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Archive for September, 2007


Why Apple Isn’t Microsoft

Wednesday, September 26th, 2007

As Apple continues to grow a lot faster than most people ever expected, it’s inevitable that there are going to be comparisons with Microsoft. This is particularly true when it comes to the iPod and iTunes, both of which hold serious majorities in market share.

So if you complain that Microsoft is a monopoly, shouldn’t you also make the same complaint about Apple and its standing in the digital music market?

Unfortunately, many of the people who make this claim have failed to learn from the lessons of history, particularly how Microsoft came to occupy a dominant position in PC operating systems and office suites. And, no, it wasn’t because they built the best product and beat their competitors fair and square.

From the very beginning, when Bill Gates played a shell game with IBM to sell them the original MS-DOS operating system before he acquired it from another company, it is clear that Microsoft knew how to play the game of business hardball, ethical or otherwise.

Through the years, Microsoft has grown, in part, by double-crossing its partners. Remember when they were working with IBM to develop OS/2, the next great industrial-grade operating system? Well, that partnership evaporated, and Microsoft created Windows NT instead. That way, they could keep all the profits to themselves and not have to share the glory with anyone.

This is not to say that NT was necessarily a bad operating system. Certainly it was a tremendous leap beyond the DOS-based Windows, and thus something that benefited all Microsoft customers in the end. But you don’t have to question why IBM these days is pushing open source.

More recently, when its PlaysForSure partners couldn’t gain a foothold in the digital media player market against the iPod, Microsoft released a modified version of a Toshiba Gigabeat player, called it Zune, and went off in their own direction. Still no success, but it does show the folly of partnering with Microsoft.

I do not need to recount the issues that led to antitrust actions against Microsoft in America and Europe. Even though some of the fine elements of those complaints may be debated, the overwhelming evidence shows that Microsoft employed all sorts of questionable tactics to achieve and retain market dominance.

It was never about having the best product.

Now compare that to Apple Inc.

Over the years, Apple has done some pretty foolish things that squandered their prospects for early control of the personal computing market after the huge success of the Apple II. You can certainly argue about a lot of things that could have been done better — or at least differently — but can you honestly say Apple has used illegal marketing tactics to achieve its present-day status as a industry-leading consumer electronics manufacturer?

Certainly, although it hasn’t always met shipping dates, Apple hasn’t played dirty tricks to enhance the Mac’s market share. They’ve simply built the product, shipped it, and let the customers decide whether or not to buy. There was no tie-in with other companies, forcing you to pay for their products even if you didn’t want them, as you have to do with the typical PC and Windows.

But what about the iPod? Doesn’t Apple have a huge advantage in that market segment? Sure they do, but they also started the iPod from absolutely nothing and, I gather, without any expectation that it would become a culstural icon. Apple had never built a digital music player before, and there were indeed a number of competitive products out there.

Apple didn’t succeed by riding roughshod on Creative and other companies building music players. When the iTunes store first appeared on the Mac expanded to the Windows environment, Apple didn’t demand exclusive agreements with the music companies. They all had product at other music stores too.

But a combination of ease of use, sex appeal and smart advertising drove Apple to the top of the heap. They didn’t prevent competitors from building their own music players. While the iPod and iTunes were closed platforms, that didn’t prevent other companies from building similar environments for their own gadgets, or offering superior hardware and music store integration.

Should there be one unified format that would allow you to take your iPod and have it work with any music store? Should iTunes integrate as seamlessly with the Zune and other products? Maybe, maybe not. But that doesn’t mean music lovers don’t have a choice.

However, don’t forget that many Apple products these days are fully compatible with Windows. On the other hand, Microsoft and its PlaysForSure partners treat the Mac as if it didn’t exist.

No, Apple isn’t a monopoly and it doesn’t behave like one. Let this argument die a quick death once and for all.

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Will Apple Be Forced to License Mac OS X?

Tuesday, 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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