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Summary:

I am sick and tired of hearing this over and over again. It’s been on so many blogs, and even in Mac Addict magazine – that Apple will/should license the Mac OS to other hardware manufacturers, so that, for example, you could legally run OS X […]

I am sick and tired of hearing this over and over again.

It’s been on so many blogs, and even in Mac Addict magazine – that Apple will/should license the Mac OS to other hardware manufacturers, so that, for example, you could legally run OS X on a Dell machine.

The comment thread on this post on Theocacao was really the last straw for me, so I set out to prove that this can’t be true.

And I’m absolutely positive that Apple will never do this. So positive, in fact, that if I’m wrong, I’ll eat my shoe.

Here’s the proof:
Only 5% of Apple

Only 5% of Apple’s revenue in the most recent quarter came from software sales. Keep in mind, software sales include sales of Final Cut, iWork and iLife, FileMaker, etc, which means that less than 5% of their revenue comes from sales of Mac OS X.

Can anyone really explain why Apple would completely give up 33% of its revenue?

By Julian Bennett Holmes

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  1. Your premise is backward, and assumees that they would have to give something up.

    The whole idea is that apple would be increasing their software revenue so that it would be a larger piece of the pie.

    At some point, as their market share grows, apple will either have to license the OS or start making about 400 different models of MAC, because they will hit a point where they can’t sell stylish plastic macs to people who need ruggedized machines, for example. Or big, luggables computers. Or whatever form factor you wish to name. It may not be this year, or next, but if they are going to give PCs a run then they will have to do it at some point. Steve Jobs isn’t stupid, and he understands this. I’ll bet it’s in the plan somewhere.

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  2. Even if Apple does increase their software revenue so it’s a bigger piece of the pie, they’re still giving up something.

    And you’re right, Steve Jobs isn’t stupid. That’s why he doesn’t want to use a Dell.

    Apple is never going to make a computer to please everybody. Just like there’s no $10,000 Rolls Royce. Some companies make luxury cars, and some make cheap cars. If Rolls Royce made a $10,000 car, you can bet your life they would lose a lot of respect from the people who buy the million dollar Rolls Royce.

    Apple doesn’t make super-low-end budget computers, and they never will.

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  3. Bill,

    You’re right. Steve Jobs isn’t stupid. He’s one of the few people in the industry who understands that the only way to make a really usable product is to control both the hardware and the software. This is why the iPod is so successful.

    iTunes + iPod = Good user experience.

    If Apple license OS X to other PC manufacturers they would then have to divert development time away from cool applications (like photo booth) into making sure their OS works on a wider hardware base. Not only does the hardware base grow significantly, so too does the backwards compatibility support required.

    For the same reason the iPhone is currently (and will probably remain) closed to third party developers. Apple (and SJ) wants to control the whole experience.

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  4. If Apple were to give up their computing hardware, and concentrate on an making only an OS – one might argue that their superior OS would drive enough sales to make it worth their while. But it’s trading one set of headaches for another.

    The problem I have with Apple is their lack of truly mobile computing platforms. Mac sales in Japan (the world’s second biggest economy and consumer market) are quite poor and have been getting worse with each quarter. Although many factors are likely, the lack of a laptop under 4lbs has a lot to do with it. Japanese consumers like small compact things, because most people commute by train, bike and foot. People don’t want to lug around ‘MacBricks’ when they can get laptops between 1-2kg that meet their needs.

    If Apple were to actually release an ultraportable – that would certainly help their sales here. But even the MacBook Pros are heavy compared with Windoze laptops of equal caliber from several makers.

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  5. Michael Houghton Thursday, February 1, 2007

    Simple. Jobs would give up his hardware revenue if his software revenue was going to be substantially greater, if it would expand the market for Apple’s other software, and if his support costs would drop. Apple don’t sell many standalone copies of OS X now because few people need it. Next quarter, when Leopard comes out, that figure will be larger, for one thing.

    Whether or not he will licence, and whether or not it is a good idea, I don’t know, but your argument is not going to be why he doesn’t. The other shareholders will have something to say on the matter, too.

    My bet is that he will, one day. I figure we will see a handful of licensed hardware providers producing tightly regulated designs, when the time is right again. The economics of Vista’s almost inevitable failure will begin to make it incredibly tempting for Apple’s shareholders to demand it.

    Whether it’s a good idea or not, that’s another matter.

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  6. Apple has always been preaching that they make “the whole widget” with both hardware and software, and therefore are able to do things others aren’t.

    Most recently it was in the Macworld keynote where Steve quoted someone saying “People who are serious about software should make their own hardware”.

    It will never -ever- happen under Jobs’ rule.

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  7. I dont know if you can just assume that if they liscnese their OS out, that they will lose on hardware. I can think of some people that won’t go to an Apple OS, because they don’t want to buy their hardware. You could sell the software to that person. Therefore, you increase software revenue and hardware revenue stays the same.

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  8. I agree with Matt. I don’t really understand your logic here. Most computer hardware sold are PCs. Explain why the fact that Apple currently doesn’t make much on software sales is the reason they would avoid increasing their potential market for it?

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  9. @ Matt, Anderson,

    It’s because Apple is not a software company. They are a hardware company. They sell MacOS as something to run on the hardware that they sell.

    If they license MacOS to run on a Dell, then they won’t sell as much hardware, since people won’t need it in order to run the software. Since most of their business is hardware (from the pie chart, 13% desktops + 20% portable + 48% ipod + 4% peripherals == 85% of their revenue) there’s very little incentive to them to make it easier for people to NOT have to buy their hardware in order to use their hardware. They would be effectively throwing away a very lucrative existing business model and fanatic customer base to try to sell more of something that they currently make almost no money on. That would be incredibly stupid business logic.

    And the $10k Rolls Royce analogy is dead on. People are willing to pay money for the integrated “it just works” experience. If they separate the experience it won’t be as seamless (if you don’t believe me, consider Microsoft OS on a Dell == sucks) and they’ll completely alienate their existing user base.

    I literally had almost this exact conversation with my Dell rep the other day when he saw my MacBook on my desk.

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  10. If Apple does license its OS, does that mean hardware manufacturers will start writing device drivers for macs. NO.
    Apple will be in the same situation as linux, where hardware manufacturers simply refuse to write device drivers for linux. and Linux developers having to reverse engineer the drivers.

    yes u will be able to buy Mac OSX and put it on dell, and when ur new exotic graphics card won’t work on it, u will be pulling ur hairs out. which will give bad rep to macs, as operating system that simply doesn’t work.

    Why would Apple want to do that. By keeping its software and hardware together it can make sure that whatever hardware gets in a mac there is a driver in the software. so it all works seamlessly.

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