RFI has received reports that Apple's sales in May have fallen off and their inventory of G3 DT/MT models have been backing up in the channel. Add in to this equation that the Quality Control problems with the G3 PowerBooks have constrained supplies and pushed Apple's sales forecasts for the G3 PBs off track then we might see Apple's sales hampered for the second month of the current quarter. And, we can also expect Apple to lower prices on the models that are backing up in the channel with associated price cuts on other models to bring them into line with the other models; namely the iMac, etc.
With those expected price cuts we might also see Apple cut the price on the iMac from $1299 to $999 sooner than expected. It wouldn't do for Apple to be selling a G3 DT for less than the iMac, etc. And, that would also mean a lower price point for that "LC" box sooner than expected. Great for the consumers and potential demand, but it might place some pressure on Apple's margins in this quarter. But, better the margins than sales and revenues.
As for the G3 PowerBook sales, Apple had reportedly anticipated selling 75,000 of them by June but the QC and production problems put the squeeze on their forecasts. And with Apple trying to ramp up production for the iMac, and even the "Speed Bumped G3 PowerBooks" that means that they're busier than the only working girl in town when the Fleet rolls in.
Could this situation impact Apple's Q3 earnings report? Yes, but RFI suspects that the overall impact might not be as severe as some would fear / hope. Remember, RFI has previously stated that Apple might benefit from the fact that it had been marginalized in the PC market over the past several years as the entire industry started slowing. Call it a matter of degree.
It appears that those G3 PowerBooks are finally starting to get into the channel as they've started appearing on the Apple store and others are stating that they have them in stock. But, whether they get into the general channel in quantity soon is another issue altogether. Currently there's a huge backlog of orders and the last report we received was that the dates keep slipping.
Could these problems run into the introduction of those "Speed Bumped G3 PowerBooks?" Yes, but if Apple slips the ship date for the speed bumps then it won't matter.
We'll keep you posted.
With the reported plunge of PC sales in April (31% decline) there's a back up of boxes in the channel and that is also spilling over into the component market; especially DRAM. Let's call it a glut. In order to move that inventory, the spot market will probably cut prices with the exception of 258Mb DRAM. Those probably won't erode significantly until the Koreans get their operations ramped up for those chips.
And while some of the Semi Bulls and Hope Scenarists are already selling Micron, et al, there's a lot further downside if the DRAM prices tumble again. And, RFI suspects that they will. Whether it is "weeks" or "months" the tumble is bound to happen. Remember, the DRAM Market is still afflicted with The OPEC Disease.
But, as one person opined: "Is it worth waiting months to get the best price when your productivity requires the RAM now?" Good question. But, we might not have to wait months, it might be only a few weeks.
If, as the recent trend suggests that the General Tech Sector is already weak as it heads into its weak period, then the pressures on DRAM prices could be exacerbated. And, now you know why that RFI has been so Bearish on not only the General Tech Sector but the DRAM market.
If you've visited Apple Recon of late, you will have noticed a banner for garage.com on the main page. That it's also a direct link to the site is a plus. There's a reason for that banner and it's not because we're trying to win a T-shirt.
Strolling around the public areas of garage.com we realized that beside it being a resource for qualified investors to get a piece of a startup before the IPO (and yes, there are ways for "unqualified investors" to become qualified investors but that's a major headache for everyone involved), we also realized that the public areas are also an excellent resource for everyone once all of the public areas are operational: the "VC Cartoon," news agents, etc. are all places where people can access information, enjoy the experience, etc.
So, we not only placed the banner, which is also a link, on Apple Recon but we'll also put garage.com on our main page text links because we feel it is a valuable resource.
While RFI whispered it as "Recon We Dare Not Utter" it appears that MacWEEK's Mac The Knife has apparently confirmed its existence and what we whispered is now being shouted from the rooftops in MTK's latest column. And, he's also reportedly learned that the roll out of this motherboard is slated for the Winter of '98; which could be "The Winter of Discontent" for the General Tech Sector as well as Microsoft.
And whether or not we'll be able to clutch hard copies of MacWEEK in "Sweaty Palms" or just peruse the information as distributed electrons over the Internet, people should know by now why we consider Mac The Knife "The Abby Joseph Cohen of Macdom."
And as far as this relates to the iMac, it's still open to question. Whether the iMac board was / is an early version of this board, or a vision of things to come is also open to question. However, that the iMac board is "different" goes without saying.
If "The Mother of All Boards" comes to pass, this could alter the calculus like we discussed in the AMP Special Report.
RFI has heard rumors that MacAddict has allegedly gotten the urge to merge and there were several reports that Mac Home Journal was the likely suspect. However, sources close to Mac Home Journal have denied that there is any deal in the works although the topic did come up recently at a casual meeting between MacAddict and Mac Home Journal people. Nothing came of the discussion.
Why is RFI mentioning this if there's nothing to it? Because of the fact that MacAddict might be looking for a merger / pooling of interests so the company that publishes MacAddict could focus on its other publications as there is severe competition for ad pages in not only the Mac market but the general PC publication market. Not to mention Apple's stated desires that there "be two" Mac Centric publications; so that leaves Macworld and whomsoever else. There's definitely not "room" (in Apple's view) for three or four.
Sources close to Mac Publishing LLC also expressed surprise at the rumors when contacted. RFI suspects that with their focus on the EMedia Weekly launch they wouldn't be considered a potential suitor for MacAddict so those starting the rumors used the next likely suspect.
And, there are also reports that MacAddict isn't in the Dog House vis-a-vis Apple but is actually under it. If it weren't RFI as "The Sunk in the Wood Pile" we would be tempted to give MacAddict that distinction. Apparently, Apple is none too pleased that the MacAddict G3 PowerBook cover leaked weeks before the launch.
However, RFI sees some problems with MacAddict attracting a potential merger partner because of its "culture." MacAddict presents itself as an "addict / fanatic" magazine and that is not the identity that Apple wants associated with its users as it tries to break into the mass consumer markets as well as present itself as a "Really Cool Consumer Company." In other words, Apple doesn't want to continue the perception that the "Average Mac User" as akin to the militia types running through the wilds of computerdom or "Rabid EvangeListas" who attack anyone who says a negative thing about Apple.
Which is one of the reasons why our eyebrows were raised about the MacAddict and Mac Home Journal merger rumor. Whose culture would be dominant? Allegedly, Apple wants Mac Home Journal to be used as a platform for the Mass Consumer Market if we take the recent E3 iMac showing by MHJ as any indication. Not to mention other things we've been hearing regarding MHJ and Apple. RFI had a hard time reconciling the "combination" of the two cultures. A melding would have put off one or the other's "base," as well as alienating a lot of others.
What is also left open to question is whether MacAddict personnel might be the originators of these rumors. It isn't the first, or the last, time that a company floated a rumor to gauge interest from other companies as to whether they're an attractive target or not. But, we'll leave that to others.
And, in a related issue we'd also have to see what, if any, reaction Macworld might have to any merger / deal for MacAddict as well as the purported positioning of Mac Home Journal as "The Mass Consumer Market" publication for the Mac market. But, that is another topic altogether. And since Macworld is already positioned to exploit the convergence movement, we suspect that they will also exploit the Mass Consumer Market aspect of this convergence.
No matter what the eventual outcome of this alleged "shopping" of MacAddict rumors has, don't believe for a minute that there wouldn't be handwringing over the fact that "this is bad for Apple because....;" even though it's not true. No one was wringing their hands over the consolidation that is occurring in the PC Centric market. The cause behind this is that there are too many publications chasing too few ad pages as Tech companies are looking at all of their advertising spending and shifting those pages to where they get the best results.
So, we'll see what comes of all these rumors. And, we can expect that if anyone happens to bump into someone at a coffee line or lunch there will be rumors of a deal in the works. And, this is a precursor of things to come.
In reading Peter Coffee's "PC at Work" column in PC Week; titled "India teaches a Lesson About IT Tools as Weapons;" one of his examples in the "Free Data vs. Costly Information" section leapt off the page as it directly related to the AMP/vMac. What was it? Volkswagen. We quote:
"Volkswagen looked in the right place. The company could have studied data on automobile buyers, which might have led it to adjust the leasing terms on its Passat sedan. It would not have led to the company to build its successful new Beetle, for which no number-crunching model would predict a need -- but which people clearly want ... Don't let your competitors nuke you while you're looking the other way."
We tossed in that last line as an afterthought as the main paragraph is the point we were trying to make.
Would the AMP/vMac fall into the same category as the Beetle? What do you think? Would Mr. Jobs have used those "La La Land" and "TV on, Mind off. Internet On, Mind On" statements if Apple "Thought Differently" like Volkswagen? Again, what do you think?
And in the same issue of PC Week there was an interview with Mr. Ellison (who's been strangely silent since) regarding Apple's future in selling "digital appliances." Well Mr. Ellison, you better tell Mr. Jobs "for which no number-crunching model would predict a need - but which people clearly want" - the AMP/vMac.
Of course, the news that the "LC" that is a Set Top Box that is Not a Set Top Box is welcome, but there's more to it than that if recent reports prove true. From reported conversations between NeXTers and Applers they're still talking about a set top box model so maybe it is not as dead as Mr. Jobs' recent comments imply. However, we're taking Mr. Jobs' public statements as the final word, so we'll continue to shake our heads in puzzlement.
Mr. Jobs' and Apple's comments about the Internet vs. TV is a prime example of what could be labeled as "snobbery" and "elitism." Two things that are at odds with a company whose strategy is to transform itself into "A Really Cool Consumer Company." And, it's a serious error of attitude. For if Apple is to become "A Really Cool Consumer Company" there are several prerequisites to be filled. We'll just mention a few of them.
This second should be a "No Brainer" but it's not. No matter how altruistic their motives, trying to "pull the consumer up" is a non-starter. The resistance the company would receive on this issue alone is almost insurmountable. Yes, it would be preferable to "pull the consumer up to the mathematical precision of Mozart and Rembrandt" but that is several quantum leaps above where the consumer is at with the Spice Girls and South Park. And even more quantum leaps above Snoop Doggy Dog and graffitti. And if that "pulling up" were possible then Apple would be facing antitrust actions and Microsoft would be in Apple's position.
Rather than trying to pull the consumer up, the company needs to meet them where they are at. Even if it means getting down into the gutter and appealing to their basest instincts and preferences. It's no wonder that Jerry Springer beats out Swan Lake on A&E. In looking at all of the "Successful and Cool Consumer Companies," this going to the market is one of the key components.
If Heineken sold for the same price as Bud or Miller Lite could they gain dominant market share? Probably. Could it be profitable? Probable. As profitable as the higher prices / margins? Probably more so. It all goes back to the razors, razor blades, steel for both example RFI used in the QuickTime Licesing Report.
Yes, we know all of the above are supposedly "No Brainers" for most, but since these basic facts are apparently being ignored by Apple they must be said.
If you want to sell to the masses you have to go to the market and where they're at, not try to pull the market up to where you think they should be. That's not how McDonald's, Disney, Coke, etc. became "Really Cool Consumer Companies."
Enough said.
While we don't have anything we're comfortable enough with to go public with, we're mulling over reports that IBM and Apple are "up to something" as far as: AIX, Yellow APIs, Carbon, Mac OS X, Rhapsody, etc. And we're starting to wonder whether "Lou" might be putting in an appearance at Macworld Expo New York or not. Even though IBM has no publicly stated intent to have a presence there.
But, we have been hearing rumblings for many months about AIX and there's always that "Deep Dish Server" that was at Macworld '97; which could run both AIX and Mac OS; and was wildly popular amongst those who were shown the server. Furthermore, to bring back an old report, there are IBM PPC boxes that can boot the Mac OS (not even 8.0 but 7.6) but the floppy drive can't be used. In the case of the iMac, the floppy is moot anyway. USB Imation LS-120s and USB Zips are "replacements."
Do you remember that RFI Recon Report from last summer? When the cloning issue was on fire? And the follow up report that we received queries from IBM personnel who then fell silent after we gave them what we had? Well, it's back and with a vengeance. In fact, RFI has been given model numbers of IBM Iron that makes it possible.
Not only are we checking on this and other aspects but others are too. And while we don't know whether we'll see: "Live! From New York! It's Lou Gerstner!" Or, whether it will even be: "Live! From Armonk!" both are pure speculation at this point in time and appears as a remote possibility for Macworld Expo New York. All we know is that those calls between Mr. Jobs and Mr. Gerstner last summer and fall are placed in an entirely different light.
Why? Because of one line that was related to us. Just one line. About Apple and IBM having a "Common / Shared long term goal for a while now." Yes, it was that one line that raised our eyebrows.
There has been some speculation that with the continued delays in Merced that Microsoft might port NT to the PPC platform again so that it won't be left to the mercies of Intel's shipping Merced. Especially after the announcement that Intel might not be shipping Merced until '00 rather than '99. Which, by that time the G4 PPC chip will have already been shipped and 1Ghz PPC chips will be ready for launch. That could place NT on Intel at a distinct performance disadvantage; no matter the developments in the antitrust suit.
While RFI would like to tell you that these rumor reports are "true," they're mostly wishful thinking on a lot of people's parts for the moment. Just as Apple has cooled to the idea of RhapTel (separate item below) Microsoft isn't about to put NT5 and NT6 on PPC as of today. NT will "integrate" Mac clients and allow other platforms to "integrate" WinCE clients but that's about the limit for the moment. Just as Apple will "integrate" NT connectivity and WinCE clients.
In reality, it's too bad that NT PPC is still wishful thinking because it would open up CHRP again as a cost-effective alternative to both the WinTel and Mac platforms.
If someone who spends a lot of money with Microsoft says they want it, Microsoft would expend the effort for the money. But, with the Apple and IBM reports we're excluding IBM from this potential customer who wants it. RFI suspects that the positioning that is reportedly taking place between all of the relevant players probably precludes any such move or development unless Microsoft decides that it is in its best interests.
Currently Apple is acting like President Clinton making a speech. Apple's position on RhapTel depends a lot on who's speaking, what audience they are addressing, what day of the week it is and even the time of day. What is said in one place might be entirely different than what is said in another place on the same day by the same person. And, people wonder why so many are conflicted about RhapTel. We're reminded of the old movie: "If It's Tuesday, It Must Be Belgium."
Okay RhapTel fans (we're among them), we know that it's already been reported / posited elsewhere, but for all intents and purposes RhapTel beyond v1.0 has been "Steved." Well, "Steved" isn't really the right term as there are more than one set of fingerprints on the knife. Mr. Jobs was only the executioner. Yes, my friends, RhapTel's reported demise was caused by "Bill and Steve" and not "Thelma and Louise."
RhapTel was "Billed and Steved" even though RhapTel was / is part of Microsoft's "Insurance Policy" lest the worst case scenario happens with Judge Justice and their posse. And while RhapTel could be resurrected like Lazarus, we're not counting on it. That scenario would only happen if Microsoft applications were suddenly tossed into chilly dark waters as the regulatory iceberg of Judge Justice et al wreaks its havoc and alters course towards its next victim after caroming off "S.S. Microsoft."
While RhapTel might be part of a rider to Microsoft's insurance policy, RhapTel v1.0 is part of Apple's "insurance policy" to appease shareholders and prevent lawyers like Lerach from schooling with Class Action lawsuits.
As for the evidence at the crime scene where RhapTel was killed, there are bloody Redwing bootprints leaving the scene as well as eivdence that RhapTel was slammed against a Redmond brick wall with great force. Yes, RhapTel would have "smoked" NT5 and even (eventually) NT6. And, Microsoft's stance on "coopetition" only goes so far.
As long as there's hope and light, for Microsoft, at the end of the antitrust tunnel RhapTel has been placed in the tomb of v1.0; which also almost guarantees its "failure." Who is going to adopt or support something that is in "maintenance mode" even before its release? Sure, Yellow API apps will run on it with a recompile but who is going to adopt it? Especially when Apple is reportedly moving towards NT Connectivity?
Well, Joel Klein et al would love to mine the potential collusion issues, but the dangers go far beyond that. Like with the AMP/vMac Apple made an egregious error in caving on RhapTel. Forget hardware, stick with software. Every sale of RhapTel would mean Yellow APIs too. That's revenue. Revenue that Apple would never see otherwise because it would be coming from Intel based shops.
When "The Grail of RhapTel" was first grasped by people at Macworld Boston '97, even before when we were talking with people about it, there was excitement, yea even rational exuberance. Not because "Apple could stick it to Microsoft and NT," but because of the promise that RhapTel held. That's where Apple mucked up.
Financial firms and others who used OpenStep and WebObjects to model their trading strategies and derivatives models were ecstatic that they'd have the power they currently had but also enhanced (and we quote) "and as easy to use as the Mac?!..." They were salivating. And, it was also at Macworld Expo Boston '97 that we heard numerous comments from corporate, government and military types saying that for the first time they could "spec" an Apple solution without worrying about hitting the "Standardization" problem. Something we reported on contemporaneous to the events.
So, what happened? Apple could have had RhapTel 1.0 out the door long ago but that's another issue altogether. Another point we also brought up contemporaneously. Also, Mac developer reticence to support Rhapsody also played a role. Apple, and Mr. Jobs, wanted a river of major applications for Rhapsody and the Mac developers weren't jazzed about porting to Rhapsody and supporting two versions for the Mac platform. This brought about the "Green Box"/Carbon/Mac OS X.
Which also brings up the point that the porting of QuickTime to Rhapsody also served as the "base" for "Carbon Based Life Forms." As that is an issue, the reports we have received pertaining to the vMac also intimate that "QuickTime could be an OS with Java." That's more compelling than the speculation about QT being the basis for Carbon.
Not to mention the previous "coopetition" (AKA: collusion) between Microsoft and Apple. FWIW, "agreeing to compete in certain specified areas while cooperating in other areas" does fit the general concept and definition of collusion. Something ADM got into big trouble for not so long ago. But, that's for the Justice Department to evaluate and decide upon. But, we digress.
"RhapTel" might not have had Adobe Photoshop ported to it, but there was / is a hungry market for it if they only marketed it. The other problem was that Apple, even under Mr. Jobs, didn't bother to talk to current and potential customers about it. Heck, it never even had a road show. Those who already used OpenStep and WebObjects didn't have to be "Sold" and those that could be sold only had to see it getting put through its paces to "get sold." Not the IS/IT people, the senior management. But, that was not to be. So much potential wasted. But, isn't that the story of Apple? Unfulfilled potential?
Yes, we understand the calculus behind this decision and it doesn't "kill Apple's potential," but it does show how "politically deaf" both Microsoft and Apple are on this. And we're not just talking about any potential "collusion" charge the DoJ might mine in order to "Get Microsoft."
Bill doesn't convince Steve to "Steve/Bill" RhapTel. Bill actually has Microsoft assist Apple (with licensing deals, etc.) in ensuring it works with Microsoft and Windows applications. Bill also eases the Microsoft licensing agreements with the box makers allowing them to not only do a dual install of Windows and RhapTel but also allows them to break out the RhapTel only installs that they make. Think: "Mi Amiga Gateway."
Want to know what would happen to the "sound footing" that the trustbusters believe their case to have? It would shift like quicksand beneath their feet. It would disappear like spit on a Phoenix sidewalk on an August afternoon. Remember, RFI is not talking economics, we're talking politics and survival. So what if RhapTel even gained 20 - 25% market share? Which is the least of all the evils? That's the issue at stake. It's too bad that it falls on deaf ears.
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