Yes, we know it's old news as far as RFI goes, but don't be surprised if some "Big Mouse" with oversized feet and hands is seen in the vicinity of MWNY. And not to worry, it's not some mutant rodent that has emerged from the sewers to devour women, children and men who get in its path. That "Big Mouse" will have traveled a long way to New York, well at least from Times Square, in order to show off its wares and make nice to the attendees at MWNY.
But, that's "Da Mouse." From what we've been hearing, maybe Apple Recon might have been too quick to pull down that MickApple logo off the site. Nothing concrete, just some rumblings from some friends on the West Coast in "LA LA LAnd."
In what will likely be seen as a boon to consumers all over the U.S., the FCC is reportedly preparing to announce that consumers should have the ability and choice to buy their set top cable boxes just like they buy their VCRs which will "work" with any Cable System in the nation. In other words, no longer will the consumer be forced to pay "$5/month for the Converter and $1/month for a remote..." in order to have their cable service "enhanced." Wonderful thing, no? And why do we mention this at all?
Government does not operate in a vacuum. Don't you think that the biggest boosters of the AMP/vMac didn't have some inkling that this was coming down the pike? Why do you think there was such a plethora of Set Top Boxes being shown at the recent Trade Shows? Why do you think that there's a huge race to see who can build the most flexible and functional set top box that would take full advantage of what we described in the AMP Special Report? They all wanted to race off into "La La Land?" That quote will come back to haunt Mr. Jobs, mark our words on that one.
Now, if the FCC does mandate that the consumers have the right to buy those set top boxes that will enable them not to have to worry about whether it's compatible with their cable system, as well as benig able to connect to the Internet, etc. ; what's going to happen to the market? And, what's "Joe Six-Pack Mass Consumer Market" going to want? You know what RFI said they'd want and why. We laid it all out before this went public. And, the broadcasters, content creators / providers, etc. all saw it coming as well. Now, you can see why they were all excited over the potential for the AMP/vMac. And, you can also understand why they got so hacked off at Apple once it was "Steved." And why they got angrier still at the "La La Land" comments from Mr. Jobs.
But, "Ah" the critics say, "That's a few years down the road. There's plenty of time..." Right. Plenty of time for a lot of other Set Top Boxes to define the standards, gain a foothold in the market and grab a heck of a lot of mind share while others are waiting to launch their "Really Cool Set Top Boxes" to show everyone else how they should be done. We've been down this road too many times before. Once people invest heavily in a technology on the provider side they are loathe to switch horses in midstream.
And, within 3 - 6 months after that edict takes effect, you can almost guarantee that combination cable boxes / VCRs will be seen on the market. The capabilities are already there. That would probably be the first generation and incarnations., "First to Market." Others are sure to follow. Makes you wonder what Sony or Samsung could have done....
RFI is resigned to the fact that the AMP/vMac is dead and has been relegated to the tomb of one of Mr. Rubenstein's locked rooms. And, we're also resigned to the fact that no matter what evidence Apple might be provided in an attempt to persuade them otherwise, they won't be moved from the iMac focus. And, that's another story altogether.
And, RFI wishes to remind those who cluck their tongues at us over this stance, what is currently happening today RFI was talking about as the future in '93 - '95 and on. So, cluck your tongues all you want. We have just one request though: In '01 - '05 please don't complain that Apple failed to recognize where the markets were heading and why didn't they exploit the opportunity when they had the chance. No whining please. They had more than enough lead as well as people excited over the potential and the prospects. They had it. And they had it first.
If you take the recent reports as a "given," it appears that Apple only intended the iMac to be targeted at not only Apple's installed base but targeted at those people who have recently departed the Mac platform for WinTel based boxes. And that the iMac is also meant to be initially targeted at those Mac owners who have not upgraded their boxes in the past 3 - 4 years. And, that's where those "millions of iMacs" are going to be sold. Only after those initial adopters buy iMacs will they then "evangelize" first time computer buyers to buy an iMac rather than one of those Compaq Internet PC's mentioned below.
And, the perception that The Street formed to the contrary of Apple's intentions was misguided and that Apple didn't mean for those iMacs and other _Mac boxes to be targeted at the Mass Consumer Market and "First Time Box Buyers" (AKA: "The 60%+ Who Don't Own PCs Yet"). Never mind that a lot of those impressions and perceptions formed by The Street were cemented by the public comments of Mr. Jobs himself on "Moneyline with Lou Dobbs" and other interviews in May. Never mind that they were also cemented by CompUSA's exuberant statement that they were "going to sell millions." The Street got it all wrong. It's all about the installed base and recent departures, not Joe Six Pack et al.
Yet, even with this "Installed Base & Recent Departures" target market, it is not beyond the potential for Apple to sell between 350,000 - 500,000 iMacs between its launch this summer and the end of the Christmas season. If Apple succeeds in selling between 400,000 - 500,000 iMacs in that period then The Street will perceive it as a huge success and even dare call it a "Mass Consumer Market" box. Such numbers would provide a lot of revenue and profits to make The Street happy and continue their warm glow towards AAPL.O
Sound "Schizo" on our part? Not really. The key factor here is "perception." The nagging problem after that is what does Apple do to maintain momentum and break above the market share percentage that it held before '95? That's the question.
However, RFI would prefer the "Mass Consumer Market Target Market" scenario that could be made if Apple did: target the Mass Consumer Market, positioned it as such, marketed it as such; and had a willing partner in CompUSA in executing such a strategy. What would generate more positive mind share and perceptions; especially on The Street and amongst the general public? Apple having the above scenario or this one: Apple sells so many of the iMacs as "Good Stuff Cheap Internet Boxes" to the mass consumer market that demand outstrips its manufacturing capabilities, and the following report is made all over the media:
"The iMacs are so popular that they are becoming the Tickle Me Elmo of this Christmas season. Apple Computer is running their factories around the clock at full capacity and still can't keep up with the demand. People are lining up waiting for deliveries at CompUSA stores as it's on a first come, first served basis. Apple Authorized Resellers are complaining that demand is so high that the distributors are not filling their orders so as to fill the larger orders of the large volume resellers. Consumers are calling Apple Authorized Resellers all over the country to see if they have any in stock. Not since the Beanie Baby shortage at McDonald's has such a frenzy been seen. AppleStore has registered XXX million hits per day. Joe Motzeratz, Computer Analyst with Bull & Bear MegaBrokerage, stated that there was no way Apple Computer could have forecast the demand for the iMac nor was there a way they could have kept up with demand even if all of their factories were converted over to iMac production. In light of this strong demand, Motzeratz has raised his earnings estimates for Apple in '99 from X to...."
Sound like a flight of fancy? Especially since RFI was never a big fan of the iMac AIO configuration and execution? Not really. And while we never expected such a thing to happen, it could have happened. And, that would have done more to boost Apple's mind share and its transition to "A Really Cool Consumer Company" than all of the PR campaigns combined. It's too bad that it will probably be only the gleam in the eyes of the most Bullish Apple Bull.
While the Compaq announcement is centered around "a response" to the success of Dell and Gateway, a lot of the features of Compaq's "Consumer Strategy" appear more to be a response to Apple's "Mass Market Consumer Strategy" and _Mac boxes than running head on against Dell. If we take the major points of their "Low Cost Internet Boxes" and Customized BTO Retail/Direct Hybrid, one sees a lot of similarities with Apple's strategy. And while Compaq's Internet PC's don't match the iMac's performance, they're "Good Enough" for most Mass Market Consumers and definitely beat the iMac on price. And, we're fairly certain that those kiosks might become ubiquitous. Gee, does CompUSA sell Compaq boxes?
The Hybrid Retail/Direct BTO Model also resembles Apple's opening up its BTO options to Apple Authorized Resellers. Those, like PC Data's Baker, who expressed concern about how well the hybrid retail/direct "experience" doesn't mesh with the traditional retail experience; they should look at the Apple Resellers reaction to not being able to offer their customers the same options that are available on Apple Store. If it weren't a desirable feature/option, then they wouldn't have requested the same capabilities.
Those who also question the merits of such a hybrid are also ingoring one of the main bugaboos that Retailers face: overstock and inventory. Retailers who have this "Hybrid Retail/Direct BTO" capability will also see their need to have a lot of inventory on hand in the stores and in the warehouses decline. No longer will they feel the necessity of having to guess which boxes will sell and pray that they ordered the right mix of inventory. If they're still getting paid for those kiosk ordered boxes, what do they care because they don't have to have the item in stock. Nor would Compaq have to worry so much about inventory backing up in the channel or seeing retailers holding off on orders or canceling orders because they can't move what they have. Isn't "Channel Stuffing" one of the major complaints that people have with Compaq?
As far as those Internet PC's go, Apple is probably "Having an ExcedrinÅ, MaaloxTM and ProzacTM Day" as they try to figure out how to deal with Compaq "mimicking" Apple's "Consumer Strategy" even before they rolls theirs out. Especially since Compaq has basically taken a lot of the "Great Ideas" and is able to get it into a lot more places a lot faster than Apple.
Yes, Compaq is going after Dell and Gateway as far as the WinTel market is concerned, but it's also a direct response to Apple's strategy. Is this a "negative" for Apple? Given the fact that Apple is allegedly backing away from the "Mass Consumer Market" as far as the iMac is concerned, we have to give it a neutral for now. Neither good nor bad. As far as Gateway and Dell are concerned, it might be bad news indeed. And, it only signals that "the race for the bottom" is far from over and that there will indeed be consolidation in the Box Makers as the environment gets ever more competitive and the margins all the more lean.
We're not going to cluck our tongues and shake our heads at Apple but we'd hate to think what would happen if those Compaq kiosks show up in CompUSA which will basically take away a lot of the advantage that Apple would have had in the "Mass Consumer Market" if they had executed the _Mac strategy when they had the obvious potential to define the market for such things.
They still have the opportunity to do so, but everything is being put on the iMac to the potential detriment of everything else. In other words, it might be a game of "What Might Have Been" years down the road. And, no one can blame Compaq for seeing a great idea and opportunity when they saw one.
Next Story
