I heard a rumor last week that Apple would
announce they are switching to Intel chips. My first thought
is that I hoped that Steve Job's success selling iTunes to the other 95% of the
world - Microsoft
Windows users - would embolden him to take a strategic step that could
shake up the PC business as we know it. I was hoping that he would
catch the openness wave sweeping the technology world and apply it to
his business. I would love to see Apple's PC market share reverse
its downward trend. Few people know it, but I started my tech career
as a Macintosh user, ran a consulting company specializing in
Macintosh, and even wrote my first commercial application, Network
Security Guard, for the Macintosh.
Unfortunately,
I was
disappointed with Apple's actual announcement
on Monday, which revealed not
a bold strategy embracing the openness movement but confirmation that
Apple is still a company locked in the time warp of the go-it-alone
'70s. Apple agreed to switch from processors
made by IBM to special processors made from Intel over the next two
years - that's it. This
is only slightly more significant than Apple choosing to change the
hard
disk or memory supplier it puts into its computers.
Instead of a brilliant strategic
maneuver, it's a step necessitated by IBM's inability to keep pace
with Intel. It seems Apple was tired of losing the gigahertz
competition to the PC world. Apple had been promising faster
computers for some time and had not been able to deliver them. In
addition, they were frustrated at IBM's inability to produce a fast
low-powered chip for laptops.
Mac users will eventually see
the benefit of this move, but will first have to suffer through a
period of
uncertainty and forced upgrades. Eventually, this switch will enable
Apple to offer speedier machines more in line with PC performance.
Until then, however, customers will have to make a tough decision -
purchase a new
computer that is guaranteed to be made obsolete or wait two years for
machines to be released and software to be natively working.
My
disappointment was captured by an Apple spokesman who commented on what
the switch does not mean: "We
will not allow running Mac OS X
on anything other than an Apple Mac." Future "Mactel" computers
will
have specially designated Intel chips, not generic x86
compatible chips found in common PCs. My sources say that Jobs is going
to use Intel's cryptographic technology called LaGrande to make sure
OS X will only boot on Apple-branded hardware. This is a similar
technique to the one that Microsoft used to make sure Linux could not
be loaded on Xbox - see:
MM on Linux on Xbox.
The bottom line is
that PC buyers will unfortunately not have the option to install and
experience
OS X. There will be no low-cost laptops from budget-minded Taiwanese
manufacturers. There will be no generic AMD or Via white boxes sold by
the
millions capable of running OS X. Apple will not be reaching the
95% of the world buying Intel-compatible machines.
I'm sure Jobs remembers a failed experiment in the '90s when Apple
embraced a
more open strategy. During that time, other companies were permitted
to build Mac clones. Those companies targeted the most lucrative
customers, siphoning off the high-end users who wanted the fastest
machines. Apple depends on those customers to pay top dollar and uses
those profits to fund their significant research and development
costs. Losing them was a painful experience and Jobs shut down the
clone business when he returned to the corner office at One Infinite
Loop.
A more open strategy could perform differently this time
if Apple put as much ingenuity to its structure as they put into their
elegant software and hardware. Imagine a world where Apple encourages
clone manufacturers to grow the middle- and low-end markets while
keeping high-end products for themselves. Perhaps they limit clone
products to a certain speed? Or maybe offer variable pricing so that
computer builders would pay a percentage of the computer price for
the operating system, meaning Apple would make much more if a
top-of-the-line Mac clone was sold. This could significantly grow the
Apple
market share because price-conscious clone manufactures could attack
Microsoft and grow new markets. If these clone makers did poach
existing customers,
it would be Apple's least profitable ones or they would have to pay
handsomely.
You may be
perplexed why I am inviting Apple to compete with Linspire in the
PC-compatible world. I believe another threat to Microsoft would divide
its counter-operative forces, and desktop Linux would continue to
compete well
with Apple on cost and software variety - two critical components for
any platform.
Apple would
be a
meaningful threat to Microsoft and present another target to absorb
Microsoft tactics. Instead of putting out bogus IDC reports about how
Linux is more costly, and extorting manufacturers and retailers not to
work with Linux, Microsoft would have to divide its time between
Apple and companies like Linspire. Microsoft couldn't charge more for
its operating system just to those that support Linux without
doing the same for those that support Apple.
Secondly,
the two
biggest factors driving people to consider non-Microsoft solutions
are security and cost. While Apple's security is on par with desktop
Linux, Macs are more costly than XP machines. Apple's extensive R&D
means
they can never offer a low cost operating system like Linspire which is
able to
for $10-15 per computer to
system builders.
In addition, after-market software costs
more for Mac than for Microsoft Windows, so the cost advantage for
desktop Linux is magnified when compared with Apple beyond just the
operating system.
Finally, the
developer community is always the key to an operating system's
adoption, and desktop Linux is enjoying an explosion. There's a
substantial library of Linux software such as the 2000+ programs in
the CNR (click and run) library, which can be installed with a single
mouse click. Apple has superior polish today, but Linux is closing
that gap quickly as leaders emerge and natural selection is creating
some
uniformity. Already Linux has Apple beat on variety and user
community. Here's
a great chart showing some of the many products available
today.
With this news, Apple certainly did gain a faster processor, but it's a
shame it missed the greater potential prize - a massive new market for
its innovative wares.
--
Michael
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