A Memory of Gateway
About a dozen years ago or so, I was coming out of H&H Music after purchasing a large fake-book in what would ultimately prove a futile attempt to figure out how hit songs are composed. Nearby, in the set of strip centers just outside Baybrook Mall, was a “Gateway Country” store, easily visible from a zillion miles away by its big, black and white cow colors.
Every time I saw that Gateway store, it depressed me. As an Apple aficionado I had watched my favorite computer decline steadily throughout the late ’80s and into the mid ’90s under the stewardship of stiff CEOs from Planet Suit’n’tie. Both the company and its products seemed to get bleaker by the year. The computers looked more and more like generic, beige boxes, not significantly different than their market-dominating cousins on the Windows side. OS 8 and 9 looked more like a copy of Windows than ever, the interface items becoming greyer and squarer with each iteration. And Apple’s retail presence was almost completely confined to obscure, local, niche stores that didn’t do a particularly good job of showing off the product in any public way. As if to cement the certainty of Apple’s demise, Gateway, the then-juggernaut of the PC world, suddenly built their stores all over the place.
I never set foot in that Gateway store (something I now regret) — not out of spite but because I thought that my depressing feeling about Apple’s fate would only get ten times worse once I had seen the Gateway glory firsthand. So in my mind, I imagined a stunning, clean interior with gleaming, screaming-fast computers neatly arranged, and friendly, bright, knowledgeable employees brimming with answers to every doubt one might have about why to buy a Gateway PC. “If only Apple had something like that,” I thought at the time, “but I guess you have to command Gateway-like volume to support the cost. Oh well.”
And then, as in the old cartoon with the scientists at their blackboard ... a miracle occurred. First, in what seemed like a wildly improbable move, Apple bought out NeXT, and reinstalled Steve Jobs back at the helm — at first in a so-called “interim” position, but then as time went by in what became clearly a permanent leadership post. Mac OS got a complete overhaul and became OS X. The first iMacs appeared, and I’m ashamed to say my honest initial reaction was, “Oh no, a tiny, cute, all-in-one Mac! This time in candy blue! Steve’s back and he’s crazier than ever!” But that reaction would turn to new respect and admiration just months later when, to my surprise, iMac sales turned out to be quite robust.
And the miracles didn’t stop. Just as suddenly as they had appeared, the Gateway stores all closed! Just like that. And at about the same time, Apple announced that they would be opening a set of retail stores around the country. Pundits quickly predicted dismal failure for these stores — after all, if Gateway couldn’t do it, how could Apple? — but I had a gut hunch it would work, especially when I heard that Apple’s goal for these stores was just that they break even. Exactly: Don’t lose money on them, and get people seeing Apple from a pro-Apple perspective for the first time ever. That sounded right to me. And, as if we didn’t all know by now, it worked beautifully. The Apple stores were everything I imagined the Gateway stores had been, and more.
Then came the iPod. As soon as I saw the first commercial for it, with a Cosmo Kramer-like New Yorker jamming his way out of his apartment to the hopping sounds of the Propellorheads, I breathed a sigh of relief: I had almost taken the bait and bought a Creative Nomad just weeks earlier when my all-things-tech buddy Jim Kluka (now an Indianapolis home theater designer) showed me one in the Vegas Harrah’s. Cool indeed, but not quite portable enough and not quite user-navigable enough, I thought. Better wait until they come out with a smaller, easier-to-use model. And they did — Apple did. Imagine that!
No sooner did the iPod take off than the pundits once again predicted doom. Here comes Microsoft with their own music store technologies and DRM, and they’ll license it to anyone who wants to buy! Meaning everyone but Apple. Too bad, said the naysayers, it’s going to be a repeat of Windows beating out the Mac all over again. And VHS beating out Beta. But a few pro-Apple voices said no — Beta only ever had dominance of an infant market, and the Mac never rose above 10% market share. Neither product was beaten out of a dominant share of a mature market. That position has been enjoyed only by VHS, by Windows — and now, by iPod. Needless to say, the iPod is still going strong, years after the Beta/Mac analogy wore thin and dropped off the op/ed radar.
Need I even mention iPhone? Icing on the cake. Its the PDA and the cell-phone both finally done right, and with an even better iPod thrown into the bargain. Who will confidently predict its failure? Anyone? Anyone? And hey, I think I just heard someone say that Apple’s market share in computers (not handheld devices) is rising towards 10% for the first time since the mid ’80s. How high will it go this time? Wait, did I just hear the sound of Windows proponents grumbling that Vista is a basket of headaches? And how about all those viruses swarming all over the Windows community? I’ve never installed anti-virus software on my Mac, never even configured a firewall. It just doesn’t seem to be a problem.
In my mind’s eye, I can still see that Gateway store with its white paint blazing in the insane Texas heat. Now comfortably relegated to the status of memory. Thank you, Steve. Miracles do happen.
Update 2007.09.03 — Just heard that Gateway has now been bought out by Acer, for a small fraction of their valuation back when I used to see that Gateway store at Baybrook Mall. Oh, and Baybrook now has an Apple store. In the mall. I’ll have to check it out if I’m ever back in Texas.
Update 2008.01.30 — You know those somewhat-cool-looking Dell kiosks you see in many malls? The kiosk where you can play with Dell products, but not actually buy anything? Dell’s just announced they’re getting rid of them. Too sweet.
Update 2008.03.18 — At its peak (in the latter half of the ’80s) the Mac had nearly 10% market share, then sunk to 5% or less for a very long time after that. NPD just reported that the Mac hit 14% last month, and was 25% by revenue. It has begun.
Note: 25% / 14% = 1.8, which means that, on average, Mac users paid 80% more for their computers. That does not, however, mean that a Mac costs 80% more than a similarly equipped PC. (Do a price comparison and see for yourself.) It simply means that the average Mac user buys a better-equipped model than does the average PC purchaser.
Update 2008.04.11 — This is just getting better and better every few months. Gartner analysts say Windows is collapsing due to bad design.
Update 2008.04.23 — Apple just had a record quarter, in the middle of a recession, no less. And check this portentous analysis of Microsoft’s situation at RoughlyDrafted.
Update 2008.05.01 — Joel On Software’s very negative assessment of Microsoft’s “architecture astronauts”, which reminds me of Surface, and how you can’t use Windows-dominance leverage against successful third-party products when those successful third-party products don’t actually exist.
And don’t miss this hilarious episode of Fake Steve gloating over the iPhone SDK and the equally hysterical first reader response and its counter-response! (Update 2009.11.25: Sadly, all the original comments are now gone. But the article itself is still available here.)
Update 2008.07.16 — Apple passes Acer to become #3 US PC vendor. Say, didn’t Acer recently buy up Gateway?
Update 2008.07.24 — Satoshi Nakajima, chief architect of Windows 95 and 98, switches to Mac, and “says that he’ll never touch a PC again.” Steven Smith, most ardent Zune supporter, gives up and says he will hide his Zune tattoos.
Update 2008.10.21 — iPhone is now the top-selling smartphone beating out second-place BlackBerry by 25%.
Update 2008.11.10 — iPhone is now the #1 selling model of mobile phone (not just smartphone) in USA, beating out the former #1, Motorola’s RAZR.
Update 2008.12.05 — Worldwide, iPhone now outsells all Windows Mobile devices combined.
Update 2009.01.24 — Microsoft is getting ready to lay off 5,000 people. Apple’s experienced steady revenue growth throughout the Bush recession.
Update 2009.02.10 — Microsoft shareholders enraged at billions and billions of dollars of R&D with nothing much to show for it. (Update 2010.03.07: Microsoft set to spend $9 billion on new R&D. Can’t wait to see what great things they come up with.) (Update 2010.04.30: Microsoft’s Bing division reportedly losing over $700 million per quarter. I don’t know if any of that counts as R&D.) (Update 2010.07.23: After spending $500 million to buy Sidekick, and more money to turn it into Kin, Microsoft is now writing-off the project to the tune of $240 million.
Update 2009.03.02 — Ages 12, 9, and 6, the children of Bill Gates are prohibited from owning an iPod or iPhone.
Update 2009.04.23 — iPhone’s web traffic, worldwide, now surpasses all Symbian phones, putting iPhone in first place.
Update 2009.04.30 — Remember this update from one year ago (see above)? Apple had a record quarter in the middle of a recession. Well here we are a year later, the recession is still going strong, and Apple just eclipsed last year’s record quarter with another record quarter. Oh, and by the way, Microsoft’s year-over-year quarterly profits are down 32%.
Update 2009.05.21 — iPhone market share doubled from the year-ago quarter.
Update 2009.05.24 — Three pieces of malware found on factory-fresh Windows netbook.
Update 2009.05.29 — Dell’s net income falls 63% from the year-ago quarter.
Update 2009.06.03 — Apple’s New York glass-cube store pulled in revenue of $440 million last year — and all during a recession.
Update 2009.06.22 — iPhone 3GS sells over one million units during its opening weekend.
Update 2009.07.03 — London Stock Exchange to abandon Windows. The iPhone is now the best-selling smartphone in Japan, a country that supposedly wasn’t interested in the iPhone.
Update 2009.07.23 — Apple’s market cap passes Google’s. Apple now accounts for 20% of all profits in the entire mobile phone industry. Apple now receives 91% of all revenue on computers costing $1,000 or more.
Update 2009.07.28 — Apple’s market valuation now greater than HP and Dell combined.
Update 2009.08.04 — The iPhone now pulls in a third of all mobile phone profits worldwide (not just on smartphones).
Update 2009.08.06 — Remember the highly successful IBM ThinkPad line of laptops? That was sold off to Lenovo? Lenovo just reported a $16 million loss for the quarter.
Update 2009.08.12 — iPhone sales increase more than 6x during the second quarter of 2009.
Update 2009.08.17 — iPhone now the bestselling phone (not just smartphone) in Japan.
Update 2009.09.02 — Of the fifteen entrants in Microsoft’s own app development contest, the only one to develop for a non-Microsoft platform (the iPhone) wins the contest.
Update 2009.09.04 — Dell’s latest quarterly year-over-year profits are down 23%.
Update 2009.10.19 — Mac sales up 17% from the year-ago quarter. And they’re higher than any quarter in Apple’s history — including holiday quarters (which this wasn’t).
Update 2009.11.04 — iPhone app count now past 100,000.
Update 2009.11.05 — Steve Jobs named Fortune’s “CEO of the Decade.” Apple now has no debt and greater liquid assets than any other tech company.
Update 2009.11.10 — Apple’s iPhone profits overtake Nokia’s, putting iPhone in the top spot.
Update 2009.11.12 — iPhones are now 17% of all smartphones sold worldwide.
Update 2009.11.19 — Dell’s net income drops 54% from the year-ago quarter.
Update 2009.11.23 — The iPhone is now 50% of all mobile data traffic in the USA, UK, and worldwide.
Update 2009.11.25 — Last month Apple received nearly half of all desktop computer retail revenue in the USA.
Update 2009.12.17 — In about a year in Japan, iPhone takes close to half of the smartphone market.
Update 2009.12.21 — January-October 2009 data show that more iPhone 3G phones are in use than any other single model of mobile phone in the USA.
Update 2010.01.25 — Mac sales up 33% from the year-ago quarter. iPhones up 100% from the year-ago quarter.
Update 2010.02.01 — NPD now reports that 90% of all $1,000+ computers sold in the last quarter of 2009 in the USA were Macs. That’s not just by revenue, it’s not just by retail, and it’s not just by laptops.
Update 2010.02.05 — Former Microsoft VP describes Microsoft as a “failing,” “clumsy,” “uncompetitive,” “inept,” and “dysfunctional” company, crippled by “internecine warfare,” that has experienced “a steady exit of its best and brightest.” “It’s not an accident that almost all the executives in charge of Microsoft’s music, e-books, phone, online, search and tablet efforts over the past decade have left.”
Update 2010.02.09 — The iPhone is now 25% of all smartphones sold the USA.
Update 2010.02.25 — Apple just sold its 10 billionth song on iTunes.
Update 2010.03.04 — Apple named Fortune’s most-admired company for the third consecutive year.
Update 2010.03.14 — Total remote access Windows trojan found in factory-fresh Energizer USB charger software install. Apple’s market cap now about equal to Walmart. Mariposa botnet client found on factory-fresh Android phone.
Update 2010.03.19 — Three pieces of malware found on up to 3,000 HTC phones.
Update 2010.04.24 — iPhone is now 72% of the Japanese smartphone market.
Update 2010.04.30 — Apple passes Motorola to become largest US phone maker. Major provider of Windows anti-virus software accidentally breaks large number of its users’ PCs.
Update 2010.05.17 — The iPad sells a million units in less than a month.
Update 2010.05.26 — Apple’s market cap now larger than Microsoft’s, putting Apple in the number one spot for tech companies worldwide, and the number two spot for American companies of any kind (behind only Exxon Mobil).
Update 2010.06.04 — Windows Mobile game silently calls Somalia and Antarctica, costing its users over $6 per minute. Apple is the only US computer maker to outgrow the market in the January-March quarter.
Update 2010.06.14 — Factory-fresh Olympus cameras found to carry Windows virus. Former high-level Microsoft employee recommends 30,000-40,000 job cuts (about a third of Microsoft’s current workforce).
Update 2010.06.22 — The iPad sells three million units in well under three months. Apple stops taking pre-orders for the iPhone 4 after receiving 600,000 of them.
Update 2010.07.03 — The iPhone 4 sells 1.7 million units on its opening weekend. Dell reportedly sells many millions of defective PCs and lies about the cause of the problem.
Update 2010.07.09 — The just-released-then-cancelled Microsoft Kin phones are alleged to have sold only 503 units in their few weeks on the market. Fortune magazine picks Steve Jobs as the smartest CEO in tech, and Apple’s Jony Ive as the smartest designer. Apple now has more cash than any other American company of any kind.
Update 2010.07.20 — The iPhone 4 sells three million units in its first three weeks. Apple has its best quarter ever, with profits up 77% from the year-ago quarter.
Update 2010.07.23 — Dell ships computers with physically undeletable (i.e. hardwired) malware. Dell settles with SEC for $100 million after being found to have padded their books for about twenty consecutive quarters with under-the-table, don’t-use-AMD’s-chips payments from Intel. “[The SEC] claims that, at their peak, the exclusivity payments from Intel represented 76% of Dell’s quarterly operating income.”
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