ChannelWeb’s Steven Burke says that in the manifold comparisons of Windows 7 (s msft) with Snow Leopard (s aapl) burning up the Web, what all the reviewers and pundits seem to be forgetting is that it’s not about the operating system, which he maintains is simply the engine that runs the PC. As Burke puts it, you don’t go into a car dealership and buy an engine. You buy a car, and in his opinion, starting October 22, there will be no better ride available for the money than Windows 7.
Burke leans heavily on the initial purchase price angle, noting that an Apple Mac Pro desktop he cites as an example is nearly four times the price of an HP Pavilion, asking rhetorically whether anyone really believes the Mac is four times better than the HP Pavilion? I think some of us would argue that the value is there under the right circumstances, but it would’ve been more relevant to compare a mainstream Mac model such as the iMac or MacBook to their still admittedly cheaper, but not so dramatically so, Windows competition.
Apple Ignoring “Economic Reality?”
Burke accuses Apple and company CEO Steve Jobs of not considering “economic reality,” and having no interest in producing mass-market PCs, which is fair comment I suppose. However I’m constrained to observe that as Forbes’ Brian Caulfield pointed out last weekend, over the past year, banks have collapsed, PC sales have plummeted, unemployment has soared, and Steve Jobs went on mysterious medical leave for a liver transplant, but meanwhile Apple has thrived through all this with sales and earnings down less than everyone else in the industry and actually up year-over-year — on Monday reporting the company’s best quarter ever and a net quarterly profit of $1.67 billion on revenues of $9.87 billion. Consequently the question is begged as to who is and is not considering economic reality.
Netbook Sales Soar But Profitability Fizzles
NPD Group’s DisplaySearch Q2 ’09 PC shipment data released last week estimated that netbook sales soared a whopping 264 percent year-over-year in the quarter, accounting for 22.2 percent of overall PC sales, but woefully for PC manufacturers and for Microsoft — only 11.7 percent of revenues. Overall PC laptop sales (excluding netbooks) declined 14 percent and PC laptop average selling prices dropped to $688 in Q2 2009 from $704 in Q1 2009 and from $849 in Q2 2008.
Apple, on the other hand, eased prices somewhat on entry level MacBook Pro models in all three sizes while holding the $999 price point for its price leader white MacBook, and is still enjoying healthy sales and profits on its laptops. Even the most substantial MacBook Pro price cut — $400 on the base 15″ model — was partly compensated by substituting an SD Card slot for the preceding model’s ExpressCard slot, and leaving out the discrete NVIDIA GeForce 9600M GT graphics processor unit with its 256MB of dedicated VRAM in the new price-leader model, so I doubt that Apple has taken a major profitability hit. It’s more about marketing refocus.
Burke says Jobs wants to build “Rolls Royces,” not “Fords” and for him it was never about putting a PC on every desktop, while Microsoft has always had more of a Henry Ford style mass production bent. Again, partially true I suppose, although it doesn’t hold up particularly well in the iPod and iPhone context, and I don’t think Mr. Jobs has anything against growing market share provided he can do it without compromising quality standards or profitability, as his “there are some markets Apple doesn’t choose to serve” comment a year ago attests.
Simplistic Fixation On Initial Purchase Cost
I don’t gainsay that Windows Vista was a gift to Apple that just kept on giving, or that Windows 7 will prove much stiffer competition for OS X, but I think Burke is overstating his case in contending that Apple’s market share gains over the past several years are now destined to evaporate. To borrow his own analogy, it’s the whole car, not just the engine, and many of us perceive the Mac as being not only a smoother, better-handling ride, but also a better value in a whole raft of contexts that transcend simplistic fixation on initial purchase cost. CNET’s Dong Ngo reports that Snow Leopard consistently beats Windows 7 in many general performance areas including boot up time and battery charge life in laptops, for example.
Burke says PCs running Windows 7 are for “the masses” while Macs running OS X are for “the rich.” I’m not rich by the wildest stretch and neither are most of the other Mac-users I know. I do like to think that I appreciate value, a superior user experience, lower total cost of ownership, and elegance of form and execution, and that while Windows 7 will narrow the gap somewhat, it will fall well short of closing it.