Gassée: The Macintosh Endgame

What’s ahead for the 32-year-old brand? Jean-Louis Gassée weighs in.

From his Monday Note:

What do you do when your business is part of a declining world? Do you decrease prices to gain market share? Bad idea, this is the PC clone makers’ race to the bottom, a game in which everyone loses as products become commoditized, undifferentiated, and, ultimately, worthless…

Instead of racing to the bottom as the market plummets, Apple appears to be taking the “high road”, in a sense: They’re taking refuge at the high end of the market by introducing new, more expensive MacBook Pros, with a visible differentiating feature, the Touch Bar. This is known, inelegantly, as milking a declining business, although you shouldn’t expect Apple to put it that way.

Apple’s recognition that the PC market is declining also explains why the company has been slow in updating its laptops and desktops. The iPhone, with $136B in revenue for 2016, is a much higher priority and gets more development resources. In a war, the top general puts more and better troops on the most important battle.

Gassée, who ran Steve Jobs’ old Macintosh division under John Sculley, knows something about milking a declining business.

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  1. John Kirk said:
    The Mac is not nearly as important to Apple as the pundits think it is.. It is to Apple what Windows is to Microsoft.

    November 28, 2016
  2. Fred Stein said:
    OK. Hook in mouth. I disagree.

    In a declining market, the vendor with the deepest pockets, and the best margins, can out-invest the competition to gain share. This is not using price, but adding value, to gain share. The ROI won’t compare to the ROI of the iPhone, but compares well with tech industry ROI as a whole. Apple, uniquely, has software and services that cross their three platforms, iOS, MacOS, and iCloud. (IMHO – lot’s of opportunity to improve though.) The biggest reason to invest in the Mac is to retain, and attract, software developers on Apple’s platform…. forever.

    The challenge is that Apple depends on Intel, which limits their ability to differentiate. At the same time it reduces their R&D costs somewhat.

    November 28, 2016
  3. Tom Wyrick said:
    I’ll let the clickbait dust settle first and deal with the new laptops, and their perplexing launch, once I’ve had the opportunity to own and operate one. T

    November 29, 2016
    • Tom Wyrick said:
      Oops, sorry about this partial quote from the Gassée column. Please disregard.

      November 29, 2016
  4. Tom Wyrick said:
    The article concludes: “Gassée, who ran Steve Jobs’ old Macintosh division under John Sculley, knows something about milking a declining business.”

    This vague statement suggests (wrongly) that Mac was on its last legs in the 1980’s and that Gassée knew something about running the Mac business. What makes the sentence vague is its unstated implication that “declining” and “milking” from Gassée’s early career have some link to Apple in 2016.

    But Apple II was the declining business business being “milked” by Apple through the Gassée years (mid- and late-’80’s). Gassée wasn’t “milking” the Mac then, but riding it as fast as he could make it run. At the time, he considered himself the equivalent or better than Steve Jobs.

    Now that Jobs is unable to contradict them, Gassée and John Scully appear frequently in the media speaking as experts on Apple, Mac and Steve Jobs. They are quoted as though at some point in their careers they possessed successful visions of computing.

    I don’t agree with the use of the word “endgame” applied to Mac in the headline above, either standing on its own or as representative of the analysis in Gassée’s column.

    The Gassée column observes the broader PC business is declining, but he doesn’t claim that Mac is losing ground relative to other PC’s. The decline of Mac relative to PC is exactly what has been claimed time and again here at Apple 3.0 over the past week or so. The multiple “worries” expressed in comments about Mac and the issue of Apple “pissing off” its power users were not about a declining PC market, but about uninformed, disinterested Apple management in 2016 in their treatment of the Mac business. The Gassée column does not support that view.

    November 29, 2016

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