• 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. Andrew says:

      As much as I would love to run OS X on my ThinkPad (eraserhead mouse, swappable optical/battery, non-wide screen), I believe offering a stand-alone OS X would be a mistake for Apple. What would be a better idea is to select one or two manufacturers of hardware not in Apple’s core market, and certify and sell those products under the Apple brand. Sort of like the original PowerBook 100, which was contracted out to Sony. Apple could contract out a tablet PC from Toshiba, an ultralight from Lenovo.

    2. As much as I would love to run OS X on my ThinkPad (eraserhead mouse, swappable optical/battery, non-wide screen), I believe offering a stand-alone OS X would be a mistake for Apple. What would be a better idea is to select one or two manufacturers of hardware not in Apple’s core market, and certify and sell those products under the Apple brand. Sort of like the original PowerBook 100, which was contracted out to Sony. Apple could contract out a tablet PC from Toshiba, an ultralight from Lenovo.

      In the case of the PowerBook 100, this was still an Apple-branded product, never sold as a Sony. Basically, Apple uses the same contract plants as the other PC makers, so I kind of suspect that if they wanted to deliver a model that had a tablet feature, fingerprinting, etc., they’d design it themselves. They might use outside resources on an OEM basis, but it would still be sold as all Apple.

      Peace,
      Gene

    3. Tasha says:

      The reason why PowerComputing and the other cloners did so well against Apple was due to Apple’s slowness in putting out cutting edge product. I see that Apple is right back in the same rut they were back in the pre-clone era. They put out a product design, let it moulder for 9 months and then put out a barely adequate update. Also the pricing on their products seems to have crept back up, leaving no real entry level models. It would be nice to have some competition for apple in making Macs. So we can see the kind of innovation that came after the last clone era.

    4. Andrew says:

      It should be sold as an Apple, like the PB100, the only difference is that the PB100 was actually designed by Apple and was a unique product, but in this day and age a unique product takes time and money.

    5. The reason why PowerComputing and the other cloners did so well against Apple was due to Apple’s slowness in putting out cutting edge product. I see that Apple is right back in the same rut they were back in the pre-clone era. They put out a product design, let it moulder for 9 months and then put out a barely adequate update. Also the pricing on their products seems to have crept back up, leaving no real entry level models. It would be nice to have some competition for apple in making Macs. So we can see the kind of innovation that came after the last clone era.

      Apple is not really increasing pricing so much as adding more value to the products at the existing price point. In recent years — and let’s not start the argument again — a Mac is priced quite close to a PC that mostly or completely matches it feature for feature.

      In terms of doing product updates, they are regularly updating to support newer Intel chips. They’ve even had access to higher-performance chips before other computer makers, witness the quad-core 3GHz Intel Xeons first introduced in the Mac Pro.

      Peace,
      Gene

    6. Rich says:

      I agree with this article 100%. It’s an old argument, that Apple should have licensed. It’s almost as old as Microsoft itself, really. People started this chatter back in the early 80s. But the fact is, a Mac isn’t hardware. And it’s not software. It’s the marriage of the two. It’s why you can run Windows on your Mac very well but really don’t have a viable option for running Mac on your Windows-compatible machine.

      Ironically, it was licensing — and the likes of PowerComputing — which almost killed Apple. They took away from their primary revenue stream, computer hardware. Others were making cheaper, faster machines that ran the Mac OS. Short term? Good for consumers. Long term? Bad for both Apple and consumers.

      Now, Apple’s got so many other sources of revenue, part of me wonders if they’re mulling licensing again. Does the switch from “Apple Computer” to just “Apple” mean anything in this context? I hope not… because software alone won’t turn a Dell into a Mac.

    7. Now, Apple’s got so many other sources of revenue, part of me wonders if they’re mulling licensing again. Does the switch from “Apple Computer” to just “Apple” mean anything in this context? I hope not… because software alone won’t turn a Dell into a Mac.

      All it means is that Apple builds more than personal computers these days, and the removal of “Computer” from the corporate name reflects that fact. However, with reports that Mac sales are continuing to break records, and more and more people are switching from Windows because they are disgusted with Microsoft’s problems, there’s no incentive for Apple to license or change anything.

      Peace,
      Gene

    8. Andrew says:

      Software alone won’t turn a Dell into a Mac, but it would turn, say, a Vaio, a ThinkPad, a Shuttle, etc., into a Mac. Even the Dell would become a pretty nice Mac if the tower was under the table.

      My G4 PowerMac sits under a table and my interaction with it is limited to the keyboard, mouse and monitor. How would that be different on a generic PC box other than everything being faster?

    9. Software alone won’t turn a Dell into a Mac, but it would turn, say, a Vaio, a ThinkPad, a Shuttle, etc., into a Mac. Even the Dell would become a pretty nice Mac if the tower was under the table.

      My G4 PowerMac sits under a table and my interaction with it is limited to the keyboard, mouse and monitor. How would that be different on a generic PC box other than everything being faster?

      You mean other than who earns the lion’s share of the profits from the sale of that box? 😀

      Peace,
      Gene

    10. Andrew says:

      Which is why a rebranded computer (only in the niches where Apple doesn’t compete) makes sense. Apple then has control over the specs and a share of the hardware profit.

    11. gopher says:

      A European court decision may soon force Apple to open its operating system. It has begun to do that to Microsoft. In the end, Apple may have to allow cloning, not because they want to as a company, but in order to stay within international law.

    12. A European court decision may soon force Apple to open its operating system. It has begun to do that to Microsoft. In the end, Apple may have to allow cloning, not because they want to as a company, but in order to stay within international law.

      I don’t think so. Apple is invisible in terms of global market share, despite having a huge market cap and rapidly growing sales. Microsoft is on the front lines, because of their history of doing bad things to their partners and competitors and, of course, being on over 90% of the world’s PC desktops.

      Peace,
      Gene

    13. better then them says:

      Ok, the thing that gets overlooked here is that there is not Imac substitute on the PC market. I would not consider buying anything else other then apple as long as they have the edge of balancing performance, design,cost and usability as good as they do. But licensing osx to dell, HP and others mid-highend products would be a start for OSX to go mainstream and eventually be considered an obvious player when choosing IT environment for the future. I hope for more wide spread osx customers which will in turn grow the developer community which will benefit all mac users. Selling OSX for todays price would be a tough for MS to handle considering their approach with almost 5 times more expenisve package “to get it all”. You get it all in the ONE OSX version which sells for a fith of the price of Vista Ultimate. Yes prices may change but still OSX pricing vs features balance beats VIsta and XP hands down. The knowledge of the “alternative” would need a fair investment in educating the customer, maybe even “deprogramming” the customers expectations when it comes to computer user experience. Leopard could be the thing needed to point out that there is a alternative here, today.

    14. Marcus says:

      Why would the European court force Apple to open its OS? MS was found to have antitrust issues….Apple has not. Dell and Gateway (to name two) make off the shelf computers with razor thin margins – they don’t make an OS, nor design what goes on the motherboard. Apple makes the whole widget, and kept margins at a very good point, so as to not have issues with liquidity, or compatability. As noted above, making the OS compatable with every configuration that the home-built crew comes down with would not be possible, nor practical. Take a look at the headaches folks ‘upgrading’ to Vista are having…and most are waiting for the first service pack to make that OS viable.

      If folk really want to have an inexpensive computer/OS match, they need to educate themselves on hardware and a flavor of *nix so that they’ll know the little ins-and-outs of the electronics and OS. If they want one that just works out of the box, then they will have to pay a bit more, and get a Mac.

    15. mjtomlin says:

      “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”

      This is not necessarily true. Apple could leave it up to the hardware manufacture to develop their own drivers for any unique hardware built into their systems. Just as Apple had to create their own drivers for XP and Vista running on Mac hardware, so to would others who wanted OS X on their own hardware. Apple could also release a “reference” design or even implement an “OS X Compatibility” program that could significantly reduce support issues.

      I think sometime in the near future this is exactly what will happen. Especially since they’re less dependent on their computer hardware division as they once were.

    16. Louis Wheeler says:

      Wintel and Apple have different marketing schemes. Wintel has a single OS with many hardware manufacturers. This has lead to advantages and disadvantages. The advantage is that the hardware market has advanced while Microsoft Windows has become an embarrassment. No wonder that Wintel users want to dump it.

      Apple’s marketing scheme supplies a unified hardware/ software solution. Because Apple is a tiny percentage of the overall computer market it cannot satisfy every computing need. Many people want to take the best there is in Wintel and combine it with Apple while some people want to take the cheapest. Apple maintains that only by a tight hardware/ software integration can it deliver an acceptable user experience. The question is where Apple draws the line and how fast they draw it.

      Apple does not want to compete in the low end market, because there is no profit there. Nor does Apple want to compete in Enterprise and Government markets where the demands of IT personnel interfere with Apple’s consumer marketing schemes. Apple does not want to adopt the “lowest possible price” of the low end Wintel buyers because quality issues are involved.

      Wintel computers are more disposable than Apple computers since their average life expectancy is half as long. This leads to a Total Cost of Ownership that is two to three times higher in a Wintel box over the useful life of a Mac. A Mac has a higher front end price because more features are built in. There is a disagreement over which method is better and cheaper.

      The people who want to put the Mac OS into a Wintel box want to have it both ways– cheaper up front and a better user experience. Why should Apple agree? Especially since Apple is selling Macs almost as fast as it can build them. Does Apple want to cheapen its product name to gain a few more bucks? I guess not.

      My computer is a five year old 800 MHz G4 iMac with a 15 inch flat-screen which I have been happy with. Only with Leopard’s introduction has it been rendered obsolete. It should be useful for someone else for another three to four years. They just have lower expectations than I do. But, they will get my computer for about $200, so what should they complain about?

      So, I will buy a 24 inch iMac when Leopard is released next month which will be eight to ten times faster than for my original machine for $300 less. I will probably keep it for just as long. I will never open its case or change its components. People who want that ability should pay more, not less. If they want a miserable computing experience, let them stay with Windows. Don’t try to mess up my computing experience by interfering with Apple’s marketing plan.

    17. Louis Wheeler says:

      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.

    18. James Katt says:

      This is a silly argument.

      Apple makes a proprietary OS and proprietary hardware. They are one widget.

      There is no stopping anyone from buying Mac OS X and trying to run it on their Intel Hardware. However, it will not run well because it won’t be integrated with the hardware. It would be difficult for the hardware company to have the resources to keep up with Apple’s updates of the operating system by making patches to keep the software compatible and not break a lot of software. Every Apple update – and they are very frequent – will end up breaking something.

      Apple can license Mac OS X – at a price – if forced to. It is easy to envision selling Mac OS X without the Mac Hardware for $500 a copy wholesale. I bet people will then complain about the price. But then, Apple makes a profit primarily from selling the hardware. If it has to make a profit from making the software, then Apple should price the software accordingly. It is after all, better than Windows Vista – and should be priced as such.

      Now, Apple is not trying to stop anyone from buying hardware. Nor is Apple trying to stop people from buying whatever software they want to buy. So what monopoly are they trying to put on someone?

      If interoperability is needed, then Apple certainly works with standards. Open Office is available on Mac OS X as it is on Linux.

      I don’t think there is a basis for forcing Apple to “open” Mac OS X.

    19. Terrin says:

      That is highly unlikely. Think of the precedent that would set. I could force Microsoft to open the OS on its X-Box, or Sony on its Playstation. I could force essentially any hardware manufacturer to open up its hardware to competing software. Texas Instruments would have to open up its calculator software. The Microsoft ruling was because of Microsoft’ monopoly status as well as abusive behavior.

      A European court decision may soon force Apple to open its operating system. It has begun to do that to Microsoft. In the end, Apple may have to allow cloning, not because they want to as a company, but in order to stay within international law.

    20. David says:

      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.

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