Monday, 10 April 2006
When I wrote about Boot Camp Thursday, I started by observingthat while I and many others were initially shocked by Apple'sannouncement, it only took a few hours before the idea seemedcompletely obvious and not really surprising at all. Piano synthesizer online.
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Boot Camp has opened the door for a lot of additional speculationregarding what this means going forward for Apple. I think it's onlyfair for me to go on the record regarding which of these ideasreally would be shocking, if they were to come to pass.
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Regarding anything related to Apple's strategy going forward, it'sessential to keep in mind just how Apple functions as a business.It's not very complicated. Apple now has two fundamental businesses:selling Macintosh computers and selling iPods. And I think if youwanted to, you could argue that this is really one core business,selling computers, and that some of their computers are Macs andsome are iPods.
I'm not offering this as anything other than a statement of theobvious, but it's apparently not so obvious to many of the punditsspeculating on Apple's future plans.
Selling hardware is their business. That's where their revenue comesfrom, that's where their profits come from, and revenue and profitis what defines a business. Everything else they do is in support ofthis core business. Apple is famous for its software — both the MacOS and their own Mac applications — but they make way less moneyselling Mac software than they do selling Mac hardware. And theiTunes Music Store is just the equivalent of 'software' for iPods.
And so that's the prism through which one needs to view Applespeculation. For any idea, ask yourself this: Would it help Applesell more Macs or more iPods? If the answer is 'no', Apple isn'tgoing to do it, or, if they do, it'd be a genuinely shockingdevelopment.
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All Apple needs to do to be spectacularly successful with itscomputer business in the next few years is to take just a fewsingle digits of market share away from Windows. Monks can into space mac os.
But that doesn't actually quite make sense, because 'Windows' — orthe company behind it, Microsoft — doesn't actually sell PChardware. If Apple is going to grow a few extra percentage points ofcomputer hardware unit sales, those points must come at the expenseof PC makers.
If this growth is driven by Boot Camp (and/or Parallels Workstation,or VMware for Mac, or an Intel-native version Virtual PC, or anyother means of running Windows on Mac hardware), Microsoft may noteven 'lose' anything at all, because customers driven to the Mac forthis reason must also buy Windows if they want to run it.
Boot Camp doesn't pit Mac OS X against Windows, and so it doesn'tpit Apple directly against Microsoft. What Boot Camp does is pit Machardware that can run both Mac OS X and Windows up against allother PC-hardware that can only run Windows.1
Apple Is Going After the Profits, Not the Mass Market
If Apple takes a few additional market share points, it will be atthe expense of companies like Dell, Toshiba, Lenovo, and Sony.What's essential to note is that they're not just going after anyand all of the PC market — they're going after the high end, whichis to say, the profitable end.
Nicholas Carr agrees with me, and he nails it in his analysis of whyBoot Camp matters:
As I've said many times before (too many, in fact), the consumerPC market has, like other consumer markets before it, split intotwo basic segments: buyers of commodities, and buyers of premiumgoods. The money's in serving the latter. That's why, forinstance, Dell just bought Alienware.
In reference to my line that 'Instead of choosing between a WindowsPC or a Mac … you now get to choose between a computer that canonly run Windows or a computer that can run both Windows and Mac OSX,' Carr continues:
I think that's the reason the Apple's stock price has shot upnearly 20% since the Boot Camp announcement yesterday. It's notthat Apple may be able to expand its general market share by acouple of percentage points; it's that those percentage points arelikely to represent many of the most attractive customers in themarket.
And that's Apple's strategy in a nut. Wine para mac sierra.
What would be interesting would be to see computer manufacturers''market share' computed in terms of profits, rather than unit sales.Apple almost certainly makes more profit from a $600 Mac Mini soldthrough one of its own stores or Apple.com than eMachines does froma $500 POS PC sold at Wal-Mart. But in terms of 'marketshare', they each count as one computer sold.
The new deadly world mac os. Whatever Apple's 'profit share' of the PC industry, it must be muchlarger than its 2-5 percent market share. And Apple's strategy seemsclearly geared toward ramping up profits, not just unit sales.
Why Apple Isn't Going to Release Mac OS X for Other PCs or License the Mac to Other PC Makers
One contrary view to Apple's Boot Camp announcement, espoused bothby Paul Boutin in Slate Friday and Robert X. Cringely in anop-ed Saturday in The New York Times, along with numerousother pundits and webloggers high on Boot Camp fumes, is that BootCamp isn't bold or important at all, and that what Apple reallyought to do is release a version of Mac OS X for generic PChardware. As Boutin puts it:
Instead of a disk that allows you to boot Windows on a Mac, whatabout a disk that lets you boot OS X on any Intel-powered PC? Idon't want Windows on a Mac. I want OS X on a PC.
The reason this isn't going to happen — at least not soon — isthat it doesn't fit with Apple's aforementioned business, sellingcomputer hardware. Boot Camp fits because it makes it more likelythat more people will buy Mac hardware, and doesn't make it any morelikely that existing Mac users will switch to buying computers fromsome other company.
Cringely writes:
This strategy would turn Boot Camp on its head, as the companyselling all those $140 [sic] retail copies of its operatingsystem would be Apple. And with hundreds of millions of Windowsmachines in the world, getting even 1 percent of PC users toswitch to OS X would be a huge new business for Apple. It wouldalso create another headache for Microsoft. And that, in theend, is what Apple does best.
The problems with this logic are manifold. For one thing, gainingone percent of the market by selling one percent more of the totalcomputers would be way more profitable than selling that many $130copies of Mac OS X.
According to Apple's quarterly financial statements, thecompany in recent years has consistently hit gross profit margins atad over 25 percent. Apple does not (publicly) break these marginsdown on a product-by-product basis, but I think 20-25 percent is areasonable estimate of their profit for most of their big-ticketproducts.
So, let's say today Apple makes $500 in profit on a $2,500 MacBookPro. Tomorrow, in Boutin's and Cringely hypothetical world whereApple sells $130 copies of Mac OS X for any PC, they might makeabout $100 in profit when someone buys a Sony Vaio and a copy of MacOS X.
Cringely's statement that 'getting even 1 percent of PC users toswitch to OS X would be a huge new business for Apple' ignores thefact that it might also completely sabotage Apple's existing andvery profitable business of selling Macintosh computers. Cringelyseems to be making the assumption that everyone who's currentlyusing Apple hardware would keep buying Apple hardware, and thatthese retail copies of Mac OS X that run on generic PCs would besold only to new customers.
If that were the case, sure, it would only add to Apple's success.But that wouldn't be the case. There can be no doubt that manycurrent Mac users would buy other-branded hardware, costing Applehundreds of dollars in profits. To make up for each such loss, Applewould need to gain three, four, or maybe even five new customers.
That's not to say all Mac users would abandon Apple hardware. Buthundreds of thousands would, and Apple would need to gain millions ofnew switchers just to compensate for that lost revenue and breakeven; otherwise they'd lose money on the endeavor, even whilegaining many more users of Mac OS X.
If Apple takes a few additional market share points, it will be atthe expense of companies like Dell, Toshiba, Lenovo, and Sony.What's essential to note is that they're not just going after anyand all of the PC market — they're going after the high end, whichis to say, the profitable end.
Nicholas Carr agrees with me, and he nails it in his analysis of whyBoot Camp matters:
As I've said many times before (too many, in fact), the consumerPC market has, like other consumer markets before it, split intotwo basic segments: buyers of commodities, and buyers of premiumgoods. The money's in serving the latter. That's why, forinstance, Dell just bought Alienware.
In reference to my line that 'Instead of choosing between a WindowsPC or a Mac … you now get to choose between a computer that canonly run Windows or a computer that can run both Windows and Mac OSX,' Carr continues:
I think that's the reason the Apple's stock price has shot upnearly 20% since the Boot Camp announcement yesterday. It's notthat Apple may be able to expand its general market share by acouple of percentage points; it's that those percentage points arelikely to represent many of the most attractive customers in themarket.
And that's Apple's strategy in a nut. Wine para mac sierra.
What would be interesting would be to see computer manufacturers''market share' computed in terms of profits, rather than unit sales.Apple almost certainly makes more profit from a $600 Mac Mini soldthrough one of its own stores or Apple.com than eMachines does froma $500 POS PC sold at Wal-Mart. But in terms of 'marketshare', they each count as one computer sold.
The new deadly world mac os. Whatever Apple's 'profit share' of the PC industry, it must be muchlarger than its 2-5 percent market share. And Apple's strategy seemsclearly geared toward ramping up profits, not just unit sales.
Why Apple Isn't Going to Release Mac OS X for Other PCs or License the Mac to Other PC Makers
One contrary view to Apple's Boot Camp announcement, espoused bothby Paul Boutin in Slate Friday and Robert X. Cringely in anop-ed Saturday in The New York Times, along with numerousother pundits and webloggers high on Boot Camp fumes, is that BootCamp isn't bold or important at all, and that what Apple reallyought to do is release a version of Mac OS X for generic PChardware. As Boutin puts it:
Instead of a disk that allows you to boot Windows on a Mac, whatabout a disk that lets you boot OS X on any Intel-powered PC? Idon't want Windows on a Mac. I want OS X on a PC.
The reason this isn't going to happen — at least not soon — isthat it doesn't fit with Apple's aforementioned business, sellingcomputer hardware. Boot Camp fits because it makes it more likelythat more people will buy Mac hardware, and doesn't make it any morelikely that existing Mac users will switch to buying computers fromsome other company.
Cringely writes:
This strategy would turn Boot Camp on its head, as the companyselling all those $140 [sic] retail copies of its operatingsystem would be Apple. And with hundreds of millions of Windowsmachines in the world, getting even 1 percent of PC users toswitch to OS X would be a huge new business for Apple. It wouldalso create another headache for Microsoft. And that, in theend, is what Apple does best.
The problems with this logic are manifold. For one thing, gainingone percent of the market by selling one percent more of the totalcomputers would be way more profitable than selling that many $130copies of Mac OS X.
According to Apple's quarterly financial statements, thecompany in recent years has consistently hit gross profit margins atad over 25 percent. Apple does not (publicly) break these marginsdown on a product-by-product basis, but I think 20-25 percent is areasonable estimate of their profit for most of their big-ticketproducts.
So, let's say today Apple makes $500 in profit on a $2,500 MacBookPro. Tomorrow, in Boutin's and Cringely hypothetical world whereApple sells $130 copies of Mac OS X for any PC, they might makeabout $100 in profit when someone buys a Sony Vaio and a copy of MacOS X.
Cringely's statement that 'getting even 1 percent of PC users toswitch to OS X would be a huge new business for Apple' ignores thefact that it might also completely sabotage Apple's existing andvery profitable business of selling Macintosh computers. Cringelyseems to be making the assumption that everyone who's currentlyusing Apple hardware would keep buying Apple hardware, and thatthese retail copies of Mac OS X that run on generic PCs would besold only to new customers.
If that were the case, sure, it would only add to Apple's success.But that wouldn't be the case. There can be no doubt that manycurrent Mac users would buy other-branded hardware, costing Applehundreds of dollars in profits. To make up for each such loss, Applewould need to gain three, four, or maybe even five new customers.
That's not to say all Mac users would abandon Apple hardware. Buthundreds of thousands would, and Apple would need to gain millions ofnew switchers just to compensate for that lost revenue and breakeven; otherwise they'd lose money on the endeavor, even whilegaining many more users of Mac OS X.
Boutin clearly recognizes that this would in fact happen:
Face it, most of your time at the computer is spent interactingwith the operating system and applications, not admiring the case.OS X is an excellent operating system, with a lovely, soothinginterface that doesn't wriggle like a bug. Why not run it on thecheapest computer you can get? If you cracked open a new Mac andtook stock, you'd realize you could buy the same computer muchcheaper by ignoring its packaging. Once you got rolling on e-mailand Web surfing, you might even forget what your PC looks like.What matters is what's onscreen.
Leave aside for this discussion the fact that you can't actuallyget a comparably-equipped computer from any other company forthat much less than Apple's current Intel-based Mac line-up —you can get much cheaper computers, sure, but not much cheapercomputers with comparable components. The point here is thatBoutin is right that what matters most is what's on-screen.
Unlike Cringely, Boutin even acknowledges that Apple tried somethinglike this a decade ago:
Sound crazy? Apple actually tried this, allowing othermanufacturers to produce 'Mac clones' for two years during SteveJobs' absence from the company. 'The styling of the Mac clonesoften more closely resembled that of a PC,' Wikipedia notesaccurately, 'but the clones frequently offered a lower price andsometimes better performance.' Bill Gates himself proposed theidea in an earnest 1985 letter to then-Apple CEO JohnSculley shortly after Jobs' ouster. Sculley passed on the idea,leaving a successor to try it, perhaps in desperation, 10 yearslater. Jobs killed the clone program when he retook the helm in1997. He's since locked Apple's software into onedifferent-thinking hardware product after another, from theoriginal iMac to the iPod nano.
But Boutin's claim makes it sound like Jobs killed the Mac cloningprogram out of spite. Wrong. Jobs killed the cloning program becauseit was killing Apple Computer financially. Recall that during theMac clone era, most of the mainstream press coverage of Applecentered around speculation that the company was on the verge ofcollapsing into bankruptcy. Apple did not profit from the cloningprogram, for the same reasons outlined above: many Mac usersswitched from buying Apple hardware to clone hardware, and Applemade much less money from Mac OS licenses than it did from sellingMac hardware, and there was nowhere near enough growth in the userbase to make up the difference.
It's just not true that most Mac users use Macs because the hardwareis better designed. They're Mac users because of the Mac OS. Whatthe original cloning program showed was that many of Apple'scustomers were Mac fans, not Apple fans.
Now it's true that Apple's current industrial design is far betterthan that of typical cut-rate PC makers, and aesthetically it's evenfurther ahead today than it was a decade ago, when Apple itself wasstill making 'beige boxes', albeit nice beige boxes. But it's notthat much better than other high-end PCs. Sony Vaios and LenovoThinkPads, for example, are fine laptops. And it's on high-endmachines like good laptops and powerful PowerMacs — the machinesApple makes the most profit on — where Apple would be most likelyto lose sales. They can't say, 'Here's a license for Mac OS X butyou can only install it on low-end machines', and nor can they sellMac OS X licenses for the $400 or $500 profit margins they make onhigh-end hardware.
The '90s Mac cloning program was popular with many Mac users becausethey were able to purchase faster computers for less money.2 But Apple was losing money on thecloning program, and no company can stay in business while losingmoney, no matter how happy their customers are. Without question, ifApple were to offer Mac OS X for generic PC hardware, it'd be aninordinately popular product. What's questionable is whether it'd beinordinately profitable, or even profitable at all.
I'm not going to say it's impossible that Apple could be successfulwith such a plan, but I do think it's unlikely. And unquestionablyit would require completely changing the company's business model,abandoning the current model that has proven to be consistentlyprofitable for a commodity model of making much less money pertransaction and making it up on volume. Anyone who denies that sucha plan would be risky either doesn't understand Apple's currentbusiness model — which is, as repeated ad nauseum herein, sellingcomputer hardware at 20-25 percent profit margins — or is makingthe completely unrealistic assumption that all current Mac userswould continue buying Apple-branded hardware. Remember too thatApple's current business model is bootleg-proof; unlike Mac OS Xinstaller DVDs, you can't burn copies of MacBooks or iPods.
Why Would Apple Want to Compete Directly Against Microsoft?
Cringely signs off his op-ed with this claim:
[Licensing Mac OS X for generic PCs] would also createanother headache for Microsoft. And that, in the end, is whatApple does best.
Trying to make some pocket money over the summer holidays mac os. Really? Creating headaches for Microsoft is what Apple does best?When has Apple ever created headaches for Microsoft? And beforeyou say 'iPod and ITMS', note that that's a new market that Appleconquered first, not a market where Microsoft had already gained afoothold. If anything, it's the other way around: historicallyMicrosoft has created far more headaches for Apple than vice versa.
Microsoft's biggest headache is the long-delayed Vista, and that's aself-inflicted wound.
I think what's happening is that guys like Cringely and Boutin, whoare tasked with writing about the computer industry at large, havegotten bored with Microsoft. They still need to write aboutMicrosoft because it remains the biggest, most influential, andmost profitable company in the industry, but Microsoft has nothreatening rivals. Vista (née Longhorn) is turning out to be one ofthe biggest debacles in industry history — they're sheddingfeatures and it still keeps slipping further behind schedule.Imagine how far behind schedule they'd be if they were stillplanning to include all of Longhorn's originally slated features.
And yet the Vista debacle isn't really hurting Microsoft at all,other than in the technology press. They're still making money handover fist each quarter.
Would it be exciting if Steve Jobs were to stand up at his nextkeynote address and say, 'We've decided to license Mac OS X to anycomputer maker that wants it, and our goal is to put Microsoft outbusiness'? Most definitely. But it'd be exciting in the way thatit's always exciting to watch someone else do something reckless andrisky. https://site-4776214-4247-3946.mystrikingly.com/blog/spirited-heart-deluxe-itch-mac-os.
It's not Apple's fault that Microsoft sucks to write about, nor isit their obligation to put themselves on a collision course againstMicrosoft just because it would make for good drama, and thus,something interesting to write about on the tech beat.
Cocoa for Windows
One more thing-Apple-won't-do: release a version of Cocoa forWindows. Back in the '90s, after Next stopped making its owncomputer hardware and turned into a software-only company, theydeveloped a version of the OpenStep application framework that ranunder Windows (and other OS's). Shortly after the Apple-Nextacquisition-cum-merger, Apple released a preliminary operatingsystems roadmap in which the application framework we now know asCocoa was called 'Yellow Box'.
The real Mac OS X doesn't bear much resemblance to these preliminaryplans, which (the initial plans) really amounted to little more thana revision of NextStep with a classic Mac OS compatibility layer,which layer was called 'Blue Box'. There were no plans for what wenow know as the Carbon APIs — i.e. in these initial plans, there'dhave been Classic for old-style Mac applications, but there'd havebeen no way to write native applications other than Cocoa.
Another part of this initial plan was to maintain the cross-platformYellow Box libraries, the idea being that developers could write(what we now know as) Cocoa applications and have them run both onMac OS X and on Windows. This wasn't a pipe dream, Next actually hadthis working in the OpenStep era.
Much to the consternation of some developers, this plan was soonscrapped as well.
Rumors of its resurrection persist, and while I haven't seenany high-profile punditry positing its imminent return, I'vereceived a bunch of emails from readers wondering if Boot Campsomehow means Yellow Box for Windows is coming back.
Viewed through the aforementioned 'keep in mind at all times thatApple's core business is selling computer hardware' filter, theanswer is clearly no. A Cocoa runtime library for Windows might wellmake developers happy, but it wouldn't help sell Macintosh hardware.
Quite to the contrary, it'd take away one the main reasons peoplebuy Macs: to run cool Mac applications. If the whole point of theappeal of Mac OS X is that Mac software is better than Windowssoftware — or at least better in the eyes of one segment of themarket — what possible good would it do Apple to help thatsoftware run on Windows, too?
The continued existence and success of Mac OS X hinges on thepremise that it is better than Windows. If all or most of the appspeople love on Mac OS X ran just as well (or nearly so) on Windows,it would lessen the degree to which Mac OS X offers a betterexperience. Cocoa for Windows might well prove wildly popular forsome Cocoa developers, but it wouldn't make money for Apple andcould potentially cost them in hardware sales, so it isn't goingto happen.
Please don't argue that Apple would gain hardware sales becausemany Windows developers would switch to Cocoa and buy Apple hardwareon which to develop their software. Even if we assume it's true thatApple would gain new developers (which is admittedly a reasonablyfair assumption), and that those developers would buy Applehardware,3 there just aren't thatmany developers out there compared to the number of civilian users.It'd be foolish to gain a few new developer customers if it meantlosing many times more regular users who decided thatWindows-with-Cocoa was good enough for them.
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'Oh, but then Apple could sell iLife and iWork to Windows users'isn't a good argument either, because, repeat after me, Apple'sprimary business is selling computer hardware.
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And the best way for Apple to sell more computer hardware is to makeMac OS X as much better than Windows as they possibly can; nothingcould be further from this goal than releasing a version of Cocoafor Windows.
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Feel free to substitute 'Windows and other PC operating systems such as the various Linux-based distributions' for 'Windows' if you'd prefer. ↩︎
Personally, I always thought the Mac clones were pieces of junk, at least the ones from PowerComputing and Umax, and most people I know who bought them regretted it. You got what you paid for, more or less. ↩︎
Note that this argument — that Apple would profit from Cocoa-for-Windows by selling hardware to former Windows-only developers — presupposes that Apple isn't going to do the 'license Mac OS X for generic x86 hardware' thing. ↩︎
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