Analysis

Posted on 4 Mar 2004 at 12:32

 

Gallery

'May you live in interesting times' is supposedly an old Chinese curse, which makes the wry observation that upheaval and change are seldom for the good.

For the Mac faithful, times are about as interesting and event-packed as you can get. Whether they are good or not depends on which ones you regard as important.

In Main Street the arrival of the iPod minis after advance orders of 100,000 is just the latest sign that Apple is getting everything right. Despite mutterings that Apple overpriced the mini, it looks set to become another huge hit. In the last three months of 2003, Apple sold 733,000 iPods, which accounted for 13% of its revenues, and could have sold more if it had been able to make them. Now with the minis and the HP deal, Apple could sell as many as four million this year, which would see it racking up around $1.5 billion in sales. And each sale makes a profit.

The iTunes Music Store is outselling rival Napster four to one. Napster is losing money ($15 million in its first two months of operation) and senior executives, and now it has begun laying off staff.

All good for Apple and yet Microsoft is still signing up important allies - most recently Disney - as part of its strategy to make Windows Media Player and its digital rights management (DRM) technology the prevailing standard, rather than Apple's. Meanwhile Apple tenaciously keeps Fairplay, its proprietary DRM technology, to itself even when an important company like Real Networks tries to support both Apple and Microsoft's standards for music download.

Apple leads the market thanks to a superior offering, but looks to be repeating its mistakes of the 1980s with the superior but proprietary Mac. But then again its decision to let HP sell the iPod suggests it may be learning.

The news from Apple's core Mac market is also 'interesting.' The iPod and the GarageBand-enriched iLife suite mean that Apple's profile in the consumer market has never been higher, and yet iMac sales are slumping alarmingly, down by nearly a quarter during the Christmas period. What is the point in opening glitzy retail palaces in the US, and soon in London, when Apple cannot produce a competitive home computer?

On the other hand, IBM has picked up the ball that Motorola dropped so badly, and is running ahead with PowerPC development. It has just started producing a G5 class processor that will run cool enough to fit in a new iMac and PowerBook. When Apple launches a G5 iMac, perhaps the company will finally listen to reason and release at least one model that doesn't come with a built-in monitor. A headless G5 iMac could then at least compete better on price in the cutthroat consumer market. If the glass is half full, Apple is well aware that the ageing iMac range is failing badly and was just waiting for the new G5 chip.

Steve Jobs' off-hand introduction of the Xserve G5 during his Macworld keynote did little to promote the fact that in the corporate world, Apple has a very competitive offering in terms of pricing, something for which the company is not generally known. Both the Xserve and the Power Mac G5 present Apple with the best opportunity to sell to business and governments in over a decade.

Microsoft's dire record of vulnerabilities, virus attacks and most recently the leak of Windows source code, has created a major opportunity for Unix-based rivals to roll back the Windows-juggernaut. 'The World's Safest Operating System' screamed a recent report by London-based security analysts mi2g: 'The world's safest and most secure online server Operating System (OS) is proving to be the Open Source family of BSD and the Mac OS X.' Interestingly the report found that Linux-based systems were proving increasingly vulnerable to virus attacks.