Anthony Frausto-Robledo, EIC ([email protected])

5 Jan 2005 - (originally written 8 July 2004)

 

Opinion: Apple needs a New 'Mac LC' for Market Growth - Part 2

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The Apple ePower Pro

Apple can come up with its own name but for now I want to call the new Mac LC the Apple ePower Pro. Quadra is a great name too but Apple should reserve that for a future product with four something (like four processors!). So what's so great about the ePower Pro?

For starters it doesn't have Mac in its name. Secondly, the letter "e" stands for two things intricately related to market share growth in the computer market: enterprise and economical.

When Saab decided to broaden its product portfolio with the new 2005 Saab 9-2X it needed to describe its key attributes. They did it like this:

"The list was short: the vehicle needed to have a high-performance personality, all-wheel drive, distinctive European design and be priced below the 9-3." --- Saab Magazine

There are only four key attributes in that description above. If I was to try to do the same with a product aimed at broadening Apple's portfolio with the intent on increasing market share I would likely say this about the Apple ePower Pro:

The computer needs to have a flexible businesslike personality, an OS X / Linux boot strategy, distinctive Apple design and ease-of-use, and be priced below all other Macs.

Apple's General Motors: IBM

Since I am constructing an argument that says Apple should look at what is going on in the automobile world in order to learn how to increase market share with a luxury brand, I may as well take the analogy to its full extension.

What is going to make the new Saab 9-2X successful is that Saab (which is owned by GM) was instructed to work with Subaru (which GM has a 21 percent stake in). GM used its full resources in Subaru to tap their expertise in all-wheel drive as well as to tap Japanese Subaru dealers for new sale points for this and other future Saabs in Japan. As I said before, I think this new Swedish-Japanese hybrid is going to expand the Saab market share a small percentage in the US and Canadian markets, which is exactly their goal while broadening their global presence and ultimately increasing their market share on a global basis.

Saab will do all this without existing Saab owners coming down market or leaving the Saab brand. The word on the Net is that existing Saab owners would never buy the 9-2X, it doesn't appeal to them, and that is a good thing for Saab because it isn't meant to.

In many ways IBM is Apple's GM. And in the past IBM has seen Apple as a type of possible luxury or unique-brand division. The two companies have come very close to merging in the past (in essence IBM buys Apple Computer) with the goal of the two collaborating and maintaining separate business identities. I have several IBM friends. It is no secret to those who know the inside story that IBM has had a fondness for Apple for well over a decade and half. The two companies, if anything, have one very mutual enemy. Both companies were burned badly by Microsoft.

IBM can serve as Apple's GM in many ways. In the vision of the Apple ePower Pro noted above, IBM's role might include co-manufacture and co-engineering. Additionally, IBM might sell an enterprise version of the Apple ePower Pro to IBM enterprise customers.

We have to remember that its entirely possible that a six-figure individual who owns a $40,000 Saab 9-5 might just buy a $23,000 Saab 9-2X just for fun, as a second car. In like manner, professional graphics artists who regularly buy Power Mac G5 computers might want an Apple ePower Pro for some particular reason, but it would be additive to Apple's market.

Flexibility and Linux

Perhaps the best reason why IBM might want to do this with Apple is to push their PowerPC platform into the enterprise market on the desktop. But IBM is not going to do this if Apple makes all the profit. So they have to figure out how to both win.

These days IBM is pushing Linux and its flexible nature. But IBM could win really big if they were able to push a Linux/OS X combo. That's real flexibility. And something that HP and Sun can't do. Paul Murphy of LinuxInsider thinks IBM is headed towards pushing Linux on the corporate desktop with or without anybody's help with the Cell processor at its center. He suggest that Apple could lose big time if this happens. If I was Apple I would go to IBM and say I want to help you with this goal but let's figure out a way where OS X can play into this.

What we are talking about is Apple market share. There are many ways we can shape this analogy which started with GM and Saab. Here is one way. In the proposed ePower Pro Apple and IBM could agree to co-produce it and ship a dual boot system that enables IBM's enterprise customers to run either of the two PowerPC-based operating systems (OS X or Linux).

In the case of a large government IBM customer, managers, secretaries and administration folks might run Blue Linux (if it exist?) on the ePower Pro, while scientists, engineers, and marketing folks might run OS X mostly. Ideally both OS's would be able to run simultaneously. Here IBM has expertise in making processors that can run multiple operating systems at once. This is a core capability of IBM.

Closing Comments

This article started by saying that the Mac LC line of computers forms a valuable historical reference for Apple and its battle with market share growth. The challenge for Apple is to edit products wisely enough so that lower priced products don't cannibalize higher priced products and that the lower priced products sell to a new class of users in order to increase market share.

The suggestion is that Apple look at how luxury brands are coming down market as well as what is going on with the automobile industry for cues on how to leverage brand yet tap broader expertise and global sales channels. Cheap chic is in. IBM can become Apple's GM; but the reference is actually more attractive than it sounds. IBM and GM are both big but in the case of IBM, they are noted for their cutting edge technology too and this makes them more akin to a Saab or an Apple than to GM at large.

And we must remember that IBM doesn't have to buy Apple outright. GM didn't buy Saab outright either. They became 50 percent owners back in the early 90's. With IBM freed from its struggling PC business, the company could become major stakeholders in Apple without a whole sale acquisition. Such a deal could form the basis of a new more workable arrangement where Apple can increase market share for its OS while IBM conquerors the globe with its PowerPC chips. ---- ANTHONY FRAUSTO-ROBLEDO, Editor-in-Chief

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