By: Robin Bloor Published: 14th June 2007 Copyright © 2007

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14th June 2007: 'Dale Vile' said:

Hi Robin Bit short of time at the moment, but here are some initial random thoughts from reading your piece: a) I would be interested to know if you want Apple to be successful or Microsoft to lose its domnant position. The latter is fine, but isn't the former a little dangerous? What's in my mind here is when you look at the closed end-to-end business models based on technology lock-in that Apple has put into place, it appears to me to fly in the face of the general industry move towards more openness - which even MS has had to acknowledge. Out of the frying pan? ... b) My main concern is the business market. Outside of the media sector, Apple is still just a niche OS, even in the US. There are practical and commercial reasons why this cannot change overnight, for the reasons we discussed when we were together (commercial interest of the channel, infrastructure switching costs, software switching costs, skill set switching costs, etc). This is to do with business, risk and service delivery -not technology. At a personal level, it frightens me that as a recent iPod convert, I have sacrificed openness for usability. I recently bought a mobile phone for personal use and it happened to have a music facility so I thought I would try it - then I realised none of my Apple centric music would play on it. I fear I might regret the decision to go the Apple route at some point down the line. On this last point, while I am not qualified to talk about the dynamics of the consumer electronics sector, I think we have already created a bit of a latent monster here, so I think we should be careful what we wish for.

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14th June 2007: 'John' said:

As much as I loathe Microsoft's products, I think that Microsoft the company will have a fairly long decline. Certainly it will decline; this is the nature of the technology market. Witness DEC, NCR, and lots of other past giants. Of more relevance is IBM, once THE unquestioned leader of technology. While they are still large and important, their role in the market has shifted dramatically. I see a similar thing happening to Microsoft, and they know it. That's why they're looking at things like the Xbox, Zune, and that table computer thing they demo'd. Interesting that IBM went from hardware dominance to a lesser role in hardware and software; Microsoft will go from software dominance to a lesser role in hardware and software.
What will happen to Apple? I really can't say. They seem to be morphing into a consumer electronics company (they even dropped "Computers" from their name). I don't think Apple cares too much what Microsoft does. I think they just want to be a profitable, COOL company - just what they are.
As much as I would love to see Microsoft collapse and see Bill Gates standing on the street corner holding a sign saying "Will be a nerd for food," I don't think that's likely.

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14th June 2007: 'Hans Chr. Gronsleth' said:

Interesting article. We have made business software for the Mac since 1988 and for Windows since 1993. The interest is getting bigger year by year, but Apple need to put more focus on business to really have a chance to overtake Microsoft. We have seen the same thing, being multiplattform since 1993 incouding Linux and from 2004 on the mobile devices running MS Mobile or Nokia S60 (Symbian). More than 68.000 companies run HansaWorld as their erp or crm system. Now releasing SmartApps (a stand alone developement tool for business needs on your mobile) we hope to get the same interest from the rest of the business community. http://hcgblogger.blogspot.com/

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14th June 2007: 'AppleVsOranges' said:

Apple missed the boat years ago when in the middle of the Motif vs. Open Look war Sun (and others) wanted to license their GUI & APIs to run on thop of their non-Apple OSes. Microsoft filled the vaccuum created by market fragmentation. Now Apple has ported their GUI & APIs on top of *IX themselves, if they license it to others they replace Microsoft as the industry leader. If they sell MacOS for non-Apple i386 machines then they threaten Microsoft but MS is still dominant. If they stay as "proprietary" they should ditch the HW and focus on services since thats where the groth is ... iPod/iPhone revenue is nice but is the service thats pure profit, open it up to non-Apple HW owners and they dominate, keep it closed and they stay 3% niche type player ...

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17th June 2007: 'Chris G' said:

Not accounting for iPods, Apple's profits come from their staggering margins are on computer hardware sales. Why on earth would Apple get out of hardware? That's just insanity. I hear that suggestion come up from industry pundits from time to time, and I have to ask, what are they smoking? Apple tried going the software licensing route back in the 90s. Does anyone remember this? It's what nearly destroyed the company. The first thing Jobs did when he got back to Apple was scrap all the OS licensees' contracts, buying the companies outright if needed, or negotiating out of their contracts, at any cost. Apples vs Oranges indeed. I think, like most people, you're missing the point. Who gives a flying-F-bomb what their OS market share is? Comparing Apple to Microsoft is the biggest red herring in the business. Apple is not a software company, Apple is a hardware company. Apple encourages the idea that they're a software company that competes with Microsoft. It reinforces Apple's position as underdog. The David vs Goliath analogy is part of their corporate mystique. The real unit sales numbers to compare are Apple vs Dell, Apple vs HP, Apple vs Lenovo, Apple vs Sony Computers. When you look at those numbers, Apple is no small fry. Additionally, licensing the software would take the hardware out of their control- they would lose control of part of the Mac "system". The fact that Apple makes both the hardware AND the software that the hardware runs on is what makes them such high quality machines. The system's quality perception would drop precipitously if Apple gave up control of either half of the equation.

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18th June 2007: 'ApplesVsOranges' said:

Not accounting for iPods, Apple's profits come from their staggering margins are on computer hardware sales. Why on earth would Apple get out of hardware? Its called market GROWTH ... Let's see, if we are generous and say that Apple has 10% of the market (not 3% but 3x that) then that means they are locked out of 90% of the market by design. That is a niche player by any definition. If Apple is to truly threaten Microsoft it needs to move out of its niche into the mainstream. Their HW margins may be nice but are they sustainable as there are copy-cat products available? The HW margins are small compared to software and re-occuring service margins! The proprietary HW business model is at the end of its life, standardisation drives commoditization. Comodity HW driving re-occurring service revenue, or future sales of SW, that's the natural evolution of the market. Look to cell phones, how long before Apple gives away the iPod to lock in a three year service contract? If you can't see that as a posibility then your writing off Microsoft, Sony, the Telco's, the Cable industry, and a few more "service provider's" we don't know about yet. Apple computers, iPod HW and services maintain high margins ... for how long? The beauty of iPod is the leverage Jobs applied over the recording industry ... not the HW or its margin - that's not sustainable! Apple tried going the software licensing route back in the 90s. Does anyone remember this? It's what nearly destroyed the company. The first thing Jobs did when he got back to Apple was scrap all the OS licensees' contracts, buying the companies outright if needed, or negotiating out of their contracts, at any cost. Apple never openly licensed its SW value add to OEM's. The model that failed was to allow OEMs to produce a high priced clone of Apple's product (license fees meant to place a barrier against competition and lock in the Apple margins). Apple nearly fell out of existance because it focused only on high margin HW sold to a loyal niche market. The resurgance of Apple is based on new products, new business models, and most important market share growth. That's something Apple had not seen since the early days of the Mac. They have a growth market again (based on iPod) which floats all boats and leads to secondary sales of related product. What I suggested, and others as well have suggested, is that Apple take its value add (while its still relevant) and license it to OEMs who can build on it to create new innovative products which increase the overall value of the Apple brand! Additionally, licensing the software would take the hardware out of their control- they would lose control of part of the Mac "system". Exactly the point, instead of innovative new products being based on Windows or Linux ... some portion of the industry would innovate on top of MacOS for non-Apple branded HW. Remember, the total percentage of Apple branded HW out there is niche level for every market except perhaps the iPod space. The fact that Apple makes both the hardware AND the software that the hardware runs on is what makes them such high quality machines. The system's quality perception would drop precipitously if Apple gave up control of either half of the equation. Quality and Perception are not the same thing. Apple products are ok Quality wise, if someone used MacOS on non-Apple HW or just the GUI API on top of another OS that is in no way an indication of the Quality (real or perceived). Apple's riding a wave of "perceived security" that is going to rebound when people realize how wide open some of their products are to being abused by anyone more knowlagable than the typical "script kiddy". Show me a firewall based on Apple HW - there are non. I could give you a list of half a dozen off the top of my head that use Linux. Does the user know that the $99 Broadband Router they bought is a Linux computer? Do they Care? Does Apple care that 99% of the innovation in the industry is done on HW and SW that they derive no licensing revenue from?

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14th June 2007: 'Blademonkey' said:

Great article, i like the statistical illustration on the movement of Apples' shares. However, I think that the Apple selling hardware era is somewhat of a honeymoon. Especially with the advent of the MAC OS running on Intel hardware, it wont me long before people put two and two together and start requesting a Intel version of the OS to install on any PC. That would be a bittersweet victory for Apple, since they would be able to overtake Microsoft's reign on PC hardware, while at the same time would not be able to make as much revenue from their own hardware. As stated in your article, most of the sales of the apple products are new apple users. I think if we want to see long term results we should analyse the ratio of repeat apple customers to repeat PC customers. Somewhere in between, there are people who buy both, it's not always so black and white. Identifying the "camps" and their "purchasing behaviors" may help us forecast a more realistic picture of what we can expect. I'm also interested to see that no there doesnt seem to be a competition between Apple's OS and a Linux/FreeBSD alternative. I think in the long run, Open Source is Apple and Microsoft's TRUE competitor, whether they decide to accept it or not.

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14th June 2007: 'EchoBinary' said:

It seems to me that Microsoft brought standards to the desktop environment. And kept to making software.
Apple made a standard just before Microsoft but made the platform both hardware and software. To date they have not significantly changed that - although they are moving in that direction with the Intel chips. Microsoft achieved market share by being compatible with the path of least resistance. After a while anyone could build a PC with cheap off the shelf parts. Need a "reliable" OS? Microsoft will run on it. With Apple - not so much. Who knows why Apple wanted to control both the hardware and software aspect of their platform? For a time in the beginning it was true that the hardware was superior, and the OS banked on that. Thats why Apples were big in graphics and other design firms. The playing field has been leveled against both Apple and Microsoft. Open source and free programs with a service oriented business model have been becoming (slowly) more realistic than a product based business model. The lack of upfront cost for licensing for example has encourages many people to explore and play with things they might not if they had to pay license fees just to get started. I have yet to see Apple really separate software from hardware. And that might be their downfall. I am not sure that Apple can do it. Even if they manage to gain the market share that Microsoft has, they wont do it by ignoring the standards that Microsoft has set. There will have to be a lot of cross pollination. Otherwise business users will stick with Microsoft for excel files and word documents. And given the flexibility of open source platforms adopting standards they are kind of like the mixing grounds. Both Apple and Microsoft will have to adapt to this.

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14th June 2007: 'Fred Matzner' said:

Thought I would toss a couple of thoughts in about the comments here. I think Apple has shown over and over it won't go the pure software route. iTunes for Windows, for example, is really a system for giving value added to iPods, and is designed to make only a small profit (still better than Microsoft dumping billions into their loss leader products such as Zune and XBox though). Selling OSX separately to PC's would I think put Apple in the exact same boat as IBM with OS2. Selling macintoshes with OSX is NOT repeating the OS2 debacle, again there is value added, due to the high integration between software and hardware. When individual (not IT departments) choose operating systems, they do sometimes walk away from Windows.

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14th June 2007: 'vishalrajpal@blogspot.com' said:

Interesting Thought.
Although the analysis seems to position that this might happen I really doubt it. Couple of things to understand is that with the advent of a iPhone, there would be some cannibalization of the iPod sales. I think a sizable share of Apple's success is the honeymooning effect and a lot because of the creative innovation. Apple's continuous growth will however be a challenge. When Apple will be trying to increase market share with other new innovative products its not like Microsoft will watch it happen. MSFT will very soon create competitive products. Besides this there are might be new innovators coming into the space with Open Source technology and products which is the other segment worth looking into. I look at Apple's growth and think that its products are some what in the early Majority Range part of the Innovation Adoption Curve. How much more the market share will keep growing and will the rate be still the same will be something only time can tell, but it would be wrong to assume that it will continue at the same rate and direction for the next 5 years. That being said iPhone is definitely on my list

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15th June 2007: 'Seth' said:

This guy is completely out of his mind. Moreover, Leopard is a total joke -- nothing more than the same old ugly girl with new makeup...and not even good makeup.

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15th June 2007: 'Dw' said:

HAHA, thanks for the hilarious Article; you've made my day!

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15th June 2007: 'Skeptical' said:

I think I tend to lean towards Dale Vile's point of view. Analyst reports I have seen show that Windows Vista may be having an effect on Mac sales, that in fact they have been down in both units and share since Q3 of last year, particularly in the US. Share gains are impressive in the notebook category, but all of the share gains of the past 1.5 years have been with high end notebooks in the $1,000+ category, which happens to also be the fastest shrinking part of the market. Apple will have a difficult time breaking from the top end of the market due to cost and margin constaints they need to stay profitable in that portion of their business. There is also the reality of large numbers, Microsoft ships more Windows PC licenses in a few weeks than Apple does in an entire year, AND the profit margin's for Microsoft are in different league. Then again, most of their revenue growth the last few years is not from Mac's but from Ipod and Itunes, and now they will open new horizons with cell phones. They have done a great job as a CE company, not sure they will ever overtake Microsoft as a PC software company. A better long term comparison may be Sony or Samsung.

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15th June 2007: 'George C' said:

I agree with your premise. Microsoft is bloated and builds software by meeting. Apple has a small development team (comparatively) driven by the laser focus of Steve Jobs. I read a comment in the minimsft blog saying that a DOJ breakup of MS would have been the best thing for stockholders and users. Also, interesting how apple is growing vines over MS OS infrastructure (iTunes, Quicktime, Webkit, Safari).

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15th June 2007: 'Jim' said:

Apple has invested no real resources in an actual enterprise worthy support infrastructure and won't as long as Jobs is there. I've worked with them closely for over 6 years and it's been a maddening experience.

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15th June 2007: 'Ivan' said:

Your analysis is patchy at best. It's easy to grow at a 30% clip when you are a tiny part of the PC market. Six years ago, a friend of mine bet that Apple would pass the 10% market share within five years thanks to the iPod and the Apple stores. Well guess what, even with the great success of the iPOD, Apple's PC market share is still hovering around 3%, so where is this hallo effect that Mac fanatics keep talking about? A not so known fact is that from mid '06 to Jan '07 (the announcement of the iPhone) the iPOD's share of the MP3 market dropped from roughly 75% to 63%. Where is growth everyone talks about? Let's hope there are no hiccups with the iPhone or the fall could be quite hard!

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15th June 2007: 'Roger Coates' said:

Interesting. Those who would have Apple out of hardware do not understand the value of well integrated products. Unfortunately the price of this integration is a propriatory solution. I have recently switched to a Macbook Pro and love it, but then I was a big fan of NeXTStep too - which was always better on a Black Box. By the way my Macbook runs Vista so I did not commit professional suicide - all my business is still done with Office. Your market analysis assumes that the market remains un-impacted by other players. I would suggest that Google represents a bigger threat to Microsoft, because its marketing model is entirely different. One day Microsoft will wake up and it will be their 1992 (the decline year for IBM) - it will happen because suddenly enough of us are using the Internet for software and sales of Office have gone pear shaped. Where the other fruit are at this time I am not sure but I think focusing on consumers is a smart move by Steve, we will all need reliable systems to run our net based apps on!! Microsoft's belated focus on quality may save them from the fate of DEC, Univac, Honeywell and others, but the real trend is still away from the standalone world. I do not know (actually I do) but do not care what OS my phone has - it is a system and as long as it works all is well. I look forward to a day when I do not care what OS my computing device uses as long as "it just works".

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19th June 2007: 'ApplesVsOranges' said:

Those who would have Apple out of hardware do not understand the value of well integrated products. Unfortunately the price of this integration is a propriatory solution. The real beauty of the iPod (to me) is the leverage Apple used over the recording industry. By aggregating millions of users into a channel that represented real revenue the Copyright holders were forced to accept a modern distribution model (pay for what you want) vs. bundled model (pay 10x what you want to pay because you get "stuff" you don't want bundled in as "value add"). Consumer's now can purchase individual songs from artists ... the record companies fought this for years but Apple put reoccuring licens fees in front of them that they could not walk away from. Jobs did not create the model, it was there before with independent artists, he just made it mainstream. I have a hard time believing he will walk away from non-iPod revenue once someone else (Sony or XBox networks perhaps) has their act together in a way that threatens iTunes significantly. iPod market share is dropping even though the user base is increasing, that means others are competing ... Apple would be foolish to let this value they created disintegrate into another niche market.
By the way my Macbook runs Vista so I did not commit professional suicide - all my business is still done with Office. And, if you look hard enough on the Internet you can find references to folks who have gone the other way and booted MacOS on non-Apple i386 boxes (bios issues to hack). Your market analysis assumes that the market remains un-impacted by other players. I would suggest that Google represents a bigger threat to Microsoft, because its marketing model is entirely different. One day Microsoft will wake up and it will be their 1992 (the decline year for IBM) - it will happen because suddenly enough of us are using the Internet for software and sales of Office have gone pear shaped. Where the other fruit are at this time I am not sure but I think focusing on consumers is a smart move by Steve, we will all need reliable systems to run our net based apps on!! That's the basic observation I'm making ... is Steve focusing on Consumers (selling an online service) or is he just exploiting a new technology (internet) to differentiate his product in an old business model (product vs. service models). The internet is product neutral, it focuses on differentiation in the service/content. Jobs has created a compelling buisiness model over the internet, will his outdated "product lock" bias cause him to allow this obvious success to go the way of his previous market wins ... into a declining niche market ... can he break out of his "product lock" mindset before he loses his lock on the next generation of content distribution? People won't pay exhorbitant margins for a cute fruit logo given equivalent or superior product at a fraction of the cost!

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11th September 2007: 'Hagrid' said:

I think your right. I think apple will start to dominate the Os market in at least 5 years time when people realise the alternative is much better.

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12th October 2007: 'chris' said:

Apple missed the boat along time ago. They've done a great job of captivating interest with the iPod and iPhone which has helped them become a relevant player in the consumer marketplace but Microsoft has grown past that. With the consolidation of the applications market with two real players SAP and Oracle duking it out for the Enterprise Application market Microsoft is well positioned to gain an even stronger foothold in the Small to Midsized market with their Dynamics product line. If they're able to purchase a more robust Business Intelligence engine like MicroStrategy or Cognos they will have a very compelling end-to-end product offering. Apple is doing well but it simply isn't a viable product for corporate customers... Plus, no one has mentioned the emergence of media PC's, the convergence of IP computing and IP telephony. I think we should expect to see Microsoft grow in dominance over the next few years...

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17th October 2007: 'James White' said:

Any coverage on the release of Leopard and Boot Camp? What will this mean for Mac? Will we see more people take the plunge? Can it ever compete with the success of Vista?

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17th October 2007: 'Robin Bloor' said:

I'll be covering that when leopard finally gets out of the cage (on my Blog site "HaveMacWillBlog.com"). As for Bootcamp - there's no real point unless you're short of machine resources. Parallels has now got the required functionality sewn up on OS X. You can just click on a Windows application and it launches and then launches the application as thought it were running on the Mac.

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17th October 2007: 'James White' said:

Ah, a new blog ... that explains why your blog on IT-Director.com is so quiet. I only signed up with IT-D to get your posts, so will cancel my subscription and join your new site!!

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7th March 2008: 'geoff' said:

Apple: everyone seems to wants one here in australia, but ends up buying a pc machine due to cost, Maybe it's just my circle of friends being in the mortgage belt, Things mybe different in more well off circle's, But i own one and i love it!

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