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Cracking the low end
Network Computing and the Mac
By: David K. Every
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September 02,2003
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 acs do well in the markets they compete in, but they don't compete in all markets. This not only prevents Apple from selling well in those markets, but in many conversion markets and businesses that want machines that spread from high to low, or cover their complete needs. It also creates a fear (FUD), where companies won't buy Macs in one market, because they can't get it to fill these other needs. One of the key segments is the low-end market.
Apple's big fear is that for each low end (and low margin) sale they make, will pirate a higher end sale, or dilute the brand so it looks low end. Of course this is sort of quite limiting (myopic), because not having a low end and volume is harming them and reducing their growth in many segments. Apple talks about how they want to increase their marketshare, but to do that, they need to offer more choice diversity and attack high volume segments, like the low end. Companies that are conservative or operate out of fear of pirating their own markets often limit growth and are extincted by more aggressive and less afraid companies. And there are of course ways to crack the low end, without pirating your high end; and in fact, if done right, it can increase your other sales. And that's what this article is about, my ideas on how to do this.
     
A few years back there was a big rage by Sun and Oracle and IBM and others about the next big thing. That was going to be the NC (networked computer); and few years before that it was called the diskless workstation (or dickless workstation if you were a snide IT type).
The idea was that if you removed all storage I/O from a computer, and made it a smart terminal, then you could store everything in one centralized place (the main network server), and life would be wonderful. IT's costs would plummet, because they could just install things once (on the central server), and all the workstations and security would be controlled. Support and maintenance would go down, and because these machines were smaller and simpler, the costs of the machine would go down.
There was this migration in computing from centralization (mainframe), to decentralization (PC's) that gave users more control, but radically increased support costs and other issues. Since the industry moved too far, there's been this question when are things going to swing back. And NC's were just this concept; the return of a smart terminal.
There were indications with products like Citrix'es WinFrame or XWindows, that allows users to virtually connect to one machine, and run things remotely, but behave as if it is local. This was sort of a virtual (software) NC, without any of the hardware advantages.
But alas, the efforts were headed by companies like Sun and Oracle that really had other agendas. Sun was using NC's and Sun Ray concepts to sell Java, and Oracle was advocating NC's to all connect up to Oracle Databases. They missed the bigger picture, and ignored the major problem.
The downside was that many NC's required new software (which no one wanted), and more importantly it radically increased stress on the network. Apple and NeXT's netboot capabilities demonstrated lackluster interest. The message of NC's was "You can save $50 on a hard disk drive, but spend tens of thousands improving your network infrastructure to support the bandwidth requirements". People are less than impressed when they do the math. Still, the problems are in the implementation, not the concept.
        
Years ago, I proposed a simple solution; a diskless workstation with a disk. Look, the savings are not in the hard drive costs, the savings are in the maintenance and support costs. So don't remove the disk, change its purpose.
Currently drives are used for a user to do local storage. This adds complexity and maintenance issues; so take that away. Give the user a partition/segment on the network drive (a virtual disk). They can wander machine to machine, and their data will be stored centrally, so they can get to it from anywhere on the network; the same with their applications, configuration, and so on.
However, the computer needs to boot and run applications and do things quickly. So use the local disk drive as nothing but a big network cache. The OS and Applications get downloaded to it, and when the computer boots, it just compares its local copy with the centralized copy; if they are the same (and they usually are) it uses the local version; if not, it gets the central one and saves it locally. This radically reduces your network bandwidth and radically increases the speed of the NC, since everything behaves like it is local. It doesn't require a ton of custom Application development, all apps behave the same; you just need to tweak the file system on the NC to know to do a simple comparison of files, and how to cache (which they mostly know how to do anyways).
Writing files works the same, you save local, but every so often it feeds the information to the central server when the network bandwidth is not being used much, or as it has time (unless you logon somewhere else, when it sends it immediately, so that you can get to it).
This isn't rocket science; and is something that would make a network computer viable in many settings; especially turn-key applications, low end applications, education, retail, or many vertical markets where you don't want users doing a lot locally anyways.
     
Now, back to our previously scheduled article. Apple is in a place where they need to get back into the low end; especially in certain segments like education, Publishing, small business, big businesses (low end) and others are good examples of this. Apple is getting killed, because people compare $400 PC's to $1200 iMacs, and you can guess which they choose. So in with the nMac (network Mac) or vMac (virtual Mac); a smart terminal Macintosh with a G3 or G4, disk drive used as a cache, and netbooting capabilities, and some support software to make it viable.
The hardware is easy; strip down a headless iMac; make it look like a little baby XServe Pizza Box. No monitor to increase costs, simple I/O (mostly network and a good video chip) and that's it. Sell one model with a DVD and one without. But that's it. You could make such a thing at the $500 price point with a reasonable margin. The toughest parts are the software, write the filing system come network cache, and a lot of centralized admin functions. A good software license manager would have to be written as well. None of this is hard, and much of it is already written; it is just integrating the technologies and getting the kinks worked out.
All of a sudden, K-12 and university education market would be able to buy Macs for the price of PC's, and that whole "Macs cost too much" argument would evaporate. The same in many large businesses that want to centralize. Even smaller businesses would see an appeal; I can buy 10 of these workstations for the price of 2 x G5's? Even imagine home uses - I have my main server downstairs with controls, and the kids each have an nMac with a DVD. They can run games and stuff off their DVD, but network control (caches, email and files) are monitorable from the main server. The return of centralized control, combined with the speed of a local PC.
For the record, I would not limit the client software to just the low end machine, there are cases where this kind of workflow could be valuable on higher end machines as well. I also would not force these thin clients to only run this type of admin software; I would just sell the machines without a full Mac OS X and with the NC software installed by default. If people want to spend an extra $100 for the OS and have a low-end Mac, let them. If people want to buy the Xserve software for their current desktop box, and turn it into a server, then let them. I would even create a bootable DVD game standard, so these low end boxes could be an XBox-like game appliance or some dedicated non-network kiosk like thing. It won't pirate many sales, and the OS sales will offset some margins; and will lead to many more sales. Many people will come in thinking of buying the cheap machine, and then move up the food-chain because they like the other features they can get. Others will adapt their purchases to better fit their needs. Stop trying to micromanage purchasing decisions Apple, you do not know the customers needs better than they do; your jobs is to give them many good choices, not just the ones you like. If you don't, they will go elsewhere to companies that do; see Dell.
With all plans there is risk. Apple needs to make machines that are small but not crippled, useful and seen as a value and a bargain compared to the PC's they are competing against. Apple's biggest competitive advantage is in building Systems; the OS, Applications, Hardware and Software that people need. Integrate these solutions into something useful and viable, and do what the PC's can't. So play towards those strengths. Sure, someone could do the same thing with PC's, but the administrative costs, complexities of integration, and issues with all the hardware and software choices actually works against the PC, and could work for the Mac in this kind of niche.
Those that would argue that each low end sale would pirate a higher end one are missing the point; it would increase all sales volume and higher end sales as well.
Centralized control requires higher end servers, and higher margin servers. And companies need a mix of solutions. In publishing you need powerful creative workstations, more powerful servers, and less powerful editorial or administrative machines. In education, big business, small business, homes, it is the same. Currently people are just handing down old machines to less powerful groups because there's no compelling reason to buy new; so give them reasons.
Currently, when companies bid or buy to fill needs in all Mac houses, they have to make tradeoffs; buy a few high end machines and hand down the rest (increasing support costs), buy more machines surplus because they are good enough (but increase risk and decrease life expectancy), or compare the cost saving of moving to PC's against the barriers to exit/entry. In cases where they are not Mac-only you start doing bids for the low end machines and find out that Macs are priced to high - which leaves you with another choice; bid with Macs on the low end, and lose to those that can either offer more machines for the same cost, or just lower cost for the same number of machines - or - do a common sense bid, with a mix of cheap PC's on the low end, and Macs for the higher end creative stuff, at which point management starts saying, "why don't we save money and buy PC's across the board".
By not having low end machines, Apple keeps shooting themselves in the foot; demonstrated by Apple moving from 70% market-share to about half that in education in just the last few years. Apple needs to get into the low end, and this is just one way to do it. With the nMac, instead of buying 10 x G4's surplus, playing the hand-me-down game, trying to split solutions between Macs and PC's, or just losing options, companies could buy more low end machines, and mix them with high (and high margin) servers to support them and administrate it all. And with Apple's expertise, they could offer a systems solution that PC's couldn't compete with. This increases marketshare, sales volume, markets, segments, customer satisfaction, market perception, and results in growth. And those growth trends will result in better Wall Street evaluation, more software development, better press, and a stronger company. So the question for me isn't whether Apple should do this, but what's been taking them so long?
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