The .Mac gap

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When 15GB is not enough

It’s interesting how the Worldwide Developers Conference has become the new Macworld New York, especially since the old Macworld New York (which is the old Macworld Boston) has become the new Macworld Boston. Last year at the WWDC, Apple introduced us to Panther and the Power Macintosh G5. This year Apple CEO Steve Jobs showed off Tiger (OS X 10.4) and new aluminum LCDs to match the G5 towers. This is a good thing because I have been fretting about my 23″ Cinema Display clashing with my Dual 2.5GHz G5 tower once it arrives, and had been anxiously watching HGTV in hopes of getting some decorating tips on how to wed the two disparate styles.HangZhou Night Net

Part of the Tiger preview revolved around integration with .Mac. Instead of using iSync to keep your bookmarks, Address Book, and calendar synchronized, Tiger replaces it with Sync Services. Sync settings can be controlled from within Sync Services aware applications, and the synchronizations themselves will be done transparently in the background. Users will be able to fine-tune the .Mac synchronization as well, creating different settings for each of the Macs they have set up to synchronize via .Mac.

That’s swell, Apple. Now where’s my gigabyte of e-mail and file storage?

In the beginning there was iTools

And it was good.

When iTools was unveiled at Macworld San Francisco in January 2000, it was actually a good deal. For the low, low cost of… nothing, Mac OS 9 users got 20MB of storage via the iDisk and a e-mail account. Of course, the iTools e-mail service was POP only, meaning no web mail, but iTools users would still be able to access their e-mail via any web-based service that allowed for checking external POP accounts.

iTools’ e-mail offerings improved over time. In March 2001, Apple began providing SMTP services. That made e-mail accounts more portable, as users didn’t have change their SMTP settings when traveling. Apple then transitioned the service from POP to IMAP, allowing for easy access from any e-mail client supporting IMAP connections. Finally, May 2002 saw the beta of .Mac Web mail. Finally, the iTools e-mail offering was ahead of the game. In addition to the browser-based access offered by services such as Hotmail and Yahoo!, iTools also provided a whopping 10MB of e-mail space. Ten megabytes! Who could ever conceive of using all of that space?

And iTools begat .Mac

And it was still (sort of) good.

All good (free) things come to an end, especially if you’re a Mac user. In July 2002, Apple announced that iTools was being replaced with something called .Mac. The good news was that subscribers’ iDisks got larger (to 100MB) and their e-mail storage capacity grew as well (to 15MB). The bad news was that the service would now cost US$99 annually.

To take some of the sting out of charging for what was a free service, Apple offered value-added items such as anti-virus software (Virex, for the hordes of OS X virus in the wild); Backup, a simple backup utility that would back up files to your iDisk and other storage devices; some free photo prints for users of iPhoto; additional e-mail accounts for US$10 a pop; and more. As expected, there was much outcry throughout Macland about Apple charging for what was formerly a free service. There were predictions of mass defections, and after the 60-day .Mac trial accounts expired, many users decided that forking over a C-note every year was not worth what they were getting.

However, many other iTools subscribers stuck around for .Mac. I was one of them. Why did I keep it? Part of it was inertia ? my e-mail address had been my primary address since iTools was launched and I didn’t really want to go to the trouble of telling everyone it changed. I also liked my iDisk. Having a child and with the grandparents 1,000 miles away, things like being able to painlessly publish photos and movies made .Mac very attractive option to me. The extras? Well, we ordered the photo prints (and they turned out nice), and I have faithfully kept my Virex virus definitions up to date. On the other hand, I have weathered many a web mail outage (especially in late 2002 even after the beta concluded), and have suffered through the somewhat-painful (although improving) WebDAV implementation on Mac OS X. The tight integration with the OS is great. In fact, .Mac has been a good value. But that is changing…

Excuse me, did you say one gigabyte?

In what some thought was an April Fools joke, Google announced Gmail. The details have become well-known by now: 1GB of storage space, ads served based on the content of the e-mail, a nice web-based interface, and Gmail invitations selling for up to US$70 on ebay at one point.

In launching (beta, so far) Gmail, Google instantly upped the ante on e-mail offerings. One gigabyte of e-mail storage was far more than any other account, and it was free to boot. Never again (or at least not for several years) would anyone need to worry about deleting e-mails to stay under a meager storage limit. Questions arose about the costs of providing a gigabyte for each of what will be millions of users, but Google claimed to be able to pull it off for under US$2 per subscriber. Keep in mind that figure only covers those who actually use most of their space ? many users will never even come close to that.

Eventually, most of Google’s competitors responded in kind. Earlier this month, Yahoo upped its e-mail storage limit for subscribers to 100MB (Mail Plus members get 2GB for US$19.95). Hotmail then followed last week with an increase all the way up to 250MB. Other services (such as Spymac) are also now offering a gigabyte of mail storage to their customers. In short, Google single-handedly forced many of its new competitors to alter their strategy of steering customers who wanted extra storage into paid subscriptions. Instead, Hotmail, Yahoo, and others are being forced to give more for less.

Just about everyone but Apple, that is.

The .Mac gap

The moment other services started following Gmail’s lead, .Mac’s value proposition became weaker. As I was cleaning out my e-mail box last month to ensure I stayed below the 15MB limit, I thought about how this hassle would disappear from my life if I only had more space. Chances are, I’m not the only one thinking such thoughts.

The present incarnation of Apple is focused on maximizing revenues. .Mac has fit nicely into this strategy: in his WWDC Keynote speech yesterday, Steve Jobs remarked that they have 500,000 paying customers for .Mac. Assuming that they all pay full price for the service, that works out to roughly US$50 million per year of revenues. While that is a relative drop in the bucket compared to the US$1.909 billion in revenues Apple had for the second quarter of FY 2004 alone, .Mac likely contributes more than that to Apple’s profitability. It’s a relatively high-margin product.

Would people bail on .Mac because of the e-mail storage issue? After all, .Mac offers a host of other features: iSync, Backup, iDisk, the Mac OS X Learning Center, and a tight integration into OS X (which will become even tighter in Tiger). Problem is, how many .Mac users actually take advantage of those items? Those who partake of the entire .Mac experience are likely to stick it out. It’s those who use .Mac primarily for e-mail that Apple needs to worry about.

What percentage of .Mac subscribers are in it primarily for the e-mail? It’s difficult to say. However, an admittedly unscientific poll I started in Macintoshian Achaia showed that 50% of the respondents use .Mac primarily for the e-mail. While the sample size can hardly be considered representative, if even 25% of current .Mac users are subscribing primarily for e-mail, Apple should be concerned about that.

Sure, people have been able to roll their own .Mac for some time: just sign up for a US$5 per month web hosting account that offers IMAP, register a domain, and you’re all set. Better yet, get a static IP (or an account with and host it yourself.

This is different. Once Google gets Gmail working smoothly with Safari (and it works pretty well now), there will be no barrier to entry for any Mac user. Sign up and kiss your e-mail storage concerns goodbye for the foreseeable future. Apple may not consider .Mac to be a competitor to Gmail, Hotmail, and Yahoo, but the truth is, Gmail is commoditizing web mail. Many of those who use .Mac primarily for the e-mail will be tempted to cancel their .Mac account at renewal time and get a free account somewhere else with much more storage. Unless Apple wants to see an exodus of .Mac subscribers, they need to make some changes.

Actually one change.

Increase the storage limit of .Mac. 15MB of e-mail storage is no longer good enough. Like it or not, consumer expectations are changing as a result of Gmail and its gigabyte of storage. Tired of the megahertz gap? Unless Apple makes some changes, they will be staring at a megabyte gap as well. Storage is relatively inexpensive these days, much cheaper than when iTools was first announced four-and-a-half years ago. It’s time for Apple to pass on some of those cost savings to its customers. Give .Mac users 250MB of e-mail space, and another 250MB of iDisk room. No one likes to go through their e-mail folders and iDisks and delete and/or archive stuff. And there’s no reason that .Mac should have to do that with their e-mail.

Making those changes will not only keep customers from defecting to free alternatives, it has the potential to grow the .Mac subscriber base. The current 15MB of e-mail is not attractive anymore. However, 250MB of space along with all the other goodies that go with .Mac will make it a much more attractive offering and likely lead to a larger subscriber base. Yes, Apple will incur additional costs from increasing the current limits. Those should be more than offset by new subscribers.

It’s time to close the .Mac gap.

Quick hitsSpotlight

One of the more interesting features of Tiger is Spotlight. It looks as though Apple has turned its attention towards searching the desktop in much the same way as Microsoft, Google, and Gnome. Spotlight will be accessible from throughout OS X, and will include “intuitive search” capability. Spotlight will combine metadata and indices to return the fast search results, but questions have arisen about how new data will be added to the search index. According to some information made available at WWDC, it turns out that Spotlight’s daemon is hooked into the kernel, so it will get file-related notifications “as they happen.” This should mean that the hard drive won’t need to be reindexed periodically to keep the search results up to date.

Alas ADC, we hardly knew ye

The arrival of Apple’s new displays means a farewell to ADC (Apple Display Connector). ADC carries power, video, and USB signal over a single cable, reducing cable clutter if you have a video card with an ADC connector (and increasing it if all you have is DVI). While I have been a fan of ADC because of the aforementioned features, it unfortunately never caught on much beyond the Cinema Displays (Formac built some beautiful ADC-equipped LCD monitors). Moving away from ADC to standard DVI connectors is a solid move for Apple.

iTunes Music Store in Europe

As nearly everyone knows by now, iTMS finally crossed the Atlantic and landed in the UK, France, and Germany. Preceded by Napster and a host of other European download services (most of which were affiliated with the UK’s OD2), Apple failed to sign some of the independent labels which did not like the contract terms they were offered. Despite that, iTMS managed to sell over 800,000 songs in its first week of operation, more than OD2 had sold in all of 2004 (OD2 was purchased by US digital media company Loudeye last week). It looks like iTMS has translated rather well in Europe, and may be on its way to establishing itself as the online music store of choice in Europe as well as the US. Now if they could only make enough iPod Minis to sell there…