The Steve Jobs CNBC Interview and Apple's Revitalized Switch Campaign

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Jun
02

By: switchtoamac at: 12:42 PM on June 2, 2006 | Comments (0)

This post is segmented into two parts; the first is a description and analysis of the May 19, 2006 Steve Jobs interview on CNBC.  The second is a discussion of Apple's revitalized Switch campaign.  At first glance, these topics may appear as disparate topics.  I take the position that the interview provided some hints into Apple's strategy.  I'll combine Steve Jobs' comments with events that have transpired pre and post interview.  You're welcome to post your comments, views, and positions.

The CNBC interview
The interview was conducted on May 19, 2006 by Erin Burnett, the day that Apple opened its new flagship store in New York City.  If you happened to miss the interview, you'll be able to find it on the web.  Currently, it's available on youtube.com at the following location.

As I watched the interview with Apple CEO Steve Jobs the other day and I couldn't help coming to the realization that Steve Jobs hinted at a few of Apple's goals and initiatives.  As I was listening to Steve Jobs, I realized that my views about increased market share and switching consumers over to the Mac are goals that Apple has in mind.  I'll tie this together with additional information presented later in this post.  As for now, let's get to an analysis of the interview.

I've provided a word-for-word transcription of key sections of the interview relating to these areas.  It may be difficult to follow as I've included the pauses, "uh", "um", and various repeated words.  It may be more pleasant on the ears if you can view the interview as you read the words as they are listed below.    The clip is approximately eight minutes long.  Scroll to about 4:58 to hear the following exchange:

Erin Burnett
... you've got the Intel chips now; you've got uh computers that can run OS X as well as running Windows.  Uh, is your goal eventually to have Apple be even bigger, to sell to corporations so that there's not a Dell here on my desk at CNBC but a Macintosh?

Steve Jobs
Well, you know one of the advantages we have is, is we have a market share of around five percent depending on which uh market research firm you listen to, and uh, you know you could say well that's that's uh, that could be bigger and of course we'd like it to be bigger.

One of the advantages is; you know we've only got to convince five percent of the rest of the world to buy a Mac and we've doubled our market share.  So clearly these stores we're hoping will help us grow our company and indeed, almost half the computers we sell in our stores are to people that have never owned a Mac before.


Erin Burnett
But do you think you're gonna get a 10 percent market share in the US?

Steve Jobs
You know, we don't predict uh but, we'd be glad to tell you how we're doing.

Analysis:
Jobs admitted that he'd like to see Apple's market share increase.  Of course, any CEO would like to see the company that he or she runs expand, grow, and be more profitable.  The comments from Jobs indirectly hint at Apple's goal of getting more consumers over to the Mac and OS X platform.  Jobs also indicated that it may not be so difficult for Apple to double its market share.  He even pointed out the fact that Apple is selling a significant percentage of new Macs to people who are purchasing their first Macs.  One could argue that these people do not necessarily qualify as switchers as there is no data to demonstrate that people are leaving PC's running Macs and switching completely over to Macs running OS X.  I would agree.  However, what I can say is that the Mac is gaining momentum as a more popular computing solution for today's consumers.

Scroll to about 6:45 to hear the following exchange about Intel and AMD processors:

Erin Burnett
And in terms of your chips, I know you've expanded obviously to Intel, that shook the tech world.  Uh, what about AMD?

Steve Jobs
You know, um, AMD's got some interesting products at the very high end of the server space but the the part of the market that we concentrate on the most, uh, is notebooks and uh and consumer desktops and for that, Intel's got the best chips.

Uh, this this Yonah chip, or the uh Core Duo that they have right now is the best chip in the world for notebooks and for consumer desktops.  So right now, I think Intel's road map looks very very strong for the kind of products, uh the processors we need we need to build the products we build.



Analysis:
Jobs indicated that Apple is more focused on selling notebooks than it is on selling desktops.  This would be a logical and strategic business initiative as market data demonstrates that notebooks now outsell their desktop counterparts.  It also makes sense from a mobility perspective.  Computing is now etched into our daily activities.  Just go to your local Starbucks or airport and you'll see a significant increase in the number of people using notebooks than you would have seen a few years ago.  Furthermore, notebooks have become more powerful and the performance gap between today's notebooks and desktops have been significantly narrowed and in some cases, removed all together.

Apple currently sells the MacBook and MacBook Pro line of notebooks.  Over the past few years, PC vendors have been flooding the market with cheap low-cost component parts allowing consumers to purchase sub $1000 notebooks.  In the past few years, we've seen some PC vendors offer sub $600 notebooks albeit with Intel Celeron and AMD Duron processors.

Apple has historically sold notebooks to a niche market, to consumers and professionals who didn't mind spending the extra money to get a Macintosh.  The transition to Intel has allowed Apple to build price-competitive computers.

 

The Switch Campaign Revitalized
In 2002, Apple launched a "Switch" campaign aimed at getting people to switch from Windows to a Mac.  More recently, Apple abandoned the switch campaign and launched the "Get A Mac" campaign.  You'll see that prior links to the switch URL at Apple's web site are automatically redirected to the getamac URL:

http://apple.com/switch is redirected to http://www.apple.com/getamac/

When the new ads were launched, people immediately speculated that Apple was abandoning the switch campaign in favor of a campaign that promoted the Mac's benefits and ease-of-use.  In my view, I think the "getamac" campaign is a stealth and revitalized "switch" campaign.  For one, you can view the getamac ads.  It doesn't take a rocket scientist to figure out that Apple was essentially taking swings at Windows using strategic and subtle statements.  Another piece of evidence that drives me to the conclusion of a revitalized switch campaign was a recent visit to my local Apple Retail Store.  When I was there I noticed that the employees were wearing green shirts, each with a different phrase.  For example some stated:

  • "I can help you meet your Mac"
  • "I can make your iPod sing"
  • "I can help produce your first movie"
  • "I can help you get an iLife"
  • "I can help you blog your life story"

But the one that caught my eye is the one I find most striking, it's the one that says, "I can make it simple to switch".  You can either go to your local Apple retail store to see these in person or you can view them at the Apple retail page located at Apple's web site.  As of this post, the images are in the upper right hand corner of the page.

Taking all of these variables (information) into context, putting them together and looking at the end result of the equation, it's easy to conclude that Apple's goal is to get people to switch over to Macs.  In my view, Apple is attempting to accomplish this in the following waves:

Wave One, us the iPod to spread the Apple brand
Mission Accomplished.  Just about everyone knows what an iPod is.  The iPod has changed the fabric of technology and in many respects, how many people conduct their lives.  For example:

  • College professors are using the iPod as a way to distribute class notes.  Case in point, Duke University.
  • The podcast revolution was born.  Content producers are transitioning to a pull model as opposed to a push model.  This applies to both audio and video content.

Apple will now use to iPod to penetrate more areas of our lives.  Just take a look at the recent Nike+iPod announcement.  When the iPod was launched in 2001, who would have thought one would be able to use an iPod to help "tune your run"?  I expect Apple to expand the number of iPod related partnerships to extend the Apple brand into many more areas of our lives.  Apple will also find ways to leverage the existing popularity of the iPod and the iTunes Music Store.  Many are expecting that Apple will at some point, introduce a Movie Download service.  We'll just have to wait and see.  Regardless, the iPod is here to stay.

Wave Two, Software Innovation
The 2004 introduction of the iLife suite brought forth an integrated suite that enabled Mac users to easily participate in today's Digital Lifestyle.  iLife makes it easy for Mac users to leverage today's digital products and technologies.  Digital Cameras and photos with iPhoto, home movies with iMovie and iDVD, music creation and podcasts with Garage Band, and the most famous, music and video content with iTunes.  Two revisions later, Apple has added numerous features and extended the functionality of iLife to include iWeb, a web site and blogging solution.  Apple was able to leverage the solid OS X foundation and it added features that made it easier for users to use iLife.

On the operating system side, Apple added innovative features such as Spotlight, Dashboard, and a revamped iChat application.  You can view a list of over 200 plus features that were added to OS X 10.4 Tiger.  Beta builds of Vista demonstrate that Microsoft is copying features already available in OS X 10.4 Tiger.  Apple's next OS, 10.5 Leopard will continue this trend and will usher in a new round of software innovations that will give Apple an even greater lead on the competition but most importantly, a larger lead in features that today's consumers demand.  When it's released, Leopard will be two revisions ahead of Windows Vista.

Wave Three, Hardware Innovation
Just look at the sleek, elegant, and eye-catching designs of the entire line of Macintosh computers.  The all-in-one design of the iMac is not only a head turner but is also a collection of spectacular hardware engineering.  The most recent revisions to the iMac and Mac notebooks (MacBook ad MacBook Pro) have seen the inclusion of built-in iSight cameras and Infrared Remotes to extend the capabilities of the Mac and to leverage new technologies.  The Apple Infrared Remote has also been added to the Mac mini.

In my view, Apple's push towards changing the way the market and consumers perceive the Mac began when Apple redesigned the iMac in 2004.  For a refresher, take a look at the following clip. Also check out the following from CNet when the iMac was relaunched in 2004.

Apple will bring to market innovations that will continue the hardware innovation wave.  We just have to sit back and wait.  Can anyone say Mac Pro?

Wave Four, Transition to Intel processors
The switch to Intel processors has allowed Apple to build price-competitive computers in two respects.  One is that it has brought the cost of Intel Macs down to a level that is more affordable, it boils down to "economy of scale".  Intel is the largest semiconductor manufacturer in the world.  As a result, Intel can produce processors at a scale and cost that are realized through operational efficiencies.  This leads to a lower cost per processor when compared to the PowerPC processors manufactured by IBM.  This has allowed Apple to build computers at a much lower cost.  It has also provided Apple the opportunity to build systems than can be more easily compared to the systems built by PC vendors such as Dell, HP, Sony, and Gateway.

Boot Camp's ability to configure an Intel Mac to boot into Windows makes the Mac a more appealing computer to consumers.  Boot Camp will ultimately lead consumers to the Mac which in turn, will expand the Mac user base leading to increased market share.  The inclusion of Boot Camp into OS X 10.5 Leopard will further strengthen the Mac's value proposition.  Apple is the only computer manufacturer can offer the ability to legally run OS X and Windows on a single computer.

 

Conclusion
Overall, I think Jobs' comments provided a view into Apple's Macintosh strategy.  When combined with past and recent events, it's clear that Apple is making a push towards greater Mac acceptance.  Call it a "getamac" campaign or a "switch" campaign.  The end result is the same, greater Mac unit sales, a larger Mac footprint, and an increased Mac user base.  Apple is positioning the Mac as the computing platform for the ever changing rapidly evolving digital lifestyle. 

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