macintosh is not a volvo 5 of september, 1996 by johnmichael patrick monty monteith

The argument goes like this: "Volvo, Mercedes, Porsche, and many other stable and profitable automobile manufacturers have less than 10% of the market share. They make a good profit, are well respected, and will not be going out of business any day soon. Therefore, Apple Computer and the Macintosh with less than 10% market share can also be as strong, profitable, respected, and out of debt, too."

I suspect people who take this argument at face value might be convinced. However, there is a strong fallacy of an unwarranted assumption made in this argument. The above argument only holds true if the Macintosh is similar to the products sold by these automobile manufacturers. After a little thought, you will find that the Macintosh is far from the Volvo it is being compared to.

One of the reasons small automobile manufacturers can exist is because they create "luxury automobiles". Hidden in the word "luxury" you can read: "large profit margin". In the automobile world, a large profit margin can be 200% or more from the cost of the product by the time it reaches the consumer. Although they will sell very few cars, and therefore have a very small market share, their profit margin will more than make up the difference. Even the "economy cars" still carry a hefty profit margin for manufacturers. After all, how many people buy automobiles from mail order? Consumer expect to pay a hefty mark-up when buying a car.

This is not at all the case when shopping for a personal computer. In today’s computer age, the price of the computer is everything. It makes or breaks the sale. Manufacturers attempt to produce as many machines as they can for as cheap as possible. The profit margin is slim, and the only way to make money is to sell mass quantities. In other words, if you do not sell a significant number of machines, you will not make a profit.

This is even more the case for Apple Computer. Manufacturers like Dell and Gateway do not really have a R&D department like the folks in Cupertino. The R&D was done by Microsoft and Intel. All they need to do is piece the product together, add a few bells and whistles, and they are off selling. Apple must develop their own motherboards, hardware designs, operating system, and drivers. This is a huge expense, and therefore demands the sale of even more machines to make a profit.

There is another point many Macintosh owners miss when spouting the automobile argument. When a new Volvo owner drives their $40,000 automobile off the lot, they will have the assurance of knowing that every gas station in the United States sells gasoline that will work in their car. Every department store sells oil that will replenish what is in the engine. Virtually every mechanic could give the car an oil change, and if needed, could probably even tune it up, too. Day to day operations of this vehicle will not be hindered because you bought a vehicle with less than 10% market share.

The purchase of a Mac will have a different outcome. Computer stores carry mostly Windows hardware and software, and some do not carry any Mac compatible software. If your Mac crashes because of a virus, chances are you will have to do a lot more hunting to find a Macintosh virus program in your neighborhood than a Windows owner would. In essence, most gas stations are Windows only, and if such a situation put on an automobile manufacturer, they would have a tough time selling their cars.

What’s more, the major automobile manufacturers (Ford, Chrysler, GM, Honda, and Toyota) all have a market share above 10%. That is why they are considered "major" automobile manufacturers. Is Apple not a "major" computer manufacturer? To make matters even worse for us Macintosh owners, the market share for the Mac is now falling under 5% (ComputerWorld 8/26/96 Pg.15).

It is a sad sign when some of the luxury automobile manufacturers first used in this argument will have a larger market share than Apple Computer at the end of 1996. This Volvo equals Macintosh argument only shows just how much Apple’s market share is a sour sign for the Macintosh future.