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Archive: Lunchtime Briefing

Posted at 12:15 PM ET, 10/19/2006

Lunchtime Briefing: Apple's Hipster Strategy colleague and security genius Brian Krebs writes about the worm nesting inside some of Apple's new iPods. Also, Yuki Noguchi and Mike Musgrove take a look at Apple's and eBay's earnings that came out yesterday.

As you might imagine, Apple's earnings are strong, thanks to continued strong sales of the company's ubiquitous iPod. But an Apple honcho said yesterday that the company is increasing its historically tiny computer market, at least partially thanks to the new Intel chip that lets users run Mac or Windows operating systems.

The Apple worm is the second ding that the the company -- which I think of as one huge, multi-story sleek white box, like an iPod the size of the building that stores the Space Shuttle -- has taken in the month.

Apple finds itself part of the growing "options backdating" scandal, where execs from several companies have admitted to falsely dating their stock options to ensure the highest possible yield on their sale. An Apple board member resigned over the mess, but an internal investigation cleared Apple founder and svengali Steve Jobs.

Macs are a good example of the disconnect frequently seen between Them and Us, whichever one you happen to be. Apple has some of the best industrial designers in the world; consequently, the company's computers are gorgeous and stuff works when you plug it in.

Yet Apple has not been able to get anywhere near double-digit penetration among computer buyers; analysts show the company with about 5 percent of the market.

Why is this?

I blame part of it on MSM-bashing. The media -- not just tech writers -- LOVE Macs. Which is reason enough for most people to hate them. Okay, okay. That's a little facetious.

The problem has been price and perception. If you can walk into a Wal-Mart and, on a pallet there in the front of the store is a whole Compaq desktop in a box for $418, and it does pretty much everything you want it to do -- e-mail, search the Internet, send pictures of your kids to their grandparents, play music and make "Missing" posters when your dog runs away -- why on earth would you pay Jobs $999 for even a low-end iMac?

I think perception also plays a role, as in, "Macs aren't for us." I think about my hometown of Charleston, W.Va., which, a few years ago, completed a large, impressive new arts center for plays, exhibits and symphony performances. The city built it in a dodgy section of town on purpose, to help revitalize the area and to get regular folks to come. But the result was just the opposite for many people: The new building was extra intimidating and "for rich people, not us."

Apple may not want to change its image and become more of-the-people; it most assuredly would lose the approval of the digital hipsters who affirm the Mac's coolness. Which is why Apple's growth strategy must be in smaller devices, such as the iPod, the iPod that will play movie downloads, and maybe other devices inside Jobs's noggin, such as the long-rumored Apple cell phone.

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