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The Northern Spy
December 2002

Prognostics 2003

Rick Sutcliffe

'The time has come,' the walrus said,
'To talk of many things:
Of shoes-- and ships-- and sealing-wax--
Of cabbages-- and kings--
And why the sea is boiling hot--
And whether pigs have wings.'
--from The Walrus and the Carpenter

Lewis Carroll appropriately introduces this annual (four times at least) roundup of next year's happenings, especially since this is the second anniversary of the all-electronic, eclecticly meandering Northern Spy.

The Spy fared well last year

as some forecasts for 2002 were not difficult to get right. Higher desktop speeds, fixed TiBooks and better iBooks, and more attention to the iPod were predictive no-brainers. Worries about the ability to ramp up G4 speeds as they ought to be, and a forecast of no new small toys during the year also hit the mark.

Indeed, in the hours before this was written, the TiBook got yet another upgrade, boosting available bringing processor speeds to 1 GHz and introducing a slot-loading SuperDrive option to this form factor for the first time. Apple simultaneously cut prices on the iBook and upgraded it. Now, $999 buys a 700MHz iBook with 20GB hard drive, CD-ROM and 128 MBytes of memory. Upgrades are available to a combo DVD/CD-RW drive, 30GB hard drive and 800MHz processor, or, beyond that, to a 14-inch model with 256 MBytes of memory for $1599.

But all this is mundane. It's cabbage rolls, shoe leather, and the ship sailing on course, steady as she goes, and no big surprises.

On the negative side of the ledger were the Spy's vain hopes of at least 2G G5 chips (the big announcement that wasn't) and a new, faster FireWire bus. It is to wish.

The only item to show in the "he never thought of that" category is the Xserve, a high end box that has already bought Apple respectability that it previously lacked among the UNIX and enterprise crowd. The Spy changed his webhosting business (http://www.WebNameHost.net) to a dedicated recently, and if the Xserve had been more mature, would have bought one. He settled instead for a cheap Linux box on the theory it will outlive its usefulness in a year or so, by which time the Xserve will have mature tools for this purpose.

Hey, the professor gives himself an A- on last year's effort at prophecy. Not bad considering that nowadays spies on the inside at Infinite Loop are much harder to come by than in the days of the old Northern Spy, when he knew what went on in the research labs down yonder almost before it happened.

As the year turns

there are some troubling indicators. Apple finds itself with market share steady over all, but declining sharply in key sectors, particularly education, prompting media sharks to yet another round of premature obituaries for the fruit company we know and love. See the MacObserver article at http://www.macobserver.com/article/2002/10/29.5.shtml for a history of this crocodilian pastime.

Apple may indeed be in a niche, but it's one like Mercedes holds down--high quality, innovative, good reputation, and enduring. Fact is, according to a PC World article (!) at http://www.pcworld.com/features/article/0,aid,105854,00.asp Apple has the best customer service reputation of any major player in the industry. Alternatively, take the fact that a typical Mac installation costs less overall (once you compare everything) requires half the tech support and lasts nearly twice as many years before going to the electronic graveyard in the sky. No contest. To quote from the front page of http://www.thenorthernspy.com, " If you're a pro and your desktop is critical, why buy unreliable, cheap, imitation computers that crash a lot when you can get the real thing, with the best quality hardware and software, and end up with the most productive working environment? "

Moreover, the two oft-repeated big knocks against Macs, that they run slower and have less software, are both canards.

Yes, the nominal clock speeds of current Pentiums sport bigger ostensible numbers, and yes, IBM and Motorola have disappointed us by their mediocre performance gains this year, but the typical machine language instruction in a Pentium chip takes two to three times as many of those clock cycles to execute as a corresponding PowerPC chip instruction. That is, the Wintel boxes need at least double the nominal numbers on the clock to produce the same throughput.

And, on the software side of the scale, there are very few programs, and no application categories, that the Mac lacks. The Spy has knocked around computing machinery since the 1960's and could put whatever he wanted on his desk. (He's used applications and OSs on them all, from Altair, Sinclair, TRS-80s, Commodore, Sorcerer, Apple //, Mac, DOS and Windows boxes to Suns, assorted minis (DEC and friends) and mainframes (starting with the IBM 360). Right now, for functionality, reliability, efficiency, security, configurability, total cost, elegance of use, and programming ease, he'll take MacOS and its application suite and tools first, Linux second, and Windows fifth. There's enough others who see things this way to supply sales for many years yet.

Meanwhile, Apple continues to enjoy margins around the 30% mark, and despite the occasional quarterly loss, is still profitable overall, with huge bank reserves to help stay that way. The retail stores have been well-received and are already adding to the bottom line, winning many converts, and expanding market share among home users. The Cupertino crowd figures to be in the race for long haul, obituaries notwithstanding.

The road ahead

while clear and straight enough for many kilometres to come, has a few bumps, however. There's no reason to suppose that Apple, after years of mismanagement and neglect is suddenly going to "get" the educational market, and reverse the precipitous loss of market share (down to about 12%, it's lowest ever). Higher education is long gone from the fold, and the K-12 market is following fast (not because of teachers, but because of Windows-centric Chamber of Commerce types that tend to dominate school boards).

The business market has retrenched, become more suspicious of anything lacking the imprimatur of the Golden Gates, and offers few opportunities at this time. Even the DTP market is not as solidly in Apple's camp as it once was. Moreover, the courts have now given carte blanche to continue the kind of illegal business practices that created and sustained the near monopoly situation we find ourselves in.

But marketing isn't just an appeal to the masses. It boils down to convincing customers one at a time, capturing their loyalties early, and keeping them aboard for many more sales. Apple (just) needs to re-reinvent the company, storm the gates of the educational establishment, and continue expanding rapidly in the personal market. The enterprise arena (apart from niche markets) is a non-starter until there is a much larger critical mass of individuals onside, so can't be counted on for much for the foreseeable future. Take sales where you have to get them.

On the technology side, the one thing Apple cannot afford is to produce boring incremental upgrades alone, become stagnant, and drop the leadership ball. Hey, this is the company that has pioneered nearly every innovation the industry has seen in the last twenty-five years. Let people forget that, and they'll stop buying. There has to be at least one, preferably two big announcements in the coming year to continue confidence in Apple's technology leadership. Let's offer Steve and his boys and girls some help.

What are the candidates?

A new CPU is more than a possibility, its a necessity. I'd love to be a fly on the wall when the suits from Apple, Motorola, and IBM get together these days. After all, even with the better internal design, it's clear the G4 is lagging. If the G5 (or a similar next generation chip from IBM) cannot be brought to the box in the next six months, expect Apple to try buying silicon elsewhere. Intel? Not likely. Doesn't leave many candidates, does it?

The iPod is a nice toy, but the PDA is still the missing spoke on the digital hub. If Apple is serious about transforming itself into a consumer electronics company, it needs to build a faster, larger capacity, more appealing iPocketBrain than anyone (even themselves) has ever done before. Hey, the PalmOS is old and stale, despite never yet reaching the quality of the Newton. And, as an eBook reader, it's down there with cuniform on clay. There's a window of opportunity here to create a first class pocket computer/PDA/reader, if someone wants to throw up the sash. If it could consume and display PDF and HTML files (with other formats), it could be marketed into the university arena as a paper textbook replacement, placing a large footprint through the door to presage a possible big time return to academia.

And, while the Spy is offering advice, Steve, why not buy out Corel, or at least Nisus software, build or buy a spreadsheet program, then market your own office suite, competing against the other side like a first class citizen, instead of subsisting on the software crumbs they dole out after they first stiff all their other customers? Who knows? If you offered real alternatives to the stifling majority culture, perhaps software prices would drop to realistic levels. Isn't that a radical thought?

Oh, and the Apple stores, along with selling iPods through retailers like Dell are both good ideas, but don't take things nearly far enough. Apple needs new marketing panache. Perhaps they could take over Sony, Philips, or Yamaha, becoming a leisure toy manufacturer across the board. Or, why not buy out tired old directionless Radio Shack and pick up some retail breadth to go with the flagship store depth. Alternatively, exploit the tools paradigm by selling products at Home Depot, Rona-Revy, Costco, and other big box appliance and hardware outlets. Duct tape and iBooks, why not? Meanwhile, perhaps a stunt is in order. Sponsor a trip to the moon, underwrite the next Olympics, buy a TV network, or pick up a few sports franchises out of spare change. Then flog the publicity for all it's worth before selling out for a profit.

On the other hand, why not get back into trench warfare, revive the old University consortium, build real partnerships with the students who'll make decisions ten years down the road, and regain market share by reversing the policies that saw it erode, one sale at a time, the way marketing 101 teaches. Perhaps pigs or Apples will fly, but this way takes renewed vision and many years of hard work.

Down in the grotty details,

of sealing wax and things, expect to see a few obvious incremental improvements:

- G4 desktops to 1.5G, but not likely much more unless there's a breakthrough at Motorola or IBM;

- thus, necessity being the mother of invention, a new CPU;

- more improvements to the iPod;

- dual processor portables;

- steady to slightly declining market share for at least three years, perhaps picking up thereafter;

- larger, thinner, and cheaper flat screens;

- at least one unexpected toy or new market penetration other than the PDA;

- by version 10.5 the functionality of OS 9.2 restored, speed and permissions issues addressed, and OS X finally fulfilling its promise.

And then again, sometime this year

- the Spy may stop using system 9, but not until NisusWriter for OS X is published;

- someone in the industry will make a decision as bad as was IBMs in marketing the PCJr, still the all time champion worst box ever offered for sale. Whoever does will go spectacularly broke providing plenty of entertainment for the rest of us;

- someone in the industry will make a decision as good as was offering the original Mac. Most people won't realize it;

- the Spy will be right in more than half these predictions, but everyone will notice the rest.

--The Northern Spy

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