Scott Stevenson blogs about Dvorak’s recent headline. He then follows up with a good reason why Apple won’t be following Microsoft’s model.
Revenue is not important. Profit is important.
Technically, Microsoft’s model of selling the software and not hardware is a better indicator for success. The costs of CD and packaging duplication are incremental whereas the costs of creating another entire computer and loading the software are considerable. Selling software is technically an easier business to be in.
I don’t think Scott makes enough of the point that Microsoft’s model has only ever worked for Microsoft. there aren’t a lot of OS vendors in recent history but apart from NeXT, I can only think of two – Be and SUN.
SUN still sell big iron hardware and some also-ran workstations but it’s plain that making their operating system free to download and making it x86 compatible has made no difference to their market share. Combine this with their ability to make worse business decisions than Apple and it’s not surprising. But it goes to show that even making your OS free doesn’t guarantee success.
Be is the best example. They quickly transitioned from making their own hardware to making BeOS run on Apple’s PowerMac which I spent some time playing with. Then they pushed their OS onto Intel which is around the time I lost interest as I didn’t own any x86 hardware. They then limped along for a few years before being torn to pieces and sold to Palm. Where are they now huh? With a pinch of salt, we can see how Apple transitioning to a Microsoft model might be fraught with difficulty with one little difference – the apps. Be had nothing competitive, Apple has an entire back catalog of very compelling apps that only run on Mac OS X. I must say however that with Apple’s recent move to Intel chips, an old Be application Sheepshaver is now providing “Classic” emulation for the new hardware in a new and interesting ironic twist.
The slow uptake of Linux and BSD on generic x86 boxen also shows that making the operating system free is not enough to beat the Microsoft war machine. (And no, Linux is still a distant and falling third place behind Mac OS in the market share arena).
So, I’ve digressed. Revenue is not important. Profit is important.
This is a corollary from “Cash is King”. Sales without profit mean you’re losing money. I’m sure that Apple’s shareholders might like Apple to move from a $1500 computer company with a 27% margin to a $150 software company with a 80% margin assuming the unit sales increase to make up the difference.
This last point is important. The unit sales would need to take a massive upswing – perhaps even an order of magnitude. Apple sells a million Macs every quarter. If they started selling ten million copies of Mac OS X every quarter, then yeah, we’d see an upswing in “Mac” market share. The costs of supporting these users with their patch-quilt PC systems would be a lot higher however.
In our business, revenue will mean nothing. Profit will mean everything. In all businesses, cash is king. If you don’t have cash, then people don’t get paid and it doesn’t matter what the size of your order book is – if you can’t fulfill the order then your business dies. eBay recently bought Skype for example – though it’s going to take more than a decade at Skype’s current revenues for the cost to be paid back. That’s a long term investment for sure – but the hope is that the revenues and profit will grow. Luckily eBay has deep pockets. So – if you can’t get the cash now, then you have to find someone who has….
Anyway, I’m off…have a good weekend!
(That said, I don’t think Apple really cares about the people out there loading Mac OS X onto generic Intel systems. Okay, they just served a DMCA violation notice to the OSX98Project forums but that’s them protecting their code and may mask their intent.
As for Dvorak. He’s just looking for the Mac faithful to give him ad revenue. Ignore at will.)