The Apple Mac License Myth Ping!
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Posted on 01/18/2010 3:22:11 AM PST by Swordmaker
Legends die hard. In the pre-Web days, they got printed and reprinted, told and retold and so became official, like spinach being good for you because it held the iron your red cells needed. After decades of the disgusting veggie inflicted upon young kids - I remember, a scientist went back to the bench and found out there was no digestible iron whatsoever in spinach. You don’t get calcium by ingesting chalk, you need a calcium compound that’ll get through the sophisticated filters in the digestive system. Eating spinach gives you as much digestible iron as sucking nails.
The spread of legends gets worse with the Web. Stories, I’m avoiding the word “information”, travel fast, I’ll sidestep “light-speed”. Yarns bounce around a world-wide echo chamber. If I hear it from five sources, it must be true. Never mind the so-called sources heard it from one another in sequence. Worse indeed, as the Web never forgets, everything gets cached, archived and will be unearthed by search engines.
This creates a need and entrepreneurs pop out of the quantum vacuum ready to fill it: a Google search reveals at least three companies, reputationrestore.org, reputationrestorer.net and restore-reputation.com who promise to clean up your besmirched Web image. Actually, these three look like the same company and, at the risk of unfairly tarnishing their own rep, they look like one of these only too frequent scams purporting to protect you from scams. Ah well…
So it goes for a tenacious legend, the one that Apple “lost” the market because it failed to license the Mac operating system to “everyone” and thus get to own the market instead of losing it to the “obviously inferior” Microsoft product.
A few days ago, no less than über-blogger Henry Blodget, the Internet Bubble repentito now head of Business Insider blog hub fell for it. This industry observer who admitted he never set foot in an Apple Store, not a sin if your territory is the quick oil-change industry, chides Apple for “making the same mistake again”. In Dear Henry’s view, just like in the 80’s, Apple insists “on selling fully integrated hardware and software devices, instead of focusing on low-cost, widely distributed software”. As a result, Apple will lose to the Open Source Android, just like Apple lost to Microsoft.
I know we shouldn’t let facts get in the way of a good story, but let’s take a closer look at today’s as well as yesterday’s data.
Today, Android is free. This, in effect, sets the market price for smartphone licensing deals. Ask Microsoft. How do you tell Motorola or HTC they ought to fork $25, or $15 for a Windows Mobile license while Android is free (and arguably better…).
In this context, how does Apple charge for the iPhone OS? How do they replace the $400 or so they make per iPhone (approx. $600 they get in direct $199 plus $400 or so in carrier “revenue-share”, minus $180 in hardware costs)? As the joke goes, do they make it back in volume? Or in App Store revenue, an estimated net $500M in 18 months? Great but no match for the tens of billions (multiply 50 million iPhones and iPod touches by $400…) of hardware sales.
Apple could indeed end up “losing” the smartphone market to Android, just as it “loses” the PC market today, making more money than Dell and HP combined, they with a 33% market share and Apple with less than 10%. (More details in the November 1st, 2009 Monday Note.)
Ask GM how they feel about a “tiny” Bavarian automaker.
Of course, Apple can make an inferior product and lose for good. No customers, no market share, no margins. Which isn’t too far from what actually happened with the original Macintosh. I know, I was there.
We’re back in 1981. IBM introduces the PC . At the time, it’s pretty much a clone of the Apple ][, slots, a cassette tape interface, game controls and all. The big difference is a 16-bit Intel processor, the 8086, whose four digits where used for the ending of Microsoft’s original corporate phone number, I’m not kidding. The then reigning Apple ][ has the 8-bit 6502 processor, a dead-end architecture, as the supplier, MOS Technology, can’t provide a credible transition to a 16 or 32-bit world, markitecture BS notwithstanding.
The PC evolves, gets faster with newer Intel CPUs, with the crucial inclusion of a head disk and the even more epoch-making advent of the first “killer app”: Lotus 1-2-3. Written in assembly language, lightning-fast, Lotus 1-2-3 is called an “integrated application”, the rage at the time, as it incorporated a spreadsheet, a word processor and a database. I know, because to some people’s chagrin, in a small cubicle behind my office at Apple, I maintain a PC.
When the Mac comes out in 1984, this is what it faces. The original Mac clearly shows great promise, its user interface is clearly superior and it builds on the lessons learned from Lisa’s failure. (Lisa was Apple’s first bit-mapped screen and mouse driven machine of 1983.)
But the first Mac, for all its promise and sexiness, is slow, buggy, with a small screen, no hard disk, no color and no application software that could compete with Lotus 1-2-3.
When Steve Jobs came back at Apple in 1997, he brought in a team of experienced engineers from NeXT, promptly killed the half-hearted licensing program that was siphoning off the company’s hardware margins - you can’t be in both the hardware and the licensing businesses at the same time. Over the years, a steadily improved product and a tight control of the layers of the user experience, including the Apple Stores, produced the revenue and profits we know.
But legends live on. How about that almost forgotten one? IBM licensed key parts of the original PC design and, for its reward, lost the PC market in spite of its effort to regain control with a new bus architecture, Micro Channel and a new software platform, OS/2, called “better DOS than DOS” and “better Windows than Windows”. —JLG@mondaynote.com
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Who would know if Apple makes money, they never pay dividend. But, hey it’s quirky and it feels good.
My son is an Apple fan. For the life of me, and can’t understand this article, so I won’t send it to him until I do. Is there a one sentence explanation as to whether the author has a clue.
And yes, it is as rambling and nonsensical as Gasseé is himself. He is french, after all.
Apple lost in the 80s plain and simple because they were too expensive and wanted to keep themselves that way to make “more margin”
While the glitterati and other techno idiots are always willing to pay top dollar for items, that universe is limited.
Today Apple is making the same mistake again with the iPhone.
Just so that we are clear, the iPhone NEVER even had 20% of the total smartphone market and now its share is falling again.
I am a iPhone user. When it first came out, it had the best technology, no doubt.
However, once my contract is over, here is why I will NOT be an iPhone user again.
Here are dumb rules made by good old Steve Jobs that make no sense except to Apple fanboys
1. Worst camera EVER!! For a $600 phone, the iPhone 3Gs has a crappy 3 MP camera with no flash. Every competing device, even at half the price has 5 MP
2. No changeable battery! This is a DEAL killer for business travelers. Understand this, the iPhone is a MOBILE computer first and then a phone. If so, then you suck up the battery a lot using it for email or browsing. But, if you are traveling and do not have access to a power port (almost all foriegn airlines/airports) then you are out of luck. Because Lord Jobs has decreed from the Apple Heavens that a battery slot is “not sexy”
3. No haptic feedback. Since Lord Jobs has banned keyboards it would have been nice to have Haptic feedback on the screen. But no, it is not so
4. Keyboards. Talking about that, what about an option (a la Droid by Motorola) for a freaking keyboard. Would it kill you Jobs. You are already charging me $600 and idiotic AT&T is charging me another $100 a month
5. AT&T. Clearly a communist company because no capitalist company would want to alienate its customers like AT&T does. But, oh wait, the iPhone is ONLY available on AT&T in the US
6. Slow as Molasses. Ever tried to use your iPhone when it is downloading emails. About dead as a donkey. No surprise cause it has an old and slow processor. All the new phones have the 1 Ghz mobile processor
7. No multithreading. Talking about sloooooooow, there is no multi-tasking on this “computer”, something my Windows 3.1 PC had. So, now you can only run one app at a time. God forbid if you have to switch between apps.
8. No built in IM tool. There is NO instant messenger built in. Imagine that! In today's day and age where literally entire distributed companies live on IM, Apple discourages it as “it takes up battery time”. So you have to use sucky third party apps
9. About 100 other things. But why bother. Soon an Apple Fanboy will come and say inane things like “it is sexy”, “they invented it”, “Steve Jobs is God”. No, they did not invent the smart phone. Yeah, they did come up with a functional interface. So did Xerox back in the 70s with the first GUI. So, why don't you trash your Mac Book and work on a Xerox Book. Oh wait, there isn't any
Long term, Apple will continue the death spiral that it was on. It only revived because in the US, trendy people were willing to pay TWICE as much as a PC to buy a product that was the same. Now, with this recession, the number of people wanting “trendy” luxury PCs will come down
Mark my words
Just so that it is clear, I have no favorites in this space right now.
Android seems a capable Mobile OS. Windows 7 Mobile MAY turn out to be nice. Palm Pre, God rest their soul, seems dead. Blackberry, has not kept up at all with the iPhone. Nokia seems more content on suiing Apple than actually createing an OS that someone likes.
iPhone will soon have version 4.0 of their OS. It should be pretty interesting to watch, how that competes with both Android and Windows 7 Mobile
I have a feeling it will come down to the above 3. The only thing is that Windows 7 Mobile will die if they don’t make it free as they don’t have a captive customer (like Apple with its own hardware)
Apple lost because it's hardware was worse than the first IBM PC, not because it didn't license its software as per Microsoft.
And that's also true when it almost died in the mid-90s. The package offered by the Windows/Intel clones was better than the one on the LC IIs and Quadras running System 7.
The author of the article speaks authoritatively while the article is full of false facts, premises and conclusions. When the author claimed that except for the processor, the IBM PC was basically an Apple II clone, because it had slots and a tape port. You may as well say a Buick is a clone of a Studebaker because they both have four wheels and a place to pump gas.
By far the biggest problem with the Apple Macintosh was Jobs unwillingness in the mid to late ‘80’s to let the then successful software vendors (Satellite Software/WordPerfect Corp., Ashton-Tate, Lotus) make software that could play nice with their PC counterparts. I am not just talking about having a Mac style interface. Jobs did not even want direct data level compatibility.
On the PC side, the software was able to load the data files, and sometimes completely emulate the significant CPM base already in existence (especially WordStar and DBase II).
In my opinion, Apple had the biggest margin when it had faultless 8 MB+ (Mac II, SE/30) machines that could run pre-emptive multitasking via multi-finder, and PCs were still playing games with 640K limitys, Sidekick and Desqview. Apple’s base configurations were awful.
Jobs learned a lot during his sojourns with NeXT and Pixar, but a bit too late. Even so, it was Spindler and Amelio who almost killed the company. Jobs, and oddly enough, Sculley, weren’t so bad.
I just noticed that the author of the article was Jean-Louis Gassee, one of the original Mac guys. He should have known better to make so many misleading and erroneous statements, He also should know better than to recycle articles he was writing 20 years ago in Mac User. I can only fear that he is old and senile now. I bet John Dvorak could beat him in shuffleboard.
He Jean-Louis, the BeBox was the wrong product at the wrong time.
I got out of it that I don’t have to eat spinach any more!
Not an iPhone user here, but there are solutions to that problem:
Mophie iPhone External battery
I know there are third party solutions to many of the problems I outlined. However, that is insane asking your customers to buy MORE devices to do the job that your device at $600 should have done.
None of this is rocket science. Any business traveller worth his/her salt carries spare batteries for his/her cellphone or smartphone. This is predictable and commonplace behavior.
To cock a nook at the needs of people so that you can have a “sexy” design is the ultimate definition of an elitist
typo..sorry typing too fast
snook.. not nook
(Pssst. You've just nailed Apple's core market...)
See my post 18 for a way-cheaper alternative.
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