The Apple Licensing Myth

Monday Note ^ | January 17, 2010 - 7:46 pm | John -Louis Gassée

[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

[Swordmaker]

NO! The article does not make sense. It is typical Apple BS.

Why don't I believe a word of what you just posted... not one word?

Just so that we are clear, the iPhone NEVER even had 20% of the total smartphone market and now its share is falling again.

Smartphone market share as of October 2009,
iPhone market share 30% and rising.

So you're wrong, right from the start.

What you post for the rest of your rant is a repeat of the talking points from every FUD article about the iPhone...

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

The iPhone 3Gs is not a $600 phone for the consumer... It is a $199 phone for the consumer. Every competing device does not have a 5MP camera and many do not have video. Most have only plastic lenses, not optical glass which the iPhone has.

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”

There are numerous secondary market external battery systems for the iPhone that add extra charge times. They are reasonably priced for such road warriors. I have used an iPhone on the road and have not found a need for an extra battery. I charge it every night... and carry a car charger. I have had other smartphones... and didn't carry an extra battery for them either.

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

I haven't had a problem using the virtual keyboard... haptic feedback isn't necessary on the iPhone because it works when you RELEASE the virtual key... not when you press it... and haptic feedback would not work well with that set up. This difference tells me you really don't use an iPhone.

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

Why, yes, I have... and I don't even notice it downloading email. Again, another sign you don't use an iPhone. You are lying. Very few of the competition have 1GHz processors, only the Nexus One does, as far as I know. AT&T's 3G speeds are clocked faster than any of the other carrier's 3G speeds for downloads.

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.

Another lie. The iPhone multitasks native applications such as the mail (again showing you don't know what you're talking about, downloading of IM messages, iTunes playing, loading of webpages, etc., and other built in Apple apps. What it does not allow is third party multitasking and multithreading because of energy management considerations.... and switching between apps is almost instantaneous and fast enough to be useful for cut and paste work on line.

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

ABSOLUTE PROOF YOU ARE A LIAR ABOUT USING AN IPHONE! The iPhone has had built in Instant messaging since day one and has had SMS since the release of the 3Gs.

[SoftwareEngineer]

ABSOLUTE PROOF YOU ARE A LIAR ABOUT USING AN IPHONE! The iPhone has had built in Instant messaging since day one and has had SMS since the release of the 3Gs.

Hey Apple Fanboy (Steve Jobs, is that you??)

Tell me again where this so called Instant Messaging is on the iPhone.

..and Regarding market share, look at it WORLDWIDE. YOur stats are US market stats only. Gosh almighty. There is stupid and then there is Apple Stupid

Go keep defending them. Who gives a flip. I don't. I am technology agnostic. If tomorrow Nokia has the best OS (not likely, but just saying) then that is where I will go.

Apple WILL fail. A single hardware vendor for everyone. Are you freaking kidding me???

Regarding $600, that is what it is. Not everyone got the subsidy. Ask anyone who did not have a credit history with AT&T as to how much the iPhone cost them. The fact that it was subsidized for some does not make its cost less than the $600 that AT&T charges for many clients.

[SoftwareEngineer]

Here is a great DATA and FACT based article that shows how “dominant” Apple is in the PC market.

HINT: It is not. Its market share is slipping again just as I said and what is happening to the Mac now will happen to the iPhone

http://windowsitpro.com/mobile/pda/Article.cfm?ArticleID=103438&News=1

[Star Traveler]

Here's something for you, to get you "up to speed"... it's from 26 years ago... LOL...

---

Found Footage: The Story of Macintosh

by Steven Sande on Jan 18th 2010 at 9:30AM

Denver-area Mac consultant Mike Kimble is no stranger to Apple; he worked at an Apple reseller prior to the introduction of the Mac in 1984, and he's been involved with Macs and other Apple products ever since. Mike recently found several old Apple tapes that were sent to his business back around the Mac intro, and his description of one of them says it all:

"I found this VHS cassette while cleaning my office this week. This "Found Footage" comes from a video tape I received from Apple back in 1984 when the original 128K Mac was introduced. It was part of the authorized dealer training videos given to each store to help them become familiar with the Macintosh. You will see a very young Burrell Smith, Andy Hertzfeld, Phil Gibbons, Mitch Kapor, Bill Gates and Steve Jobs. You really get a good feel for how proud and excited these people were for the creation of something special. Little did they know how much they were about to change the world..."

My personal favorite scene is the one where Bill Gates is sitting with a 128K Mac on his desk. The video is divided into two parts; the second can be viewed by clicking the "read more" link below. Enjoy this trip down memory lane!

---

DanzArtZ

January 12, 2010

I found this VHS cassette while cleaning my office this week. This "Found Footage" comes from a video tape I received from Apple back in 1984 when the original 128K Mac was introduced. It was part of the authorized dealer training videos given to each store to help them become familiar with the Macintosh. You will see a very young Burrell Smith, Andy Hertzfeld, Phil Gibbons, Mitch Kapor, Bill Gates and Steve Jobs. You really get a good feel for how proud and excited these people were for the creation of something special. Little did they know how much they were about to change the world...

YouTube video...

The Story of Macintosh, pt 1.mov

The Story of Macintosh, pt 2.mov

---

Some other videos

1983 Apple Keynote-The "1984" Ad Introduction

peestandingup

April 01, 2006

Here we see Steve Jobs at a keynote in 1983 showing for the first time ever the famous "1984" ad by Ridley Scott to an exclusive audience. The ad was shown on tv shortly after that only once during the 1984 Superbowl & never aired again & is considered to be one of the greatest ads of all time.

---

Steve Jobs demos Apple Macintosh, 1984

tranquileyedotnet

November 07, 2006

Demo of the first Apple Macintosh by Steve Jobs, January 1984, in front of 3000 people. Andy Hertzfeld captured the moment quite well in his retelling: "Pandemonium reigns as the demo completes. Steve has the biggest smile I've ever seen on his face, obviously holding back tears as he is overwhelmed by the moment. The ovation continues for at least five minutes before he quiets the crowd down."

[Star Traveler]

You were saying ...

Apple WILL fail. A single hardware vendor for everyone. Are you freaking kidding me???

Yeah..., now where have I heard that one before... ummm... for maybe the last 30 years or so, from these "oh-so-intelligent computer pundits"... LOL....

Do you think that it will happen by the year 2525 or what? :-)

Never mind that this company is not in debt, that they've got billions of dollars in the bank, that they're selling computers and their other products like gangbusters, even in the middle of a Great Depression -- naaahhh... they're going to fail for sure... :-)

I'll be sure to make a note for my great, great, great grandchildren, so they can be on the lookout for it.

[Star Traveler]

You were saying ...

Responses like yours show a cult like behavior where you think ONE manufacturer is somehow going to survive over the marketplace because they are “special”

Oh... never mind that they're still in business, doing great and selling products like gangbusters and they're over 30 years old...

And for a "computer-maker" -- that's like being Methuselah... LOL...

[Tribune7]

I mean... other companies should "fail" as marvelously as Apple has.

Well don't forget that Apple really was near death.

[Swordmaker]

So what. Both IDC and Gartner's estimates under estimated Apple's actual growth and sales figures every quarter for the last three years often by double digit percentages. . . and often disagreed whether Apple would grow or have a loss and never correct their erroroneous predictions. And Paul Thurott draws his paycheck from Microsoft. Two years ago the same exact Thurott article said Apple never had more than 3% of the worldwide market. Now it's 4%. One company.

More importantly, that one company has 25% of the world's profits in the desktop market share and almost 33% of the profits of the notebook market. In the US, Apple has almost 50% of all personal computer profits and its marketcap is greater than Dell and HP COMBINED and growing!

[Star Traveler]

You were saying ...

Well don't forget that Apple really was near death.

Well, I've been near death a couple of times, but no one is saying that I'm going to kick the bucket anytime soon now...

I mean, if I had certain people following me around saying "You're going to die and you're not going to last; it's inevitable..." well, I might shoot them, instead... LOL...

Yeah, we can say that we're all going to die eventually (and so do companies, because not one of them lasts forever [maybe a long time but not forever...]). But, that's supposed to be "informative" -- or what?

Like I said... there have been these "computer-industry-pundits" who have been saying Apple was going to die, just about every year of its life... :-) (they're still out there now saying it, but in low and hushed tones...).

[antiRepublicrat]

The original IBM PC used a 4.77 MHz 8088 processor. While it was, internally at least, a 16-bitter, its interface was eight bits.

I have quite a bit of familiarity with the 6502. It was 8 bit for registers and interface, but with a 16-bit address bus (you could bank select to go higher than 65535). The 8088 was the same as the 8086 with 16-bit internals, but as you said an 8-bit interface.

But the 6502 was basically at a dead-end. It had a lot of quirkiness, and the 8-bit registers were a PAIN (want to access any address over 255, need two bytes and juggle the high and low bytes yourself). Everybody who used them for desktops, Apple, Commodore, Atari, moved to the Motorola 68000.

[Blue Highway]

There are numerous secondary market external battery systems for the iPhone that add extra charge times. They are reasonably priced for such road warriors. I have used an iPhone on the road and have not found a need for an extra battery. I charge it every night... and carry a car charger. I have had other smartphones... and didn't carry an extra battery for them either.

Again I have said in the past Apple wants to use their holier than thou proprietary garbage earning them more money screwing their faithful disciples all while deluding them into thinking Apple can do no wrong all the while letting them feed off them like a parasite.

I have several of these portable mobile battery boosters for my Motorola Smartphone and they work maybe in a sort as a emergency form of charging. I have had my Motorola Q and I have 3 high capacity 3200mAh batteries along with the original OEM 900mAh battery and several 900 mAh Motorola batteries. See our point Swordmaker, it IS important to have replacement batteries. If you keep making excuses for what is in everyone's eyes as a design flaw, then go crawl back into your narrow Apple viewpoint and come out when Jobs tries to market the iReligion where all of life and relativity will be all things Apple. Then you can be one with Steve Jobs and his minions.

[antiRepublicrat]

Regarding market share, look at it WORLDWIDE. YOur stats are US market stats only.

I don't believe you specified worldwide. Another one for you, Apple has 99.4% of the worldwide mobile app market.

I am technology agnostic.

So am I. That's why I went Mac. I see nothing on the horizon even approaching the ability to take me away.

Ask anyone who did not have a credit history with AT&T as to how much the iPhone cost them.

I believe that would be $199, but a deposit will also be required. This is the same for any phone, even Android phones, when getting them subsidized.

In general, I agree that multiple manufacturers do have a better chance of dominating the marketshare. But that's multiple manufacturers, not one. Individually, they end up suffering from the inability to distinguish themselves while using the same platform. Case in point, pretty much every PC manufacturer these days.

Apple is able to distinguish itself quite well, and make tons of profit doing it. That is the point of a company, right? Profit. What company aims only for marketshare? How much money does the combined marketshare of a shared platform put into an individual company's coffers?

[antiRepublicrat]

If you keep making excuses for what is in everyone's eyes as a design flaw

Design decision. It's an issue of strength, smaller size, aesthetics and more simplistic components vs. being able to change a battery. Apple made the decision based on wanting those former attributes rather than the latter, most likely based on the usage patterns of the vast majority of users who never buy extra batteries.

It's not a flaw, it's a decision. Otherwise I can turn around and say a battery door is a flaw due to its lack of strength, smaller size, aesthetics and simpler components.

[Blue Highway]

And when that battery becomes a boat anchor after it reaches end of life due to limited amount of charge cycles you will still say it was a smart decision, correct? Are you part of the Apple elite that wants to live in this disposable world where you’re expoected yo buy a new iPhoney every 1.43 years?

[Swordmaker]

And when that battery becomes a boat anchor after it reaches end of life due to limited amount of charge cycles you will still say it was a smart decision, correct? Are you part of the Apple elite that wants to live in this disposable world where you’re expoected yo buy a new iPhoney every 1.43 years?

I bought my first iPhone when they first were available on June 29, 2007. My daughter is using it now... 2.5 years later and the battery lasts about 90% as long now as it did when it was new. So we're really worried about it dying an untimely death

When it comes time to replace the battery, it will either be replaced or a new iPhone will be purchased to get an iPhone with more capabilities than the original 2.75G iPhone is able to do.

The Motorola phone that iPhone originally replaced had batteries that lasted about the 1.5 years you think an iPhone battery lasts. By the way, Apple will replace the iPhone battery for about $86 and provide a loaner iPhone while it is being replaced... it takes 3 days door to door. Faster if you take it to an Apple store. Or you can buy a third party iPhone battery for under $20.

This company, iPhone Battery Repair, does the whole job, shipping and battery included, for only $45.90 and provides a 10 year battery warranty. So what is your problem, Blue? You've been beating this worn out drum for two and a half years now. It's time to give it a rest.

[antiRepublicrat]

And when that battery becomes a boat anchor after it reaches end of life due to limited amount of charge cycles you will still say it was a smart decision, correct?

Apple will replace it for free if it does so within warranty. If it is outside of warranty, you can buy your own and replace it for the normal price of cell phone batteries.

[Blue Highway]

$86 for a freaking battery? Are you freaking kidding me???? Every high capacity battery I have cost me less than $10 shipped. That’s a hell of a freaking racket they got going on there I’m sure even YOU can now admit.

[Blue Highway]

Of course people will have to replace it outside of the warranty as they do this on purpose. Are you willing to spend 50% for battery replacement as an equivalent Droid phone complete? This is a joke right?

[montag813]

Can one run Leopard OS under VMWare? If not what kind you run it under on Windows PCs?

[antiRepublicrat]

Battery replacements are not that expensive doing it yourself. As I said, replacement within warranty, which requires Apple do it, are free. Outside of warranty, it is irrelevant that you voided an expired warranty to change the battery yourself for cheap.