Ballmer fixated on Mac, Misses Big Picture

Recently Steve Ballmer was crowing. Why was Steve so happy? It turns out, according to Steve, that Macs have slipped in popularity. Where Macs were once 10% they have dropped a point (or two, it doesn't really matter). Why have Macs become suddenly, um, less popular than they were when they weren't that popular to begin with? It is the economy stupid. According to Steve the hard times all around us means people don't want to pay $500 for an Apple logo. Or as Steve might have said "This recession kicks ass for Microsoft!"

The most tempting thing at this point is to argue that Macs really don't cost $500 more. You could go to Dell, do your own spec sheet battle, and discover, depending on the models, that Ballmer is either right or wrong. That exercise is futile in this case. It doesn't really matter if Macs cost $500 more or if the machines are $200 hundred bucks cheaper than a Dell. The number of people who have bought a Mac because it was the cheapest machine going can be counted on one hand and that includes Apple employees who can get 25% off.

The other canard that we need to do away with is the notion that people are somehow buying a computer based on how much it costs the company to produce said machine. While not implicit in Ballmer's statement there is a pervasive notion that Macs cost more because they cost more to make. That simply isn't the case, Macs cost what they cost (more or less either way) because that is what people are willing to pay. If you want to see cheaper Macs then hoping Apple will sell less of them is the surest way to get there.

With those arguments out of the way it is time to look at what Ballmer said a little more carefully. The first problem is that he said anything at all. If you get asked about Macs and you're the CEO of Microsoft the correct answer is always:

 "Apple has done very well with the Mac. We are happy to have Apple making computers. The company makes some nice hardware and to see Apple doing better than ever since the machines are able to run Windows is satisfying."

With a statement like that Ballmer would be intimating that the growth of Mac marketshare is largely due to Windows. The odd thing is that he would probably be right. Plus, he's also telling people the best thing about a Mac is that it can run Windows. People can figure out the cost thing themselves.

That isn't what Ballmer said. He went with the Apple blast. More problematic than the actual blast is the message it sends. Read it again:

 "Apple gained about one point, but now I think the tide has really turned back the other direction. The economy is helpful. Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be."

 What that says if parsed correctly is:

"Apple's market share has gone down. Thank god. I've been crapping myself brown about this for a year"

Deriding the Mac's market share when you're Microsoft is a lot like picking on the stupidest kid in Math class when you're Leibnez. The fact that Johnny Leadpaint got a 9 on the last test instead of a 10 shouldn't even be of interest. You're supposed to be worrying about the big things, your next proof if your Leibnez or where the tech market is headed if you're Ballmer. For Microsoft the biggest competitor for Vista is XP. The money is in getting XP users to go to Vista (or Windows 7) not in beating up the Mac. XP still has 63% of the market. Where is the best return on your investment: Getting 10% of current XP users to switch (or 6.3% of the entire market) or worrying about the 10% of the market using a Mac. If you convince 10% of all Mac users to switch you've picked up 1% of the market. It doesn't take an Excel spreadsheet to determine 6.3>1.0.

The worst is yet to come. Ballmer's statement equates hardware with the platform. If Macs are just a $500 logo then software doesn't matter. Microsoft is, unfortunately, in the software business. Sure, he could have said:

"Users are finding Vista capable to tackle all their multimedia needs. Apple had the ease of use for awhile but we've really gone the extra mile with Vista."

But what he said was:

 "It is all about a product we don't make. The friggin hardware. Software isn't special"

Undoubtedly Ballmer doesn't actually believe this. You can guess what the cheapest option is (hint: it rhymes with Dinux) but familiarity and ease of use are important factors. If everything really came down to the ingredients and price no one would by Coke or 7 up. Everyone would be drinking Shasta Cola and generic lemon lime soda.

It does seem stupid on the surface, Coke and Sprite aren't demonstrably different from Bubble Up and Laura Lynn cola just like OS X and Windows aren't any different from Linux. In the case of sodas they all use high fructose corn syrup and in the case of OSes they all see ones and zeroes. On the other hand, let's be honest, Laura Lynn Cola tastes like dog rectum compared to Coke (or Pepsi). But to really be honest we'd also have to note that the reason that we love Coke or Pepsi isn't because they taste like a caramelized version of battery acid but because that is what we are used to. It doesn't really matter, people will pay extra for Coke or Pepsi and people will pay extra for OS X.

Which brings us to Balmers most telling misstep. He's talking about a battle that not only never really was (Macs topped out at 15%) he's talking about a percentage point in a battle Microsoft has already won. Not a good move, people are already tired of the big bully rubbing the supposed failures of others in their faces just makes Microsoft seem more like that jerk who passed out swirlies and wedgies in high school.

Sadly, it also reveals a willingness to cling to the good old days. Microsoft tried and failed (miserably) to beat the iPod. The company tried and failed (even more miserably) to beat Google in the search game. The company tried to create the dominant console. They failed but did manage to create a desirable console. The company tried (and failed doubly miserably so far) to create a worthwhile successor to XP.

It looks a lot like Microsoft is a tired bully. Not enough in the tank to pick on anyone the bully returns to the targets of yesteryear trying to recapture the glory days. Is it true? Has Microsoft more or less given up on everything but ruling the desktop?

Perhaps, it is always easiest to do something where you can dominate. The desktop is important, Linux users have a long time dream of dominating the desktop. But you have to wonder how much longer dominating the desktop will really matter. Smart phones, Games consoles and other devices are becoming more and more capable. If people can get all the tech they want with a dedicated computer those devices are even cheaper than a dedicated machine. Microsoft will likely dominate the desktop forever but recall that men used to wear hats all the time. Being the dominate manufacture of snappy fedoras (or something) meant something in the fifties. Today the excursion is still profitable but does anyone really care who dominates hat manufacture?

Keep focusing on the past Steve and the things that don't matter and, in short order, you'll find Microsoft with one foot in the past and the other somewhere that doesn't matter.