Switched to Apple / Mac

Ode to Macworld?

December 17th, 2008

Yesterday Apple announced that Steve Jobs would not be doing the keynote at the upcoming Macworld in January and that it would be their last Macworld. There has been a lot of media about this and most of it seems to defend Apple’s decision and attempts to elaborate on why this happened. As of now there I have seen four main points being raised and I think that all of them are off the mark.

1. It costs too much for Apple to participate at Macworld for very little return

IDG, the parent company that puts on Macworld Expo every year has a sales office at the show and a lot of the exhibitors contract for next year’s booth during the current show at this office. I was there last year and commented that we would like to have that big booth in the middle (Apple’s location) and I was told that it costs $1.6 million for that spot. I replied “No problem, we’ll take it” only to be told that it was reserved for Apple and that we couldn’t buy it for $1.6 million or any amount of money. Apple has a lock on the center of the exhibit floor. I’m guessing this will be available for the 2010 show though as Paul Kent has stated that the 2010 show is already a go even without Apple in it. Let’s say that the cost to deck the booth out with the big screen and furniture they already own along with the signage for the new products and such costs the same as the booth and that would out it at $3.2 million. It is a Monday through Friday show but lets include the preceding and following weekends for setup/prep and teardown and assume Apple has to pay some overtime to their hourly employees who already get paid during the week whether they are at Macworld or in the office, hire some security guards, and reimburse some travel expenses even though it 40 miles from the Apple campus. Let’s say that costs another $800,000 for the week. For good measure, lets throw a million dollars on top of that pile for miscellaneous and come up with $5 million dollars. Maybe I’m a little low or high but I would say that is a fair guess of what it costs for them to participate for the week.

For the quarter ending September 27, 2008, Apple reported revenue of $7.9 billion and net quarterly profit of $1.14 billion. That’s 1.14 billion for 3 months or 1,140 million dollars. The cost for the expo participation would be .4% of one quarter’s profit. So is money really the issue here? I don’t think it is a good argument and the numbers do not support it. Even if I were way off on my calculation on how much it costs to exhibit and it is $20 million instead of $5 million then we are still talking 1.6% of one quarter’s profit! I’m not an accountant so feel free to check my math.

It’s not about the money.

2. Big trade shows are dying

I won’t argue that big shows like Comdex and the like seem to be dying off. However, Macworld Expo is not really a big general audience trade show. In terms of trade shows it is very unique in the fact that it surrounds one company. Although Microsoft was a big player at Comdex the show was never Microsoftworld Expo. The show was never about a celebration of all things Microsoft. Microsoft was just another player in the commodity based PC world. Shows like Comdex fail because commodities do not generate excitement and buzz. Who wants to go see a show with a bunch of cheap PC parts with no community around it.

Moreover, this is a local event for Apple. It is in their backyard! People commute daily longer than the distance from Apple HQ to the Moscone center where Macworld is held. It’s like a huge birthday party every year for Apple where they are the guest of honor and celebrated by their adoring friends and fans. I don’t really consider that a trade show. What Macworld Expo has in common with a trade show is that they have an exhibit hall and conference programs. The similarity ends there. Macworld Expo is more about community. The once a year gathering of the Mac faithful and Apple’s biggest fans. It is a concert with Apple as the main act on center stage.

Macworld Expo isn’t your typical trade show

3. Macworld forces Apple into scheduling their product releases around the show

The simple fact here is that it does not. Yes, people have come to expect big announcements at the Expo and I’m fairly certain Apple has helped accommodate this by timing releases around the show, but they also release products and have events outside of the show. If this was really the issue at heart then all Apple would have needed to press release is something like this:

“We’re no longer going to time our release around Macworld Expo, but we’re still coming to party and have a great time with our supporters.”

Some people would be a little disappointed but it would not be a huge deal. I’m sure if Jobs got up and did the keynote without announcing a single new product then people would still show up and stand in line for hours to see it.

Apple can release products whenever they want.

4. “Apple Stores: They’re like mini Expos!”

Oh, but they are not. Jason Snell jumped on this one too and if you look at pure numbers then I could see how you might buy into this line of thinking. Apple says that they get 3.5 million people a week through their Apple retail locations and that this is tons better than the 40,000 or so people that show up to the Macworld Expo once a year. However, here’s a big point that is being missed: those 40,000 are a tiny subset of a larger community. For example, a local Macintosh User’s Group (MUG) may have 100 members with only one of those attending the Macworld Expo. Its the most passionate fans of Apple that show up to the show every year. They return and spread the word about all things Mac to a much larger community including those at Apple retail stores. Guy Kawasaki understood this type of evangelism. Apple seems to be missing this. Perhaps they need to pick up and re-read Leander Kahney’s Cult of Mac book.

Apple Retail stores do not create the raving fans than Macworld Expo does.

If all these speculations are wrong, then why did Apple decided to pull out Macworld Expo? The simple answer is: I don’t know. Only Steve Jobs and those in Apple really know the reason but I think it is a mistake. It is never a good idea to shun your most hardcore raving fans and there will be some consequences to to Apple’s decision.

Will there be a Macworld Expo after 2010? Maybe.

If so, will it be a smaller event? Probably.

Has Apple made mistakes in the past? Yes.

Time will tell.

Entry Filed under: General, Macintosh