Will Apple Be Forced to License Mac OS X?

September 25th, 2007

Over the years, tech columnists and “industry analysts” have been clamoring for Apple to open up Mac OS X. By in the 1990s, when it seemed the company could do nothing right, they actually complied, with a Mac OS compatibility program that included licensing basic hardware reference designs.

The hope and dream was to expand the Mac marketplace into areas where the company had not succeeded before, including the entry-level arena. Now I don’t know all the specifics of the contracts, but what happened was precisely the reverse. Aggressive startups such as Power Computing actually went after Apple’s core market of content creators with a vengeance that was, in retrospect, incredibly wrong-headed.

True, Power Computing simply wanted to sell boxes, and what they built were essentially Macs packaged in cheap PC form. Because their production quotas were far lower than Apple’s, they were able to install faster chips first, long before production quotas were adequate for the mother ship.

What’s more, the innards of their boxes could be disasters, and I recall my original PowerTower Pro, for example, where the hostile chassis layout inevitably gave me lots of bruises whenever I tried to swap out a hard drive, or add RAM.

When Steve Jobs returned to Apple as part of the deal to acquire NeXT, one of his first acts after taking control was to make the lives more difficult to Mac clone makers. Just before he pulled the plug entirely, I recall one Macworld Expo where Power Computing adopted a bunker mentality. Their reps wore battle fatigues and Army vehicles were included in the exhibit.

I can bet Jobs went ballistic over this, and it wasn’t long before he handed the remnants of Power Computing a check to shut them down, and took over their fabulously efficient online ordering system. That became the core of today’s Apple online store.

You have to believe Jobs was thoroughly jaded over the value of operating system licensing then and there, and you can see how Apple adopted more and more vertical solutions through its entire product line in subsequent years.

Today, in fact, Apple’s growing success may be partly due to the fact that they build the whole widget, and can offer products as close to plug and play as you can get these days.

However, as you may have expected, once Apple migrated to Intel processors, software hackers went to work inducing plain PCs to run Mac OS X. Mind you, reliability might have been wobbly, and there were probably peripheral driver issues to cope with, but it could work.

When folks managed to do the reverse, which was to allow Windows to run in its own partition on a MacIntel, Boot Camp followed within weeks, followed shortly thereafter by the first public betas of Parallels Desktop and the ride began at full speed.

So once again, Apple is being urged by people that I regard as highly uninformed to allow Dell and HP and other PC makers to offer Mac OS X as an option on some of their computers.

The theory is laudable, to be sure. They’d like to see Apple compete directly with Microsoft, with the hope that the Windows hegemony would begin to dissipate.

I expect the shouts will be louder now that the issue of Microsoft unbundling Windows is being debated in Europe, but, as my article on the subject clearly stated, alternatives to Windows, other than Mac OS X, are simply not viable in a variety of situations.

However, the larger issue is that the people who are most vocal about Apple opening up Mac OS X could use some remedial math training. If you spend even a few casual moments looking over their financial statements, you’ll see they earn the lion’s share of their profits from the sale of hardware. Sure, some software products, such as iLife and iWork, plus the professional audio and video applications, do bring in a nice piece of change, not to mention Mac OS X upgrade kits.

But nowhere do those revenues match what Apple can earn from the sale of new Macs. To make up that income, they’d have to move huge numbers of Mac OS X retail kits to compensate, and that’s by no means a certainty. It would, in fact, be a huge risk to take, considering that plain PC boxes would — as Mac OS clones did over a decade ago — cannibalize Apple’s sales big time.

Just as bad, Apple would have to make Mac OS X compatible with thousands and thousands of new system configurations — including home-built boxes — rather than the small number of Mac systems they support.

In other words, this could be one huge disaster for Apple. It could, of course, happen some day if the industry situation changed substantially from what it is today. But I wouldn’t take any bets.

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22 Responses to “Will Apple Be Forced to License Mac OS X?”

  1. Apple will not license their OS unless it’s absolutely necessary. Anyone with basic arithmetic skills can dig out an annual report from Apple and calculate the profits per class of machine. From there you divide the profit by the wholesale OEM cost of Windows and you’ve got an idea of how many million copies of MacOS X they’d have to sell just to break even on the experiment. Add obvious factors like the cost of supporting thousands of hardware configurations, resistance from IT departments, and retaliation by Microsoft and the number goes through the roof. Apple would probably have to ship MacOS X on every HP, Dell, Acer, Lenovo and Toshiba before they’d bring in as much profit as the Mac hardware division does now.

    Thank you for summarizing the logic against such a move. Too bad lots of tech pundits aren’t paying attention.


  2. Marcus, it’s true that the only reason that Microsoft got its monopoly was by forcing buyers to pay for Windows software on a PC’s even if they didn’t want it. This is anti-competitive.

    If Apple sold its hardware without the Mac OS the way that the European commission wants, then it could charge less for the hardware. I don’t see any requirement that Apple will be forced to make its software available for any other hardware. The ruling would not lean that way. Splitting the OS from the Hardware wouldn’t change Apple’s business much. Apple makes its money on the hardware, not the software. Very few people would want a Mac without the Mac OS.

    Of course, with today’s MacIntel, you could buy a naked Mac and install Windows on it, right?


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