Is Steve Fiddling while Apple's Education Market Share Burns?

Last week's news that Dell Computer had displaced Apple from the lead in educational unit sales for two straight quarters should have shaken the Macintosh world to its knees. Instead, the Dataquest report went essentially unnoticed at first by the various Mac news and rumor sites. Thursday, The Register, the San Francisco Chronicle, and Mac Observer posted short columns on the announcement. Mac Observer offered the following spin on the report:

This is disturbing news, but it is our opinion that this trend will reverse itself as Apple's new product lines start to figure into these numbers. This report covered the 1st quarter and hints at the 2nd quarter. Traditionally, Apple's strongest quarters in Education are the 3rd and 4th calendar quarters. When these quarters are finally touted, Apple's iBook and iMac DV product lines will likely help make a very strong impact on Apple's standings.

Let's look at the numbers a bit. At one time Apple controlled over 50% of sales to schools. Last week's Dataquest report said Dell had garnered the most unit sales for two straight quarters with 21% of the market: 5% more than Apple. Henry Norr in his Chronicle posting noted that Apple's sales were actually up "from 101,000 to 125,000," but the "Cupertino company's share dropped from 22.7 to 16.5 percent."

A July Market Data Retrieval report documents the continuing upward trend of schools connected to the internet and using WANs or LANs. Schools are obviously still purchasing computer hardware, although possibly at a slower rate of growth than in the past. The MDR report also speaks to the question of now that schools have the hardware and hookups, what are they doing with them? But, that's another story altogether.

Mac Junkie quoted the following reader insight:

Apple hasn't been king of the education hill for a long, long time. The King is called WINDOWS... The battle isn't between companies. The battle that counts is between OSes. Once a district switches to Windows they are free to buy from Dell, or Compaq, or HP or Gateway or from a screwdriver shop.

Mac Junkie editor Ben Apple added:

Apple cannot claim even a near-majority in schools based on sales alone. If Apple is providing 20% of K-12 computers, the other 80% is pure Windows.

Is Nero (Steve) fiddling while Rome (Apple's Ed market share) burns?

Has Apple placed too much of its focus on the consumer market while ignoring or taking for granted the educational market? Almost a year ago David Plotnikoff sounded such an alarm in a San Jose Mercury News column (link requires payment to read entire article) about Macworld Expo (Jan., '99).

Mr. Jobs' message to the Macolytes earlier this month was refreshingly blunt: We make the finest computers in the world for creative professionals and for families. Two distinct markets. Two distinct product lines. Period.

The third player in Apple's market trinity - the education market - was largely overlooked.

Plotnikoff's argument held for a good bit of the year until Apple released the iBook. While definitely aimed at the education market, the iBook suffers from the same problems that have limited iMac sales to schools. The iBook comes in for educational institutions at $1499. Adding a $62 AC adapter brings the total to $1561--a very respectable price for a laptop with its features. If Steve was just fiddling on this one, it was a good tune, but maybe just a little off key. The pricing for the iBook is a tough go when compared to $1,000 PC's. This may seem an unfair comparison, by its design that is its major competitor in the school market and the comparison that will be made by educational buyers . . . not the iBook versus a PC laptop.

Until October 13, schools were asked to pay $1099 for the base iMac. Along with the nearly essential VST USB floppy at $89, the iMac entered product/price comparisons at $1188. I was recently encouraged when the high school of one of my daughters recently invested in iMacs for their computer lab and journalism department. The iMac has been much closer to a Wintel package in initial cost and is probably a hands-down winner in total cost of operation. Unfortunately, when Apple is dealing with students, teachers, administrators, systems administrators, and schools that still use floppies, the continued absence of an integrated floppy blows the concept of an all-in-one. While this argument enrages the Mac faithful, someone in Cupertino needs to get a clue and realize that it's not an "all-in-one" the second you have to add something external onto it to bring it to minimum PC standards!

The recent release of the $949 iMacs (Ed price) is a breath of fresh air to the product/price comparison wars. Knocking some major bucks off the base unit can cause even the most hard-boiled "missing floppy critic" (moi?) to reconsider their arguments. Whether Apple has knocked enough off its base price to induce buyers to opt for a 333 MHz machine with a 15" monitor, a cramped keyboard, an uncomfortable mouse, and a smaller hard drive versus a comparably priced 450 MHz Pentium III with more base RAM, a 17" monitor, a spacious hard drive, a usable keyboard and mouse, and an integrated floppy remains to be seen.

For schools with a significant investment in Macs and Mac peripherals, the new line of Macintoshes present a crossroads. USB adapters are readily available for many products. PCI SCSI cards have dropped dramatically in price. But if you're going to insert a SCSI card, will you put it in a Mac or a PC? When our school made a considerable investment in scanners a year ago, each unit came with a Windows compatible SCSI card. Probably the best news in this whole issue is that older serial and SCSI peripherals can be migrated to older Macs still in use. The longevity of some older Macs is nothing short of phenomenal.

Color has made the iMac a household word. It's shaken the PC world out of their beige and charcoal molds into imitating Apple's successful offering. On the other hand, color hasn't really done much for sales of mid- to high-end Macs. There seems to be an entrenched belief that it has to be semi-ugly to be a workhorse. I readily admit that while I think the iMac colors are fabulous, I'm very content with my beige minitower. The move to the "smoke" case of the G4's was probably an excellent move on Apple's part. But even I have to admit the current minitower case would be really ugly in platinum!

What has consistently been missing from the Apple lineup for education for over a year is a Mac designed exclusively for schools. The $949 base iMac may be Apple's next LC, but it doesn't have an upgradable chip, PCI slots, a floppy, or even a comfortable keyboard and mouse! Even though a specific education model has been rumored along with a sister product for business, it remains the "Stealth edMac!" It is almost always mentioned as containing a larger display, along with many of the features of the old "Artemis" G3 All-in-one. Apparently, Apple couldn't figure out how to shoehorn a 17" monitor into a 15" case. I suspect these versions lost out to the iBook in R&D dollars somewhere along the line as Apple went for the "new concept." Only time will tell if Apple's reliance on the iMac and iBook to fill educational demand will work. The "early returns" from Dataquest last week would seem to argue otherwise.

Apple's new G4 minitower offerings don't even come close in price to comparable PC offerings. The minimum "smoke" G4 350 MHz runs $1439 with the matching 17" display costing $449 (Ed prices, again). While a powerful setup (If I had the bucks and the need, I'd go for one in a heartbeat at that price over any competing PC.), the combined $1888 price tag is going to put off educational buyers who are counting their pennies.

In the past, Apple Ed's response to the arguments above (at least to me) has been to continue saying the iMac fits most educational institutions needs and budget. The Dataquest numbers clearly indicate that is not the case. While things currently look better for the Macintosh world in general, make no mistake about it. Apple's once secure education market dominance is burning, and it would appear Steve Jobs is just standing around toasting marshmallows by the flames.

Notes:

Bad news, good news: I hadn't used my copy of Crossword Express for awhile, but had reason to do so last week. I was making a vocabulary crossword for one of my reading groups. I took the time to upgrade to the latest version and found that when I tried to select a dictionary (word and clue list), the app brought down the whole system!

A couple of quick emails back and forth to Australia's John Stevens brought a rapid answer and Mac version 3.6c (872K) of his excellent utility. John is another shareware author who so far has resisted the urge to charge previous users for upgrades and updates, all the while adding more features and compatibility updates to his product. While the problem apparently wasn't a major one, you can't beat a 48 hour turn around time from the initial bug report to a revised release! Now if we could just get John to work at Aladdin...

Good news, bad news, good news, bad news: Even though I ordered my copies of OS 9 the same day and through the same source as Jon Bonner and Tom McKenna (who received their upgrades October 12 & 13), I finally received an email from Apple Ed telling me to expect my copies October 27. The shipment didn't make it and I zapped out a little rip on Apple's Customer Service while waiting 43 minutes on hold just to get the UPS tracking number. I was then told the shipment wouldn't arrive until Monday, November 1. It then came, of course, on Friday, the 29th! Unfortunately, Apple had done exactly the same thing they'd done with my OS 8.5 order. They shipped only one copy and charged me for two! That took another 45 minutes on the phone to Apple Customer Service to straighten out. While marginally better than my last experience on hold with Apple's "Customer Service," it leaves a bit to be desired. But after over an hour on hold with them, I am running the upgrade . . . some. I'm still switching back and forth from System 8.6 to 9.0 because some serious tools I must use simply aren't yet updated for the new release.

Good news, good news: After Jesse Berst published his surprising and provocative column, "Think Different? Why Jesse Wants an iMac?", Apple made a class move by sending him an iMac to review! Okay, Apple, where's mine:-)? I don't expect Jesse to become an instant Macintosh convert, but I think it may do wonders for ZDNet's view on Macs in general.