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JANUARY 18, 2002 A Talk with Apple's Mr. Marketer Phil Schiller discusses the "dramatic change" that is OS X, Apple's new products, and who's going to be biting
Schiller is a rah-rah guy, but his exalted post also requires that he step back and look at the big picture in terms of selling these pretty machines. BusinessWeek Online Technology Editor Alex Salkever spoke to Schiller on Jan. 14 about what the future holds for the company. Here are edited excerpts of their conversation: Q: How goes the switch to OS X? A: Starting this week, all of our computers are shipping with Mac OS X as the operating system. That takes us a long way toward the new-generation system that we started on last March. Never in the history of the industry has a company made such a dramatic change in its operating system so quickly. Q: I got a look at your new iBook. Very nice. A: The iBook we're shipping now is one of the most popular notebooks Apple has ever made, and probably the most popular consumer notebook available. The state of Maine has decided to give the iBook to every seventh- and eighth-grade student and teacher. Q: Why all the buzz about iPhoto? How is it different? A: It's a new type of software that you can use to store your life's pictures in one place. We think it's a category-buster. Q: What does the rollout of the new iMac look like? A: This month, we'll get out the $1,799-configuration iMac. Next month comes the $1,499 configuration. In March, we'll get out the $1,299. We've got a lot of work to do to execute on this plan. It's a big deal to roll all that out and meet everyone's expectations. Q: It seems that Apple is becoming a cyclical product company, living from launch to launch. I noticed how steeply sales fell off last year for the iMac. A: At 6 million, the iMac is the best-selling Mac model ever, and perhaps the best-selling PC ever. Consumer desktop sales in general dropped pretty precipitously the past year, and I would say the economy had as much to do with that as anything. Q: Over the years, one of the key things that has caused Apple to lose market share has been the lack of software. A: Our developer program has seen a 75% increase in participants over the past year. So we're really getting some exciting rejuvenation. We see applications not only coming from our traditional Mac developer base but also from Unix developers. That makes possible things that were never possible on the Mac before. A great example of that is Maya, the industry's leading 3D-rendering application for professionals. That came over to OS X because of the Unix core of the system. We are also seeing developers from the Java world, because Mac OS X includes Java 2. So OS X is getting great software, no doubt about that. And it will get more. The software development language for OS X, Cocoa, allows new generations of applications to be built quickly. We see a ton of them coming out now. One of my favorites is a utility called Watson that has really cool Web services. You can find movies over the Internet, look at TV schedules, track packages, find people and photos. That's all made possible because of Cocoa and the new development tools on OS X. In the past three months, we've seen more than 1,000 new applications on OS X. The momentum is tremendous. Q: How many market-share points in the PC market do you think Apple needs to really thrive? A: We don't quote our short- or long-term goals publicly. The real question to ask is: "How many people do you think are interested in something better and are willing to try something different?" I am not sure what that number is, but it's bigger than what we have today. Q: Where do you hope to make inroads? A: First, we want to look at our existing customers, because we never want to lose sight of that incredibly loyal base of 25 million active Mac users. They are our best advocates and salespeople. The second group is new users. We find that when they take the opportunity to look at a Mac vs. a PC, we do really well, much higher than our current market share. So the key thing is getting them to consider a Mac. That's what [Apple's retail] stores are for. The third group is the Windows switchers. Sometimes it's a person who once used a Mac in school, where over half the computers are Apples, and was later arm-twisted into using a PC where they went to work. If we continue to do great things, more and more of these people will get a Mac. In addition, there are some new segments taking a look at the Mac. Q: What are those new segments? A: One is sci-tech. In the biosciences and genetic research, Mac is very strong. As we move to more of a Unix base with Mac OS X, we are attracting a lot more of those customers. Even in the government we're seeing this. A number of government organizations require a Unix machine, and we're tapping into that. Q: What do you think is the size of that market? A: It's huge, but we don't want to put a number on it. The best example [so far] is Genetech, which placed an order for 1,000 new iMacs for its workforce. [Note: Genentech CEO Arthur Levinson is on Apple's board.] Q: It appears Apple is making a transition from a computer company to a consumer-electronics company with the release of the iPod. What's different now that you have entered this market? A: We have to have a vision for where we're going. We aren't just trying to be a consumer company. We're trying to get somewhere with the personal computer. We have to solve customers' problems.  Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | JANUARY |
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