Sometimes little Tommy thinks
about other
things than whether it's time to change his diaper.
Note: Since this was originally written, Apple Computer has been "turned around" by Steve Jobs. As successful as the new Apple products are, however, it is unlikely that Apple will ever again achieve the market share it once had. The damage done years ago (as per this article below) can probably never be reversed. Tommy still runs DPF solely on Mac computers and loves them.
In today's world of computers, two interesting things are happening at the same time (early 1999). One is that Bill Gates is become richer and more powerful every day. The other is the impending demise of Apple Computer. Strangely, both of these events are absolutely interconnected; they both result from the same cause. This "cause" is one of the greatest marketing errors ever made by any company in the world. The foundations for Bill Gates' success and Apple's demise were laid down many years ago. Apple's error is so obvious that it is surprising that only Bill Gates took advantage of it for his own benefit. Here's the story.
It is not hard to comprehend two of the simpliest and most basic marketing rules. Everyone knows them because we are surrounded by thousands of examples in everyday life. Rule 1 is that "lower priced items always outsell higher priced similar items". Rule 2 is that "higher priced item MUST be substantially superior to lower priced similar items to maintain their market share". As an example of Rule 1, Chevrolet cars will always outsell Mercedes or Lincolns. As an example of Rule 2, Mercedes or Lincolns must offer a substantially superior product in order to maintian their share of the market.
With these two, simple, basic rules in mind, let's turn back the clock and look at the personal computer industry from the middle '80's to the early '90's. (Rule 1) IBM compatible computers were outselling Apple MACS because they were lower priced. (Rule 2) Apple MACs still grabbed a rather substantial portion of the total market in spite of their higher price because they were a superior product.
Bill Gates came along and simply saw what should have been obvious to anyone - if he could modify IBM compatible computers to be BOTH cheaper in price AND equal in power to Apple MACs, he could totally dominate the computer world. It was equivalet to having the "magic" to turn every Chevrolet on the road into a Mercedes or Lincoln for only $100, and everyone who paid for a new Chevy could use "magic" to walk out of the dealership with a Mercedes or Lincoln. Bill Gates knew all he had to do was to develop this "magic", and he did.
It seems impossible that no one at Apple saw this coming. Even after Bill Gates publically announced that he was developing the "magic" (Windows 95 operating system), no one at Apple seemed to recognize this threat. No one at Apple asked the question, if every lower priced IBM compatible computer will be able to do what our Apple MACs do, who will buy our more costly MACs?
Apple had only two ways they might have saved themselves. One was to price their computers competitively. The other was to create a new product that was so superior it could still maintain their market share at a higher price. They never did either of these things (until Steve Jobs came along).
Thanks to Apple's blindness and Gate's vision, Bill Gates is now one of the wealthiest people in the world, and Apple is a second rate computer company struggling to exist.
PS - I love my MAC. Also, comments welcome to babytom@well.com
