Is The Time for Clones Now?

by Hadley Stern Apr 22, 2008

The last time Apple openly accepted, nay even legally licensed clones the company was widely seen to be on its death bed. Having ignored the pleas of Bill Gates before he created Windows, Apple continued on happily creating closed hardware and software systems. Until the crap hit the fan. Then, in a scramble of sorts, Apple licensed its operating systems and companies like Power Computing (remember those great, Fight Back for Mac ads?), Umax and others came along. They all sold similarly specced computers for a lot less than Apple. I owned a couple myself and they were great.

Then Steve Jobs came back to Apple and in one of his first moves he killed the clones. At the time I think he had no choice. The company was at a serious end-of-life with its operating system and it needed to start anew. Jobs focussed on bring OS X (derived from his Next operating system) to Apple with all its bumps and betas along the way; let's not forget that up until Tiger Apple really didn't have a rock-solid operating system. And with Leopard, Apple has taken things to the next level. Leopard is arguably a perfect operating system. Sure it has some hiccups here and there. But by in large it functions extremely well. The Apple hardware and software model is rock solid.

So what next for Apple? Sure, it can continue making witty ads about how much Vista sucks and Leopard rocks but in terms of market-share that is only going to get Apple so far. In order to take the next big leap in computing growth it is time for Apple to revisit the clone market. But this time Apple will do it from a position of strength, not weakness.

The benefits to Apple would be many, let's look at a few.

1. The corporate market: Companies don't like to be locked into an operating system let alone a hardware manufacturer. There is great flexibility in being able to have different companies bid against each other. Right now if a company wants to run OS X it can only use Apple hardware. This also makes switching, or even experimenting with OS X prohibitively expensive. By reselling OS X to Dell, HP, IBM, whomever Apple gets a foot in the corporate market.

2. Scale: The current Apple Genius bar model will only go so far. Apple, by in large, makes good hardware. But there are faults too (My Macbook Pro has had to have a new hardrive, 2 new fans, a new superdrive, and is currently in for a new display). By letting others take the costs and risk of hardware manufacturing it helps mitigate risk. It also allows for a ton of Macs to be made and sold around the world, in markets that Apple may not be focussing on.

3. Adoption: There are so many users out there who won't buy a Mac because its a Mac. But if they had an option when buying a Dell to have OS X pre-installed they may very well bite. And, as iPod users have shown, once users adopt an Apple product they are more likely to use and purchase others.

4. Money: Apple will make more money by licensing OS X. Plain and simple.

Does this mean Apple should stop making Macs? Heck no. There will still be people who will want Apple hardware design and will pay more for it. And that's just fine. But in this time of great success for Apple it is time for the company to take things to the next level. License OS X, and watch it spread like a (good) virus.

What do you think? Is the time ripe or am I under the lack of sleep from the arrival of our 3rd child last week!


  • I, for one, do not agree with that. Not at all.

    Apple won’t make more money by licensing Mac OS X. They’ll lose money because the clone makers would completely destroy Apple’s high-profit hardware business. I don’t think they’re going to make more money by way of licensing Mac OS X than they will lose due to it.

    The current model works best for Apple. They have scores of dedicated, satisfied customers, a very good reputation in the industry and media attention that most companies would die for. They’re pretty much ruling the roost right now. Who cares for the market share anyway!

    Aayush Arya had this to say on Apr 22, 2008 Posts: 36
  • Nope. Clones won’t help Apple.

    The received wisdom is that IBM clones are what made Windows so successful.  That without the clones, Windows would not have been the dominant platform today.

    I beg to disagree. DOS (and Windows after it) succeeded because IBM picked them.  Microsoft (not IBM) ended up dominating the personal computer market because IBM did not get the exclusive rights to DOS.  And so Microsoft was able to sell to the cloners and the rest is history.  If Microsoft was barred from selling DOS to cloners, IBM would still own the PC market today.

    Cloning makes sense for Microsoft because they do not sell hardware.  Would it make sense for BMW to license their technology to BMW cloners?  Would it make sense for Boeing to license Boeing clones?  Would it make sense for Sony to license PS3 clones?  Of course not.  Why does anybody think Apple is any different?

    tundraboy had this to say on Apr 22, 2008 Posts: 132
  • Definitely sleep deprived - here’s why clones were, are and will remain a bad idea for Apple:

    Peter Cole had this to say on Apr 22, 2008 Posts: 7
  • Apple’s US market momentum is growing by up to 32% (as predicted for the 2nd FQ) and about 6% increase globally. That is in stark comparisons to the overall PC growth of ~2% worldwide.

    US domestic momentum will keep the incentives off the table, for now, to license OSX to potential Mac hw makers. There is just not enough justification at the moment to risk derailing this speeding Mac train.

    What about globally? Well, Apple likes to control its own destiny and will unlikely authorize any regional player - say, Legend in China - to sell Mac clones only for that market. Until Apple’s boneheadedness in this regard is softened a bit, this jack won’t happen.

    As for Hadley’s 4 points:

    1. The corporate market: True and convincing points. But Fortune 1000 companies run Windows to run Windows applications and as departmental servers. Replacing them with Macs will be like pulling teeth - excruciatingly painful. And where is this incentive come from? To run servers for iPhone/iTouch mail, calendar, contacts? Maybe so. Still, Macs in the corporate offices will be an uphill struggle for Apple.

    2. Scale: refer to my argument above. I do agree to some degree Apple may be able to pull of some limited licensing say Embedded OSX. Embedded OSX would go to devices such as GPS, set-top boxes for multimedia home viewing, or test instrumentation that processes or renders high-quality graphics and videos. Take the iTouch as a reference kit for Embedded OSX.

    3. Adoption: Apple will never let any US domestic competitors access to OSX…ever. Take that Michael. wink

    4. Money: False (thanks, Aayush). Allowing Dell or HP to make Mac hardware will eat into Apple’s high-margin pro machines and eat into its burgeoning U.S. market share. When, perhaps, this current momentum suddenly derails itself, then and only then, Apple will consider sending the Clones once again.

    Disclaimer: I do favor Apple license its OSX to select partners both here in the US and abroad to dramatically increase adoption - especially in developing countries like Asia, Australasia, and Latin America. Like you mentioned Hadley, if Apple is not interested in that market why not let a local player market the Mac and split the revenue?

    Robomac had this to say on Apr 22, 2008 Posts: 846
  • Totally agree, Hadley.

    People’s fears about clones are based more on maybes and what happened in the past. Particularly, clones will give a lot more to the Mac’s PC marketshare than it will take from Apple’s own Mac marketshare.

    If Apple licensed OS X, undoubtedly more computers with OS X would be sold then are now.

    And yes Apple would concede some sales of its own Macs.

    But wouldn’t it prefer more OS X machines out there? It’s like the adage “you have to spend money to make money.” That is, Apple has to accept making less money in one stream, to make more in another, an importantly, to long term make more in both streams.

    Chris Howard had this to say on Apr 22, 2008 Posts: 1209
  • Chris and Hadley are both right.  The fanboys can rail against clones all they want (for reasons that really escape me).  But reality is reality.

    Software has a MUCH higher profit margin than hardware.  It is easier to manufacture, easier to release, easier to meet demand, easier to stock, and easier to sell.  So even if Dell and HP ate into the hardware sales, the profits from the software would more than make up for it.

    And the fact is that it couldn’t hurt.  Even after 10-years of constant media fellatio of Apple, Macs are still in single-digit market share.  Seriously, fanboys, why keep defending a strategy that has kept Apple in perpetual second place while Microsoft’s OS licensing scheme dominates the market?

    “And yes Apple would concede some sales of its own Macs.”

    I would hope and think that the fanboys would argue that since Apple hardware is demonstrably superior and no more expensive than PC hardware, Apple could more than compete in a head-to-head against Dell’s Mac-clones. 

    But once again we see that, when push comes to shove, the faithful really don’t have a lot of confidence in what Apple is capable of doing.

    Beeblebrox had this to say on Apr 23, 2008 Posts: 2220
  • “They’ll lose money because the clone makers would completely destroy Apple’s high-profit hardware business.”

    I’ll ask this more directly since you’ve made the claim.

    IF Apple’s hardware is truly no more expensive than equivalent PC hardware, and IF users truly want simplicity and ease-of-use over so-called “feature creep” and IF Apple’s hardware is truly superior in quality and design, then why do you have so little confidence that Apple could compete head-to-head against Dell and HP in the hardware market?

    Beeblebrox had this to say on Apr 23, 2008 Posts: 2220
  • IF Apple’s hardware is truly superior in quality and design, then why do you have so little confidence that Apple could compete head-to-head against Dell and HP in the hardware market? - Botox

    A more evolved common sense would give you that answer. If the PC marketplace were a fairly competetive landscape vice an unfairly gotten monopoly of pre-loading Windows on all but 90% of all PCs made on Earth, then and only then, Apple would jump in to the pool.

    If HP, Dell, and the other MS cogs suddenly changes tack and ship all PCs without preloading an OS - a naked PC - then this market is fair competition. Apple could then compete “head-to-head” with anyone on features alone. OSX being a mere $129 compared to $399 of the competition, it would be a no-brainer for customers to pick right? i do think so!

    But as it is, the majority of folks who bought a Windows preloaded PC has no motive nor the initiative to replace that in-built OS when it works damn well enough already. No amount of elegance, simplicity, nor price can sway much of this crowd. Remember, these folks do not care much what OS comes with the PC they buy. These folks expect PCs to be like their toaster ovens.

    Therein the point of my argument. When PC hardware makers are intent on making this market a fair competition then stop preloading Windows to every damn PCs. Let the consumers pick their OS based on listed price and features upon ordering. HP and Dell can do this prior to shipping. Dell already does in a limited way with Canonical’s Ubuntu Linux boxes.

    Reality is, HP nor Dell will not risk their livelihoods to promote fair and square competition at the OS level. So what if Windows has been deemed “illegal monopoly” that is MS’ problems not theirs. And so these MS cogs will build clones after clones of Windows PCs to feed the monopoly that sustains their very lives.

    Now back to Apple releasing OSX at retail. Do you really think Apple has any chance when all PCs already come preloaded with a toaster OS? Surely, some of our Mac shills will happily endow Apple some $129 for the rights to install on their creaky eMachines. Yet, I doubt that will be the rule, Mac shills are the exception.

    Robomac had this to say on Apr 23, 2008 Posts: 846
  • Beeblebrox, you’re quite mistaken. Please read my post here:

    Peter Cole had this to say on Apr 23, 2008 Posts: 7
  • The main reason for the success of the Macintosh can be summed up in one statement, “it just works.” Several of my coworkers have switched to the Mac for their home computing because they got sick and tired of fooling around with the problems with their Windows PCs. A couple of them are Unix software engineers who have the computer knowledge and skills to keep their networks working, they just don’t want to do that at home. Apple can achieve this reliability by controlling both the hardware and the operating system software. Once OSX is allowed to be installed on any Intel PC then some of the kinds of issues that plague the ‘wintel’ world will begin to appear in the Clone OSX world. As for cheap, you usually get what you pay for.

    flyboy had this to say on Apr 24, 2008 Posts: 30
  • Apple should not now, or ever license OS X. Apple’s goal has never been to just make money, and that’s what is a the center of all this speculation. Apple’s goal has always been to achieve the highest user experience possible. They have fought to prove that quality is key. Business analyst always count out the businesses who focus on making great products, and focusing on the the customers instead of the bottom line; and most of the time they are right, but in Apple’s they have gotten it wrong every time. Everyone is always predicting Apples doom if Apple doesn’t start playing like every body else, and they are always wrong. The rest of the industry needs Apple to stay the way they are. If Apple joins the ranks, all the innovation that drives the rest of the industry will disappear. If Apple stops leading, and just falls in line, who’s going to take their place? Hadley, why would you want to stop the innovation to save a couple of bucks. Once your company’s focus becomes making money instead of making great products that’s when you are doomed. Apple having survived that move before is remarkable, and incredibly rare for any company. If Apple stops doing what they are doing, the industry will start moving backwards. Making the most money, and having the most market share doesn’t mean you are the best… I’d rather be the best, than the richest any day.

    brainsan had this to say on Apr 27, 2008 Posts: 2
  • “you usually get what you pay for.”

    Unfortunately, based on mine and friends’ experience with Macs and iPods, I suspect we don’t get what we pay for from Apple anymore.

    Brainsan, I’m not sure Apple is as altruistic as you hope.

    As several respondents above have already said the only reason Apple won’t allow clones is because it would cut into its very profitable hardware business.

    Apple’s primary motive is profit. While it was a niche player, it had to make high quality products. But as its market has expanded, it has been able to cut corners on quality.

    I do believe that clones can again be a reality without compromising OS X’s reliability.

    Unlike Windows, which runs on anything, Apple simply chooses one or two PC manufacturers to license OS X to, and sets some reasonable hardware limitations. And then we wouldn’t see all the compatibility issues that plague Windows.

    I don’t recollect that the clones in the ‘90s were plagued with compatibility issues.

    Compatibility is a non-issue., The only issue for Apple is profits. That is. being “the richest”. “making the most money”. It believes it can make more profit making all the Macs, instead of sharing that market.

    Chris Howard had this to say on Apr 27, 2008 Posts: 1209
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