Internet Appleiance

DESPITE INTERIM CEO-for-Life Steve Jobs' crowing at the recent Apple Worldwide Developers Conference about revitalized software development for the Macintosh, and despite Apple's revived profitability, all is still not well with the Mac platform. I say this with sorrow, after a 15-year customer relationship that goes back to the Apple IIe. But even I can no longer deny that over the past few years, Apple has stumbled in forecasting demand and in marketing, and has suffered a hemorrhage of key personnel. It wasn't until recently—when the IBM Aptiva and ThinkPad lying in wait in my office saw their chance and took over as my primarymachines—that I realized how badly the company was doing.

As I transferred my files to Windows, the names of my critical Mac applications conducted something of a grim memorial march across my screen. Now Contact. Now Up-to-Date. Claris Emailer. Managing Your Money. Bestbooks. Retrieve It. All are either long abandoned by their original maker or are languishing, neither supported nor upgraded for years. Practically the only vital software of mine that hadn't been abandoned was Microsoft Office 98 (propped up in a settlement of the Microsoft-Apple legal battles) and FileMaker (which is owned by an Apple subsidiary). Even FileMaker's parent, the former Claris, has discontinued almost all of its Mac applications.

My experience is not unique, as is proven by a look at how Mac applications are doing in the marketplace, according to sales numbers tracked by market research firm PC Data of Reston, Virginia. For what's selling and what's available, the Mac's been on a relentlessly downward trend. As recently as March, Mac software accounted for less than 2.5 percent of all unit software sales at storefront, mail order, and Web retailers. For all software in 1998, compared with 1997, Mac unit sales were down 20 percent.

Choice has suffered, too: PC Data shows that between January and December 1998, the number of Mac products available through retailers dropped from 1,994 to 1,680, a decrease of 16 percent—this at a time when the total number of software packages went up 8 percent.

But what about the thousands of forthcoming Macintosh applications trumpeted at this spring's Apple Worldwide Developers Conference? Well, as anyone who's worked in the software industry can tell you, a product promised is not a product delivered.

ANY COMPANY THAT makes a PC operating system, whether Apple or IBM or Microsoft, needs third-party software applications to survive. A PC is a general-purpose tool, and its operating system has to have a good selection of general-purpose applications for customers to consider it as such. IBM learned this the hard way with OS/2: when developers stopped releasing new OS/2 software in favor of Microsoft Windows applications, I realized (also using PC Data figures for my analysis) that OS/2 was destined to become a niche operating system for custom-built corporate applications. It did, in short order.

And the reality of the marketplace shows Apple heading the same way. Apple's current poster child, the hugely successful iMac, is first and foremost a mass market information appliance disguised as a PC. Sure, you can run other Mac software on it—if you can find it. But what the iMac really excels at is simply being a slick Internet machine.

Much like the fruit offered up by Snow White's nemesis, Jobs' Apple is not what it seems. Jobs has simply—and quietly—transformed the personal computer maker into another type of company entirely: the maker of a niche operating system and consumer computing appliance.

The Mac as a mass-market Internet device that happens to run some basic software? There is a good market—the 50 percent of US households that don't own PCs—in what Apple used to call "the rest of us" and what Jeff Goldblum touts in new Apple TV ads as "non-computer people." But this isn't a Mac with the broad array of business and personal applications that Windows offers.

Apple should give up on the illusion that it's still in the traditional PC business. It should be wondering whether it can tell its loyal users, who continue to expect a personal computer's flexibility and breadth of applications, that they're being hoodwinked . . . or whether it can remain silent, hoping the next time customers bite into what's offered, they won't notice that something tastes slightly off.

Frank Catalano is an Internet industry executive and long-time analyst. He can be reached at frank@frankcatalano.com.