You have heard it before, probably during the late 90’s from an open source proponent or a Netscape executive, Microsoft is on the way out.  Microsoft will loom large in the market for PC’s indefinitely, but growth in the PC market is shrinking.  A graph of PC sales over the last twenty three years illustrates this.  We have not reached the peak in terms of the number of PC’s sold, but a scan of the growth rates indicates a decline.  The mix of PC products consumed is also experiencing a significant shift towards smaller, cheaper machines.  This shift in the types of products sold, which is caused by shifts in consumer tastes, combined with smaller growth rates will ultimately lead to a significant reduction in Microsoft’s dominance.

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Bill Gates taught us, and Steve Ballmer has reminded us, that developers are important, if not the lifeblood of a computing platform.  A computer running an operating system without them is nothing more than an expensive way to enable global warming.  So why would Apple, an operating system maker, want to compete against Adobe, a developer?  There are two reasons why Apple makes its professional applications like Aperture for photo organizing and Final Cut Studio for video and audio editing, one, to guarantee a minimum level of software quality that is available to the marginal professional user; two, to enforce its tacit development agreement with Adobe.  To unpack this we need some background on the professional software market.  I will use the photography workflow market as a case study.  In this space Apple produces Aperture, and Adobe produces Lightroom.  [Read more →]

When purchasing a Mac, one has to wonder what Apple is thinking about when it sets its RAM prices.  Does anyone really pay Apple anywhere from $160 - $190 per gigabyte for RAM, when Other World Computing is selling comparable RAM for about $43 per gigabyte?  This is absurd to the point that some rabid Mac fans have wished for Apple to drop its RAM prices rather than introducing a new product at MacWorld.  What economic justification does Apple have for such a pricing strategy? [Read more →]