[opendtv] News: Observers Wonder If Apple Plans Low-Cost Macintosh
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Mon, 10 Jan 2005 09:23:06 -0500
http://www.nytimes.com/2005/01/10/technology/10newcon.html?oref=login&th
Observers Wonder If Apple Plans Low-Cost Macintosh
By JOHN MARKOFF
Published: January 10, 2005
SAN FRANCISCO
IN what might be the next episode in Silicon Valley's longest-running
soap opera, Apple Computer's chairman, Steven P. Jobs, is planning to
surrender to the computer industry's received wisdom and introduce a
sub-$500 Macintosh, according to several published reports.
So much for "Think Different."
In the past Apple has stood alone, insisting that its software and
industrial design continue to command a premium from computer users
willing to stray from the Windows and Intel computing standard. Is
that era about to end?
The answer will come during Mr. Jobs's keynote presentation at
Macworld, which will take place here Jan. 11 at the Moscone
Convention Center. And in what has become a tradition for Mr. Jobs,
speculation has heightened expectations far beyond what surrounds any
other technology industry executive.
The Macworld event is an annual rite for the Mac faithful, who accord
the conference a reverence approaching that surrounding baseball's
spring training. Each year there is impassioned speculation about
what Mr. Jobs may or may not be planning for the coming year. In
recent years a handful of Macintosh rumor Web sites have fed the
frenzy by publishing ostensibly leaked product descriptions of the
coming announcements.
That in turn has led to skirmishes between Apple's legal department
and the enthusiasts. In early January, Apple escalated the conflict
by filing suit against thinksecret.com, a rumor site that in December
published what it said were specifications of a new low-cost
Macintosh computer. The lawsuit alleges that the Web site operator,
who calls himself Nick dePlume (and who has refused to disclose his
real name), attempted to induce Apple employees or contractors into
divulging the company's trade secrets.
Apple refused comment on the lawsuit, which appears to acknowledge
the accuracy of the reports. Mr. dePlume, who describes himself as
the editor and publisher of Think Secret, said in an e-mail message
that he was reviewing the lawsuit and that he was confident that his
reporting would be protected by the First Amendment.
However, even if the product descriptions, which have since been
treated as gospel, are accurate, Mr. dePlume could be right about the
facts but wrong about the larger picture.
If Mr. Jobs is now actually preparing to plunge into the Best Buy and
Circuit City world of razor-thin consumer electronics margins, he
would finally be paying heed to the industry pundits who have
repeatedly claimed during the seven years since he returned to run
Apple Computer that the company was doomed by its higher-priced
computers.
The reasoning goes as follows: Having tricked the computer industry
into believing that Apple was on the verge of becoming a digital
music company on the strength of its wildly popular iPod music
player, Mr. Jobs will suddenly reverse ground and begin selling a new
iPod peripheral - a cheap Mac desktop - to the legions of PC owners
who have eagerly purchased iPods but so far have failed to switch to
the more costly Mac computer world.
It would be a nifty jujitsu move that would finally lure the millions
of PC owners who have lusted for a Mac, but have until now stuck with
the Chevrolet-like price tags of Windows-based PC's.
"Apple wasn't building market share because of the switching costs,"
said Charles Wolf, a financial analyst at Needham & Company, a New
York investment firm. "It's such a logical move."
And yet it just does not seem likely that Mr. Jobs is now ready to
descend into the brutal low-priced PC wars with the likes of Dell and
Hewlett-Packard. The obvious dangers inherent in that course were
underscored recently when I.B.M. released financial data showing that
it had lost almost $1 billion in recent years in the ailing PC
division that it just sold control of to the Chinese computer maker
Lenovo.
For Apple, the nightmare consequence of a low-cost Mac scenario is
that it might do no more than cannibalize the company's high-margin
markets. Unless a cheap Macintosh is artfully crippled, many existing
Apple customers might decide to scale down instead of scaling up. And
if a low-cost computer is crippled in some obvious way, it might fail
to increase the Macintosh market by any meaningful amount.
And based on Mr. Jobs's history, a low-cost Macintosh seems
remarkably out of character. In all his years at Apple and Next Inc.
(the computer maker he started after being driven from Apple in
1985), the one surprise that has never come from Mr. Jobs is a low
sticker price.
So if Steve Jobs is really thinking differently on Jan. 11, it would
make more sense that, instead of cost-cutting, he is counting on his
proven ability to create new markets seemingly from whole cloth.
Having successfully connected the music world and the computer worlds
with the iPod, Mr. Jobs may have his sights on extending Apple in
other new directions - perhaps a high-priced set-top box - rather
than looking backwards. He has worked his magic in Hollywood before
and would have the credibility to strike an alliance that might
permit Apple to deliver movies and video to some sort of elegant
digital home server.
"Remember, he's a mogul in both Silicon Valley and Hollywood," said
Tim Bajarin, a Silicon Valley consultant who is president of Creative
Strategies.
To be sure, Mr. Jobs has been frequently and publicly skeptical about
the efforts by Microsoft and others to create hand-held digital video
players. He has been a little more circumspect about the idea of
watching digital movies at home.
Whatever he has in the works, Mr. Jobs has already succeeded in one
sense. When he takes the stage at Macworld, clad (inevitably) in
running shoes, jeans and a black turtleneck and carrying a bottle of
spring water, he has insured that all will be there on the edges of
their seats to find out what will be the Next Big Thing.
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