Mac ads haunt Steve Ballmer

chris meyer writes:

"Apple's ads are childish. While Apple does have some pretty cool software (iLife), their computers are of a poor quality. I would choose Microsoft over Apple any day, for 1) quality, 2) user friendliness, and 3) professionalism."

So you would buy a microsoft computer ahead of an Apple computer? OK. Good for you. I hear your arguments about build quality. Those microsoft made PC's are faultless in their build quality. I have never heard a single complaint about microsoft built PC's.

you guys are all myopic!

Sure windows leads now but this business model is rapidly becoming passe!

When Google launches a Free operating System, no one will care about Microsoft. People have had too much of their monopoly, they've given too much garbage already and none bigger and worse than Vista.

Whether or not Windows7 redeems Microsoft is not the point. Cloud computing is haunting Microsoft and they know it.

With Ballmer running the show, Microsoft will fade into oblivion. This guy makes sense:

http://web.me.com/mycorrectview/mycorrectview/Stance/Entries/2009/11/20_Is_Microsoft_Relevant.html

Before this column fades into history (Philip, I enjoy your frequent additions to your Apple 2.0 columns), it should be emphasized Microsoft is a wildly successful company with a working global monopoly in desktop operating systems.

Apple's rising market share, though an attractive, high-margin segment of the PC market, is not essential for Microsoft's continued success with its ubiquitous Windows OS.

Windows 7 will be at least a qualified success. Coming on the heels of the PR disaster called Vista, Windows 7 is replacing XP which has been in the market for eight long years. No doubt we'll see at a least temporary spike in Windows OS sales and a rebound of sorts in PC purchases as consumers and enterprises look to replace older PCs with product running the latest version of the OS. But no matter the reported Windows 7 unit sales, the changes in the market since the debut of XP have altered the economic terrain and thus the measures needed to gauge the product's success.

The chip market has changed dramatically in the past eight years. New operating systems no longer provide the impetus for new hardware purchases as in the past. Intel's multi-core processors for the most part can handle the Windows 7 upgrade without hassle and while netbooks are popular, by and large they don't return the per unit margins of conventional laptops and desktop PCs. This isn't so much about the number of units of Windows 7 that are sold, it's how much Windows 7 can pump new revenue into the vast Windows eco-system. Consumers and enterprises won't be clamoring for new software updates to match the power of new operating systems and new processors as in the past.

In all the release of Windows 7 may be an economic red herring for the folks in Redmond. With consumers and business people moving in droves to smartphones to replace the communications and even light productivity tasks previously performed with laptops and desktops, developers are taking notice. Windows Mobile is losing market share by the day. There's no answer to the Apple app store and by Stave Ballmer's own admission developers are central to Microsoft's influence in the market place.

Responding to Apple's Get a Mac ads might improve the mood of Microsoft shareholders, but focusing on the Mac is the wrong target. Windows 7 will be Microsoft's flagship OS for the next few years and will reign during a time of fast-paced change in the way consumers and enterprises select and purchase productivity and communications devices.

Finding an answer to the iPhone's success and the emergence of the Android OS might be a more productive pursuit than responding to Apple's humorous ads. Developers will follow the dollars. Over the next few years it's apt to be the iPhone OS that picks Microsoft's pockets much more than the few folks in a hundred this year that will migrate from a PC to the Mac.

ex ped: Smart analysis. Thanks, Robert.

To claim Apple doesn't want to be a successful business is a departure from the facts. It's highly improbable the company would have achieved such consistent levels of success over a 10-year period solely by accident.

I will agree Apple does not not follow a classic model for achieving success, but claiming the company is indifferent to its bottom line and wealth generation for shareholders is an implausible argument.

Apple hovers in the top ten in market cap of American publicly traded companies and is dueling with Google for the #2 spot in market cap in the technology industries.

The company is experiencing a torrid pace of growth in profitability in both GAAP and non-GAAP measures. Listening to the quarterly conference calls with Apple's management one quickly understands the focus is on financial metrics including revenue and profit performance.

One is hard pressed to find another CEO over the past ten years that has delivered the level of wealth creation that Steve Jobs and the management team at Apple has delivered to shareholders.

Let's take a cursory look at the company's product positions:

The company is the domestic leader in PCs costing $1,000 or more.

The company achieved the distinction of being the fastest growing retail chain in history, growing from $0 in sales to $1 billion in sales more quickly than another other retail store operation.

The company is the world's largest distributor of music.

The company has about a 70% share of the global digital music player market.

The company is an emerging leader in global smartphone sales.

Apple has a market cap of about $180 billion making it one of the most successful companies in the market today for creating shareholder wealth.

Apple has virtually no debt and about $35 billion in cash and financial investments on its books and a wholly-owned subsidiary incorporated in Nevada to manage its cash and reduce state income tax liabilities on the return.

To say Apple isn't interested in success disputes the facts. Rather, I'd say Apple has raised business success to the same level of obsession it applies to its product development and design.

Perhaps Steve Jobs sees himself more as an artist or artistic master than a classic builder of business enterprises. The difference with Steve Jobs in terms of artistic mastery is that he has added fiscal performance as an integral component of his fascinating artwork.

I remember Steve Jobs sending a message to Apple employees that made its way to the public the first time Apple surpassed Dell in market cap. Steve Jobs had not forgotten the remark Michael Dell made when asked what he would do as Apple CEO back in the early days after Mr. Jobs returned to Apple. It was a foot-in-mouth response that has plagued Mr. Dell ever since. It was a remark, in fairness to Mr. Dell, I'm sure he has regretted since moments after the remark was made.

I expect a similar notice being made sometime in the next 12 to 18 months when Apple surpasses Microsoft in market cap and in achieving that market milestone becoming the most highly valued technology company in the land.

To say Apple is not interested in business success is not supported by the facts. To say Apple has incorporated success into the variables involved in every product decision would be a far more accurate statement.

I will quote from Mike Elgan at Computer World who sums it up better than I could.

"Apple doesn't want to be a successful business

Tech watchers love the horse race aspect of technology industry competition. Apple competes with Microsoft. Apple competes with Google. Apple competes with companies like HP. But Apple doesn't see it that way.

Industry titans like Microsoft, Google and HP instinctively "fill out" their product lines to dominate huge areas of technology. Microsoft, for example, wants Microsoft software running on wristwatches, supercomputers and everything in between. Google wants to offer every conceivable service that can be squeezed through an internet connection. HP's massive product line runs the gamut from consumer digital cameras sold at Best Buy to entire data centers filled with enterprise systems.

Apple doesn't want to dominate like this. It has no interest in this kind of imperialist expansion. Apple is interested only in surgical strikes into this business or that product category, where they can solve design problems others have failed to solve.
Understanding this about Apple helps explain otherwise inexplicable decisions, such as why Apple got into the mobile phone handset business, and why the company is so ambivalent about business products.

To Apple, the mobile phone industry proved clueless at how to offer a compelling user experience with a phone, with its history of cramped buttons and claustrophobic user interfaces. They believed, correctly it turns out, that their designers could drop a game-changing phone into the market and "change the world" again. But when Apple casts its gaze at the enterprise space, it doesn't see sufficiently compelling design problems that will emotionally affect users. So why bother?

Apple's choices in markets it gets into make no sense, unless you understand that they don't want to dominate industries, or even maximize revenues. They just want to design and sell better products that will affect user experience in markets where that's an achievable goal.
Of course, business success is great. But Apple sees that as only a means to the end of shipping thrilling designs.

Steve Jobs was recently named CEO of the Decade by Fortune Magazine. I'm sure Jobs' ego was pleased by the designation. But ultimately, he doesn't care about this sort of thing as much as you might expect. Jobs doesn't want to be viewed by history as a Lee Iacocca or a Henry Ford. He wants posterity to look at him as a Mozart or a Da Vinci. He wants to be seen as a builder of beautiful things, not a builder of business empires."

ex ped: Thanks for that, Tony. You can read the full text of Elgan's piece here.

As far as the estimates of W7 go, my recollection of the Vista launch was that MS announced 40M licenses shipped in its first quarter, which was boosted by all those vouchers they enclosed with pre-Xmas sales. So, perhaps that 20M and 40M estimate are a tad high.

As for their mobile strategy, it's pathetic. I recall a year and a half ago, they were saying they were targeting 40% of the smartphone OS market by 2012. Since then, they've gone from about 20% to 10%. I think their mobile strategy is a failure. Apple generates $12B in iPhone sales, while WinMo "may" generate $250M, which doesn't even cover its ongoing development costs. I'm not even sure WinMo generates any real sales, since it seems they are now paying companies to load WinMo on their devices, lest they run off to Android.

If they're not careful, they won't have any manufacturers to license WinMo to, they'll be forced to make their own phone. How has this happened?

Apple's ads are childish. While Apple does have some pretty cool software (iLife), their computers are of a poor quality. I would choose Microsoft over Apple any day, for 1) quality, 2) user friendliness, and 3) professionalism. While Apple pics on PCs (specifically Microsoft) with their "New Generation" ads, Microsoft does not retaliate, instead conducting business as usual, and that is the mark of a good, RELIABLE company.

Thanks "Mac", I'll stick with my PC.

Microsoft is in a touch position. They dominate the desktop OS in terms of marketshare and if they give up a few percentage points, they're blasted by stockholders. At the same time Ballmer fails to acknowledge current trends and only points to Microsoft's continued dominance.

The problem here is that Microsoft has the desktop market by default. Corporations will continue to buy from Microsoft, it's just a matter of whether they continue to buy XP or move to Windows 7. However, in the markets where Microsoft actually has to compete (like Search, mobile, MP3 players, etc.) they prove that they cannot. They are not innovative, despite their vast amount of resources. In short, they don't deserve to be on top.

In terms of advertising, I always considered Apple's ads to be a bit silly, but I'm now seen first hand on multiple occasions where converts were made as a result of Apple's ads. Particularly with respect to the notion of moving to Windows 7 or going to Mac. For users with old systems and older software, the move to Window 7 represents just as much of a hurdle. Apple's commercials are definitely more effective than Microsoft's.

@Mike Wadner:

Ssshhh…. don't give the Microsoft board any ideas. Many of us are quite happy to have Ballmer running the show at Microsoft.

Hey Phil this is too funny! Goes perfectly with your article. Check it out:

http://www.cultofmac.com/journalists-cover-microsoft-using-macs/21741

Exhibit 2 (Chart at bottom right) is not enlarged after clicking on it. Is it possible to enlarge it? Thanks.

ex ped: Sorry. Fixed now.

Steve Ballmer is sn idiot. Until he is replaced by the Microsoft board, Microsoft will continue to be and provide 2nd rate produucs and service.

I'm on a PC now. I've never bought a Mac for me, but I've bought 8 or so for other people. I'll never buy another PC. Mac here on out.

They don't compete directly, so there's really no comparison, but when I can get one machine to do it all, it's cheaper overall, and it's as tightly coupled as a Mac/OSX box, why go to a Win7 machine? If I do, I automatically inherit every screwup for every vendor in the box and it could be dozens. Not worth the hassle to save a few hundred bux. (That's why I got an MBA.)

It would be an interesting exercise to calculate the pent up demand for new windows systems as represented by the underperformance of Vista and the nature growth rate of the PC market in the years since Vista to see what would have been expected by a new Windows release in the current time frame.

I would imagine that most of the growth might be explained by those two factors.

@Timbo
"Why is their marketing so horrible"

Because it doesn't have to be great, like Apple's is. Microsoft and Apple are not direct competitors, so when Apple pumps out another ad, shareholders don't need to worry. If you are in industry or corporate america you are on a PC or a machine running microsoft period (as a matter of fact, most people I know who utilize their home Mac hardware best run VirtualPC )

Microsoft isn't the greatest hardware company, sure; but I dont need a commercial to tell me that Microsoft can make a mobile device twice as good for half the price (though a bit ugly) than Apple.

"They simply repeat what they have done in the past"
If Microsoft continues to put out the #1 OS and holds 99% of the market in indust machines and 80% of home PCs I really can see that as a bad thing

Microsoft will continue to decline until Ballmer leaves. There continued success is only the result of inertia. Ozzie will contribute some interesting things but they are mostly Microsoft's response to a market driver (Azure and cloud computing), not something that Microsoft is driving. Innovation will happen when Microsoft breaks up. The breakup won't be driven by the government, but by shareholders. If various units were spun off on their own they would have different drivers and become more innovative and competitive.

You know this is such a stupid game. Really, yours is worse than mine and mine is better than yours is childish at best.. If a corporate environment is going to impliment any technology , high availability, remote user capabilities, emailing or whatever.. I highly doubt that apple is going to have a chance, right. The same goes for highend publishing companies using windows based computers. There is a need for both and they each do their thing great. Once you put the human emotion into the mix is when issues arise. It's almost like us as consumers simply will not be happy unless there is chaos. In the end both companies sit back and reap the benefits. I got a windows pc and an apple phone, and there is always a moment or two when I curse them both! The main thing is that we have a choice. Let's remember the level of inteligence we have and not get so wraped up in the stupid haha yours sucks game and they say blah phrases.. I don't may be dump but oh well, I still go home at the end of the day and play with the kids!

The interesting market share number to watch will be Q4… Windows 7 will be generally available to consumers for most of this quarter (all except 3 weeks)…. With a completely new, and by all accounts better, Windows on offer this quarter — and signs of poor quality in the latest newish Apple OS — last quarter's marketshare figures probably don't mean much. Look for a new marketshare baseline for Q4 and 1Q2010.

Ah, marketshare…that's always what MonkeyBoy trots out when backed into a corner by anyone concerning the less-than-stellar job he's done since taking the helm at Micro$uck.

Ballmer has created his own reality and populated it with backward-looking indicators, which do not reflect the reality as it will exist in the years ahead.

Microsoft is spending heavily to pick up market share in areas like search, which would perhaps be worth a few billion in marginal revenue should they claw and scrape to 10% or even 20% share.

Yet in areas such as mobile, which is already what, a $250 billion business, and growing 20% per year, Microsoft is giving up. They had a 20% market share and just watched it evaporate. They keep saying the same things about the future development but surrender is obvious.

Ballmer's fundamental failure is that he simply does not understand technology strategy and does not know how to build a roadmap into the future. They simply repeat what they have done in the past, and that is not good enough.

Plus, he's a Marketing and Sales guy, right? Why is their marketing so horrible? It's laughably bad and often cringeworthy, and it simply rejects a big chunk of people who choose to spend high dollars on products that reflect better design and operation.

This should be a major concern to shareholders.

Ballmer and his pals shouldn't draw to much comfort from W7 sales; being faster than those of any earlier version. It's simply the manifestation of hope by all who have come before (okay, by many) that finally there is a version of Windows worth loving. With a new generation of computer users entering enterprise level in the business world Apple is poised to sell passively in the face of aggressive upgrade efforts.
Arguably the best marketing tool Apple has, Windows 7 may be spreading like wildfire, but there are users around the world hoping that they and their hopes and dreams aren't the ones getting hosed.
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