Issue #33

May 2011

Apple is the success story of this generation.  From tails between their teeth, a paltry $150 million loan away from insolvency (from Microsoft no less!) in 1998, Apple rose to dominate the phone, entertainment and rich media industries.  It’s been enough to add $350 Billion in market cap, and make it the second most valuable franchise in the world.  But for all that success, Apple still gets in its own way.  Still more than 90% of the PC market is PC-based.  Although many applications are becoming “browser, web, or cloud-based,” for most corporations, their critical applications only run on Windows (or Linux) machines.  Mac users are shut out.  Or are they?  What if Apple could offer two-pound laptops (the Macbook Air 11.6 inch) that run a dually configured, Windows/Mac operating system?  Wouldn’t corporations buy those two-pound laptops?  Forget corporations — how about small businesses, which make up 85% of all businesses?  What’s stopping them from the hardware nirvana of Mac products?

A few years ago, Apple switched over to Intel chips, which do have the capability to run Windows.  But here’s the catch, YOU, gentle user, have to install Windows yourself.  Sounds like no real big deal, right?  Well, not exactly.  Let me share with you my recent experience.

A few weeks ago, I could resist no longer.  After having used IBM Thinkpad notebooks for the last 6 years, (you know, the ones with the funny red button in the middle for a mouse that functions as a mouse and which I hugely prefer to touch pads).  But a lot has changed,  and it seems that the IBM machines are about 2-2.5 times more expensive than those made by many other PC manufacturers, such as ACER.  So I bought an 11-inch Acer Timelinex.  It had a huge hard drive and a big beefy Intel CPU.  But, alas, my move cost me.  I didn’t like the keyboard.  If you don’t like the keyboard, what’s the point of having a laptop?  Also, it has a plastic case, and that seemed a little clumsy.  I did get it to run decently at home and in the office, but I discovered that a laptop with a keyboard I didn’t like was just not the device I wanted to schlep back and forth from the office.  Maybe it was my indecision about where to use the machine that frustrated me, but eventually I spilled my morning cereal on the keyboard I didn’t like.  I thought, “Great, problem solved!”  But, it kept working.  Then the charger went missing.  Is someone trying to send me a message here?

I dutifully went to back to the store, paid another $60 for a charger, and thought I’d just make due.  But then, the machine stopped charging, randomly, with the new charger.  I got it fully charged and went to give a powerpoint presentation for Rotary Club on “The Wacky World of Fantasy Baseball,” only to have the presentation completely collapse. It had functioned perfectly during setup, but at the beginning of my presentation, it died — as in would not start, would not reboot, just gave me a dead black screen. Do you begin to sense that I was getting fed up with my Acer laptop?  Surely, this was a sign to go back to Mac, right?  Besides, these machines keep getting more and more beautiful (especially the new Airbooks.)

I’m a very impatient guy when it comes to computers — or when it comes to waiting in traffic. I’ll happily drive farther rather sit and breathe the exhaust of the fellow travelers around me.  Perhaps some of the new technology can bring real-life speed back into the computer user experience.

Let’s start with discussing the advent of solid-state hard drives.  The tech industry has finally begun to retire the spinning hard drives.  Solid-state drives, similar to flash memory (like a smart phone), can enable the laptop to start instantly, rather than needing to “spin up.”  That sounds hard to beat.  So I broke down and ordered the new 11-inch Macbook Air through Apple Business sales.  It arrived less than a week later.  The beauty — ooh, ahh — of it spinning up, with gorgeous graphics!  Since the 64GB solid-state drive version cost $999, and another $100 to upgrade the RAM from 2GB to 4GB, I was in business. Or was I?  I’d foregone getting the 128 GB solid-state drive, because that extra 64GB, cost $300.  That seemed mighty pricey.  But Apple Business Sales did not ask me if I were going to install Windows.  Frankly, I can’t remember how much I emphasized that it was my intention to do so.  I’m pretty sure I mentioned it.

You see, this article is all about the business opportunity that Apple has. The company could capture a significant share of the corporate and small business laptop market share by offering Macs that are dually configured to run Windows.  Small business guys really have no interest in partitioning hard drives or installing Windows software, but that’s what Apple currently expects us to do.  This is stupid.

I’m going to take you through my step-by-step experience of trying to install Windows on my Macbook Air.

First, I went to the Apple store in Walnut Creek around 7:45 on a Wednesday night.  Here’s how the first conversation went:

DB: I need to configure this to run my financial application in Windows.

Apple Guy: Well, you’ll need Windows.  You can run it in Boot Camp Assistant.

DB: Okay, what’s Boot Camp Assistant?

Apple Guy: Boot Camp Assistant allows you to run Windows on the Mac.  Or you can use a “Windows Emulator,” Which will virtually run Windows.

DB: What’s that mean, “virtually run” Windows?

Apple Guy: It runs a program, within Mac, that emulates Windows.

So far, so good.

DB: “But does it do it cleanly, will my Windows application work just right?”

Apple Guy: “Yes, probably, but maybe not exactly like it would if it were in Windows.”

DB: “What will it cost?”

Apple Guy: “The emulator will cost $80, and you will need to buy the Superdrive for $80 to run and load the program.

DB “But it won’t work as clean as installing Windows?

Apple Guy: “Probably not”

DB: “…and I need need to spend $160 plus buy Windows…”  (I can’t remember if he said that I also have to buy Windows. But suffice it to say, it seemed to be a best practice recommendation, to buy Windows and install it, using the Boot Camp assistant.

Now I ask you, why do they call the program “Boot Camp Assistant.”  Why do I have to decide how to get the Mac to run Windows?  Imagine you are buying a TV and you have to decide whether the machine will install FAT or NTFS decoding systems.  Then you have to have a detailed conversation about that before you buy the TV.  Or better yet, you’re buying a car, and you have to have a discussion with the car engineers about what type of catalytic converter you need to use?  Is that really a conversation that you want to have?

I just wanted my Mac to run my Bank of New York trading application.  Why can’t Apple deliver me a laptop that does that?  This is business sales! Business sales is supposed to make it EASY for business owners to be customers, isn’t it?

Back to meeting #1 in the Apple Store on Wednesday night.  

So we decide, I decide, that I’ll do it the seemingly “right” way, with no complicated “emulator” software.  I’ll just go buy a copy of Windows.  Wait, buy a copy?  My powers of deduction “spin-up” (albeit slowly, like the cranky old hard-drive I’m trying to be rid of…)

DB: You mean that this is an Intel chip, but I have to BUY a copy of Windows to use it as such?

Apple Guy: Yes

DB: (thinking) Well, how much can a copy of Windows cost?  I mean, I know that Microsoft typically gets approximately $40 for their Operating system on new PC’s which PC manufacturers pre-install for customers.  So the off-the-shelf price should be, at most, double that price, right?

WRONG.  The Windows upgrade price is 3x that price — or $120 to $140.  But I don’t have a copy of Windows to upgrade because I’ve bought a Mac Machine, and it doesn’t come with Windows!  The next day, I go to the store and figure out that it’s going to cost me $200 for Windows 7.  So now, I’ve put just over $300 and about an extra three hours of time into this project.  So the fresh price of a home (not even the professional edition), of Windows 7, even at the super discount electronics store is a full $200.  And that’s before tax.

The next day, I fire up my “Boot Camp Assistant” and copy the Windows Support Software, running on the Mac, to the CD in the Superdrive.  So far so good.  Then I instruct Boot Camp Assistant to partition the hard drive.  You see, in order to run two different operating systems, you have to divide the hard drive into two.  OK, that can’t be that difficult, can it?  I select “partition.”

Nothing happens. I’m stymied.

OK, finally, I give up.  Life takes over. 

A few days later, I make it back to the Apple Store. It’s a Saturday afternoon.  I’ve got my Windows 7 in hand, and I figure, it can’t be that hard, installing it.  I must just be missing something simple…

It was a busy Saturday.  I came, armed with my new Superdrive, the Windows 7, the CD-Rom with the Windows Support Software which I had downloaded on to the CD Rom as a first step in the “Boot Camp Assistant” program.

Now it’s beyond me why its necessary to download “support software” for loading Windows, but apparently it is.  Remember, this is an “Air” machine, meaning it doesn’t even have an Ethernet cable slot.  If your WiFi isn’t working, you can’t access the Internet. Back to the logjam with installing Windows.

The hard drive refused to partition.   I had loaded some pictures and videos. (Videos, of course, take up a lot of space.)  The business salesperson who was helping me couldn’t figure out why the drive wouldn’t partition.  He went to speak with Maddie, the lead technical wiz.  I asked Maddie if she had ever gotten Windows to successfully run on a Mac.  She said she had successfully done it once for her mother.  I asked her how that went, she grimaced and said it have been very painful.  Remember, Maddie is the lead technical wiz of a store that sells $50 Million in computers and peripherals annually.  If it’s painful for her, how’s it going to be for the typical small business owner, who is expected to install Windows himself?

So Maddie didn’t have an immediate solution either.  In fact, my 64GB hard drive, that had been showing 40GB free when I had tried to do the partition myself, was now showing just 30 GB available.   A few minutes earlier, when the sales guy was trying to help me partition, the machine memory was still showing 40GB available.  But in the process of trying to get the partition to work, another 10GB “disappeared.”  Computer memory and system diagnostics can operate in strange ways that are opaque to this gentle user (and maybe most of you, too?).

By this time, I’d been in the Apple Store for more than an hour.  Biz Sales Guy was conferencing.  Maddie returned, with the Manager of Operations, Tiffany.  Tiffany was a razor-sharp, woman who has about 15 years of retail experience and manages this store that has $50+ Million in annual sales.  My impression was that she wanted to solve my problem.

While they’d been conferencing, I decided to trash all the photos and video in an effort to find enough extra disk space to successfully partition the unit.  On this 64GB drive, that produced another 20GB of space or so, somehow, the 10GB of videos, was being double counted, or something, go figure.  But still, the machine refused to partition with Boot Camp Assistance.  I suggested to Maddie that it sounds like I was going to need the full-size solid-state drive, the 128 GB version, if I am going to install and run Windows 7. Everyone agreed. The only 128GB they have is with the 1.6 microprocessor, and it costs another $100, for a total price of $1399 before extra software.  I told Maddie I’d be okay with buying that one, if she’d mark it for $1299.  She said she could make that work.  Progress.

She even remembered to add in the business discount of 5%, so my price was pretty reasonable, less than $1400 with tax.  I was, however, running out of time, so I took the new machine, and left my old one with Maddie.  She said she’d mail it back to Apple Online Sales.  You see, I couldn’t or wasn’t supposed to actually return the machine to the Apple Store because I’d bought it through online sales.  This creates what’s known as “Channel Conflict.”  Sales channels are silos.  It’s a common rule that product is not to be swapped across channel lines.  If you got your computer from Online Sales, then it needs to be returned to Online Sales.  But, I was well-pleased with the pragmatic approach and flexibility of Operation at the Walnut Store.  I was not happy about Apple’s policy of refusing to pre-configure their computers with Windows.

Unfortunately, this story goes on.

I’d run out of time that Saturday.  I took my new 1.6GHz 128GB new Apple 11.6 Air home, and figured that I could now partition it myself.  It must work, right?  About two days later, I found the energy, to attempt to do so again.  And, voila!, it partitioned successfully.  Then I loaded the Windows 7 on to the machine.  This takes nearly an hour.  That seems like a really long time, but who’s being critical?  Once Windows had finished loading, I tried to get it to run, but it wouldn’t connect to the Internet in Windows mode.  In fact, it wasn’t functioning in anything but a basic, “safe” mode of Windows. Obviously something was missing.  I went back to the Apple Store.  They couldn’t actually figure out what was wrong.  It was also too busy in the store to really get help, so I resigned myself to the idea, of calling the Apple Care online to try to finish the install.  I called them that afternoon, and we realized that it was the Windows Support Software that was missing.  There was another glitch in the installing and partitioning of the drive, too.  I can’t remember who showed me that; I believe that when I partitioned, it refused to partition the drive, under the regular options.  But Apple Care on the phone, told me to press the “advanced” button, in the Boot Care Assistant software during the partitioning phase, and Voila!  This had some feature of allowing the FAT or NTFS partition to occur.

Anyway, the other problem was that ”Windows Support Software,” which I have mentioned before, was now missing. I’d previously downloaded in Win Install 1.0, or thereabouts.  It occurred to me, that this element was missing, and somehow, with the telephone support, this got loaded onto the machine. I can’t recall if it got loaded when I was in the Windows or the Mac mode.  I think it was when I was in Windows mode.  In order to switch between the one operating system and the other, you must, upon start-up, press on the option button, which will then give you two symbols for the OS, and you have to choose which one you want.

With the install of the “Windows Support Software,” Windows got the necessary drivers to use its normal stuff, including the wireless card (so that now the machine would connect to a WiFi network, when it was in Windows mode).  I was very happy to have completed this odyssey, or so I thought.  I then loaded the other software, including the Bank of New York trading application, which was the sole reason that I was attempting to get Windows to run on this MacBook Air in the first place.

In so many ways, this is a very pleasurable computer to work on. At just 2.3 pounds, and less than 8 inches wide, the laptop has a good, full-size keyboard, yet it has a footprint smaller than a piece of paper. It’s only 1/2 inch thick.  It’s a beauty to work on, and I am typing this article on it right now.

So my Bank of New York application loaded correctly, and it began working.  Nirvana — success, at last, was mine.

Nirvana was fleeting.  Within the next days, the machine began to crash when it was in Windows mode.  I accepted the problem and made 3 Genius Bar appointments (15 minutes each) to inquire as to what to do with my crashing machine.  At the appointment, the tech guy and I agreed that a new installation of Windows was the way to go.   This took about another hour, and I think it was at this point that I realized it still wouldn’t connect to the Internet, and again had the problem of the Windows Support Software.  Anyway, I don’t quite remember the details, but I got things working again.   About a week later, I left for my mini-sabbatical in Berlin (where I’m typing now).

 

June

When I started using the machine with the Windows side, I started having crashing problems again.  Finally, I gave up with using Windows altogether.  I uninstalled the partition, and now I am simply using the machine in Mac OS only.  One very unpleasant residual of the affair remains however.  The machine now turns itself off, or powers into Windows mode, even though I’ve removed the partition, then it tries to boot up in Windows, but can’t find the “boot up disk,” so it fails.  I’m forced to do a hard shut down, and restart when this happens, and press the option key quick enough, so that I can have it boot in the MacOS.  Now the MacOS is the only option, but if I do not select this option fast enough, it slides into the Windows boot-up option, then dies pitifully in some loop looking for the Windows boot disk. If you want more details, schedule a meeting with Bill and Steve, the masterminds behind these to lovely evil empires.

Did I just call Apple evil?   Did I mean it?  Well, kind of.  The metaphor that currently seems to apply to Apple (and did to Microsoft as well), is that “pride cometh before the fall.”  Apple Corporation is acting pig-headed, in its asinine policy to expect customers to configure and install an operating system themselves.

Apple’s momentum is so large right now, that NOW is the time, to invade the PC notebook market, and offer preconfigured Windows operating systems on Apple laptops.  The corporate and small business user would love to buy some apple products particularly for their mobile needs which require a keyboard.  The iPad, isn’t enough.  Apple’s strategy to offer PCs on Intel chips that will run Windows is ill-conceived because it places and unacceptable burden on its customers to install operating systems on their own accord.

No wonder the business world continues to mostly ignore Apple.  Apple is ignoring the needs of business users. Most business users understand this intuitively.  I, unfortunately, have offered myself up here as a guinea pig, to use this beautiful machine as a PC; to be an early adopter of this technology.  To date, as chronicled here above, this early adoption adventure has been an abject failure.

Perhaps somebody at Apple will read this column and actually care and respond is some meaningful way.  One can hope!  A Phoenix has risen from its own ashes.  Can that Phoenix swallow its ego and serve the needs of business, to deliver beautiful products to laptop business users using Windows?  Is anybody listening?

This article is a total workout.  I’ll follow up with this story as it continues to unfold, and tie it into the enormous business opportunity that Apple seems to be squandering.  That said; the stock isn’t expensive.

Your Airbook Guinea Pig,

Daniel

Barnes Capital LLC is a Registered Investment Advisor located in downtown Lafayette in the Bay Area.  We manage trusts and retirement income portfolios. Financial planning is an integral part of our process. We protect client capital using municipal bonds, high-quality dividend-increasing companies and precious metals which have protected wealth in every epoch spanning five millennia of bankruptcies, inflation and other forms of attrition. Call 925-284-3503 and visit http://www.barnescapital.com