Monday, August 20, 2007

The Big Fat Hole in Apple's Desktop Line

It doesn't make sense to suggest that Apple build a computer that is so exotically fast that its price point would only appeal to a few percent of the population. We're well familiar with the steep curve associated with the fastest and the best hardware, and climbing that curve means pricing the computer out of the range of target customers. SGI tried that and got into big trouble.

I am going to argue that there is an emerging hole in Apple's (Nasdaq: AAPL) Make the Mac a 1st Class Citizen in a Windows Shop Latest News about Apple desktop line of computers. That hole is growing larger because of the change in the way we use our desktop systems. In this case, however, it's not just me with that thought.

This column is a first for me because it is based on a recent TMO forum discussion. Several wise and thoughtful people contributed to a discussion, and so I will do my best to transform this essay from one person's experienced opinion into an opinion that has been crafted by experienced and articulate Apple customers.

Here is the crux of the argument: Both ordinary home and technical professional users who use a desktop Mac are transitioning from a productivity workflow into a video and interactive workflow. In concert with this, our broadband pipeline is slowly growing. As a result, there is a growing gap between the iMac, engineered for home users, and the Mac Pro, engineered for pro-level work in Hollywood video production and scientific computing.

The new iMacs introduced on Aug. 7 don't do anything to change the situation.

Apple's Side

I'm not going to argue that Apple isn't aware of its customer patterns. They know a lot about their customer needs and preferences. They also have the analysis of their sales Email Marketing Software - Free Demo down to a fine art. At some point, Apple's fine-tuned understanding springs forth into exciting products. Of course, if Apple doesn't get the guidance it needs, because customers don't understand the technology, then we end up with reality distortion fields (RDFs) instead of what we really wanted.

As we all know, the sales of notebook computers are off the charts. Everyone loves MacBooks and MacBook Pros for their great design and portability. They're just plain sexy, and for a mobile society of technical professionals, they're perfect.

The desktop systems, on the other hand, have grown passe. Apple has transitioned the G4 PowerMac into the G5 as a high-end tower for people who want certain features, such as better video cards, expandability and more memory space. In time, however, the Mac Pro has transitioned into a severely high-end work station that doesn't make sense for users who want the features of a powerful, expandable desktop but can't justify the cost of a Mac Pro. So far, that's been okay with Apple because most users simply settle for an iMac, propelled by a little Apple RDF. Equally important, Apple must continue to cater to Final Cut Pro and CS3 (Adobe's Creative Suite 3) power users, and so there is no clear idea of how a third desktop (like the dreaded Cube) would fit into Apple's lineup. Even more doubtful is the sales potential of such a system Manage remotely with one interface -- the HP ProLiant DL360 G5 server., given that even Mac Pro sales are not stellar while MacBook sales are astronomical.

So I will grant all that. Yet ...

The Customer's Side

One of the keys to this discussion is the current state-of-the-art in CPU (central processing unit) design. We all know that as processors got faster and faster -- around 2003 -- an effect called "transistor leakage" cropped up. It was related to the fact that as the clock speeds of the single core CPUs increased, there was increased heat generated due to an inefficiency of the electrical current flowing through each transistor. When you have hundreds of millions of transistors, it all adds up. We ran out of cost effective cooling capacity.

These days, IBM (NYSE: IBM) Latest News about IBM and Intel (Nasdaq: INTC) Latest News about Intel have made improvements that reduce that effect, but not so much that it doesn't make sense to add processing power with more cores and less clock, so to speak.

As a result, we've moved into a valley of death, a plateau in the 2-plus Ghz range, where the major chipmakers add cores for the sake of competition and exotic benchmarks, but everyday developers are hard-pressed to keep up with designing software that can exploit four or eight cores.

As a result, the eight-core Mac Pro is essentially designed for very expensive production software or custom research software that can exploit such a monster. If you look at the typical benchmarks that don't take into account extensive threading, you'll find that the Mac Pro's Xeon processors aren't exactly smoking the Core 2 Duo.

This doesn't mean a lot for the average home user or even the mobile professional who surfs in the evening, trades e-mail with colleagues, updates, and may even catch up with an episode of "Lost" on

It does mean something for younger people who have grown up on PC games and YouTube Latest News about YouTube. It means something to people who are sizing up the HD industry and deciding what role their home Mac is going to play in a future of a 1080p video library. It means something to technical professionals who do work at home. It means something to those customers who have their own display, sometimes multiple displays, thank you, and want a very fast computer for the sake of the sex appeal of a very fast computer.

Face it, the Mac Pro is an ugly beast of a computer.

The (Intel) PowerMac Returns

It doesn't make sense to suggest that Apple build a computer that is so exotically fast that its price point would only appeal to a few percent of the population. We're well familiar with the steep curve associated with the fastest and the best hardware, and climbing that curve means pricing the computer out of the range of target customers. SGI tried that and got into big trouble. They're not out of business, but they're on life support. We don't want to go there.

Even so, I will add my voice to those in the recent forum discussion and suggest that Apple has ignored some of the more muscular CPUs from Intel, compromised the memory bandwidth (to save on cost) in preference to the obvious hoopla of eight cores in the Mac Pro, ignored the fact that many power users find it psychologically difficult to buy a computer with a built-in display (which is seen as a less capable, consumer machine), and has held on to the G5 cheese grater design for far too long.

There is another problem, and it has to do with positioning the product. An Intel PowerMac with a balanced architecture, optimized for video and optimized for the most typical desktop applications that can only exploit two or four cores might end up with benchmarks that could borderline embarrass the MacPro. That would create a perception problem regarding the differentiation Apple's desktop line.

On the other hand, Apple seems to want it both ways. They keep the price of the Mac Pro barely within reach of the power user -- too expensive to justify compared to a nice MacBook Pro but not so expensive that it's dismissed out of hand. Then, there's that nagging necessity to retain the perception that the best Macs are no more expensive than the best PCs. If Apple added US$500 to the price of the Mac Pro to eradicate some engineering compromises, the PC world would jump down Apple's throat and many users might not notice the difference with their typical software. No win there.

All the above may sound like I've talked myself out of the proposition, but I haven't.

Boldly Going ... Out of the Comfort Zone

Right now, Apple is in a comfortable spot. They like their Mac Pro's acceptance in business, government, research, science and professional video editing. Consumers are buying iMacs and loving them. The new ones are spectacular looking. What's not to like?

Intel is in a comfortable position as well. They've figured out how to add more cores, and it won't be long before we see 16 core CPUs, all scrambling for memory access, straining the limits of an SMP (symmetric multiprocessing) system. No matter, just jazz up a few benchmarks and lead the consumer down the path of "twice as many cores means oh so yummy goodness and, ahem, twice as fast." Sure.

By and by, the general population is going to stop buying that story. A general perception could ensue that the iMac remains an exotic toy for John and Mary Doe to file their taxes and read grandma's e-mails because Apple has steadfastly deprecated games, raw power and Blu-ray on their consumer desktop.

In that scenario, the coarseness (for Jobs, read simplicity) of the Apple desktop line could become a weakness in the very near future, and a weakness in Apple is just what some competitors would like to find now that Apple appears distracted by the iPhone and strained by getting Leopard out the door. The path is not without difficulties. I mentioned a lot of them above. Yet change is inevitable. Apple knows we are all dreamers. Apple loves to be the best at everything. There's a big fat hole in Apple's desktop lineup that's been conveniently glossed over in all the buzz surrounding Apple's success.

The Dream

It would be oh so easy to give up on the dream. The dream of of an ultra-sleek, beautiful, designed-by-Ive, quad core, Blu-ray, omigod-gotta-have-it personal desktop. Fast FSB (front side bus). Game-class video card. eSata interface.

Giving up is so easy to do, after all.

Customers would want the Intel PowerMac to have expandability and flexibility. Those of modest means would want to get one for a reasonable sum, yet let the more affluent load it up. This would be the next generation desktop that we've all been waiting for, and the Mac Pro would remain in its rightful place as the ugly, behemoth, put-it-under-the-desk workhorse pro machine it has evolved into. Downward price pressure and engineering compromise in the Mac Pro would be eliminated. Maybe Apple will sell fewer Mac Pros, but they'd sell a lot more digital hub desktops. An Intel Power Mac.

Notebook computers and iMacs have their uses, but managing our terabyte video lives is not one of them.