From: mancini@fysik.uu.se (Derrick C. Mancini)
Newsgroups: comp.sys.mac.system
Subject: Re: reasons to charge for 7.1
Followup-To: comp.sys.mac.system
Date: 30 Sep 1992 08:57:07 GMT
Organization: Fysikum, Uppsala Universitet
Distribution: world
NNTP-Posting-Host: usx215.fysik.uu.se

Actually, I should probably retitle the thread "reasons to charge for 7.1
NOT".  But I don't want to cry about not getting things for free, etc. 
Actually
I would not be unhappy about paying Apple say $25 for a new version of the
operating system without manuals.  IF I believed that it would generate
some
new business for Apple.  HOWEVER, here I would like to argue that it will
most
likely hurt Apple UNLESS the plan is for Apple to completely divorce
hardware
from software sales.  

FIRST, to clear up a clear misconception, APPLE HAS ALWAYS CHARGED FOR
SYSTEM SOFTWARE, that charge was included in the base price of the machine.
 We all
know that, we paid it, and we knew it was worth it. 

SECOND, comparisons of Apple to Microsoft is like apples to oranges.  Why?
Because Microsoft does not sell system solutions, it sells software on a
very
generic platform.  IF Apple now sees its major market as the system
software
after market, and is less concerned about sale of NEW machines, then that
comparison is more apt.  ALSO, comparison of Apple to IBM and OS-2 are not
correct either, because Apple is the sole source of BOTH MACHINES AND
SYSTEM
SOFTWARE.  IBM can't sell OS-2 because there are alternatives.  IBM can't
sell more machines because there are alternatives.  Right now, for the Mac,
THERE ARE NO ALTERNATIVES. 

THIRD, Apple wants to increase market share as
part of its effort to increase revenue.  Apple wants to charge for system
upgrades to increase revenue.  HERE IS WHERE THE LIKELY CONFLICT COULD
OCCUR
in that Apple may find that trying to maximize one of these goals will
damage
prospects for the other.  If they charge for system software, THERE WILL BE
DISAFFECTION AMONG THE USER BASE.  PERIOD.  THERE WILL BE PLENTY OF
CRY-BABIES.
BUT, THE CUSTOMER IS ALWAYS RIGHT, in the sense that if you have alot of
cry-
babies, what you have is alot of unhappy customers.  I believe they will
not
respond as Window users have.  New users, with no previous contact with
Apple,
may not be affected by all this.  BUT NEW PURCHASES, WHICH I BELIEVE ARE
OFTEN
MADE OR DETERMINED BY MAC USERS, may be so affected.

However, at some point I imagine Apple's marketing types must be saying to
themselves something like:  The hardware to get market share must start
being
sold at low margin.  Once that happens the profit goes out of sales, and it
may be advantageous to allow others to manufacture and sell base machines
under
license.  Then, with such a large existing installed base, we can market
the
system software much like Microsoft does, and make our real money that way.

And that may be true in the long run.  If, however, that have no plan to
separate hardware from software, I do feel that as a sole source of the
system software they are under obligation to maintain currency of the
system
software among the user base in the most efficient means possible.  I think
Apple may not have realized how INEFFICIENT it will be to implement this
kind
of strategy, especially at large networked non-commercial sites.  The truth
is
THE SOFTWARE WILL BE PIRATED.  Hey, that isn't true for Mac only.  WINDOWS
IS
PIRATED EVERY DAY.  There are most likely more illegal Window systems
running
than legal amongst users who did not get the current version bundled with
their system.  AND THAT IS THE RELEVANT GROUP HERE.  REMEMBER that much of
the
often quoted Windows sales is due to OEM versions  BUNDLED WITH THE NEW
SYSTEMS.  APPLE ALREADY DOES THIS AND CHARGES FOR IT.

So the question remains, does Apple generate more BAD WILL for changing its
philosophy in the middle of product life (it IS a change in PHILOSOPHY. 
The
Mac was not meant to be a MACHINE with an OS RUNNING ON IT.  It was sold as
an
integral system solution) than it can generate in new revenue from older
users
choosing to upgrade.  REMEMBER APPLE HAS TO CONTINUE DEVELOPING THE SYSTEM
IN
ANY CASE FOR SALES OF NEW MACHINES TO GROW.

I think the jury is out on THIS QUESTION, and if Apple goes ahead, their
long
term success may well depend on whether they made the correct marketing
estimates.  On the other hand, THERE IS A SECONDARY ISSUE:  MAJOR VERSUS
MINOR UPGRADES.  And here Apple will have to be very careful.  Because I
believe PEOPLE MOST LIKELY WONT PAY FOR MINOR UPGRADES (LIKE 7.1) even if
they will begrudgingly do so for major ones.  That means Apple will not
enjoy the quick update to new system features in minor upgrades among their
user base.  Which means developers won't develop for such features until
they
are in major upgrades.  However, I PRESUME APPLE ANTICIPATED THIS PROBLEM
WITH
THEIR SYSTEM EXTENSION UPGRADE MECHANISM.  IF so, then most new features in
minor upgrades like 7.1 I would expect would be possible with free or
bundled
system extensions to 7.0, etc.  That is my guess.  Otherwise, they are in
trouble with their developers.

OK.  Enough.  I suspect none of my reasoning is new to Apple's marketing
people,
and given the various pluses and minuses, they have decided to go one way. 
I
think I would have chosen the other until the change in product line to
Taligent.  But then, I am a physicist, not a market researcher.

Derrick Mancini
mancini@fysik.uu.se
Newsgroups: comp.sys.mac.system