Apple’s problems can be characterized by using to human traits: stubborn and vain. Now if you have ever watched Pirate’s of Silicon Valley which basically covers the rise of Apple and Microsoft their depiction of Jobs fits those two traits as well. Back in the 70s and 80s there was money to be made in hardware. In this day and age the hardware business is a cut throat business with slim margins. The exception to that is Apple, since there is no competition they set the market for themselves. This advantage is also there downfall and inevitable drum beat of their death march. Why do I say this? Well here is my reasoning behind it. In 1991 Apple’s market share was in the range of 9.6% then they dropped to the 2% range last year. The problem is two fold hardware and software. Last time you walked into a CompUSA how many shelves were lined with PC software as compared to Mac software? A lot of this boils down to cost of ownership. You can buy a pretty powerful fully equipped Dell for around $500 and change. In comparison the least expensive Mac an eMac fully equipped will set you back $900 and change. You’re paying a hefty difference for a machine that is not as upgradeable ant not even close to the raw power as the PC counterpart. Now don’t get me wrong I like Apple’s products and their OS is beautiful but their hardware is just too damn expensive for what you’re getting. Their operating system ‘OS/X’ runs on top of a BSD UNIX operating system. If there was ever a chance for Apple to make a mark for itself in the industry it would be now. Since their OS is sting on top of a UNIX kernel it shouldn’t be that difficult to port it to the x86 (Intel/AMD) platform. They would see an overnight boom in Operating System sales and give Microsoft a run for their money in the desktop OS arena. Apple has seen the writing on the wall for some time now but has ignored it. Had they ignored it when they rolled out the first Ipods that were only Mac compatible they would not be sitting on the hottest portable music player on the market. At first it seemed like a way to get people to buy Macs to use their Ipods, but who is really going to cough up thousands just to use an audio player. Soon after the initial release they came out with a PC version of the Ipod and thus began their dominance in the mp3 player market.
Now comes the biggest monster to threaten Apple and if it doesn’t respond to it quickly and become friendly with the PC market, it will sign their own death warrant. The monster is called “Convergence”. What do I define as convergence in the computer market and home? A central computer that controls Internet, TV, Videos, Photos, Music and is able to share that information in multiple rooms and multiple peripheral devices seamlessly. Microsoft is about to pull the rug out from underneath Apple and its Ipod. Microsoft has over the past couple of years been quietly tweaking its Media Center edition of XP and has just released its 2005 version. Now what makes this so special and why do I think this will kill the Ipod? One word “Convergence”, this product finally does it all. Microsoft now has an online store that can rival iTunes and is also compatible with Napster and various other music providers. MCE2005 (Media Center Edition 2005) can run three tuners for TV. Two tuners for Cable/Satellite channels and the third an off air High Definition tuner. All three channels can be recorded simultaneously with its PVR functionality that rivals Tivo’s interface without the subscription fee. If you’re MCE is equipped with a DVD recorder you can press a button and it will transfer anything you have saved with the PVR onto a DVD automatically. The MCE will also display pictures you have saved to it and have the ability to touch them up inside MCE and then burn them to disc or send them to Kodak for printing and shipping it to friends and family all from one easy to use interface. MCE can tune in FM stations and pause and rewind live broadcast just as you would do with TV. Various vendors are signing up to offer services through MCE some of these vendors include XM radio, CinemaNow, Court TV Extra, Audible, MLB and various online downloadable music stores (Music Now, Pure Tracks, FYE, Wal-Mart). Why go to blockbuster or wait for you rental to come in from Netflix when you can just order it and download it online from CinemaNow. And you have the ability to plug in your portable MP3 player or Portable Video player and sync up your songs from you library or shows you recorded on your PVR. Now here comes the show stopper, drum roll please. You don’t have to have an MCE in every room to get the features listed above in every room of your house. Microsoft has engineered a way to use what they call extenders. Extenders are small somewhat inexpensive devices that hook up to your MCE via a wired or wireless network. With an extender you can browse all your music, photos and video from your MCE as well as watch live TV from one of the MCE’s tuners and have the ability to record, fast forward, reverse and pause just as you would from the MCE. Rather than have to buy an extender, if you have an Xbox you can purchase a package that will include software to install on the Xbox as well as equip you with a remote so you can use your Xbox as an extender. It’s this overall focus of convergence that is going to be the Apple/Ipod killer unless Apple responds to this quickly and embraces the PC user as well as its Mac users. If it doesn’t do this and only counteracts with a Mac only solution it will be over for them n short order.