Different Thinking --Except on Price
Think different.
Unless you’ve been on vacation in the South Pacific for the last few weeks, you know about Apple’s new ad slogan.
Last week, CEO Steve Jobs explained what “Think Different” means to Apple so far: Adopt or adapt the successful sales models of other computer makers. By Apple’s ever-iconoclastic standards, though, that qualifies as a different kind of thinking, and not a moment too soon.
So what’s the substance behind the hype? Apple announced that it will sell directly to consumers via the Web (https://www.apple.com) and will implement a Web-based built-to-order (BTO) system for its newest products.
In doing so, it joins the likes of Dell and Gateway 2000, which pioneered such methods in the Wintel market. Dell succeeds because it builds premium machines but charges less than the big boys (notably Compaq and IBM) who rely on retail store sales.
Once you order, Dell can generally build and ship your unit in days, if not hours. So the keys to this game are clear: Sell a well-supported, quality product, move fast, and undercut the competition on price.
So direct/BTO should be a smart move for Apple--if it has those keys. Does it?
Key No. 1: A good product. Last week Apple launched some sensational machines based on the latest PowerPC processor, the G3. These boxes are well-designed and blazingly fast. The new PowerBook G3, in particular, is a jaw-dropper--Macworld magazine tested it out at more than 50% faster than the PowerBook 3400/240, previously the fastest notebook on the market. So far, so good.
Key No. 2: Move fast. “It’s really just execution. Can we get systems out really fast?” Phil Schiller, Apple’s marketing vice president, asked me, and answered yes. It’s too soon to tell, but for now, let’s take his word for it. Two down.
Key No. 3: Price. Uh-oh. Apple can’t undercut its own retailers or they’d jump ship. So its direct prices are the same as retail. Buyers lose the personalized store experience yet gain nothing on price. No other company has successfully managed this kind of hybrid model.
Jobs made his announcements at a pep-rally-style news conference during which he showed a huge image of Dell CEO Michael Dell behind a bulls-eye. “We’re coming after you, buddy,” Jobs said to the cheers of the assembled Apple employees.
As long as Apple has targeted Dell, it seems only reasonable to engage in a little comparison-shopping on the Apple and Dell Web sites.
I built a top-flight 266-megahertz Power Macintosh G3, equipped with the features you’d expect in a powerful system. I matched it against a Dell Dimension XPS, with a 300-MHz Pentium II processor and virtually identical features. The Mac cost $732 more.
In a similar comparison of a 250-MHz PowerBook G3 against a 233-MHz Dell Latitude CP notebook, the Mac was $934 more. In both cases, Dell throws in a three-year warranty, compared with Apple’s one year.
Granted, the PowerBook is far faster--probably on the order of 50% faster--than the Latitude. Apple claims similar margins for its G3 desktops over the fastest Pentium IIs; although I haven’t seen independent testing, I believe them. The previous generation of Macs was already as fast as top Pentiums, if not faster.
So performance (and the Mac OS) counts for a lot. But $934? (And Dell’s far from the cheapest of direct PC vendors.) You be the judge.
This points to an even bigger problem for Apple as the all-important holiday buying season approaches: The least expensive Mac will set you back $1,500, when sub-$1,000 PCs are expected to capture a gigantic share of the overall market. Even IBM has recognized this with its new Aptiva.
So on balance, “Think Different” looks suspiciously, and problematically, like business as usual at Apple: Build great machines, but pick the pockets of loyal users. And we know how well that plan has been working lately.
*
Charles Piller can be reached via e-mail at cpiller@aol.com
