Stupidity should be painful

The pundits weigh in on Apple’s MacWorld announcements

Overall reception of the Mac Mini has been positive, but already we have a few of the expected Mac Mini doom-sayers—here to warn us of the inevitable apocalypse that is to come if anybody actually purchases a Macintosh computer.

Or perhaps they just like flinging insults. Take, for example, Seth Jayson’s poorly-composed musings on Fool.com:

[Editor’s note: Typographical errors in Seth Jayson’s article were initially keeping this article from displaying correctly or validating as XHTML 1.0 Strict. These have been fixed by yours truly.]

The Mac Mini—I’m pretty sure Minimac is something you get from Kraft—is a cute little device. Yes, it cribs mercilessly from PC-based mini-ITX designs that have been around for over a year now, but it does put low-end Mac guts into a smaller, stylish little Mac package. The most interesting magic trick here is the illusion—somehow completely lost on the mainstream press—that this is really a $500 computer. Check out this sleight of hand.

It comes with no keyboard, no mouse, no monitor, no speakers. Kind of like Ford promising you a $7,000 car with no steering wheel or windshield. Long story short: Gathering the cheapest components I could find at Apple’s online store, I came up with an $800 system before shipping (and the low-end monitor had a wait of six weeks). I think it’s ludicrous to expect that someone buying a Mac—and looking for Apple style, after all—is going to want to plug in a pizza-stained, three-year-old keyboard and a mouse chock full of desk scum. Why not just shell out the extra $500 for the low-end iMac, which has more juice and comes loaded and packed inside a crisp, flat-screen monitor?

But this isn’t about Mac fans, right? It’s about “converting” the unrepented. Unfortunately, Apple won’t be competing on price, contrary to Jobs’ claims. Mac fans who’ve been sipping Steve’s Kool-Aid have often claimed that price—in addition to various Microsoft (Nasdaq: MSFT) conspiracies—is the only thing keeping the masses from switching to their favorite brand, but take heed. Even if that were true, a quick online check shows you can get a comparable, full Dell (Nasdaq: DELL) system for $450. A quick peek at margins (Apple, 3.3%; Dell, 6.6%) explains why.

I’m sure Mac-happy Walter Mossberg will go into one of his uncharacteristic fits of apoplectic ecstasy when he gets his hands on one of these. (He must look like Bernini’s Saint Theresa about this time every year.) And I’m sure the Mac masses will praise it to the skies. But I’m also pretty sure Ma and Pa Kettle can do the third-grade math that escapes the headline writers for now, which shows the cheapest Mac system you can build around this thing is still 78% more expensive than a comparable PC.

In other words, I don’t think this is the key to those big improvements in market share that pundits have been promising. In fact, as we’ve discussed here in the past, the post-iPod record for Apple’s computer sales remains decent, but uninspiring. For last year, they were up 10% by dollars, 9% by units.

Opening insult aside, I would first like to point out that while mini-ITX has, in fact, been around for “over a year now”, the Power Mac G4 Cube was introduced in 2000—two years before the first ITX-based logic board was released. And that was twelve years after the NeXT Cube was released. Small form-factor personal computers have been around for quite some time—the original Macintosh was only 13.6″ × 9.6″ × 10.9″ in size.

See, Seth? It helps to actually research for your articles before you write them. But I digress…

Yes, the Mac Mini is a $500 computer. But more specifically, it’s a $500 Macintosh. The entire point is that people who have been hesitant about getting a Mac have been so primarily because they are perceived as “too expensive”, which shows that the question was never “On which platform should I spend my $500?” Rather, the question was always more along the lines of “Can I get a cheap Mac so I can give the platform a try?” And for the record, there was previously only one answer for the first question since—before the Mac Mini—one couldn’t get a new Mac for $500.

But since we’re comparing the machine to small form-factor PCs like the mini-ITX, let’s compare the Apple Mini to the systems available from the leading OEM in small form-factor PCs—Shuttle.

Showdown: Mac Mini vs. the Shuttle XPC G 4300h

While it is worth noting that Shuttle offers a “Media Centre” line, it starts at $999—hardly price-competitive against the Mac Mini. The least expensive computer that Shuttle currently offers is the XPC G 4300h. (rolls off the tongue, doesn’t it?) It is available for $599, and with it you get:

• An AMD Athlon XP 2400+ processor running on a 266MHz system bus.
• Windows XP Home Edition preinstalled.
• An S3 Unichrome onboard graphics chip that accesses 64MB from the system’s main RAM.
• 256MB of PC3200 RAM.
• An 80GB 7200RPM hard drive with a 2MB cache.
• The “Shuttle 6-in-1 Media Reader”.
• A 52x tray-loading CD-ROM drive.
• S/PDIF in/out and headphone/audio line out.
• Onboard 10/100BASE-T Ethernet.
• A Logitech UltraX Desktop Keyboard and Mouse.
• Four USB 2.0 ports (two in the front, and two in the back).
• Two FireWire 400 ports in the back, and one “mini” FireWire port in the front.
• One TV-out S-Video port, and one VGA-out port.
• The “Shuttle Standard” limited one-year warranty.

By contrast, Apple now offers the Mac Mini, which is noticeably smaller than the XPC G 4300h—in fact its logic board is smaller than mini-ITX. The Mac Mini is available for $499, and with it you get:

• A 1.25GHz PowerPC G4 processor running on a 167MHz system bus.
• Mac OS X 10.3 “Panther” (including the Classic environment) preinstalled.
• An onboard ATI Radeon 9200 with 32MB of dedicated DDR SDRAM and AGP 4x support.
• 256MB of PC2700 DDR SRAM.
• A 40GB Ultra ATA hard drive (RPM and cache size unknown at the time of this writing).
• A slot-loading Combo-Drive (DVD-ROM/CD-RW).
• Headphone/audio line out.
• Onboard 10/100BASE-T Ethernet.
• Two USB 2.0 ports.
• One FireWire 400 port.
• One DVI-out port, with included DVI-to-VGA adapter.
• 90 days of free telephone support and a one-year limited warranty.

Additionally, the Mac Mini includes iLife ‘05, AppleWorks, and Quicken 2005. The Shuttle XPC G 4300h will ship with the “PC Treasures Elite Suite”, which includes the Corel Wordperfect Productivity Pack 11, Quatro Pro 11, McAfee VirusScan 2004, Pinnacle Instant CD/DVD, Ulead Photo Impact, and Quicken 2003… for $24.95 more.

The processor speed issue has been beaten to death over the past few years, but suffice it to say the only way to fairly compare the two would be with benchmarks, which unfortunately don’t exist for these two computers at the time of this writing.

While the apparent “value” of getting Windows XP Home Edition versus getting Mac OS X 10.3 could be considered a matter of personal taste, “Panther” comes with far more applications and other “value-adds” than Windows XP Home does out of the box; and the value of Internet Explorer 6 versus Safari 1.2 is stacked against the former when you consider IE6’s massive security problems and pitiful web standards support.

The Mac Mini leads in the video department, hands down. However, the Shuttle XPC G 4300h does beat out the Mac Mini in regards to hard drive space, doubling that offered by the latter. But the Mini takes the lead again by offering a Combo DVD-ROM/CD-RW drive, compared to the XPC G 4300h’s CD-ROM-only drive.

The Mac Mini does have a built-in speaker, like all Macintoshes have had since 1984. No matter what, you will always be able to get sound out of a Mac. This is a lot more than one can say of most PCs, and it’s something you can’t say at all about the Shuttle XPC G 4300h (unless you spend more money on external speakers). However the XPC G 4300h does have a S/PDIF-out audio port, whereas audio out (other than headphone/audio line out) on the Mini is provided through 3rd-party peripherals.

Keep in mind, however, that for each area in which the Shuttle XPC G 4300h leads, it is still $100 more than the compared model of the Mac Mini. The point, however, isn’t that either computer is superior specification-wise, but rather that the Mac Mini—like Apple’s notebook computer offerings—is in fact competitively priced . So using the “you can get more for the same amount of money” argument is subjective at best and flat-out wrong at worst. “Marketing” should never be confused with “Market Forces”, but it’s something that these doom-sayers seem to do constantly.

While Apple does need to get more realistic on international pricing, in the United States, at least, it is easy to see that the Mac Mini will be a big hit. (thanks in no small part to its competitive pricing) Either way, while the Mac Mini most likely isn’t going to give Apple a dominating PC market share percentage, it will likely provide noticeable gains. And that assumes that PC market share is really what they’re going after.

But there is one more thing…

Jayson went on to give his ill-informed opinion on the iPod Shuffle. Sadly, like most Apple-bashing “journalists”—The Motley Fool maintains that their employees are not journalists, but rather something more akin to “teachers”—he couldn’t resist opening with another insult rather than attempt to intelligently and convincingly present his case:

Jobs also introduced a cute little flash-based iPod subtitled the “waffle,” I mean, “Shuffle.” Silly me, where did I get waffle? Oh yeah, the famously opinionated CEO derided the need for a display and visual user interface on this model, saying that it would be too small to be useful. Need I point out the irony in that point of view? It comes from a guy who expects people to pony up $500 or $600 for the privilege of squinting at their photos on an iPod screen that’s smaller than a credit card. Of course, Jobs once said that flash-based players weren’t worth the trouble, but they are a big market, and the thought of leaving all that money on the table seems to have swayed his thinking. (That’s a good thing.)

The problem is that faced with the challenge of trying to invent a decent, micro user interface, Apple just punted. Shareholders had better hope that music fans enjoy “shuffle” mode as much as Jobs says they must. The competition in this segment of the player market is fierce, coming from everywhere including SanDisk (Nasdaq: SNDK) and Nike (NYSE: NKE). Most of the dozens of competitors allow you to see your tunes, and many have sophisticated interfaces for using and modifying playlists. They also work with Microsoft’s Media Player.

Yes, yes, I know. “Boo! Hiss!” But the fact is, better interoperability with the world’s dominant OS would help Apple make more money. I can’t be the only Windows user out there who didn’t get an iPod because he didn’t want to reconvert his entire collection of music files and get locked into iTunes as his only online music source.

Of course, experience suggests that Apple fans are already writing me angry email about how Apple is somehow “not about making money!” “It’s about freedom, about the alternate lifestyle, blah blah blah.” That’s an acceptable—if tiresome and bogus—point of view if you’re just a fan of the gear, but it’s a silly attitude for shareholders.

Now as I’ve said, I’m not really too interested in the iPod Shuffle, personally. But I think it is worth it to counter many of the misconceptions put forth in that segment of his article. (At least, I assume they’re misconceptions—his terrible writing skills, typical for Apple-bashers, makes the article somewhat hard to follow. I often wonder if these people even know what a sentence diagram is…)

Since it lacks a screen, the iPod Shuffle’s interface is rather minimal. However, the “shuffle” mode is not the only playback mode. Using iTunes, you can load specific playlists onto the iPod Shuffle, or you can drag and drop individual songs from iTunes onto the device. Either way, once you have your tracks loaded, you just flip the iPod Shuffle’s switch to “Play in Order” mode, and it will play your songs in order. Not only is this the dominant interface type for entry-level flash-based portable music players, but it is also the dominant interface type for another common portable music player with which most of us have probably had a fair amount of experience using: the portable CD player. This will help the iPod Shuffle compete with other entry-level flash players, since it will then be providing an interface that flash player consumers will be expecting—with the optional “shuffle” mode as a value-add.

The appeal of the other iPod models is not just in their interface. (although that did help the iPod’s rise to fame) A large part of the iPod’s success was that you could take your entire music collection with you, wherever you went. This was not a characteristic of the entry-level flash-based players on the market, whose storage capacities have never been high enough to allow that. That is the main thing to realise: each portable music player resides in its own market, which has only minimal overlap with the others. This isn’t 1999, when there were only one or two mp3 players on the market—like living creatures, these devices have specialised to fit into specific niches. As such, it is not fair to compare the high end digital music players, such as the iPod, the Creative Zen, or the Dell DJ with the low-end flash-based digital music players; they’re different animals.

Seth does do a good job of perpetuating other myths about iTunes and the iPod. He posits that “better interoperability with the world’s dominant OS would help make Apple more money”. Last time I checked, however, both iTunes and the iPod were available for Windows. By definition that makes their jukebox software, their music store, and their portable music player quite interoperable with “the world’s dominant OS”. And unless all of your music is sitting on your hard drive in the .WMA or .RA formats—which are just as proprietary to their respective music players as the .M4A format is to iTunes—there is no reason to “reconvert” your entire collection of music to make it operable in iTunes or on the iPod. In fact, since there is no gain in quality from converting from .MP3 to .M4A, it would be pointless to even do that since iTunes and the iPod handle .MP3 files without even flinching. While music purchased from the iTunes Music Store is in the .M4P format—a variation of the .M4A format that uses Apple’s own flavour of DRM—I fail to see how that “locks you in” any more than downloading DRM-enabled .WMA files from the MSN Music Store, or DRM-enabled .AAC files from RealNetworks’ music store “locks you in” to their software of choice.

DRM-protected .WMA- or .AAC-formatted songs purchased from their respective music stores don’t work in iTunes, so why should DRM-protected .M4P-formatted songs purchased from the iTunes Music Store work in Windows Media Player or RealPlayer? Why was there such an uproar about Apple not opening up their player to others’ DRM-protected formats? Why weren’t RealNetworks or Microsoft offering to open up their players to Apple’s DRM-protected format?

Anyone who’s taken Economics 101 and is able to apply what they learned to this situation would know the answer; there’s no money in it.

Given that the iTunes Music Store is in itself not a very profitable business for Apple (at least, at the moment), what sense would there be for opening up their format to allow other—non-Apple—players to play them? Would it help Apple sell more iPods? No. In fact, it would probably dip in to their sales. Now you show me one shareholder that wants the company in which they’ve invested to lose money, and I’ll show you my “I don’t believe you” face.

The bottom line is that the iPod Shuffle is the right product for the market it’s going after. And with the aid of Apple’s mind-share, I have no doubts that it will dominate the low-end flash player market in the same way that the iPod has dominated the high-end hard-drive-based player market.