day 61

behind apple's blunder 3: below the curve by Philip Machanick

Yesterday, we learned how Apple could have expanded its market share. Instead, the company failed to take advantage of its technology. Apple's failure to exploit their advantage left the company with half a billion dollars in unsalable stock. Could this have been foreseen? The graph (see figure) shows the performance trends. Generally, for a given price, you can buy double the performance every 12 to 18 months. This trend has been consistent since RISC microprocessors appeared in the mid-80s. The graph shows lines representing the low end and the high end, on a log scale, with some processor names suggestively positioned to show trends. (I don't intend the scale to be accurate -- otherwise the writing wouldn't fit in.) The graph clearly shows that the performance of Apple's low-end machines dropped well below the curve by late 1995. Their 68040 models, although still respectable performers, appeared to be overpriced in the eyes of year-end buyers who saw "Pentium 100" on similarly-priced PCs. Worse, most of the PowerMac line had also fallen below the curve. The red wedge in the figure represents half a billion dollars in stock write-offs. Why did this happen? Could it have been avoided? Details tomorrow.

behind apple's blunder 1 2 Daily Dose Index