2001 writing is so quaint. Didn't they know they should have called this "Rotten Apple: 10 reasons why Steve's Stores Are Going To Fail" and had each reason on a separate page? Saps.
Is it "real" to predict Apple failure based on the margins seen by PC vendors, and to assume that the buyers are just a percentage of existing Mac owners upgrading?
Yes he had figures for both of those things, but they're the wrong numbers to look at!
In an odd way, given what the pundit knew and all things being equal from the opening of the fist store, they probably would have closed down in two years.
BUT, Apple debuted the iPod that october and put it in its retail stores so customers could get a hands on for the device. I always believed (after watching my friends buy iPods, followed by Mac purchases a year or so later) that the iPod was a huge growth driver for the Mac, by making it easy for consumers to get acquainted with the Apple brand.
I think it was the iPod that saved Apple from dying, but I honestly think it was Windows Vista that propelled them to the limelight (whether the criticism of Vista was valid or not).
I don't think nearly enough credit is being given to the advances they made with the Mac following Jobs' return. The original iMacs were a big deal, and they've been nailing the all-in-one desktop ever since. Likewise with their laptops. Switching to Intel and supporting dual boot, also a huge deal.
iPods were definitely a huge growth driver for the Mac, but Apple without the iPod or the benefit of Vista would still be far from dead.
What Apple did for the Mac in the late 90's saved Apple from dying in the run-out-of-money sense. The iPod and Mac OS X in the early 00's made Apple a relevant, high-growth company again.
The criticism was pretty valid as when vista came out many of the computers weren't really up to recommended requirements with laptops (probably the biggest vista seller) having celerons and 1gb of ram.
It could have gone so much better if the computers didn't seem so slow to respond.
But in addition to that there were indeed criticism that wasn't valid and any program not working or anything else wrong with the computer was blamed on vista, mac just seemed to grab a hold of these ideas and advertise in the right way (I'm a mac).
The iPod was a good thing for Apple, but the real kick start out of the dismal Performa days in consumer space started earlier with the original iMac. Some may recall Steve getting the nickname of iCEO after that.
The iPod was also Apple's first step towards to the corporate market. It looked like a purely consumer play at the time, but with the iPhone and now the iPad, it turns out they were just taking the long road.
In the first video Steve Jobs talks about the history of the PC. The prehistoric age, the golden age, the internet age, and then the age they felt we were entering: the digital lifestyle age. That was an accurate assessment of the market. That was also only 5 years before the iPhone was released. I would be surprised if they weren't already planning for it and envisioning further development in the handheld market.
With regards to the digital hub, they don't use the term anymore, but it's still an accurate description of the mac (and iTunes for Windows).
I think what they were looking for was a trojan horse product, something you buy and then end up buying more products as a result. Think about the iPod, iTunes on Windows is meh...you end up getting an Airport, but eventually a lot of those people ended up buying Macs.
With all due respect I think you miss the point of punditry.
The point of good punditry is not to convince someone you are right and have them follow you blindly. It’s to take an insight that you have and transfer that insight to other people by explaining the thought process that led you to that insight. In doing that a good pundit expects the people who receive their insight to then evaluate it on an on-going basis and those people need to use their own knowledge to judge the original insight’s accuracy.
So it isn’t about having the reader say “that guy is right” as much as it’s giving the reader something to think about.
To use this as an example I think this guy was right when he wrote the piece. He had no way of foreseeing the iPod/iPhone/iPad and their halo effect. But as a reader in 2001 people should have taken this piece with all the negatives it lists and weighed it against Apple’s strengthening product line. Then used all that knowledge to form a new opinion based on it.
The challenge with punditry is that you don't (never?) know the complete picture, just parts of it. Good ones try and extrapolate from "what the hell are they doing" to "these guys are too smart to be doing this without some other less obvious purpose", but good ones are few and far between.
In this case it isn't a matter of the pundit being wrong, it's a matter of everybody being wrong about one thing, and the pundit having a pretty decent insight relative to that error. Everybody thought the Apple Store would be a place to buy computers. The pundit thought that wouldn't work. He was basically right, but we were all wrong about the Apple Store being about selling personal computers. Probably Steve Jobs was wrong about it, too. The pundit doesn't deserve any more blame than anybody else.
The Apple Stores seem to have been doing well even before the October launch of the iPod. (See http://www.nytimes.com/2001/07/12/technology/to-cash-in-on-a... from July: "But Apple estimates that the stores will break even by the end of this year.") However, it would also have been difficult to predict that Apple would redesign the computer retail outlet so effectively.
Personally, I view pundit status as largely irrelevant. A valid argument is a valid argument whether it came from a pundit or not.
I tend not to trust anyone unless I've heard both sides of the issue. Of course, some people make evaluating their arguments easier by acknowledging the other side. It's the ones who present their side of the story as the only possible way of viewing things that you have to be careful of. A quick skim of this article convinces me that it falls into the latter category.
To me, this is more of an example of how difficult it is to value arguments that sound, or actually are, valid.
People who make really good arguments can certainly gain an advantage over people who can't formulate their thoughts into a convincing assertion, but it doesn't make one viewpoint better than the other. I don't know if there is an alternative to arguments, though.
Your latter point is a tautology. You win arguments by making really good ones and gaining an advantage over those you don't. By the measure of "able to win arguments" the former viewpoint is better than the latter. If you're using other measures to evaluate viewpoints, you shouldn't do so in the framework of arguments.
Regarding this particular argument and how difficult it is to value ones that sound valid: at the time, this argument was quite cogent and I would have agreed with it. The author made a well-researched, well-formulated, convincing argument. He (along with many others, I'm sure) was later proven wrong, but at the time of the argument, he had a convincing case. Nothing wrong with that, in my opinion.
Often old articles with predictions that turned out to be horribly wrong come up on here. I think that whether the person turned out to be right or wrong is not very relevant. When you make an argument you are stating your opinion at that time, and so the quality of the argument should be measured in that context. That isn't to say that you can just make wild predictions without risk of losing credibility; again, your prediction can and should be measured at the time you make it, and I think that baseless ones should be critiqued appropriately.
"The author made a well-researched, well-formulated, convincing argument."
The author presented a number of fairly well known facts, but made the mistake made by many writers in treating Apple much like Gateway or another PC vendor. He threw out what sounded like facts when talking about PC Vendors having something like a 10% gross margin, but clearly was way off in assuming that figure could be used to predict Apple's sales requirements for profitability. Even most people vaguely familiar with Apple knew it as a premium brand (generally with higher prices and higher margins).
When a writer doesn't know what he's talking about, he can make an argument that seems to have substance by throwing in facts that apply to something else.
Strangely, while the author was aware of problems with Macs sold as commodity items in places like Sears, and he opens quoting Steve Jobs talking about the bad experience of people shopping for computers, he seemed clueless to the notion of stores with good presentation in upscale locations reaching people besides the Mac faithful. So in addition to using PC-vendor margin numbers, he assumes the buyers are only those needing to upgrade from existing Macs.
Not taking into account the stores going after converts shows a serious lack of insight.
From the article:
"What's more, Apple's retail thrust could be one step forward, two steps back in terms of getting Macs in front of customers. Since most Mac fans already know where to buy, ..."
The funny thing is, most of his arguments against success do seem like they'd apply to the Microsoft stores.
I think there has always been tremendous curiosity about Apple's products, especially in the early 2000s. The hardware looked interesting, and if you knew anything about the origins of OS X then the software looked very interesting too. But if you weren't already part of the club then it was hard to satisfy that curiosity, due the increasing scarcity of the hardware and the retail environment of the time.
Apple Stores were designed to take advantage of this curiosity.
Every town already had an authorized Apple dealer, and these stores were very nice, but they usually felt overwhelmingly exclusive rather than inclusive. If you were a curious outsider who simply wanted to play with this stuff it was a very awkward experience, and it always left me unsatisfied.
The official Apple Stores solved this problem masterfully.
To me, one of the most important things that apple did was offer free internet access in their stores; I go in there and use it all the time.
This is good for two reasons: it makes it look like everybody cares about apple (even though a lot of people are just there using what is effectively the free internet cafe) and it gets people into the store looking at the products.
I remember reading this article in my high school computer lab.
This is a perfect example of journalistic hubris that has only gotten worse in recent years. Rather than a non-sensational headline Cliff Edwards speaks as if he has a crystal ball. This happens all the time - looking at HN right now I see the sensationalist "RIP Java, 1995-2010" (6 points) and a more humble "Analysts: Oracle vs. Google May Hurt Future of Java as Dev Platform" (28 points). I'm happy that people seem to be up voting the latter.
Kudos for posting this, hopefully it will show that headlines like this tend to make people look stupid in hindsight.
Hah, I was clearing out my dad's collection of computer magazines (not throwing them away, just making them not a huge pile in a corner!) and there were some absolute gems from the early 80s. I ended up getting half way through and just flipping through the magazines looking at the ads :) thousands of dollars for a megabyte of storage! that sort of thing :) I love this sort of nostalgia :D
Off topic, but I have to ask: why is floating point division the appropriate operator to use here? Or is this some other kind of notation not aimed at Ocaml programmers?
It would take some work to find the historical numbers, but recent results are readily available.
In Q3 2010 apple reported $15.7 billion in revenue.
$4.4 billion of that was laptops and desktops.
Apple retail stores account for roughly 20% of macs sold. How this compares to other Apple product lines wasn't apparent in the small amount of time I spent searching.
Apple does approximately $880 million in revenue per quarter on mac sales at retail stores. That doesn't take into account any of the marketing value that the stores deliver.
It's fun to chuckle at the mis-punditry on display here but the author had no idea how strong Apple's product line would become. Jobs had a clearer picture. A balanced article would have talked more about the drivers and risks, but that's no fun to read.
Even today the question still remains, did the stores drive the product success or the other way around? But nobody even bothers to ask. The success bias ("All's well that ends well.") buries all mistakes. That's why business people learn more from failure than success.
This is stuffed full of howlers now we can look at it with hindsight. Just goes to show how out of touch the core computer market was growing with its customers.
Still, one wonders how the market would have looked if Vista hadn't been such a disaster.
All this guy is saying is that the Apple stores weren't going to get Apple booming. And they didn't, the iPod and it's successors did. Does anyone really think the Apple stores are what saved Apple?
Sure. It certainly helped sell iPods in the days before deals with WalMart, Best Buy, etc. The iPod was a major shift in how people listened to music. Being able to try it out in the store before buying it was probably a big reason it caught on so quickly. As someone else pointed out the author didn't have all the relevant information at the time. Apple Stores only selling computers would have probably been much less successful but Apple was fully aware they wanted to make a push towards consumer electronics with the iPod.
I think the mac success story could be very well be attributed to students and Starbucks.
Students because of the back to school deals that got better with each iteration of a better intel chip and that was a comfortable bet for parents enough.
And Starbucks, well, that's just a metric I've found to be useful in measuring the mac's proliferation in the american zeitgeist - I mean, the macbook has been somewhat of even a jewelry to adorned in public these days it seems, not just at Starbucks.
The story reminds me of the "Man in the Arena" speech by Teddy Roosevelt. Apple is in the arena creating its own (and our) future. Journalists are in the stands, yelling at the ump and drinking $6.00 beers.
EDIT: Apple, damn you and your spellcheck on the iPhone. :-)
Some people still had smaller screen resolutions at this time. I had 1024 by 768 but 800 by 600 was still known and there were still some people with 640 by 480 as well.
