Random Rants, by Thomas Andrew Olson

Thursday, June 09, 2005

Can MacIntel increase market demand?

Everyone else in the blogosphere has been waxing poetic on the virtues of Apple's Intel switch in terms of Apple's present business models, and the juggling act required to keep everyone happy going forward. There is little chatter, however, about the potential for growing actual market share - so I'll go with that topic.

On this issue, I get the sinking feeling in my gut whereby "Steve giveth, and Steve taketh away." Yes, Apple is moving to Intel processors, and from a long term tech roadmap position, that is justified. But Apple will not enable complete porting of OS X to run on just any Intel processor, specifically in legacy PCs currently running Windows. So if you want to run OS X, you'll still need to buy a Mac, and Bill Gates gets to continue sleeping like the proverbial baby at night. A Macworld FAQ on the topic seems to cover all the salient points. Andy Ihnatko has checked in, claiming that porting OS X to run on a Dell, for example, would be "suicide" for the company. He is probably correct, at least for now, in that Apple's present business model only thrives when you buy that $2000 iMac with OS X pre-installed, as opposed to a $129 Tiger CD for your current Dell. (However, he also suggests that the idea of running legacy Windows apps - natively - on a MacIntel is not farfetched. Others have discussed this as well.)

So...is it time for a new business model? While the present model keeps Apple solvent and innovative at the same pace, it does absolutely nothing to increase overall market share, which is the one thing that will sustain you for the long haul. I've always believed that the history of this business was driven by early adopters with big budgets, i.e., large Fortune 1000 corporations - the consumer desktop market would not have grown so quickly had not those consumers been already "trained" on office PCs. This is one of the important ways in which Microsoft won the OS wars. Ergo, any significant shift in market share for Apple will depend on a two-front battle, in both consumer and corporate desktops.

Personally, I'm disappointed by Apple's present strategy. I have long dreamt for the day when I could migrate an entire company's PC line to MacOS, while offering significant cost savings by not having to change much hardware up front, except for those machines already at the end of productive life. It would seem that right now, the timing is near perfect for exactly that sort of move - MSFT has been on the ropes for a couple of years now over security issues, issues that cost consumers and corporations billions annually in lost productivity. If you could give people a "switch" option that didn't involve massive hardware purchases, I'm willing to bet they would take it. Working in this business for 21 years, I'm here to tell you there is a lot of frustration and anger out there in the trenches, more than any marketing research pollster will ever tell you, without charging you $3,600. But it's a great key to new sales, and major shifts in technology.

However, there are many sides to this argument, pro and con.

If Mac OS X was available for any Pentium, not just MacIntels, it would potentially allow Apple to make incredible gains in OS market share virtually overnight. But that would be done at a price of other problems, and a potential loss in hardware sales, which currently drives the income stream for future development. Apple has never been a "software" or a "hardware" company. It is a technology company. By "building the whole widget", they have managed to avoid the unsupported third-party hardware glitch issues that have plagued the Wintel world forever. And who wants to be like them? Your only sales pitch at that point is "security", and unless there's another superworm in the pipeline that will paralyse the Fortune 1000 for a week, you'll need to offer more than that to convince them to make the move. It's got to be about costs, and ease of transition.

It is also doubtful that an OS X build would really work on just any Pentium. Hence there would be a need for huge levels of customizing, which could potentially send development and rampup costs (and timelines) through the roof - not to mention the loss of goodwill if a large deployment went badly. Better to customize OS X on the new Pentium M currently in the pipeline, ship 2007 MacIntels with those chips, to stay ahead of the pack, wait a few more years for those processors to filter into the rest of the installed PC base, then revisit the "cloning" issue, in, say, 2010. Meantime, the current profit model remains sound for the foreseeable future, and buys time to work out the bumps in the next "transition", if Apple wants one. (But I have another idea, and you won't have to wait until 2010 to make it happen.)

Of course, there are some who suggest that Apple is damned if they do, damned if they don't. If they don't open up to potential "cloning" by allowing the OS to run on an older Dell, they lose. They could also lose market share today under the present model, as significant numbers may hold off buying new Macs until the MacIntels arrive, under the false perception that the G5 is "obsolete".

In addition, by "opening up" OS X to run on legacy Pentiums, Apple would have to re-engage the rough and tumble OS war with Microsoft - a marketing war MSFT clearly won, and won't want to re-engage, unless forced to. It will then become a formidable enemy (again), with an almost limitless bank account. To be fair, it will be the first time such a battle would be engaged on a level field, i.e., the same processor platform. I would expect Apple to do well in that regard, as OS X is still the better OS. But Apple would take a lot of lumps in the process that might hurt them badly. MSFT could play hardball by discontinuing the Mac product line altogether - no more Office. (Actually, all they would have to do is threaten corporate America with such a move, and any notions of switching OS'es on the fly will largely disappear - the "iron fist in the velvet glove" approach.) So for this to happen, there would have to be a lot of "what ifs" to deal with, with the attendant Plans A, B, C, and D fully developed. The corporate demand would have to be overwhelming and rock solid to be worth the risk.

So there needs to be a new strategy, one that can allow Apple to sell its own wares well, near term, yet still carve out new inroads in the corporate cubicle farms to significantly increase market share, long term, which would, in turn, feed back into the consumer market. So it would be a "semi-dissociation" of the OS from the box. But I firmly believe a form of "cloning" will be necessary, in the near term, as large corporate IT departments are facing a lot of fiscal challenges these days, and will be loath to throw out thousands of perfectly good PCs, viruses or no. Your goal here is to get them onboard now - then when the normal PC replacement cycle comes around again, a couple of years later, they are primed to buy "the whole widget" from you - thousands at a time. What you lose in immediate box sales you gain in spades down the road.

My strategy for large corporations would be this: Offer a "custom", one-size-fits-all OS X build on a CD for legacy, but late-model installed-base Pentiums, but at a higher price, to cover the additional development costs. This build would "expire" in three years. For older boxes at the end of the life cycle, pitch new MacIntels (a little of something is better than a lot of nothing). Sell them on support, "migration services", training the staff, training the trainers, project management, the full monty. As their Windows licenses will still be good, there will be no issues with running legacy Winapps in a separate window, as has already been projected for the new MacIntels. This gets you in the door, without detracting from new box sales. I would assume that native MacIntels will integrate a lot better than legacy Dells with OS X loads, but the differences will be balanced to encourage full hardware migration at a later time, while still providing the enjoyment of OS X to recovering Windows users immediately. This fits in with my theory of "as above, so below". As corporate users get accustomed to the new system, they will be more open to giving it a try at home, especially as MacMini's get cheaper, and will run their legacy apps and peripherals, so the market penetration builds on itself.

I think the time is ripe to encourage corporate America to make the move away from Microsoft - the only resistors I see are Redmond itself, and IT managers whose entire careers have been built on solving the never-ending Windows problems. But that's a strategy issue for another column. If Apple really wants to regain acceptance in the larger workplace, and get its market share back into double digits, thus ensuring long-term viability, it needs a "mixed" deployment strategy around its Pentium builds, which must include some form of limited "cloning" in the near term.


  • i thought your blog was cool and i think you may like this cool Website. now just Click Here

    By Blogger joehuron19949204, at 9:16 AM  

  • http://www.computers-guide.co.in

    In the developed world, virtually every profession makes use of computers.
    However, certain professional and academic disciplines have evolved that
    specialize in techniques to construct, program, and use computers.
    Terminology for different professional disciplines is still somewhat fluid and
    new fields emerge from time to time

    By Anonymous Computers, at 3:14 AM  

  • http://www.cruise1.biz'
    in the dovloped world. ihis cruise saide of the professnal make use of cruise.
    Anon-How does Mandel manage to tap into the money that backs Fisher and Dann? That's pretty suprising to me.

    By Anonymous Cruise, at 3:23 AM  


    By Anonymous Movies, at 3:27 AM  

  • http://www.photographs.net.in

    Improvements also continue to be made in the automated processes used to
    develop pictures and have lead to the availability of one-hour photo
    processing facilities. The real future of photography may lie in the area
    of digital imagery, a computer-based technology, which produces images

    By Anonymous photographs, at 6:29 AM  

  • http://www.mentalhealth.net.in

    developments include an increased understanding of the brain's function
    through the study of neuroscience, the development of effective new
    medications and therapies, and the standardization of diagnostic codes
    for mental illnesses

    By Anonymous Mental Health, at 6:30 AM  

  • http://www.thatdentalsite.org/

    Dental insurance,dental,dental medical,care dental,delta dental,
    dental implantdental plan,dental hygienist,dental school,
    dental life met,dental dog health alth.blogspot.com month pet,
    dental hygiene,dental lab,american

    By Anonymous thatdentalsite, at 1:49 PM  

  • http://www.thebedroomdesign.o

    bedroombedroom furniture, bedroom sets, bedroom designs,
    bedroom decorating ideas,feng shui bedroom, bedroom vanities.
    master bedroom designs,ikea bedroom planner furniture store,
    bedroom suites,michelle's bedroom,bedroom furniture, bedroom, bedroom

    By Anonymous thebedroomdesign, at 1:49 PM  

  • http://www.thebodybuildingworkout.org/

    bodybuilding supplements, female bodybuilding, bodybuilding forums,
    natural bodybuilding, bodybuilding pictures, bodybuilding workouts,
    john cena bodybuilding pics.

    By Anonymous thebodybuildingworkout, at 1:50 PM  

  • ugg france yxmbtqlh ugg pas cher kvswvdrt bottes ugg xxitebtj ugg australia hzhlqrab bottes ugg pas cher lquoesuo ugg

    By Anonymous Anonymous, at 6:23 AM  

  • By Anonymous Anonymous, at 4:54 AM  

  • By Anonymous Anonymous, at 1:41 PM  

Post a Comment

Links to this post:

Create a Link

<< Home