Fun_People Archive
26 Feb
Apple: Not quite dead yet

Date: Mon, 26 Feb 96 12:39:34 -0800
From: Peter Langston <psl>
To: Fun_People
Subject: Apple: Not quite dead yet

Forwarded-by: bostic@bsdi.com (Keith Bostic)
Forwarded-by: Phil Agre <pagre@weber.ucsd.edu>
From: Greg Ross <rtbd70@email.sps.mot.com>


Recently quite a bit has been made of the "implosion" of Apple.  Financial
analysts who allegedly know how to read a profit/loss statement are ignoring
their training and making pronouncements on Apple that are quite out of hand
with the facts.  Likewise, the media has taken to reporting bits and pieces
of a story without looking further.

How does Apple's loss of $68 million in one quarter compare to other
companies?   Well, in 1993, IBM lost $399 million in one quarter and had
massive layoffs.  ATT recently lost a staggering amount of money on its PC
manufacturing unit (formerly NCR) and decided to split itself in three to
protect itself in case of overwhelming loss in any particular area, and just
announced the layoff of 40,000 employees.  Microsoft just announced layoffs,
and on top of that, several tracking groups have announced that vendors are
shipping back orders of Windows95 that didn't get bought.  Similarly, Reuters
reports that Intel's woes have only just begun.

Apple had 3 of its best quarters in the 1990's in 1995; only one quarter was
not profitable, due to price cuts due to fierce competition with Japanese
companies allegedly dumping machines on the Japanese market, of which Apple
has a nearly 20% share.

According to SEC filings for FY 1995, Apple made $11 billion in net sales,
with a net income of $424 million, $952 million in "cash, cash equivalents,
and short-term investments", total assets of $6 Billion, and a long-term
debt load of $303 million.  Bankruptcy isn't a option - Apple has too much
money on hand. One bad quarter in a otherwise profitable year does not a
failure make.

If we follow the logic of the Apple naysayers then IBM, ATT, Intel, and
Microsoft are headed for doom.

Demand is high for machines running the Mac/OS. There is currently between
a $600 million to $1 billion backorder on PowerMacs (source: Apple Computer).

Apple also has its foot in the door of innumerable other innovative
technologies that will insure longevity (their licensing of Pippin to
Bandei, for example - read the current US News on that one) along with the
development of Quicktime, OpenDoc (with Novell & IBM), QuicktimeVR,
Quickdraw3D and on and on.

Lets review a few things:

Apple maintains a 10-13 percent US market share as a computer manufacturer
in a glutted market and consistently ranks as vendor 1 through 3 (sources
below).

The Macintosh operating system (MacOS), is gaining market share globally,
with US figures of approximately 15% according to combined statistics from
Apple and the Mac compatible manufacturers (Power Computing, etc.)

According to the US Microcomputing Statistics Committee, Apple's US market
share grew to 10.8% in Q2 '95 up from 10.2% in Q2 '94.  They shipped 20
percent more computers in Q2 '95 than in Q2 '94 - compare that to 15 percent
for Compaq, 18 percent for IBM and a 5 percent growth for industry overall.

Both Dataquest and International Data Corporation (IDC) put Apple in first
place in their quarterly surveys of computer sales in the U.S. for Q3 '95.
Apple topped all competitors, with over 13 percent of all computers sold in
the U.S. being Macintosh computers, in Q3. Dataquest pegged market share at
13.1 percent, while IDC estimated share of 13.9 percent.  Apple shipped 25
percent more computers in Q3 '95 and had previously shipped over 20 percent
more units worldwide each quarter for the previous three quarters, with
units increasing over 50  percent in the U.S. in Q2.

Apple is the #1 vendor in US markets in K-12 education, higher education,
publishing, and multimedia authoring and playback.

Apple has a 63% share of the installed base in US K-12 institutions
according to QED.  Apple's market share in K-12 has risen over four points
in the last year.

58% of all K-12 purchased in the 95-96 school year will be Macs, per QED.

IDC estimates that Apple is the #1 installed base vendor in US homes in 1995.

Apple has a 63% share of the US commercial publishing market.
Apple has a 26% share of the US corporate publishing market.
Apple has a 50% share of the US chemical, pharmaceutical, biotechnology,
scientific, and engineering markets.

Apple is the #1 brand among college students: Among full-time, undergraduate
students who own personal computers and attend U.S. four-year public and
private colleges, 29% own Apple-- a full 11% more than the nearest
competitor. (Source: Roper College Track 1994)

Apple is the brand of choice in higher education institutions: 19.4% of PCs
purchased by higher education institutions in 1994 were Apple computers,
11.5% were IBMs, 8.4% were Gateway 2000s, 4.1% were DECs, and 2.9% were
Compaqs. (Source: Computer Intelligence InfoCorp, 1994)

Schools looking to own the most powerful technology available are indicating
a strong preference for Apple technology: In the coming year, PowerPC/Power
Macintosh sales are projected to out-pace Pentium sales 3-to-1.  (Source:
Quality Education Data's 1995-96 Technology Purchasing Forecast)

Macintosh is the number one Web authoring platform.

Apple achieved status as the number two Internet server vendor in two months
time.

63% of all multimedia applications development is done on Macintosh, per
Dataquest.

33% of existing multimedia personal computers are Macintosh, per SIMBA
Information, INC.

Apple is the #3 vendor in the US business market.  Over one-third of Apple's
revenues come from the business market.

Apple is the number one US computer vendor and the number two vender overall
in Japan with 16-20 percent of the market, per IDC and Dataquest.

Macintosh software sales accounted for 18% of the Japanese market in Q2 95,
up from 13 in Q2 '94, per Software Publishers Association.

Apple is the most used personal computer brand overall in Australia, per IDC
and is the number one brand in Australian business, education, and consumer
markets.

Apple was the number one vendor in the Canadian education market in 1994,
with 32.5%  share, per IDC.  Apple was the number one vendor in the Canadian
consumer market in 1994 and through the first half of 1995, per AC Nielsen
Marketing Research.  Apple's growth in Canada through the first half of 1995
was double the overall Canadian market growth.

There are over 8000 applications that run on Macintoshes.

For the first half of '95 Mac apps sales were up 16% (through May) according
to SPA.

IDC says that on average, the cost to develop and support Wintel applications
is 50% higher per dollar of revenue than the cost to develop for Mac.  The
same study indicates that software marketing costs are 13.5% of revenues for
Mac apps and 26.3% for Wintel apps. Macs generate almost 75% more software
revenue per machine than Windows machines.

US News and World Report: "From a software publisher's point of view,
releasing a Macintosh version makes good business sense.  Production costs
for Mac software are lower than those for Windows titles; less testing is
required because there is a single standard for Mac hardware and software.
And Macintosh owners buy 30 percent more software than their Windows
counterparts."

A Federal Government Computer News survey published January 18, 1996 found
that Apple's System 7.5 was tops in the overall scores and led the other
operating systems in 9 of the 11 attribute scores.  Other operating systems
which were included in the survey included Windows 95, MS-DOS 6.22, Windows
for Workgroups 3.11, Windows  3.1, MS-DOS 6.2, and MS-DOS 6.0.

Quotes from the report:

"...with eye-popping scores of 100 and 96 in the ease of use and ease of
installation categories respectively, it's safe to say the average Mac user
would never trade a Mac for a Windows machine.

"Federal users universally praised System 7.5's interface, software
compatibility and most of all, its stability.

"'System 7.5 is easy to use and not prone to constant system crashes
associated with all the Microsoft systems I use,' said Kurt Garnjost of the
Air Force Legal Services Agency in Washington.  'Not only do I have fewer
problems, but when I do, I'm never at a loss to figure out what the problem
is and how to solve it.'"

CI Inforcorp study demonstrates that Mac brand loyalty is the highest in the
industry, 90% of Mac customers buy Macs again when making a second purchase.

A PC World survey of 23 customers ranked Apple #1 in dependability, and
service.

JD Power and Associates recently ranked Apple Macs #1 in reliability,
dependability, and customer satisfaction.

Several labs have confirmed that the PowerPC chip is superior to any Intel
product, including P6 (pentium pro).

I have left a ton of other informative stuff supporting Apple and the MacOS
for due to space concerns.

Best Regards

Greg Ross
Motorola SPS
Sunnyvale, California  USA

© 1996 Peter Langston