Why Apple’s proprietary system and small market share are a good thing

by Tanner Godarzi Jan 26, 2007

Many would gaff at such a claim, as the fact that OS X cannot be installed on any generic box is a deal breaker for some. Looking beyond that limitation, Apple has succeeded in areas others would dare not venture to. Their proprietary system has only helped Apple access these areas, but at some cost to the consumer.

Since the return of Steve Jobs, Apple’s market share has increased tremendously. However, Apple still commands about 5 percent of the U.S. computer market share and about 2 percent worldwide. For the competition, Apple was no big threat, but their small piece of the market provided one thing every company wanted: a massive testing platform. Apple’s small slice provided just that, allowing them to introduce new products to a wide but limited audience, providing real world results and further optimizing future products.

One of Apple’s biggest hits, the iPod, not only took tremendous planning and execution but required the music industry’s approval. Piracy was a definite concern with record labels, as they had no intentions of promoting a player encouraging piracy, especially after the recent defeat of Napster in court.  Apple and the labels came to agreements on which platforms the iPod would be available for at launch. From its introduction in October 2001 and until 2 years later, the iPod was only supported for the Mac platform, including OS9 (support was stopped in version 3 of iTunes) and OS X. Going Mac-only for the launch of the iPod was due to the need for a testing platform that would provide real world results and evaluate the potential of the player. The small market share of the Mac not only provided the perfect testing platform needed for Apple and the record labels, but gave them a chance to showcase that piracy was a non-issue at the time, further increasing support for the yet-to-be-launched iTunes Music Store. Then in 2003, two years after Apple introduced the iPod, Windows was supported under iTunes along with the new iTunes Music Store. The iPod was now available to a much larger audience, which would not only revolutionize how you listened to music, but also how you purchased it. Had OS X and OS 9 not had such a small market share, selling the iPod and convincing record labels that the iTunes Music Store would not promote piracy would have been a much harder task to accomplish, or may not have happened at all.

The word proprietary is often associated with restriction, incompatibility, and unsupported. In the short run proprietary systems mainly benefit companies without offering much to the consumer. However, looking into the long run, Apple’s use of proprietary systems has offered a lot more than consumers realize. Apple’s two poster children for proprietary systems are Mac OS X and the iPod. Looking into these systems has not only created revolutions and evolutions, but has proven that proprietary systems can offer a lot for consumers, more than they think.

It’s well known that in order to run Mac OS X legally it must be done so on a Macintosh. Although versions have been hacked to run on generic PCs, it’s an option most consumers wish to avoid. Even with hacked versions of Mac OS X, most hardware configurations are not supported, often times crashing, and updates are few and far between. Many have criticized Apple because Mac OS X will only run on a Macintosh with most Macs supposedly out of their price range (although whether a Mac is more expensive than a PC could be debunked). And one could argue that quality does not come cheap. With OS X running only on the Mac platform, Apple has unique advantages over other manufacturers, including Microsoft. What others lack, Apple more than makes up for, especially in the communication department. Computers can be customized thousands of ways with each company going at its own pace, oftentimes surpassing the competition, but this in turn brings the quality down because software designed for other machines is not optimized for newer models. The introduction of Windows XP Media Center Edition, 64 Bit Edition, and Pen/Tablet Edition have shown how uncoordinated the PC industry is. As each new major feature manifested itself into consumer PCs, a new version of Windows was needed to take full advantage of these new additions. However, Apple is in control of their hardware and can tailor OS X for full optimization on each machine. While Microsoft creates new editions of Windows, Apple waits to incorporate all of these new features into OS X, creating a true multi-capable Operating System. Apple also has the opportunity to create simple and seamless transitions no other company would consider. The move to Intel chips from the PowerPC architecture was in the works ever since early versions of OS X. The only reason Apple could pull it off is their control of what hardware is used. If Microsoft were to support a new architecture and eventually phase out support for AMD and Intel chips it would require approval of each PC manufacturer and coordination, which they lack.

Apple has not been known for making new things no one has ever done before. Apple is known for taking an existing product and improving on it in such a way that new concepts and markets spawn from the introduction of a new product.

Comments

  • Both VMWare and SWSoft (maker of Parallels) have stated that the next iterations of their respective products will allow OS X to be installed on non-Apple hardware.

    Andrew Harden had this to say on Jan 26, 2007 Posts: 19
  • I doubt Apple will allow VMWare & SWSoft to let people install OS X on non-Apple Hardware.

    jaygee had this to say on Jan 26, 2007 Posts: 2
  • I still find the “all or nothing” argument for OS X on a Dell to be a bit of a straw man. Steve Jobs would find a way to license it, if there was overwhelming market demand for it, particularly at the enterprise level.

    If Apple was serious at getting back into the enterprise market, and market surveys of big companies with large deployments were favorable, I think a compromise could be made.

    Consider a scenario in which a big company would like to migrate away from Windows but has 10,000 PCs to support, all relatively new. They are not going to buy 10k new Macs. So the deal is this:  Apple sells them an optimized OS X license for the existing PCs, but for a limited time duration, say 3-5 years. As most companies go through a hardware upgrade during that period, this offers a short term solution that gets OS X in the door immediately. As time goes on, and PC replacement cycles begin to manifest, the company moves to Apple hardware, in comfortable bite-size chunks. Users would already be comfortable with OS X, and Apple could offer some generous bulk discounts to sweeten the deal. It could be a win-win.

    But to make that happen, of course, there has to be a market demand to justify it. Michael Dell saying he’d be glad to license OS X doesn’t cut it, as it would cut into Apple hardware sales profits, and Dell has no idea who his customers would be in any event. My scenario is a better middle-ground, as Apple is still driving events, and profiting from them directly, without a middleman.

    tao51nyc had this to say on Jan 26, 2007 Posts: 45
  • Let me add to your scenerio if not change it completely.

    Apple sells Dell the logic boards and OS X license. Dell does what it does best, assemble them into a case and pre-set the HD with 80 pieces of trial ware that they get a kickback from. Dell gets to sell OS X in a Black Dell case, Apple still controls the hardware aspect as well as the OS license control and everyone is happy. However prices between the two would be similar. But in this case Apple is still in control of what goes into a Dell, thus can keep a low failure rate. If you check Dell’s failure rate was one of the hightest for 2006.

    When they did this in the 90’s they were getting undercut by the folks that were selling knockoffs. They lost their bread and butter and in turn lost billions. They also lost something more important, control.

    To get into the enterprise market you need to start small. The base for Apple is there and has been it’s just not being utilized and the applications to support the large enterprises are not there, close but not there. Terminal Services would be used in a company that large BTW. SMB’s are where it’s at. 93% of the US Economy is based on small business.

    xwiredtva had this to say on Jan 26, 2007 Posts: 172
  • Excellent article. I agree with each point you’ve made, Tanner.

    Smaran Dayal had this to say on Jan 26, 2007 Posts: 15
  • People aren’t clamoring for a Dell Mac because they love the case or the trial ware.

    The truth is that all the money is in licensing OS’s to buisness users. Enabling generic PC’s to use it just makes it much more affordable.

    simo66 had this to say on Jan 26, 2007 Posts: 78
  • Apple has not been known for making new things no one has ever done before.

    The Mac was radically different. The Newton was revolutionary - it coined the term “PDA”. The colorful Bondi Blue iMac was such one-of-a-kind that it spawned a fad in industrial design savvy in every industry I can think of. And the iPhone? Well, has anyone even come close to the iPhone design - in or out? Perhaps, LG Prada? Pleeze…

    I think a restatement is due on your part, Tanner.

    Robomac had this to say on Jan 26, 2007 Posts: 846
  • “The Mac was radically different. The Newton was revolutionary - it coined the term “PDA”. The colorful Bondi Blue iMac was such one-of-a-kind that it spawned a fad in industrial design savvy in every industry I can think of. And the iPhone? Well, has anyone even come close to the iPhone design - in or out? Perhaps, LG Prada? Pleeze…”

    What I mean by Apple not making new things is their products are usually things you can by from Dell, Samsung, Sony etc. The iMac and the original Mac were still computers. The iPod is still an MP3 player and the iPhone is still a smart phone. Deep down there are basic forms of hardware with that Apple touch.

    Tanner Godarzi had this to say on Jan 26, 2007 Posts: 70
  • Perhaps you are mistaking Apple for Microsoft.

    As you know, MS will not dip their little toes in a market unless it has been proven to be fertile. Then MS swoops in and either buyout the pioneering company (Bungee, for Halo. Mac faithfuls remember them?) or render them worthless from competition (a la Netscape) with a $0 cost alternative.

    Whether those tactics were legal or not, it is not my point here.

    Robomac had this to say on Jan 26, 2007 Posts: 846
  • Deep down there are basic forms of hardware with that Apple touch. -Tanner

    Fundamentally, yes they are not unique. But name me a present hi-tech company (besides IBM for their mainframes) that has invented the fundamental form of their products and still alive-and-well to this day?

    Sony, perhaps for their original Walkman player? But Sony isn’t the biggy that used to sit on portable media player throne so count them out. Any other? Westinghouse for their fridge? RCA for their television and quadraphonic stereos? Hmmm… I don’t see them alive-and-well anymore?

    Robomac had this to say on Jan 26, 2007 Posts: 846
  • “Fundamentally, yes they are not unique. But name me a present hi-tech company (besides IBM for their mainframes) that has invented the fundamental form of their products and still alive-and-well to this day?”

    True most companies besides few are not around that have introduced new and revolutionary products. But the product itself still lives on and many (the fridge) are so widespread they are generic. However many products are dead but many still remember them like the record player.

    Tanner Godarzi had this to say on Jan 26, 2007 Posts: 70
  • If Microsoft were to support a new architecture and eventually phase out support for AMD and Intel chips it would require approval of each PC manufacturer and coordination, which they lack.

    Actually, MS can and has been a bully in the PC industry. The PC hardware makers did not ask for many of MS products shoved down their throats to support, but MS has done them relentlessly.

    Vista is one BIG example. Yes, XP has been passed around awhile in the last five years and has been adequate (but not lovely) with a lot of applications to do the job.

    In one fell swoop, Vista, with its massive processor and memory bandwidth requirements just to run admirably, was literally shoved to PC hardware throats to support. Were these PC guys asking for this? I doubt it.

    Vista, all of a sudden, obsoletes the gazillion XP drones out there (no matter what Bbx says about his obsoleted eMachines) including mines.

    And yes MS can mobilize their 10,000+ footcoders (err, soldiers) into making Win32 or Win64 hardware-independent like OSX is. Just so MS is unwilling to do the job does not mean it can’t be done. I have actually predicted that the next rev to Vista will go that route and have its kernel replaced with one that adds a HAL layer. MS might even dump the kernel out right for a Unix-like foundation - all just to keep pace with Apple’s OSX.

    By then, it might as well throw in the towel and be just an OSX applications developer. Now, wouldn’t that be ironic since MS was one of the original Mac developer?

    Robomac had this to say on Jan 26, 2007 Posts: 846
  • There are pro and con arguments for closed systems, particularly in devices like an iPod or an Xbox 360. 

    Macs have good and bad sides to their proprietary nature, but there are only good sides IMO if Mac’s marketshare remains tiny.  If it were the dominant system, however, that proprietary nature becomes VERY problematic.  Imagine if MS not only controlled the OS market but the hardware market as well.

    But the small marketshare is otherwise difficult to defend.  And using the roll-out of the iPod is tangential and specious.

    I went shopping for a Macbook for my mom in December.  Or rather, I wanted to.  She lives in south Georgia (USA) and wants a laptop.  She could walk into a 7-11 practically and pick up any number of computers there.  But the nearest Mac was TWO HOURS away.  My mom wanted to try it before she bought it so she wasn’t inclined to order online.

    So there are times when the lack of marketshare becomes very frustrating.

    Beeblebrox had this to say on Jan 26, 2007 Posts: 2220
  • And yes MS can mobilize their 10,000+ footcoders (err, soldiers) into making Win32 or Win64 hardware-independent like OSX is. Just so MS is unwilling to do the job does not mean it can’t be done. I have actually predicted that the next rev to Vista will go that route and have its kernel replaced with one that adds a HAL layer.

    Robotech, Windows NT already rests upon a hardware abstraction layer. NT was actually first developed on RISC chips by MIPS (R400) and Intel (i860). NT 4.0 ran on Alpha and PowerPC. Windows XP x64 was initially developed for the mostly x86 incompatible Itanium platform from Intel (Intel pulled x86 compat because they couldn’t get good performance from it.). And of course, there are all of those smartphones that run Windows CE. You can’t say that it is exceedingly difficult to port Windows to another architecture. In the PC space, there just has been no reason to. x86 has won. It is exceedingly unlikely that a competitor to the architecture will come up in the near to mid-term future.

    SterlingNorth had this to say on Jan 27, 2007 Posts: 121
  • “Vista, all of a sudden, obsoletes the gazillion XP drones out there (no matter what Bbx says about his obsoleted eMachines) including mines.”

    No matter how much you hate a company, criticizing them for having the gall to improve their products is pretty lame.

    simo66 had this to say on Jan 27, 2007 Posts: 78
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