Apple Can't Use Microsoft's Model

I didn't read all 181 comments, but the ones that I did read from this digg post say plenty. The internet collective is good at constructing business models for universes that we don't live in. Quite a few commenters say that they'd be willing to buy a copy of Mac OS X for generic Intel boxes if Apple would just release it, thus justifying the piracy.

The basic problem with this proposition is that $170 is not a replacement for $1500 in lost revenue. Just to take a very rough cut, you might need at least ten people to buy (not pirate) a copy of Mac OS X for every Mac not sold. The equation is further complicated by additional costs incurred for supporting nonstandard hardware, and more individual humans requesting support.

The comments on the digg post also suggest that some people think marketshare is some sort of silver bullet for success. It's not. Revenue is what matters at the end of the day. Apple's hardware revenue supports development of the OS and apps. iLife would not be $80 if Apple wasn't trying to sell Macs with it.

We've Been Down This Road Before

Apple has already tried the platform licensing strategy (twice, really) and it flatly failed. I'd argue that the most important thing that Steve Jobs did early on after re-taking control of Apple was to end licensing to the clone makers. Those times were without a doubt the darkest in Apple's history. NeXT tried selling the OS without hardware as well and it obviously didn't save that particular business.  

Apple's business model is unique and history suggests that it simply does not function under cloning conditions. Without a business model, there would be no more Mac OS X. And no, they would not just open source it if that happened. Any effort to get it running on generic wintel hardware on a widespread basis is a hollow victory.

Look, it's not as if it's impossible to buy a Mac. Yes, $1500 is not pocket change to most of us, but let's be realistic. A good portion of active computer users are acquiring a new computer one way or another every two years or so. If you want Mac OS X, get a Mac instead of a PC. A Mac mini is $500. Buying a Mac not only gives you a nice piece of hardware, but it supports further development of the platform.

Microsoft's OS business model has only worked for Microsoft. In fact, Microsoft wouldn't survive if it waited for everyone to go out and buy individual copies of Windows. It makes money from volume purchases of Office and Windows.

A Design for Simplicity

From a technical perspective, the Mac is the antidote to the delusion which says you force a round peg in a square hole and call it a product. If want something that's going to be enjoyable to use for the average consumer, you can't have Microsoft write the OS and have Dell assemble the hardware.

Geeks are willing to put up with maintenance chores that result from shoving two parts together, but normal people don't have the patience for it. If you want something that's useable, you need hardware and software which are designed for each other. That's why we don't have PlayStation and Xbox clones bouncing around. The market wouldn't tolerate it.

In any case, a desire for Mac OS X to be sold in a certain way does not transform into a right just because somebody wants it bad enough. Apple made the long term investment in creating Mac OS X and they have the choice to sell in the way that they feel best benefits the platform. This investment was made with the expectation that it would be used to sell hardware. If that source of revenue disappears, the justification for continued development would likely go away as well.

If you like Mac OS X, buy a Mac.
Design Element
Apple Can't Use Microsoft's Model
Posted Feb 17, 2006 — 6 comments below


MJ — Feb 17, 06 787

Pirates will steal software even if you sell it. We currently have one customer balking over two items on his bill - two operating system software licenses.

Apparently as he can download these from the net he assumes that WE can as well which means obviously we're overcharging....

Feel the loathing....

Ben — Feb 17, 06 788

Scott, once again you articulate yourself wonderfully. I believe you've hit the nail on the head about Apple and their OS.

We can't forget that Journalists like to move and shake, they like the noise. They forget or ignore the facts.

I mean, seriously, where is Joe Average going to download the drivers for his ICantPronouceThisBrand VIA chipset motherboard so he might run OS X on his old-school AMD 1800+ ?

And if the perception is people don't "get" OS X and the best way for them to "get" it would be to install the actual OS in a dual-boot so they might be able to move between XP/OSX? Again try telling Joe Average what dual-boot is, he'll look at you dumbly and think you're crazy. Let's take it even further, ever tried to explain to someone what virtualisation is, OMG what an effort?

No, selling OS X in a box on a shelf for Windows people to switch to OS X on their existing weird-ass no-name system would have to be one of the craziest things I've ever heard.

The consumer market is a massive market, and the geek-133t market is such a picky one. Even if Jobs released OS X to mass market, he'd be booed by the same people that pushed it simply because of driver support.

Go Apple! (In 2 days it will be my 1 year switch anniversary, yay!)

Wolfgang Ante — Feb 17, 06 789

Totally agree. Just one thing I think does not compare well:

PlayStation and Xbox clones are not available just because even the originals lose money on the hardware. The business model for game consoles is totally opposite to the Mac model. Sony and Microsoft give you the hardware for much less and make their money with the software.

Scott Stevenson — Feb 17, 06 794 Scotty the Leopard

PlayStation and Xbox clones are not available just because even the originals lose money on the hardware.

Fair point, but I still think the consumer market wouldn't grok or tolerate it.

Michael Brundage — Feb 18, 06 795

The Xbox 360 console I work on contains a GPU by ATI and a CPU by IBM, and plays games made by a large number of different companies. Yet game consoles are "enjoyable to use for the average consumer".

However, the console manufacturer has taken the pains to integrate those parts into a unified whole, and requires third-parties who want to participate (perhiperals makers and game publishers) to pass a certification program. Thus sparing consumers the pain.

Dell and the other PC OEMs could do this today. But they've all gone for function over form, competing on price instead of on design. Thus we have a million look-alike PC laptops with cheap black plastic shells, versus this shiny, distinctive Powerbook in its sturdy aluminum alloy shell. Please show me a PC manufacturer's page dedicated to the design of their laptops.

And the reason they don't do it is the same reason McDonald's has made more money than any steakhouse. It's not the food. It's the price and the convenience and the operational efficiency.

Consumers are ... bewildering. You've got people who top off their 3000-calorie McMeal with light mayonnaise and a diet coke and smoke organic cigarettes after their morning jog. Sometimes consumers go for the cheap stuff, and sometimes we're willing to pay for an experience.

So the Macs has 5% market share and iPods 90%, even though they have most of the same benefits and drawbacks relative to the competition.

Peter Eliasson — Feb 24, 06 835

Thank you for nailing the "argument" used by my Windoze-friends I've been listening to for the past 5-6 years.


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