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  • The Apple OS Licensing Report: Dumb Too?

    November 25th, 2014

    When I began to give this column a title, I was really tempted to duplicate that of the “Dumb and Dumber” movie sequel, but I couldn’t bring myself to repeat the silly misspelling in the title. But when it comes to Apple’s critics, the ones who demand that Apple do this, that, or the other thing, all bets may be off.

    One demand made over the years was actually shown to be potentially ruinous to Apple. After years of clamoring for the company to license the crown jewels, the Mac OS, Apple relented in 1995. The deal involved licensing the Mac ROMs and OS at a fixed fee per unit sold, starting at a reported $50. Both existing companies and new ones got involved, including Power Computing, an aggressive startup.

    At the time, Macs had an estimated seven percent share of the market worldwide, close to where it is now with much higher sales numbers. It was hoped that market would expand by offering choices. Unfortunately, Power and other companies went aggressively after Apple’s core markets and essentially became competitors. So the market wasn’t expanded, it was simply diluted among a number of companies, resulting in lower sales for Apple. Since they obviously made far more revenue and profits from selling the whole widget, you could see where this misbegotten venture was going.

    In 1997, newly minted as iCEO, Steve Jobs took steps to kill the program. Since the license covered Mac OS 7, Apple went to Mac OS 8, and only one cloner, Umax, received such a license.

    In any case, clearly Apple’s taste for attempting this scheme ever again was soured. It may have worked for Microsoft, since the company mostly sold software — the more licenses sold the better — having hundreds of companies sell Windows PCs was a good thing. As the critics often forget, Apple’s main product is hardware. Why kill the golden goose?

    But the critics never learn the lessons of history.

    So there’s a renewed suggestion in a major online publication — best unnamed because the piece is far too dumb to take seriously — that Apple really needs to expand the iOS market in the enterprise by licensing the OS to other companies.

    Now before you consider whether such a proposal makes sense, consider one key downside that the Android platform confronts every single day. That’s fragmentation. With iOS and the existing mobile product lineup, Apple has a small number of potential hardware configurations to support. The OS is optimized to run best with that hardware, nobody else’s hardware. Apple doesn’t have to deal with the consequences of having thousands of possible configurations, known and otherwise, to support for hardware, OS and apps.

    This is a key reason why an iPhone or an iPad, with hardware specs that appear to pale compared to high-end Android gear, performs as well or better. This is the advantage of building the whole widget. But if Apple opens the door to licensing, that carefully crafted integration goes out the window. The elegant user experience goes with it.

    And that’s before we come to the next problem, which is what sort of products do the critics expect to see if Apple doesn’t build them? More smartphone configurations? More tablet configurations? Larger, thicker models for dedicated enterprise tasks? What?

    Just recently, it was announced that Samsung is cutting back on smartphone configurations. Having too many varieties ends up confusing customers, and Samsung is confronting flagging sales. It’s a lesson Apple learned in the 1990s with the ill-thought Performa lineup. They had so many potential models, some with very slight changes for a specific retailer, that even executives had trouble figuring them out.

    While the iPad lineup is more extensive than usual these days, Apple learned the lesson well. The rest of the consumer electronics industry hasn’t, and the same is true for that dumb blogger who imagines that Apple will prosper by licensing iOS.

    Now if we were talking about an unsuccessful company, perhaps the critics would have a point. Things would have to change. But whatever you think of Apple’s game plan, it has succeeded beyond the expectations of most industry analysts. Apple is still struggling to keep up with iPhone orders, and Mac sales have never been higher. True, Apple would be delighted to sell more iPads, but there’s no evidence that cloning is the solution, even if it’s restricted to allowing third parties develop custom models for specific industries.

    As it stands, the iPad is by far the number one tablet in the enterprise. That’s a fact that seems to elude the blogger in question, who seems to think that Android and Windows tablets are better fits for business purposes. Apple’s new deal with IBM means the development of vertical apps for different businesses, and loads of new sales outlets and opportunities for iPad and iPhone. It’s early in the game, so predictions on the revenue impact to Apple are quite premature. Suggesting that Apple needs to license iOS to succeed, or at least expand in the enterprise, are also premature, not to mention devoid of logic.

    Unfortunately, ill-informed pundits may believe they can solve Apple’s nonexistent problems. But the facts continue to show otherwise. Even worse, the blogger in question, in the middle of the article, confesses his bias in an offhand way. It seems he works for Microsoft, and thus his views about what Apple should do are colored by that experience. And until Microsoft tablets fly off the shelves, and there’s no evidence that will ever happen, I hardly think the observations from one of that company’s employees, sanctioned or not, should ever be taken seriously.



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