“Apple Sales Mushroom, Thanks To Intel CPUs”
That is one headline that we will definitely not be seeing in 2006. Standard business practice to making a product sell, is to accomplish at least one of the following: better product for the same price, equal product at a better price, or superior customer perception of product, regardless of price. In other words, it either needs to be better, cheaper, or marketed as such.
I am not going to dispute Apple’s back office reasons for switching to the Intel CPUs. They had a rocky relationship with IBM and Motorola, and the PPC platform was not going where Apple needed it to. Intel offered them a way out, and Apple had conveniently been maintaining an x86 version of OSX the whole time. If Apple had been maintaining a SPARC version of OSX instead of x86, we would be hearing about a Sun/Apple partnership right now. The decision has been made, the code has been written and is being tested. It is a done deal.
But those who think that this deal will significantly boost sales of Macintosh computers are dead wrong. The Intel architechture simply does not add value, reduce prices, or make the product more marketable. Here is why.
This is a simple question to ask. “Does the Intel architechture make a Macintosh any better?” Currently, no, it does not. Yes, the Intel chips are running at a higher clock speed than many of the G4 and G5 CPUs that Apple will be replacing, particularly on the low-end. The mini and iBook are running fairly old chip designs. But remember our business rules here: Apple needs to offer a better product at the same price.
The switch to Intel CPUs will not make the Macs better at first. Yes, the Intel architechture offers a better roadmap for the future, which means that the Macs a year, two years from now will be better than they would be had Apple stayed with the current PPC chips. But if IBM had devoted as much time to Apple as they have to Sony and Microsoft (for the PS3 and XBox 360, respectively), then the PPC Mac roadmap would be a five lane highway compared to Intel’s dirt roads. The x86 architechture also is not offering any new features above and beyond what PPC should have been offering. It isn’t like they are building ATI Radeon 800’s or integrating 200 GB hard drives onto the CPU or something.
Yes, the Intel chips of today may have a higher clock speed and even perform more FLOPS than the PPCs of today. But without x86 native binaries, and nearly every piece of software running through the Rosetta translation layer, I am positive that for the first six months minimum, if not as long as two years, software running on the Intel Macs will not be noticeably faster than software on equivalent PPC Macs. I am pretty sure that it will actually run slower for many, if not most applications, for some time.
I have also written extensively about how the Intel switch will not bring any other tangible “value adds” to Mac users.
On the “better product” angle, the switch to Intel CPUs simply allows Apple to continue at the rate of improvement that they should have had with PPC, which simply means that (at best) they will be producing the same numbers as Dell, HP, Gateway, etc. That is hardly an “imporvement”. Any speed gains they get will have to come through superior OS design, and relies upon the availability of x86 native binaries. Considering my experiences with finding x64 native binaries and device drivers for my new Windows x64 XP Professional PC, I think that the Mac users are going to be quite shocked at how little will be available for them, at the time of launch for sure, and even much further down the road.
Paul Murphy, over at ZDNet, recently wrote a very interesting article regarding the Intel CPU switch. To summarize: a low-end Intel CPU costs $240, the G4 that is used in the iBook costs $72. That is a price increase of about $170. Apple’s number one barrier to entry is the cost of their products. Mr. Murphy’s numbers seem sound to me. To be honest, I stopped watching CPU prices around the time I bought a 486 DX4 120 mHz system, so I cannot verify them. But they seem about right.
No Value Added
If Apple had gone with AMD (particularly the AMD x64 CPUs) or even SPARC, I would not need to write this article. They would be delivering superior performance at the same, if not less price, then they are now. But they went with Intel. They are paying more money for less performance. Which means that they must either be offering the same value at a better price, or find a way to increase its markeability.
Same Product, But Cheaper
As discussed earlier, the Intel Macs will be, at best, as good as the current Macs, and the Intel roadmap is no better than what the PPC roadmap should have been. I am going to give both Intel, and the Rosetta translation layer the benefit of the doubt, and allow that the Intel Macs will be as good as the current offerings. It isn’t inconceivable, that is for sure. I have no way of knowing without seeing some cold, hard numbers when the final version is released. None of the reviews I have read of the developer kits mentioned performance in any memorable way, so I am guessing that performance was not on either extreme of the scale. So we can assume that (once again) at best, the Intel Macs will be the same product as the currents Macs.
This section definitely feels like deja vu. The Intel Macs will not (and cannot!) be any cheaper, at least on the low end, than their PPC counterparts. I have not seen prices for the high end G5 chips, but it is possible that the big PowerMacs will be $100 – $200 cheaper than they are now. Considering their current prices, that is a welcome price drop, but still hardly enough to suddenly make them a bargain.
No Pricing Advantage
Once again, I do not see the Intel CPU architecture giving Apple an advantage that they do not currently have. Since Apple isn’t going to be making a better product, or a cheaper one, that leaves them with only one way to significantly grow Mac sales…
Without a better product or a better price, Apple must rely upon the arcane art of product marketing, based around the switch to the Intel CPUs to make sales jump at all, and possibly even to reassure the faitful that this is not a Bad ThingTM.
“Intel Inside” is one of the most pervasive ad campaigns out there. The vast majority of the computing users worldwide use a computer with an “Intel Inside” sticker on it. But “Intel Inside” will not bring a single advantage to the Apple marketing strategy. There are a few reasons for this, based in the “Intel Inside” campaign, as well as Apple’s current marketing efforts.
What does “Intel Inside” promise to the end user, to make it something worth paying extra money for? Let’s look at the History of “Intel Inside” website to find out. Apparently, “Intel Inside” was designed to present the following ideas to customers:
- It matters who makes the CPU within your system. Intel wanted the consumer to equte “Intel” with “safety”, “leading technology”, and “reliability”.
- There is an easy way (the stickers, the little noise in ads, the logos in ads, etc.) to easily identify what computers use Intel CPUs and which ones don’t.
- Early “Intel Inside” campaigns stressed “speed, power, and affordability”.
- Current “Intel Inside” efforts focus upon “technology leadership, quality, and reliability”.
When one looks at Intel’s overall branding efforts, this is definitely what we see. They stress that Intel CPUs are the gold standard for x86 compatability, that PCs work best with Intel CPUs (the Centrino campaign takes this message to nearly scandalous lengths, presenting users with the idea that their computer will not work with non-Centrino equipment through dodgy wording), and that Intel is constantly innovating.
To grow market share, Apple needs to cut into the PC market. Yes, having 3% – 5% of a market the size of the PC market is still a very nice slice of revenue, but they want to, and need to grow it. They have known this for a long time now. Apple counts on existing Mac owners to keep buying new Macs. From what I can tell, with the exception of those forced to go to PCs for financial or business reasons, that holds true. I have never met a Windows user who actually seems delighted to be using Windows. I have never met a Mac user (one who chooses to use a Mac, that is) who fails to provide free advertising for Macs. They definitely have something good going on there. The fact that Apple’s market share hasn’t been shrinking while the computer pie gets bigger says that Apple is signing up new users as fast as the market expands. That is a good thing for them. Due to the nature of the situation, Apple has been throwing their energies (rightfully, in my opinion) at existing PC users. Let’s take a look at the “Apple Switch” marketing campaign.
- “It just works”
- “As easy as iPod”
- “Picture-perfect photos”
- “It’s a musical instrument”
- “Home movies in HD”
- “Online streamlined”
- “Join the party” (about Apple’s support and community)
- “It loves road trips” (portability, easy connectivity)
- “It does Windows” (ease of opening/editing files produced on Windows PCs)
- “It’s beautiful”
I do not see any convergence, synergy, or shared edges (how’s that for some buzzwords!) with the “Intel Inside” campaign. In other words, “Intel Inside” does not offer any additional zing to the Apple Switch campaign. Indeed, most of the “Intel Inside” campaign actually works in reverse for Apple. OSX on x86 is untested, there are (and will be for some time) few native binaries, it will not be faster (and quite possibly be slower), and so forth. Chances are, OSX on x86 will be less reliable than OSX on PPC. OSX suceeded laregly because the “Classic Mode” worked so well. If people running Mac OS 9 programs had huge problems, no one would have upgraded, or have been willing to buy a new Mac with OSX installed. But Classic Mode worked, and worked well, and worked fast, and OSX was adopted.
“Intel Inside” will certainly be a tough sell to the current Mac market, and it will not help Apple at all in competing against Windows. It reduces their hardware, in the minds of the consumer, to a commodity device, equal to a PC. Will a potential buyer be happy about paying significantly more money for nearly identical hardware, simply because the OS is different? Probably not. In terms of marketing, I think “Intel Inside” is dismal. Sony is not a super-huge PC seller for this reason. Sure, their computers have nice design and are packed with features. But if you are willing to settle for an uglier case, keyboard, mouse, etc. then you can save hundreds of dollars by purchasing a similarly equipped HP, Dell, eMachines, etc. PC. With Intel hardware, Apple positions itself as another Sony, and still has to overcome the problem where consumers perceive a Mac as being incompatable with what they want to do.
“Intel Inside” will not drive Mac sales at all. If Apple sales rise significantly in the near future, it will be because they are either able to substantially improve the value of a Mac, either by being able to offer faster/more hardware for the same price, or by dropping the price quite a bit. The mini shows that people are willing to buy a Mac, if the price is right. Apple needs to get that price even better. That is how they will grow market share. If the Intel CPUs could do that, I would beleive that the switch to Intel will drive sales. Unfortunately, Apple chose Intel, instead of Sun or AMD to work with, and we are going to be stuck with overpriced, underpowered Macs for the foreseable future.