Analysis: A tale of two Macworlds

MacWEEK's Robert Morgan throws himself on the majorbombage at the Macworld Expo.

I've decided to devote this installment to a recap of some salient issues RFI discussed in its Macworld San Francisco '99 Special Report.

It doesn't cover everything, but it discusses some important differences that colored Apple observers' views of the event. It's a matter of perception, we guess, but starting with Steve Jobs' keynote address, different spectators drew different conclusions from the same events.

Consider Mr. Jobs' near-gaffe during the keynote when Apple's (Nasdaq:AAPL) interim CEO said the Yosemite boxes would ship "with chips from Motorola (NYSE:MOT) and Intel (Nasdaq:INTC) ... " We know he meant to say IBM (NYSE:IBM) , but was it just an honest mistake or a Freudian slip? For what it's worth, that error caused more than a few people to suffer whiplash when they realized what he'd said. "Say what?" was the general reaction. Personally, RFI is writing it off as an honest mistake. After all, both IBM and Intel begin with an "I," right?

A tale of two Macworlds
Just like Macworld Expo Boston '97 and Macworld Expo New York '98, this week's show seems to tell two different stories. Where RFI, The Street and some showgoers see a major drama unfolding, other observers read the signs and say, "Big deal."

Amazing. No major bombage? Excuse us? Here's what those of us in the first camp saw:

1.) One (1) Yosemite G3 Server decked out with all the bells and whistles people have been waiting for (including Mac OS X Server, File Management, NetBoot, WebObjects 4.0, BSD 4.4, Java and QuickTime Streaming) and running 50 diskless iMacs on a network running three different unsynchronized QuickTime Streaming movies. (Exactly what our "Mac OS X Multimedia Server" and $500 Mac update items covered.)

The entertainment industry and the creative world not only saw lights and alarm bells going off, they heard the lovely sound of cash registers ringing. That in and of itself qualified as major bombarge, even before entertainment started dreaming about what they could do with up to 63 G3 servers in a FireWire network configuration. For what it's worth, you're talking about a total of 6.3 terabytes of storage capacity (dare we say RAID?); 63 Gbytes of RAM; 756 Mbytes of VRAM; ad infinitum, ad nauseam. In a word, scalability. That's not major bombage? What keynote address and Macworld Expo were they attending? Surely not Apple's.

2.) Boxes that could perform the jobs enumerated above while also completing more-mundane tasks. Some people have objected that this wasn't bombage because other Unix boxes can do the same thing, but do they have "The ease of use! Look and feel! That's the OS X Appeal!"? Again, what keynote were these folks attending?

3.) Pricing: $1,599 to $2,999 for the Yosemite line. If that's not bombage, we don't know what is. The fact is, the high-end Yosemite costs only about $500 higher than the top-of-the-line 266-MHz Power Mac G3 did this time last year. That fact should not be ignored, nor was it lost on a lot of people both within and without the Mac community. Moreover, bear in mind that a high-powered server with Mac OS X Server installed will be available next month for $4,999. That's nothing to sneeze at, especially if you consider the capabilities of those boxes. Think about what RFI said about OS X boxes in the "Golden Convergence Special Report."

4.) Mac OS X Server. A lot of people started moaning when they heard that OS X Server will cost $999. Excuse us? OS X Server 1.0 will include File Management, NetBoot, WebObjects 4.0, BSD 4.4, Java, QuickTime Streaming and other features. Making a price-performance comparison with Microsoft's Small Business Server should quiet any carping about the price of OS X Server.

To reiterate: With OS X Server, "you can run an entire building with that box." (Just think about that demo with the 50 diskless iMacs.) Hearken back to RFI's special report after Macworld Expo Boston '97 as well as our "Serendipity & Fantasy Special Report."

Not major bombage? You've got to be kidding. Ask anyone who is looking to upgrade their OpenStep to something even better before you start complaining about the price. And last time we checked, the latest retail price of Photoshop 5.0 was $599.95, and Office98 Gold for Mac was $439.95. Oh, we forgot: Linux is free. But with Linux, you still have to buy WebObjects 4.0 ($1,499 for a basic license). With OS X Server, which out-Linuxes Linux, you get WebObjects 4.0 thrown in gratis.

5.) PlayStation games on G3 Macs. Even this was downplayed because it's emulation, and besides, PC gamers think it's lame. Well, according to reports from the floor, there were two extremely long lines at the Connectix booth as people queued up, money in hand, to buy that "lame emulator" that will only run on G3 Macs, including iMacs.

So what if hard-core PC gamers are unimpressed by PlayStation games on G3 Macs? That's not the target market; mass-market consumers (a k a Joe Six-Pack and His Packettes) are. (Read RFI's "NC3 Special Report" to see why.)

Too bad those who think Connectix's move represents major bombage were voting with their money, not their jaws. The target market believes it's a major development, which brings RFI to the subject of games.

6.) OpenGL, Rage 128 and games. OK, maybe it's not a "big deal" to hard-core gamers, but the Mac's game performance is going to be a big deal with consumers when they hear about the capabilities of the new iMacs as well as the G3 boxes. Whether they learn about it via word of mouth, advertising or a friend's box -- it won't matter. The G3 boxes with OpenGL and Rage 128 outperform the gold standard of Wintel game boxes by 20 percent. Suddenly, Mac owners can ask users of tricked-out game boxes the same kind of hard questions that hard-core PC gamers always used to ask Mac owners. The shoe has moved to the other foot, and it pinches.

It was a big deal to gamers when the revered CEO of Id Software stated that Apple finally has its act together on games, and that the other game companies that license Id technology will have the capability to include a free Mac port.

If that doesn't move more games onto the Mac, we don't know what will. And isn't the dearth of games one of the major complaints about the Mac? Thanks to OpenGL and the rest of these technologies, even the extremely popular Microsoft Flight Simulator is en route to the Mac.

7.) Five-flavored iMacs. When RFI first commented on the iMac's Bondi-blue color scheme, we guessed that few people would have one in every room because it would clash with their decor. (Bondi blue in a yellow living room probably wouldn't cut it.)

When RFI went on the record about the place of the iMac in interior design, some readers sniggered. Who would have thought? After all, Apple repeatedly stressed that there wouldn't be multicolored iMacs. And while the current colors aren't much of an improvement, at least people can come close to matching the color schemes of every room. (And yes, that is important.)

8.) MacTopia. RFI already covered MacTopia in depth in before the keynote address started. Microsoft's Web overtures to Mac users also qualifies as major bombage for the Mac market. Disbelieve? Wait and watch. Wait and watch. RFI will offer up a heretical prediction now: Within the next several weeks, expect the site to start incorporating content from outside Microsoft and MacTopia.

9.) Eight hundred thousand screaming iMacs and 1 million retail sales of Mac OS 8.5. Okay, it's not exactly news: Those numbers are in line with RFI's estimates for iMac sales from Aug. 15 to Dec. 31. While RFI usually avoids "quant numbers" (except for estimated EPS) like the plague, we estimated total iMac sales at 780,000. So complain about us being 20,000 off! (Incidentally, the reason RFI eschews quant numbers and targets both privately and publicly is that they can boomerang in a vicious manner. If RFI predicted sales of 780,000 iMacs and Apple missed that number, people could use that "missed estimate" as a cudgel on AAPL.)

Meanwhile, the 1 million retail sales of Mac OS 8.5 to date are good news. (RFI doesn't count the copies of OS 8.5 bundled with Apple boxes because there's overlap.)

10.) Apple's fifth profitable quarter in a row. Again, this isn't really news, since The Street was expecting it. What they might not have expected is how profitable Apple's Q1 '99 was.

11.) The Street. When it comes to Apple's short-term prospects, Items 9 and 10 really caught The Street's attention. They can do the math; suddenly, they realize that RFI's fiscal Q1 estimates for Apple's earnings weren't so crazy after all and that even the RFI Whisper Number might be doable. (Was Apple CFO Fred Anderson seen walking around with a big smile on his face yesterday?)

Items 1 through 8 also caught The Street's attention; investors are using these signals to gauge Apple's long-term prospects. Those observers caught the significance of the HAL bits and Y2K references during the keynote address. In fact, a lot of the keynote content was geared more to The Street than it was to the Mac faithful.

Positive coverage
If you monitored the financial media coverage Tuesday evening, the majority of it was extremely positive. The prominence of Macworld items was second only to coverage of the Microsoft antitrust trial, and it would be a stretch to call the show stories negative or even cautious. Yes, there were some commentators who voiced doubts and concerns about Apple's ability to continue growing its market share, but a lot of those doubts were undercut by research figures that showed how many iMac buyers were either first-time computer purchasers or Windows emigres. And considering that a recent survey shows Sherlock leaping into a tie for fourth place as the Internet search engine of choice, we're not even going to whisper about what the future might hold. And the majority of The Street doesn't even have "myapple.com" on their radar screens yet.

So that ends the "First Macworld." What of the "Second Macworld"? A lot of the grousing there wasn't enough to justify calling it a major-bombage event is -- dare we say it? -- twaddle.

It's almost as if these users were handed a cashier's check for $999,999,999.99, then complained that it wasn't a cool billion. (For what it's worth, RFI will exchange a penny for that cashier's check made out to "Cash/Bearer"; they can be happy for a nanosecond while they hold a billion dollars in their hands before the check is firmly in our grasp.)

Quicktime 4 -- who cares?
Basically, RFI doesn't give a hoot or holler if QT 4.0 is officially unveiled, announced or shipped in February or at Las Vegas' National Association of Broadcasters convention this spring. The technologies were demonstrated at Expo, and the entertainment industry noticed. Boy, did they ever! Really, that's all that counts. QuickTime Streaming reared its "Think Money" head, and that's all that matters to us. The main reason why RFI hoped it would ship at the show was so we could finally get a QT version higher than 2.5 to run on our G3 boxes.

As for the $500 Macs? Even though Apple has stated that it sees no need to deploy them, the company demonstrated that these devices work in the real world and that Apple has been testing them. But of course, that's not major bombage either. No big deal? OK. Others might be able to do it, but wheels are spinning in diverse places.

Who knows? If Larry Ellison hadn't had a near-death experience in that yacht race, we might have seen that Oracle bombage as well. What if Apple had Oracle 8i as part of the NetBoot demo, too? Ding! Ding! However, RFI suspects that this news will have to wait until MRJ 2.1 is released. How so? Read this item from Apple: http://www.apple.com/education/hed/aua0101/spotlight/

No doubt
Does anyone seriously doubt that those Oracle applications aren't even more major bombage that will probably be delivered sooner rather than later? RFI suspects Apple decided to use the major bombage to continue the drumbeat all through 1999 and beyond.

Nope. That "Second Macworld" faction was right. There was no major bombage in San Francisco. It was all "the same old, same old" and nothing to get excited about, right? Furthermore, no one should expect any more major bombage at Apple's shareholder meeting or any other venue in the next few quarters.

We might as well just wait because there was not only no major bombage at MWSF '99 but there probably won't be any more major bombage, at least until the Worldwide Developers Conference in San Jose, Calif. Pardon us for laughing hysterically.

Bottom line
The tepid reaction from some Mac watchers reminds us of those whose "cup runneth over" complaining about the fact that it's causing a terrible mess on the table and floor. Fine by us. We'll be content to watch the cup run onto the table, onto the floor and out the door. Of course, only a damn fool would let that happen. Instead, we'd be inclined to stick a straw into the cup as it got to the top and start drinking to prevent the any of it from going to waste. Ingest, digest and be thankful for the bountiful supply rather than grousing. Amazing.

"A Tale of Two Macworlds." Whose report will you believe?

MacWEEK Contributing Editor Robert Morgan spins his yarns for himself and RFI. He welcomes comments at rfireport@pelagius.com. His Web site is Apple Recon for Investors (RFI).