The Mac Webb

Porting Mac OS X to Intel

- 2001.09.27

With the initial success of OS X (hey, it works) and the beginning of a migration to a Unix-based platform, much has been made of the possibility of Apple porting OS X to other platforms. The initial reaction of many is that this would greatly expand Apple's market share and allow them to gain on the Wintel competition. As I think through the ramifications on Apple's business, I have determined that porting Mac OS X to other hardware would be the last thing on which Apple should focus.

Lets perform a basic analysis of Apple as it relates to the marketplace.

Strength: Apple is known as a vendor of premium machines. When you purchase an Apple system, you pay a premium for the product engineering, support, and integration of the OS and the hardware. I have seen some make the analogy to a luxury car, which I think is appropriate. We know that a Ford Escort and a Mercedes will perform the same functions, but we also know that the experiences are quite different.

Apple has dominated the graphics/creative markets where users are more in tune with an OS which is built for graphics work. These users are typically more focused on the aesthetic value, which also works in Apple's favor.

Additionally, Apple is relatively successful in the education market. This market requires products that are easy for users of varying levels to use. Additionally, these markets require machines that have a longer useful life. Total cost of ownership numbers can balance out the initial startup costs in this marketplace. The ease of the Mac OS and the engineering of the products are the attraction for the education market.

Weakness: Penetration of the business market has been an Achilles heel for Apple since the Apple II lost the dominant position in the market. Business customers are not reached on an individual level but through selling to organizations. A company determines a set of requirements for systems and then sends purchasing agents out to meet those requirements for the best price. The strengths of an Apple system do not offset the initial cost differences in this market. If I can work a corporate deal with Dell to supply me with 10,000 laptops for less money than I can work a deal with Apple, Dell is the winner. Additionally, I will not have to defend my decision to go with a different OS.

Now that we have set the groundwork for the evaluation of OS X, let's examine what would happen if OS X were suddenly ported to other platforms.

The assumption that the current market share would remain and additional users would suddenly jump on and license Mac OS X is false. With OS X available on multiple platforms, high-end creative users will still pay a premium for the Apple name.

The problem begins in the education market. Apple must not compete only with the Wintel vendors (major and minor), but will also have to compete with vendors selling cheaper hardware with the same OS. This eliminates the ease of user factor, which is a huge reason for the success in the education market. Apple can only sell total cost of ownership at this point, which, while important, can be offset by simply making the initial cost so low as to negate the advantage.

Let's move on to the business market. If a company decides to move toward the Mac OS, they will again look for the lowest cost to enter the market. Apple will have to compete against vendors who can sell for quite a bit less and never be able to leverage its strength of engineering and design. Apple could possibly pick up some revenue from companies who enjoy the Unix background, but will selling OS licenses really generate much revenue? This market will most likely not enjoy the OS so much they then run out and pay a premium for Apple branded systems.

The issue can be simplified to this point. Selling OS X to licensees costs Apple one of its major systems markets in the hope of helping to break into the business market. Unfortunately, the revenues of the systems market are much higher than the revenues gained in OS sales. Bulk licenses of OS X will be sold at discounted rates to resellers and corporate users.

Can Apple survive as a software company?

Lets look at Microsoft, a huge software company who makes the majority of its revenue in from enterprise software and office sales. They control 90% of the market for office suites and spreadsheets. They have a formidable user base in numerous enterprise level products and licenses to numerous hardware vendors. I cannot locate the exact figures, but the OS license on Windows consumer flavors is marginal. They would not be nearly as successful without the other market areas they have grown.

Apple has very little leverage in the enterprise and has none in the office market. Some would argue that a Unix OS would help them gain enterprise market share, but analysis would indicate this to be incorrect. If I run Unix on the enterprise, I have likely licensed a variant as part of my system purchase. If I am a Sun customer, I have Solaris. Those who wish to run Unix beyond a server machine long ago moved to a Linux variant. While some of these users will move to Mac OS X, they are not a large enough group to make sense.

To sum it up, selling the Mac OS X on other platforms does nothing but transform a billion dollar computer maker into a 100 million dollar software company.

Feel free to disagree with me, as I am just some schlubb sitting in an office in Dallas trying to keep from working. I do, however, think my reasoning to be fairly sound. LEM

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