With the initial success of OS X (hey, it works) and the
beginning of a migration to a Unix-based platform, much has been
made of the possibility of Apple porting OS X to other
platforms. The initial reaction of many is that this would greatly
expand Apple's market share and allow them to gain on the Wintel
competition. As I think through the ramifications on Apple's
business, I have determined that porting Mac OS X to other
hardware would be the last thing on which Apple should focus.
Lets perform a basic analysis of Apple as it relates to the
marketplace.
Strength: Apple is known as a vendor of premium machines.
When you purchase an Apple system, you pay a premium for the
product engineering, support, and integration of the OS and the
hardware. I have seen some make the analogy to a luxury car, which
I think is appropriate. We know that a Ford Escort and a Mercedes
will perform the same functions, but we also know that the
experiences are quite different.
Apple has dominated the graphics/creative markets where users
are more in tune with an OS which is built for graphics work. These
users are typically more focused on the aesthetic value, which also
works in Apple's favor.
Additionally, Apple is relatively successful in the education
market. This market requires products that are easy for users of
varying levels to use. Additionally, these markets require machines
that have a longer useful life. Total cost of ownership numbers can
balance out the initial startup costs in this marketplace. The ease
of the Mac OS and the engineering of the products are the
attraction for the education market.
Weakness: Penetration of the business market has been an
Achilles heel for Apple since the Apple II lost the dominant
position in the market. Business customers are not reached
on an individual level but through selling to organizations. A
company determines a set of requirements for systems and then sends
purchasing agents out to meet those requirements for the best
price. The strengths of an Apple system do not offset the initial
cost differences in this market. If I can work a corporate deal
with Dell to supply me with 10,000 laptops for less money than I
can work a deal with Apple, Dell is the winner. Additionally, I
will not have to defend my decision to go with a different OS.
Now that we have set the groundwork for the evaluation of
OS X, let's examine what would happen if OS X were
suddenly ported to other platforms.
The assumption that the current market share would remain and
additional users would suddenly jump on and license Mac OS X
is false. With OS X available on multiple platforms, high-end
creative users will still pay a premium for the Apple name.
The problem begins in the education market. Apple must not
compete only with the Wintel vendors (major and minor), but will
also have to compete with vendors selling cheaper hardware with the
same OS. This eliminates the ease of user factor, which is a huge
reason for the success in the education market. Apple can only sell
total cost of ownership at this point, which, while important, can
be offset by simply making the initial cost so low as to negate the
advantage.
Let's move on to the business market. If a company decides to
move toward the Mac OS, they will again look for the lowest cost to
enter the market. Apple will have to compete against vendors who
can sell for quite a bit less and never be able to leverage its
strength of engineering and design. Apple could possibly pick up
some revenue from companies who enjoy the Unix background, but will
selling OS licenses really generate much revenue? This market will
most likely not enjoy the OS so much they then run out and pay a
premium for Apple branded systems.
The issue can be simplified to this point. Selling OS X to
licensees costs Apple one of its major systems markets in the hope
of helping to break into the business market. Unfortunately, the
revenues of the systems market are much higher than the revenues
gained in OS sales. Bulk licenses of OS X will be sold at
discounted rates to resellers and corporate users.
Can Apple survive as a software company?
Lets look at Microsoft, a huge software company who makes the
majority of its revenue in from enterprise software and office
sales. They control 90% of the market for office suites and
spreadsheets. They have a formidable user base in numerous
enterprise level products and licenses to numerous hardware
vendors. I cannot locate the exact figures, but the OS license on
Windows consumer flavors is marginal. They would not be nearly as
successful without the other market areas they have grown.
Apple has very little leverage in the enterprise and has none in
the office market. Some would argue that a Unix OS would help them
gain enterprise market share, but analysis would indicate this to
be incorrect. If I run Unix on the enterprise, I have likely
licensed a variant as part of my system purchase. If I am a Sun
customer, I have Solaris. Those who wish to run Unix beyond a
server machine long ago moved to a Linux variant. While some of
these users will move to Mac OS X, they are not a large enough
group to make sense.
To sum it up, selling the Mac OS X on other platforms does
nothing but transform a billion dollar computer maker into a 100
million dollar software company.
Feel free to disagree with me, as I am just some schlubb sitting
in an office in Dallas trying to keep from working. I do, however,
think my reasoning to be fairly sound.
