Sunday, January 4, 2009

What Apple Must Do at Macworld

News Commentary. I won't join the chorus of Macworld Expo predictions. I'm more arrogant than that. I'm telling Apple what it better to hell announce next week.

By the way, if the rumors and predictions buzzing around the Web are true, Apple has got a crop full of worms ready for delivery. There is global economic crisis, which means it's time for Apple to—using the company's 1990's grammatically incorrect marketing phrase—"Think Different."


Whoops, it's mixed metaphor time. If Apple stays the course, the storm will buffet and quite possibly sink the ship. The navigator—that would be CEO Steve Jobs—is where? He's no longer scheduled to give the Macworld keynote. So who exactly is steering the ship in crisis?

OK, now I'm in stream-of-conscious writing mode and will digress. What Apple shouldn't do:

  • Release new iMacs or Apple TV models

  • Keep to the same iPhone strategy

  • Open more retail stores

  • Leave MacBook prices where they are

It's time for Apple to think strategic for global economic downturn. That means the company should shift away from costly, margin-sucking hardware and put more emphasis—at least for the next six months—on software and services.

OK, now for my list of Apple must-dos for next week, in order of importance:

1. Fess up about Steve Jobs's health. This non-disclosure approach is a wheelbarrow full of poop. Give it up. Is he sick, or not? Will he continue as CEO, or not? As I blogged in July, there are no private matters at public companies. Steve's health isn't private. The whole last-Macworld announcement was a smokescreen to distract from Steve's Macworld keynote no-show. If it's the last Macworld and logical place to celebrate the Mac's 25th anniversary, of course he should otherwise give the keynote.

Perception-sensitive Apple should know better. It's January during hard economic times. A large number of companies, particularly in retail, will go bankrupt this month. January bankruptcies, when retail coffers are full of cash and survival prospects are best, are a longstanding tradition. But there will be more of them this year, but fewer companies surviving beyond them. Weak fourth-quarter earnings reports and the number of bankruptcies will further undermine investor confidence.

Right now, there's a question mark over Apple's future that must be answered. Now. Otherwise, paranoid investors will be that storm swamping the Apple ship. Apple must do the right thing for its shareholders and customers—that is say whether or not Steve can go on as CEO. If he's finished or soon to be, Apple must also deliver a clearly articulated transition plan.

2. Officially launch Mac OS X 10.6 (aka "Snow Leopard"). Mac market share is way up, meaning there are plenty of people who could buy Leopard's successor. With past releases, Apple has done remarkably better selling new Mac OS X versions than has Microsoft with Windows. There's reasonable expectation Snow Leopard would sell well.

Software is like pure margin, and it's easily distributed inventory that doesn't quickly go bad on store shelves. Apple assumes much more risk with new hardware, particularly when people aren't buying. That $129 price for full version Mac OS X is appealing, and there is a $199 "Family Pack" for use on up to five home computers. The SKUs and pricing are simple and straightforward.

Apple could excite customers and investors by announcing Snow Leopard next week and setting a release date no later March 31; sooner would be even better. There is Windows 7 competition to consider. I absolutely expect Microsoft to release Windows 7 Beta 1 to the public during the Consumer Electronics Show, if not earlier. Microsoft CEO Steve Ballmer will deliver the CES keynote on Jan 7. Philler Schiller, Apple's senior veep of worldwide product marketing, is scheduled to give the Macworld keynote on Jan. 6. Apple needs to get its news in front of Microsoft, not just Snow Leopard's announcement but the software's release.

3. Immediately release iLife '09, or something like it. There's a reason why so many journalism schools recommend Macs over Windows PCs or how so many younger computer users easily create content for the Web: iLife. The software is long overdue for upgrade, and it's time that Apple joined the Web 2.0 party. Apple makes posting content to its services simply easy. But there's not lots of built-in support for other services. YouTube is the major exception. People are social networking at places like Facebook or Flickr. Apple must better support services other than its own.

Like Mac OS X, iLife is like pure margin. The upgrade price is afforable—$79, or $99 for Family Pack. If the features are there—and considering time since iLife `08 launched—people will buy the new version. Software differentiation and sales can help carry Apple through tough economic times. Of course, iLife `09 or Snow Leopard sales can't replace revenue hardware produces. But software can make up for some hardware revenue declines and lift up margins.

4. Upgrade MobileMe. Apple's Web service is simply disappointing. As I will explain in a subsequent post, I didn't want to renew this year (I've had an Apple services account since 2000). There's simply not enough value in MobileMe compared to free services. Value would be better if the service worked right, but problems persist. On Jan. 1 got persistent page not found, "Looking for something on MobileMe?" notices when trying to access the home page. That's right,

MobileMe should have set the standard for synchronization among devices, computers and Web services. But MobileMe doesn't consistently deliver. The mail user interface is pretty, but why is it http and not https access? Has Apple got something against security? Yeah, like I'm going to access Mac mail in a public place, sending everything in the clear. Neither should you.

Apple needs to:

  • Secure Web access to MobileMe for use anyplace on any device.

  • Extend sync to more devices and services, that means those not developed by Apple.

  • Promise and deliver 99-percent uptime and functionality. People are paying!

5. Lower iPhone prices. AT&T has got the right idea with deals on refurbished iPhones—$99 for 8GB and $199 for 16GB models. Now those are prices that will sell iPhones. The lower $199 and $299 iPhone prices that appealed in July simply won't cut it in 2009. The economy is broken and analysts have lowered cell phone shipment estimates for this year.

But there's something more fundamental here: App Store, which could be foundation for the next-generation computing platform. Yeah, the one replacing the PC as most used computing device. Apple should make a volume play, by making iPhone so appealing it's the only mobile anyone would want to buy. Apple is way, way behind Nokia in market share and volume sales. If App Store is to succeed, Apple needs to quickly ramp up iPhone volume.

Meanwhile, Nokia CEO Olli-Pekka Kallasvuo is all cocky talk about the sour global economy. He laid out a fairly compelling strategy in an interview with the Financial TImes on Jan 1. Nokia hopes to capitalize on consumers' craving for lower-cost handsets during the downturn and specialized services offered to emerging markets, where mobiles and not PCs often are the first Internet-connected devices. I've been testing out new Nokia services, including Widsets, and I'm impressed. I see lower pricing in a down economy one way Apple can increase iPhone volumes against Nokia, spread App Store adoption and solidify the device and application marketplace position as the next-generation computing platform.

6. Celebrate the Macintosh's 25th-anniversary. During the 1984 Super Bowl, Apple announced the Mac with a commercial aired just once. Many commercials should air this month, and lots of supporting print and Web advertising— all commemorating the Mac's anniversary and celebrating the Apple lifestyle. With Mac market share so high and consumer sentiments so low, there is every reason to generate some reverie about the anniversary. The computer debuted on Jan. 24, 25 years ago.

The anniversary would be a good time for giveaways and sales promotions, too. I'm guessing that Apple and its dealers are sitting on unusually high inventories after the slow Christmas selling season. Apple should use the celebration as a way of clearing out inventory by lowering prices or offering other incentives. The anniversary promotions could be temporary, allowing Apple to leave permanent pricing in place while boosting post-holiday sales. The anniversary's timing is outstandingly fortuitous, if Apple has the corporate will to do the right thing.

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