I’m currently reading a science fiction book that refers to Bill Gates, and I was watching a movie recently in which one of the streets is named Microsoft Way, which happened to be on the moon. Clearly, Microsoft permeates much of what we do in tech, so it’s no wonder that every time there is a change, we focus on the impact on Microsoft and attempt to forecast a demise that has been overhyped and simply not forthcoming.
The Linux threat to Microsoft has, despite all of the hype, failed to make much of a dent in Microsoft’s financial performance. But while we were watching for that impact, Sun was all but gutted. Think back that, with all of the rhetoric surrounding the death of Microsoft, even Sun was focusing on Microsoft and actually helping create a future in which Sun would not exist. The company even went so far as to fund OpenOffice, which further supported the belief that Linux is the future and that proprietary companies like Sun are the extinct past.
The reason Linux took Sun out so easily is that it attacked Sun where it was the most vulnerable: in the hardware. Linux has the advantage that Microsoft enjoys in that it uses low-cost commodity hardware. Sun enjoys one huge disadvantage that Microsoft does not enjoy: Linux is a Unix derivative and, as such, it is an easy migration from Unix for administrators. It also uses the same tools, which makes it attractive to Unix administrators and technicians. And, lastly, Linux is trendy, where Unix has been seen as a dull legacy system for some time.
Sun has been undergoing dramatic changes, but while the threat to the Unix servers is now clear, there is no threat to the desktop other than Microsoft. Right? It’s not like there is a desktop Unix, is there? Of course there is: The Mac OS is now based on FreeBSD Unix, as was Solaris, which makes Apple a natural target.
The Risk to Apple
The recent and highly visible Windows migrations are at risk: Munich’s IT department is badly stalled and running overbudget due to compatibility issues; the Thailand Linux win apparently has simply resulted in a large number of students removing Linux and loading pirated copies of Windows; and Home Depot failed its Linux migration due to cost overruns. Windows migrations to Linux still look ill-advised and way too risky.
Both Red Hat and Novell are sending messages that they are designing new user interfaces based on the Mac OS. While their stated target is Microsoft, the collateral damage from the developments, much like it was with Sun, will probably be Apple. Apple has been subsidizing its relatively expensive hardware with software, so the cost disadvantage that Sun enjoyed would seem to be dramatically less for Apple. But that might not be the case. While much is said about the success of the Mac OS X, the speculation remains that the majority of Apple’s installed base has stayed with its older hardware and has not migrated to the new operating system.
In addition, the feedback is that most of Apple’s servers — which also are subsidized by software — are running Linux today. While many of the buyers indicate publicly that they plan to run the Mac OS at some future time, currently they are not, which showcases the problem of software subsidies if there is another platform that will run on that hardware. People will buy the hardware but not buy the software that supports it, a phenomenon that could do incredibly ugly things to Apple’s margins even if it does result in a dramatic increase in sales for Apple hardware.
That’s right. This trend could actually result in more Apple hardware sold. But because the corporate buyers are loading something else after buying Apple hardware, Apple’s margins will collapse. In a way, we will get a chance to see what would have happened had Apple tried to compete head-to-head with Dell, but Apple simply is not structured for this competition yet. And with the most expensive CEO in tech, the outcome would not be pretty for Apple or Steve Jobs.
Now the Novell and Red Hat user interfaces aren’t done yet, and even when they are finished, it will take some months before Apple is adversely impacted, forcing a response. But the company’s choices are ugly.
Apple’s Defenses
The most common response I get from Apple advocates when I mention this threat is that Apple will sue the Linux providers. Given that the user interfaces could fall under the GPL, a lawsuit strategy will be problematic. We have only to look at SCO to see just how problematic this will become.
Unlike SCO, Apple has a well-funded marketing organization and could be far more effective at painting Linux advocates as communists and thieves. But this could get incredibly ugly. Apple is seeking patents to protect its interface better, but its litigation against Microsoft a decade ago didn’t go well, and Microsoft will clearly dispute these patent attempts and make it difficult even if Linux supporters don’t initially dispute these patents.
Apple could abandon the hardware and shift to software-only strategy but, unlike Microsoft, Apple doesn’t have deep penetration into the corporate market. And consumers are far less loyal. While this trend could protect the hardware margins, without branded PC hardware partners Apple would still fail. Of course Apple does have a new relationship with HP that could be expanded, and this relationship is becoming increasingly interesting as a result.
Apple could abandon the OS and focus on hardware — plus their own unique user interface for Linux. The problem is that Linux buyers don’t want to pay a lot for software. Adobe and Corel have tried this and both have found that the retail price of software on Linux is too low for them to fund this platform fully. Apple would probably find the same thing to be true, collapsing its margins and creating the same outcome.
Threat and Opportunity
Of course, Apple could do nothing. This was the strategy it employed to fight Windows 95. The success of this strategy is hard to dispute, but Apple’s recent reorganization that shifts its A players to the iPod might represent its move to becoming a cross-platform multimedia and accessories vendor, which shows that it is doing something. Logitech and Adobe continue to do very well and both survived the recession more effectively than Apple did. This would appear to be the best path for Apple. And it does look like Apple, at the very least, is setting up to use this strategy as a contingency plan even if the company hasn’t yet fully shifted to this model.
In the end, Linux represents a threat and an opportunity for every software and hardware company. Apple is once again at the crossroads. While it will take a couple of years before we know whether the company will make the right choice, one thing is clear: Apple’s path is about to become vastly more interesting.
Rob Enderle, a TechNewsWorld columnist, is the Principal Analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.
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Apple has been whipped by Windows and Linux based Android. They will never succeed unless they loosen the reins.
http://youtu.be/GQl47P9grhc
Heh, yeah. Enderle is pretty predictable. Apple has had minutes to live, for like 20 plus years. It’s AM azing people still publish this schlock.
Apple’s just like sun…. Um. Yeah. Sun sells servers, not desktops for the most part. Apple sells desktops primarily.
Sun’s servers are very high priced. Apple’s are quite well priced.
Sun’s desktops are very pricey. Apple’s are only slightly more than comparable wintel boxes (and in some cases cheaper).
So no… Sun and Apple aren’t in the same space.
I wonder where Mr. Enderle gets his research from. And I wonder if he bothers to listen to them. I’ve never seen much evidence that people run anything other than OS X Server on their XServe boxes. What his informers probably told him is that people tend to install ‘Linux’ programs on their XServes (darwin ports, of course). And where did he pull that garbage about Apple subsidizing the hardware to sell software? So, the $799 eMac is really subsidized to $499, but they’re dinging you for $300 of software?
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I hate to say it, but most Macs are designed to be obsolete in a few years time. This suits many mac users just fine because they’re happy to upgrade. If Apple truely were subsidizing the hardware, then it would be in their best interest to make sure each machine lasted as long as humanly possible. Unlike commodity PCs, that can be incrementally upgraded over an extended period of time, each macintosh has limited upgrade potential. There are [virtually] no mainboard upgrades for Macintoshes. Very few video card upgrades. Admittedly, you don’t want to bother trying to massively upgrade a Dell, HPaq, or IBM system, because it generally doesn’t work well.
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I don’t know what kind of alternate universe Mr. Enderle lives in, but it doesn’t reflect reality in this world very well.
Rob Enderle does not have to justify his sources or his facts to the likes of people who are clearly sympathizers with if not working for al-Qaenix. We simply cannot win the war on Open Source by naming our sources, and those that persist in impugning his motives will be branded an enemy combatant and sent to the Thoughtcrime reeducation facilities at Gitmo.
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Anyhoo, not all Macs are designed with planned obsolescence in mind. The 7500 I bought in 1995 is running Jaguar 10.2.8, and the G4 upgrade, G4 card, memory upgrades, CD burner, and 37G internal HD still come to less than what the replacement cost would have been. Care to name a PC made in 1995 that’s running XP?
Linux GUI is now non issue …..its AM azing how Linux GUI like KDE and Gnome has become …its just took few hours of hacking to convert my linux laptop to Mac look alike …http://pagux.com/pics/linux.png
and http://pagux.com/pics/linuxosx.png
…..I can safely say it will take no more than a week to match mac feature by feature on linux …kde specially is very configurable system than mac aqua (which is more of rather apple way or highway )…have look at http://plasma.kde.org/ (next generation kde interface )and http://netdragon.sourceforge.net/ssuperkaramba.html (desktop wigets like apple wigets )….actually I AM planning to launch a project which combines best interface design concept from apple (no blind copying ) and bright ideas from opensource world …try to make most user friendly user experince in the world …anybody intrested ?? 😉
Well I don’t know how many people do it, but I started a job where they had just bought an XServe and we tried to use it’s ability to integrate in a Windows network. It was a TOTAL failure and I loaded YellowDog Linux on it instead.
It’s been rock solid ever since I installed Linux.
If I had to do it all over again, I’d still have a Linux server but it’d be running on hardware less expensive than Apple’s proprietary stuff.
I AM not sure the commodity intel argument against sun hardware holds fast – Sun never competed well at the low end against Microsoft, for almost exactly that reason – MS runs on cheap, readily available and constantly improving PC hardware, while Sun offerings are really only useful as "trainer" systems for later upgrading to a high-level sun box where Intel currently just can’t compete (they will get there, which must scare Sun a lot, but that’s a different issue)
What used to be a three-horse race (novell, sun, microsoft) saw the near-exit of novell from competition by Microsoft – and Sun’s support of Linux not only aids their own unix software (the latest Sun offering drops the CDE and its extortionate Motif licencing requirement in favour of a free linux equivalent) but places a useful staging point between it and microsoft in the server market – if your low-end but upgrading client is on MS, he has to say "we either buy a second box and load-balance, or buy a bigger (non intel) box, then have to rewrite everything, buy new components to replace the ones we run on windows, and generally have to start from scratch".
If that same client is on Linux, he can say "we can either buy a second linux box and load balance, or bite the bullet and upgrade to a bigger, non-intel box. If we go with Sun, we know all our existing apache code will run, our database will be supported, and we can concentrate on expanding into the extra processor space this gives us"
yes, you can run AMP on windows – but for most developers, windows=iis and MS-SQL, and that is unlikely to change as .net gains momentum.
Mr. Enderle’s comments are right on. Microsoft sales and market share values haven’t been dampened by Linux basically at all, it’s the other *nix systems that are being cannibalized, and Apple is right in the crosshairs. What they do about it will be interesting, let’s hope it’s not simply to become the next Napster, but so far that has been their only response.
Apple’s expensive hardware subsidizes the OS, not the other way around. It would actually do wonderful things to Apple’s margin if people buy their servers to run Linux.
Our office is dumped 50 Macintoshes for 50 brand-new Dell computers. There’s your statistics for you.
What statistic is available for clarifying his speculation that most Mac users have not upgraded to X? I don’t know any that still use classic.
If tomorrow, the only kind of car you could buy was Ford, woud Mr. Enderle be happier? Perhaps Apple is insignificant, wrong headed, too expensive, about to be gutted by Linux, etc… But it represents a choice. Choice is supposed to be what drives competition. What if Mr. Enderle focused his significant power of persuasion on how Apple actually compares to Windows/Intel and thusly informed the public as to the real choices between the two?
Nah! Apple’s failing strategy is irrelevent because …. zzzzzzzzz
These days, I can spot an Enderle article from Macsurfer.com without even seeing his byline. That’s how predictable Rob is – it’s always the same story – Apple is in trouble, Linux has problems, Sun is not viable, MS is underappreciated/overvilified.
Anyways, from Rob today we have the claim that increased Apple server hardware sales (xServe?) won’t help apple because, according to him, the "feedback" is that most people are installing something other than OS X on Apple servers. Well, Rob certainly pulls that one out of his rear end without any evidence or support, but hey let’s say its true. Apple still makes the sale. Last time I checked, Apple sold its server hardware for the same price no matter what OS you install on them.
Moving to the bigger picture, the reality is that the continued success of Linux can only help Apple. Any software written for Linux can be ported to the mac very easily (not necessarily so for windows software). Also, if linux is successful, that success would reinforce and advance the idea that there are multiple compatible options out there – windows is not the only "choice."
Also, if Linux on the desktop takes off, it likely will occur with Openoffice or other similar Office type apps gaining at the expense of MS Office. Again, that’s good for apple since MS Office is just an impediment to Apple’s freedom of action (it can’t anger MS too much).
Second, if Linux is successful (more so than today), that’s going to be at the expense of windows by definition. Linux (on the desktop) is going to take off in the corporate sector first (if it takes off at all). Apple has no presence on the desktop in the corporate sector. Ergo, MS hurts, not Apple.
In the consumer segment, the reality is that Linux has nothing like iLife, or .mac – absolutely nothing. Basically, Linux offers a very no frills desktop consumer package today (email, web browsing, basic office tasks), that is more likely to appeal to a windows is "good enough," $799 PC-type customer, not a mac customer that spends $2500 on a powerbook, $129 per year on OS X upgrades and $100 a year on .mac.
Mac customers have already shown they don’t go with the cheapest solution, like many windows customers do.