Sunday, January 19, 1997

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Microsoft Corp.
Apple Computer
Goldman, Sachs & Co.
Tandy Corp.
Best Buy
Circuit City Online
RAMWatch


Mac kept Microsoft on its toes

BY CHARLES BREWER
The Cincinnati Enquirer

I recently spoke to a class at the University of Cincinnati and asked how many of the 50 or so students owned a PC. Almost everyone raised a hand. When I asked how many owned a Mac, only three raised their hands.

That's a little better than Apple's market share these days, which industry analysts say has dropped to about 5 percent. And other news from the Cupertino, Calif., company isn't good.

First, Apple announced that it was buying Next Software to use as the basis for a new Apple operating system that wouldn't run Mac programs -- although the company would still support the Mac for a few more years.

Apple also announced a $150 million loss for the last quarter of 1996, primarily because Macs are selling poorly. The media is writing Apple's obit again.

OK, it was a fair fight, and Microsoft won. Why should we care about Apple? Because Apple is the last real competitor Microsoft has.

Apple the innovator

Almost every personal computer uses either an Apple or Microsoft operating system (OS). The OS is the foundation of the personal computer, determining how every program on the computer works. Apple has been the OS innovator.

Apple's OS was the gadfly of the computer industry, constantly pricking the thick skin of Bill Gates' behemoth. Because of the Mac, the PC is as good as it is today.

Microsoft is like a paranoid elephant. Its eyesight is poor (it almost missed the Internet revolution), and when it makes the slightest move, the ground shakes.

It wants to dominate every aspect of the personal computer. It aggressively attacks even the smallest competitors, knowing that the computer business moves so quickly that one clever idea can catapult a small company into a major player overnight. (Case in point: Netscape Communications.)

So Microsoft constantly copies the best technologies in Computer Land and uses it's marketing juggernaut to make them its own.

In a sense, Apple invented the truly "personal'' computer, by taking technologies that were once only available to rich corporations and scaling them down for the home user. In the 1980s, Apple was the innovator in the computer business.

Without Macintosh, would we have Windows 95? Without the Apple Laserwriter, would we have desktop publishing? Without AppleTalk peer-to-peer networking, would we have workgroup software?

Courting a slowdown

Apple's best days might be behind it, but if Microsoft's last OS competitor falls, we should see a real slowdown in the dizzying progress of personal computing in the years to come.

While we're speaking of slowdowns, the news from computer retailers about PC sales hasn't been good, either.

The Goldman, Sachs & Co. composite index of December retail sales showed computer sellers with losses of 4.8 percent compared with the previous year. This came after retailers stocked up, anticipating strong 1996 holiday computer sales.

Circuit City and Best Buy both reported a 13 percent decline in sales, and Tandy Corp. posted a 5 percent decline. (Tandy will close its Incredible Universe chain and 19 Computer City stores, including the Cincinnati store in Sycamore Plaza.)

It was a dull Christmas for computer geeks, with nothing new to drool over -- no Windows 96 or 97, no new Pentium boxes. Hype about Intel's new MMX Pentium chips, which juice up multimedia (sound and video) functions, might have even dampened PC sales since the hot new MMX PCs are just now appearing in stores.

What does this mean for consumers? Lower prices on top of low prices. In fact, Intel says it's cutting chip prices so that vendors can make a fully functional $1,000 computer. Many stores are heavily discounting non-MMX machines in the fear that they'll be stuck with inventory in what is traditionally the slowest time of the year.

Even RAM prices, which industry watchers predicted would level out, have been dropping, according to RAMWatch (http://www.macresource.pair.com/mrp/ramwatch/trend.shtml). RAM prices are a bellwether for computer prices in general.

If you're in the market to buy a computer, now's a good time, and next week could be even better!

E-mail Charles Brewer with questions, comments and suggestions at cbrewer@enquirer.com