the very same materials" to be better than others. Why?
      • Oh boy

        Playing the fanboy card, a sure way to loose an argument. Are you suggesting Apple gets more quality nvidea video cards, or that intel produces special CPU's just for Apple. If not, maybe you could refrain from fanboy arguments as they have no relevance whatsoever to what I wrote.
        • Oh I forgot

          It is all Apple's marketing, just as when they claimed they inserted a server grade HD into one of their routers, never mind the actual HD was a WD green !
        • Just stop.

          You're so out of your element you're embarrassing yourself.

          OF COURSE you can have better quality from the same supplier. Do you honestly think LCD manufacturers produce perfect panels 100% of the time? Since we know that NOT to be the case (dead/stuck pixels, mura, etc.), do you think they scrap the < 100% perfect panels? Absolutely not. Manufacturers set limits/specs on what they will accept.

          I'm not saying Apple *has* better quality, but I am saying that your implied statement that all manufacturing output is of equal quality' is horse----.
          Bob Macadoo
          • Oh please

            The model I was refering to had "off the shelve" Xeon processors.
          • It's the OS.

            It's the optimized OS that does the trick and not the commodities which you claimed.

            Perhaps your experience is better than the Mac users, well, that's a feather in your cap.

            But make mine Apple.
        • One way to lose an argument -

          Poor grammar.
      • @danbi

        "You don't understand why a personal computer by a company who has been making personal computers for decades is better than the "me too" stuff? That might explain your reasoning."

        Well, IBM was making personal computers for decades, yet they went out of the market.

        And MS is a software company making softwares for decades. Will you agree that they are better than Apple, Google, RedHat/Ubuntu/Suse/... and many other companies who were only 2 decades of age?
        • In Microsoft's defense,

          Apple has been around about the same amount of time Microsoft has - they're about a year apart. Microsoft also took Wozniak's basic and improved upon it, which means that every single Apple II+, IIe, IIc, and IIGS (and every single Mac with an Apple IIe card) has Microsoft codebase in it.

          However, Microsoft has been playing a huge game of "catch-up" with Apple since that time. In some areas, Microsoft has figured out how to make something better, or prettier, or more ergonomic; in some areas, Microsoft has succeeded where Apple could not (remember Pippin?), and in some areas, Apple has and will continue to dominate Microsoft. Throw Google into the mix, and the next few years of computing are looking like fun.
    • Go find someone in manufacturing and

      ask them about lot grades.
    • If you knew ANYTHING...

      ...about manufacturing variables and QC allied to batch control, tolerance metrics, production machine degradation.....among a host of 'quality' assessment comsiderations, you might get a clue about 'superior' quality.
      Why do you think some brands are 'cheaper' than others! The production labour costs are pretty much the same for everyone which makes component 'quality' the only major differentiation. At the cheap end, with little or no marketing, non-existent support and after-sales warranty, the choice is likely components from sites with known issues...but they are cheap. At the higher Apple, with extensive support, huge marketing expense, 'no quibble'(in my experience) warranty support and a very public quality image to maintain...your choice of component supplier will likely demand 'superior quality' producers with proven production excellence. Of which, component reliability...highly prized...and much more expensive, is the cornerstone of that costly support that Apple commits to. IOW...Cheap 'quality' cannot support an expensive reputation.
      Effectively, QC is the measure of 'superior' quality.
    • I am not surprised they had trouble repairing an "Apple Pro "

      Since no such thing exists.
      • Right

        An imaginairy model. If you cared to read, they did repair it, funny how they repaired a non existing model, next. It was obvious I was refering to a Mac Pro, you know the ones with off the shelve xeon processors...
    • There is a difference

      If you want a Windows machine with equivalent components to those in a Mac you have to pay much the same price, sometimes more. The only Mac that ever broke down on me in the 26 years I've been using Macs was (no surprise) not a Mac at all but one of those trashy clones from PowerComputing. It lasted a miserable five years.
      Laraine Anne Barker
      • Actually there isn't

        Having taken apart many a mac to repair them, I can confirm from first hand experience that the components inside the machines are identical to much less expensive windows machines. In fact, I was a bit surprised the first time I took a mac apart. Budget kingston ram, budget hard drive, standard motherboard and very cheap communications components. I've also built quite a few 'hackintoshes' where you assemble largely identical hardware and run OS X on it. Generally my cost to build a 'mac' is about one quarter to one half that of buying an Apple product.

        I've also actually never, ever had a windows machine break down on me. But the couple of real mac's I bought suffered extensively from overheating problems, including fried hard drives, due to the insistence in not putting adequate cooling into the machines. That having been said, the 5 years you quote is a year or two longer than the vast majority of users keep a computer.

        You're paying extra for marketing fairy dust. Pure and simple. When I can buy some parts for $500, take an hour to assemble it, stick a thumb drive in the front and install the latest OS X on it, and its the same parts and OS as a $1200 mac, tell me again what the difference is? When I can buy the machine pre-built for
  • Re: He says that it was Mac faithful who said that PC users were the idiots

    Not only were the "Mac faithful" saying that, it was the official Apple position, too. Remember the infamous "lemmings" ad?
  • 1984

    I have to say the 1984 superbowl ads was very good. This being show case as how good advertisement should be made

    As for "idiots" it's just personal choice. The idiots are the one calling other people idiots for their buying preference
  • Jaw dropping...

    An article like this is bound to bring out strong opinions from both sides. Nobody likes being called an idiot. From my perspective I've just loved seeing Apple user's jaws drop when they see something done on another platform that the corresponding Apple device can't do. Most recent was a very cheap (GBP50) android tablet doing things their iPads at ten times the price can't do. They then got defensive and started trying to demonstrate what iPad could do that the Android couldn't - but as it happened Android could match everything they had - except iPad was prettier. It's a bit like girlfriends, the prettier ones are not always the smartest but are still in high demand (and before the girls start protesting, yes some are both, my wife is a stunner and a university professor).

    Admittedly there were good reasons the Android was so cheap, like short battery life, but I'm using it in high risk of damage environments so regard it as a consumable, a fairer comparison might be with a better brand at maybe half the price of iPad.

    My experience of smaller form-factor computing dates back to before the IBM PC and includes the Apple II and the Lisa. Whenever I've looked I've reached the same conclusion - the Apple stuff is often cosmetically pleasing but expensive and to buy and run and seldom offers any significant functional benefits (I'll leave it to you to decide if the girlfriend analogy applies again). The emergence of VisiCalc was the closest I got to "I need this therefore I need the hardware it runs on" which was for a while only Apple II.

    In my opinion one of Apple's long term problems is what seems to be an obsession with avoiding compatibility with anything - things like proprietary connectors.
    • Regarding Apple's obsession with proprietary connectors

      and it's association for corporate sale problems. You might be right. For example, the Surface RT uses a proprietary charging connector and even it's cousin, the Surface Pro uses a separate battery charger (but with the same connector design).

      Who would have guessed - except perhaps you, Rob, that the sales debacle for the Surface RT was due to a proprietary connector.