Tilting at Windows

Tom Foremski
Special to The Examiner

August 22, 1995

AT APPLE COMPUTER, the incredible hoopla surrounding this week's launch of rival Microsoft Corp.'s Windows 95 software is seen not as a threat, but as an opportunity.

"When you face such a tidal wave, there are two things you can do," says Michael Mace, Apple's director of Macintosh platform marketing. "You can stand on the beach and close your eyes in terror or you can grab a surfboard. We'll be doing a lot of surfing."

Those are brave words from Apple. Already facing a major problem of declining market share, the Cupertino-based company now must attempt to stave off Microsoft's multimillion-dollar move to lure new buyers to the Windows platform. And it must do so with its next major upgrade still almost a year away from delivery.

With Windows 95 more closely resembling the Apple Macintosh operating system, Apple will have to work harder than ever to show the advantages of owning a Macintosh.

"Windows 95 will either wake Apple up, or Apple will simply go away," claims Jesse Berst, publisher of the Windows Watchernewsletter in Redmond, Wash., home of Microsoft. "The competition is so serious that unless Apple wakes up from its coma of the last five years, it will continue losing market share."

Berst suggests that for the last five years, Apple has been content to sit on its laurels rather than push ahead with technological leads in key areas such as multimedia.

Apple CEO Michael Spindler has promised that Apple will become more aggressive in its marketing, but it currently faces a marketing battle that it can't hope to match.

Microsoft is reported to have a war chest of at least $100 million for the launch of Windows 95. Add in related promotions by thousands of retailers, computer hardware and software companies, and the total marketing dollars could add up to around $1 billion - making Windows 95 the most hyped product in history.

For its part, Apple is planning a series of responses to Windows 95 that range from what Mace calls "unconventional marketing" around the time of this Thursday's Windows 95 launch to a series of full-page ads in trade publications showcasing Macintosh strengths.

Mace says that Apple's marketing message will be simple:

"Been there . . . done that," focusing on the fact that many Windows 95 features have been available on the Macintosh platform for more than 10 years.

Features such as Windows 95's "plug and play" capability, which will automatically configure add-on boards and peripherals, have been a feature of the Macintosh since its launch.

"Apple needs to show that the Macintosh of 1995 is a much better platform than Windows 95," says Apple watcher Pieter Hartsook, editor of The Hartsook Letter in Alameda. "It also needs to take a card from Microsoft and engage in some aggressive marketing, pointing to the benefits that are coming to the Macintosh next year."

Hartsook is referring to the new operating system for Macintosh computers, code-named Copland, that will be introduced in the middle of 1996. Copland will offer many advanced features that will not be found in Windows 95.

One potential immediate benefit Apple could reap from the Windows 95 rollout is frustration on the part of Microsoft customers. Once the marketing blitz dies down, many users will begin to grapple with some of the problems of upgrading to Windows 95.

"There is bound to be a backlash to Windows 95, and that's when Apple will have a window of opportunity," says Berst. "Windows 95 has been so over-hyped that it won't be able to meet all of the expectations that have been created."

Some of the Windows 95 backlash will come from users unable to run the operating system on their hardware.

"I couldn't get the preview version of Windows 95 to run on my Pentium system," says one PC consultant who wished to be unnamed. "And I know what I'm doing. There will be a lot of others in the same position."

"What we've found is that Windows 95 is a lot less forgiving than Windows 3.1," says Scott Miller, PC analyst at market research firm Dataquest Inc. "You'll need more expensive hardware from a brand-name manufacturer."

Miller adds that this could help Apple since Macintosh systems are very competitive in terms of price among the name brand PC systems.

But far more crucial to Apple than slowing the Windows 95 publicity juggernaut this week is making an impact on buyers this fall during the key Christmas buying season, experts say.

Mace promises Apple marketers will be out in force this fall. Though he offers no specific numbers, he says Apple plans to double the amount spent on last year's Christmas season marketing.

Dataquest's Miller says the real battle facing Apple and Microsoft is for new users in the home computer market, the fastest-growing sector of the industry.

"You might have a family in which the parents use a Windows machine at work while the children use a Macintosh at school," Miller says. "They will be deciding which platform to buy for the home."

Bruce Ryon of Dataquest said earlier this month that Apple had been much stronger in the multimedia and home PC markets than its overall 10 percent market share would indicate.

"Apple has been maintaining about a 19 or 20 percent share of the multimedia market, which accounts for about 95 percent of the home market," Ryon said.

Apple hopes to deliver its message of being a better system at the point of sale, in retail stores.

"We're trying to push out a message that you are buying a complete system, not just an operating system," says Mace.

Apple recently introduced a line of low-priced Power Macintosh computers, based on the PowerPC microprocessor, which rival the performance of high-end Intel Pentium-based PCs.

As it gears up for the crucial Christmas season, Apple faces an additional obstacle: overcoming product shortages that have resulted in a massive backlog of orders.

"Apple could have increased its market share if it had been able to fulfill its back orders," points out Miller.

"It's also meant that Macintosh prices have remained artificially high since demand was outstripping supply, giving Apple little incentive to cut prices."

Apple says it has taken steps to alleviate the shortage. It plans to increase production by 25 percent in the fourth quarter and by another 50 percent in the first quarter of 1996.

One ray of light for Apple amid the Windows 95 glare is that Microsoft's improvements in its user interface don't seem likely to convert current Macintosh users to the Windows platform.

"I don't know of any Macintosh users that plan to move to Windows 95," says Hans Hansen, editor in chief of the Berkeley Macintosh Users Group newsletter. "Many Macintosh users welcome Windows 95 since it validates many of the concepts of the Macintosh, and it answers criticism that the Macintosh is not a business-like computer."