Does Apple’s long-term plan involve leaving the computer hardware biz?
Posted by Dennis Sellers 
Jul 24, 2005 at 11:50pm
When I first read Paul Nesbitt’s editorial, “Why OS X is the future,” in the June issue of MacUser UK, my first thought was that immortal phrase from The Princess Bride, “Inconceivable.”
In the column, Nesbitt talks about Apple’s plans to transition from PowerPC processors to Intel chips in the Mac. He thinks it could be the first in a long-range plan for Apple to get out of the personal computer hardware business.
“This deal is all about software,” Nesbitt writes. “It is a plan to leverage Apple’s most important asset, OS X, with speed, features, reliability and usability. When Apple already out-sources its hardware production to the same Taiwanese companies that make PCs, it is not a major step to follow IBM and get out out of the PC hardware business altogether and just sell software.”
Personally, I’m skeptical that this will happen. Apple CEO Steve Jobs has long argued that the Mac experience is so good because Apple “makes the whole widget [no Dashboard pun intended],” integrating hardware and software in an elegant, easy-to-use way. Making just the software and farming out the hardware development to other companies might eventually result with an inelegant, Windows-like mess. Neither Jobs nor Mac users want that.
What’s more, it may get increasingly harder to make big profits on software alone. There’s a plethora of open source software available and in the works. And even Sun announced that week that it plans to eventually offer all of its software for free as a way to build communities around its technologies.
Also, consider Apple’s latest financials. Mac sales for the fiscal 2005 third quarter that ended June 25 were the highest in four years and were, in fact, the best sales ever in a June quarter for the computer line. Sales were up eight percent from the year-ago quarter. Apple shipped 1,182,000 Macs, representing 35 percent growth in Macs. The computers make up 65 percent of Apple’s total revenue. And Jobs isn’t about to just ignore well over half of the company’s income.
On the other hand, Nesbitt is talking about a long range plan. And let’s face it: who would have believed that Apple would ever have gone Intel.
Besides, as Nesbitt concludes: “Think I’m ‘insane’? That’s what Jobs called me in 2001 at the Cupertino launch of OS X, when I asked him how the x86 version of the operating system was doing in the Apple labs.”
And Jobs has since admitted, there was such a critter in the “basement” all along. Makes you think, doesn’t it?
â¨Thoughts? Write me at dsellers@macsimumnews.com
ken2 Says:
While we tend to think of a PC as something running XP the fact is that Macs are also PCs in that they are personal computers - as well as work/industrial computers.
As long as the PC (in generic terms) is not replaced then I believe that Apple will continue to design and sell Macs. The problem with licensing OS X to “PC” manufacturers is that you end up with a can of worms in terms of the variety of components that would be installed, the related exponential increase on customer support demands and the establishment of Macs as a major target for hackers.
The truth is that Apple cannot generate the income from just being a software house that they can from selling Macs and related hardware. I think the Mac roadmap is a strong one, especially with the challenges Longhorn faces when it’s finally released.
Posted on July 25, 2005
MODeM Says:
When the last ever set of rumors of Apple’s shift to Intel chips came to pass, the Mac pundits once again said, “It’ll never happen.”
Steve Jobs will, without question, release OS X at some point to all computers using x86 chips. I am absolutely convinced that this is his long-term plan. And it makes sense.
Few companies survive with only one product. Apple’s entire line of computers can be considered one product. Not even Jobs foresaw that the iPod would become such a success, but he threw it out there to the unforgiving marketplace, and the rest is recent history.
I argued before the Intel announcement that Apple would be adopting Intel chips because they now could; before the iPod, they just could not. It was not just a revenue issue, although that was paramount. It was a branding and psychological plain that Apple had reached: simply put, with the iPod, PC users could now hold the brilliance of Apple in their ignorant little hands, without having to switch to Mac.
Ask yourself this question: If you could turn your company into the NeXT Microsoft--in all the good ways, not the bad--would you do it? How about the the next Sony, ditto?
I don’t foresee Apple abandoning the PC market (don’t forget, Macs will be a PC now)--they have no need to. The assumption that opening OS X to all PC’s of recent vintage would mean that Apple’s sales of its own PC’s is an assumption with absolutely no base.
Consider this: If Apple is the Porsche of PC’s right now, then why would you be afraid of Apple losing market share? How much more could it lose? Doesn’t Porsche survive well enough?
Just as the pundits will have to get over the fact of Intel chip use, they will have to get over the fact that the operating system is what defines the Mac.
I mean, do you interface with the Chip? Or the GUI?
Does the PowerPC define security with the Mac? Or is it the well-honed pathways of UNIX?
So, start right now preparing for Apple becoming the dominant operating system of Personal Computers. Sell that Microsoft stock you secretly hold.
Enjoy the new partnership of Apple and Intel that will bear fruits soon in the video/movie/show/event download application and store.
Enjoy Apple’s rise into a consumer company with a diverse product base that strengthens its bottom line.
Will Apple release OS X to the mass of x86 PC’s?
It will happen.
Posted on July 25, 2005
MODeM Says:
The assumption that opening OS X to all PCs of recent vintage would mean that Apples sales of its own PCs would plummet is an assumption with absolutely no base.
Posted on July 25, 2005
Sprocket999 Says:
“The assumption that opening OS X to all PCs of recent vintage would mean that Apples sales of its own PCs would plummet is an assumption with absolutely no base”
Oh I wouldn’t be so sure of that! The whole clone issue in the mid-late ninties, albeit it started to build a Mac-base, it also cannibalized Apple’s sales in hardware through the release of very inexpensive boxes—and near the end, superior in spec and innovation to Apple’s. Needless to say, upon Jobs’ return, clones were promptly tanked.
And to paraphrase ‘ken2’, Macs, generically speaking, always HAVE been PCs. (Personal Computers).
Out.
Posted on July 25, 2005
Call Me Ishmael Says:
If Apple were to get out of hardware, then I guess so would Microsoft. License out the design of the Xbox and have hundreds of companies make compatible units. I think that is a more relevant question. For that matter, release a portion of your operating system as open source so that many more software houses could create a Windows-like OS that help create better competition. Oh, wait, something like that already exists in OS X.
We must really get beyond the mentality of the 90s where Microsoft bullied us into its rules. There was a time where nobody got fired for buying IBM, and it still holds true in certain markets; that changed to Microsoft. It is about to change again.
Posted on July 25, 2005
MODeM Says:
The problem in the clone period was that not only did Apple have a confusing array of computers (substantially reduced post-Jobs), but the clone makers increased the confusion. The “Mac” buyer--I was one of them--could barely see the forest for the trees.
Motorola, a PowerPC partner, coming out with its line of “Macs” really messed up Apple. This was a major tech player, who controlled the production of the chips, licking its chops, secretly hoping, no doubt, that they could acquire Apple at some point. Look, you might play with the big kid down the block, but you don’t want him moving into your bedroom.
At the same time, Microsoft and Windows ‘95 were doing mighty fine.
Importantly, cloning fragmented an already small market share. What we’re talking about now is expanding into a vastly huge installed base of PC’s, and, by keeping Apple hardware, still providing a superior hardware solution for the best operating system, as Porsche provides a superior car.
Posted on July 25, 2005
Sprocket999 Says:
“. . . expanding into a vastly huge installed base of PCs, and, by keeping Apple hardware, still providing a superior hardware solution for the best operating system, as Porsche provides a “ superior car.”
Nope. I most certainly do NOT agree. First, we are assuming any expansion base can’t wait for a Mac OS on their desktop. Not true. You and I might be, along with a number of enthusiasts, but that is not enough to turn any positive tide. Any that does develop over time will just errode the sales of Apple’s hardware/software combo base as it did before. And today’s market share is even smaller than it was in the nineties
Second, Apple ALREADY provides that superior hardware for the best OS.
Third, it wasn’t Motorola that upset the Apple cart (no pun intended), it was Power Computing.
Posted on July 26, 2005
Article Information
Comment on this Article Print this Article Email this Article Digg This
Contributor
Dennis Sellers
Dennis has been a newspaper editor/reporter (seven years) and teacher (seven years). He has over 4,000 magazine, newspaper and online articles to his credit. He has also covered the Mac and tech industries for over a decade for such online publications as MacCentral, MacMinute and now MacsimumNews.
J. Scott Anderson Says:
I don’t believe he is correct. Hardware will never have to worry about some freebie OSS package coming along and crashing profits. It costs something to make good hardware. Plus, as Steve has put it and as he is quoted in the article, the experience is so good because Apple makes a “system” - not components.
Apple will continue making hardware and software into the foreseeable future.
Posted on July 25, 2005