Subject:  A Lesson from the Apple University Consortium

Friends: Here is something I received in today's mail and I want to share it
with you all.

Arun

--- Forwarded mail from gkd97@tristram.edc.org

Date: Tue, 17 Jun 1997 02:54:39 -0400 (EDT)
From: "LLoyd S. Etheredge" 
To: gkd97@tristram.edc.org
Subject: A Lesson from the Apple University Consortium
Reply-To: gkd97@tristram.edc.org

When Apple introduced the Macintosh, it used a bold marketing strategy to
provide steeply discounted computers to students and faculty at
universities. The strategy helped universities. And it provided a critical
mass of users, a core market for Mac-oriented software, and helped to
establish and maintain the Mac as an alternative operating system.

In the computer industry there will be another, and perhaps more powerful,
historical challenge to Microsoft in the months ahead. It would be in the
interest of Oracle and other companies creating the new Web PCs to make a
similarly bold move to capture the educational, health, and scientific
sectors worldwide, specifically in UDCs, Eastern Europe, the FSU, and
China where a low cost of the new technology would make it especially
attractive.

This strategy could, overnight, capture the non-US market and future away
from Microsoft. And create a critical mass of major institutions and
individual users, worldwide, with shared interests to accelerate the
growth of Internet-based resources for science, education, and health.

The potential savings for education, science, and health in UDCs could be
extraordinary, especially if Oracle et al. adopted a long-term view of
their interests. The manufacturing cost of computer equipment typically is
15% - 25% of retail, and a startup package of 10,000 Web PCs could be
provided at $150 (i.e., $1.5 million) without a notable effect on Oracle's
balance sheet.

Probably, it will be better to sell Web PCs at steeply discounted prices
rather than to give them away. However even scaling a global startup
package to 100,000 units as philanthropy would be only $15 million -
and within the roundoff error of the personal wealth of some of the bold,
visionary, enthusiastic and - in the best sense - playful pioneers of the
computer industry.

Assume, however, that we are talking about a steep-discount program linked
to GDP/capita; a segmented non-profit market of educational, science, and
health users (no-resale agreements, etc.); and $ _x_ million in purchase
funds from the sponsors of GK97 on behalf of their programs and users in
the developing world. . .

Two questions: 1.) Obviously the Apple University Consortium model does
not guarantee long-term competitive success against IBM/Microsoft, but is
it useful to discuss such industry/science-health-education partnerships
that apply the earlier lessons on a global scale? 2.) To develop the
analysis, what _N_ of Web PCs would provide the Oracle et al. innovators
with the equivalent of the critical mass of the Apple University
Consortium, and make it worth their while to adopt the strategy?

Lloyd Etheredge

----------------
Dr. Lloyd S. Etheredge, Director
International Scientific Networks Project
Policy Science Center, Inc.
127 Wall St., Room 314
New Haven, CT 06520
(301)-365-5241 (voice)
(301)-657-4214 (fax)
lloyd.etheredge@yale.edu (Email)



---End of forwarded mail from gkd97@tristram.edc.org