Apple's Focus is Still Software

bonch writes "Via a Forbes interview, Steve Jobs reassures Apple faithful that despite the runaway success of products like the iPod they are still a committed software company. He also talks about the real motivations behind negotiating Microsoft's 1997 $150 million investment in Apple, the development that went into the original iTunes (only four months!), their future expected revenues, and much more. MacObserver provides an overview, and Fortune has excerpts here."

Comments

That's what I thought

[Knights who say 'INT]

I watched Steve's kenyote speech, and he spent fiteen times as much time demo'ing software than talking about the Mac mini -- which I thought was the big event of the night. Some totally noncharismatic VP demo'ed Pages for ages, a band was called to demo GarageBand, and Steve generally spent a lot of time clicking around.

I ended up thinking "wow, Apple is really a software company that happens to make hardware".

Anyone else notice a software/hardware cycle?

[TeeJS]

I buy a good deal of macs for my school district (we're about 1/5 Mac) and I've noticed Apple seems to go in a cycle with HW/SW quality. Namely, when their hardware is on, their software is full of bugs, and when their software is on, the hardware comes with 5-10% DOA? I've been a big Apple fan for 10+ years, but haven't seen a time they have everything together at once. Maybe it's just because I tend to buy their cheapest pricepoint hardware most of the time (school budget...), but it's been very consistent over the last 10 years.

Re:Anyone else notice a software/hardware cycle?

[bluGill]

I'd consider it a disservice to students to not make them use at least Linux/BSD/Unix, Ms Windows and OSX. You need to prepare studnets for the real world, and in the real world there is more than Windows. Particularly in computer science where embedded systems that don't run Ms Windows are big. Not to mention artists who generally don't run MS Windows.

I don't know how you can apply this, but it should be a part of your argument somehow. Good luck.

OS X on Intel

[99BottlesOfBeerInMyF]

The most interesting part of the Fortune article is where they reveal that three leading PC manufacturers have been attempting to license OS X for the Intel platform. I'm of two minds about it personally. Choice is good for the consumers, but, Apple being undercut badly in the commodity PC market could kill the goose who lays the golden OS eggs. They don't have the volume to compete with Dell, nor the willingness to use really cheap components from whoever is the low-bidder this week.

Re:OS X on Intel

[I_Love_Pocky!]

Apple being undercut badly in the commodity PC market could kill the goose who lays the golden OS eggs.

Jobs keeps claiming Apple is a software company. I think this would be the perfect thing to do to prove that. Microsoft seems to be doing just fine living off of the OS market, why couldn't Apple?

Re:OS X on Intel

[Gob Blesh It]

I used to think it would be a bad idea too. But software seems to be a pretty reliable "golden egg" for Microsoft, and I don't see why it wouldn't work just as well for Apple?

I mean, Apple could continue, as always, to manufacture and sell hardware for people who care about both functionality and style, usability and good taste. They could keep using the PowerPC and supporting its development. I mean, there's nothing that says an OS can't run and be sold on two architectures--it's just never been tried in the consumer market on such a large scale, as far as I know. Third-party programs (binaries) would have to be packaged and sold according to the architecture, or maybe they could be "fat" apps like we had for a while transitioning from 68k to PowerPC.

So what am I missing here?

Re:OS X on Intel

[piecewise]

Because Apple has nothing to prove to you.

Jobs is right when he says Apple is a software company, you just don't understand what he means by that. A Mac is nothing without OS X. An iPod is nothing without iTunes. Cameras are nothing without iLife. Software is the center, the key to the success of everything else.

But quite smartly, Apple makes money off both. Now why would Apple give up billions of dollars just so they can win a bet you seem to have with them?

Re:OS X on Intel

[John Newman]

Apple currently makes 95% of its money on hardware. They use that money to fund software development, including OS X.

This is true. The dogma is that Apple makes money selling computers, and the OS is just a way to push the hardware. That's why cloning was such a brickbrained idea, and why it almost killed Apple.

But, as another poster pointed out, Apple may still make 95% of its revenue from hardware, but only 60% from computer hardware. The iPod may be changing the equation a bit. For the first time, Apple has a reliable cash cow that's not a computer. If, and it's a big if, they were ever interested in trying to make the transition to being a software company, there would be no better time than now. They can afford to let Mac sales slow or drop, and let clones/licensees pick up some of their market share, while the iPod continues to pay the bills.

That said, I don't see any motivation to actually do this. The downsides are plenty (commoditization, random hardware support, variable hardware quality, loss of computer revenue, incompatibility between PPC and x86), and could seriously dent Apple's reputation. While the upside - market share - may or may not actually happen. And Apple might be able to double their market share on their own, anyway. Aside from the CPUs, there shouldn't be any problems scaling up production, since every PC maker uses the same parts and the same Taiwanese assemblers. I don't see the appeal of outsourcing hardware sales. If Apple's even thinking about it, I imagine they'll change their minds when the Mini's sales figures start coming in.

Re:OS X on Intel

[Ohreally_factor]

That said, I don't see any motivation to actually do this. The downsides are plenty (commoditization, random hardware support, variable hardware quality, loss of computer revenue, incompatibility between PPC and x86), and could seriously dent Apple's reputation.

The only possible motivation would be to exploit untapped markets, and the biggest untapped market segment for Apple is what is called "The Enterprise". Apple could partner with IBM, HP, or even Dell to open up this market for OS X Server.

Another way to look at untapped markets is by geography. Apple's presence outside of the US, Europe, and Japan (I'm including Canada as part of the US, but not Mexico, heh heh) is virtually nil. With the right licensing partner (Sony? Samsung? Lenovo?) Apple could gain a foothold in the fast growing Asian markets.

I'm not sure who they could partner with in Latin America. I do know that there are mac users in Latin America, but during a fact finding trip to Mexico (to check out the titty bars) I found very few Macs, most of them in Video Production businesses, a few graphic designers, and one really cool all Mac cyber cafe. Mexico's middle class is growing, and more people can afford Macs, especially boxes like the mini.

Your other points about why this won't happen are excellent.

Re:OS X on Intel

[99BottlesOfBeerInMyF]

In the current Windows pre-install dominated market there is no need for boxed OS sales. I think the primary market for a boxed OSX is to current users of Windows who want a better OS for the computer they already own.

Upgrades to OS X are not very different from a customer's perspective as upgrades to a better version of Windows, one that can't run any of their existing software and has only a handful of applications available. Most people buy a new machine when they want an upgrade, and they don't even know what an OS is.

I think you would have a lot of people who would switch to OSX, if only for aesthetic reasons.

A lot of people are switching to OS X, and not just for aesthetics. What advantage does OS X on x86 have over OS X on PPC? Do you think it is the cost that is the stumbling block? It would probably be cheaper to give away hardware to thousands of users than it would to convince developers to port their applications to x86.

You assume the Windows monopoly will never be broken

No, I'm assuming that it currently exists and that MS can buy their way out of legal difficulties. If Apple makes OS X for x86, they are killing their hardware business, and betting the farm that they can break MS's monopoly. How many investors do you think would back such a risky move? If you really think a superior OS can win, why is no one running BeOS?

It is far more likely that Windows will move to PPC (again) than that Apple will move to x86. I'd love for Apple to have hardware competition for OS X, but it is a house of cards. If Apple goes head to head on hardware and loses, then what happens? OS X development grinds to a halt and it all falls apart. I seriously doubt Apple can pay for their development with the cash they make selling software, even were they to grab a large chunk of the market. I seriously doubt developers would port all their applications to two different hardware platforms for OS X. All of this talk of Apple on OS X is interesting, and it is interesting that PC manufacturers would like to make a go of it, but in reality most of the people who think this going to happen, are just saying what they want to happen, not what is in Apple's best interests as a business.

vanilla

[AdmiralWeirdbeard]

whole thing seemed pretty bubble-gum to me... unless someone noticed something revolutionary i didnt.

Tho I did like the part where he said that the audio market today was people getting ipods and the bose ipod speakers instead of a real shelf system... Dont know about the rest of you, but i like my ipod hooked up to my Technics receiver/floor speakers just fine. Though it is just crushing to know that I dont have an apple-styled bose gizmo the size of a shoebox in which to stick my ipod...

Re:vanilla

[Anonymous Coward]

You probably already had the stereo when you bought the iPod. I think SJ was talking about teenagers who don't own stereo equipment yet. Instead of buying a CD player, and an amp, and a set of speakers, they just get an iPod and the speakers.

It does work the other way, too. When my CD player died, I never bothered to buy a new one. Now I just have a Mac Mini that has access to all of my music through iTunes. It's also become my DVD player because it has a DVI output for the video and 5.1 audio (via the MAudio Transit), and plays DVDs better than my old DVD player.

Re:Gee

[Gob Blesh It]

I remember C&G's SoundJam too, and the article actually mentions it and Apple's "cannibalization," as you put it, of its development staff. The details don't really seem to jibe with what I remember, though--did Fortune magazine get it wrong?

One was a company called SoundStep, founded by a then 28-year-old software engineer with an MBA named Jeff Robbin, who had left Apple literally the month Jobs returned. His program, SoundJam, wasn't ready for market, but Jobs bought the company anyway, primarily because Robbin had impressed people while at Apple before.

The alacrity and breadth of what transpired over the next 13 months are hard to believe in hindsight. Robbin and a couple of other programmers started over from scratch and pounded out the first version of iTunes in less than four months. That was just in time for Steve to show it off at the annual Macworld trade show.

Re:Still a SOFTWARE company??

[99BottlesOfBeerInMyF]

if he's changing his tune, maybe that's a sign that OS X could make an x86 debut?

This is very, very doubtful. I think their current strategy is to clone the strengths of the Intel platform with their own product line. Intel has really cheap systems, very fast systems, and an enormous number of different offerings. The mini-mac is an attempt to cater to the really cheap crowd. The G5 is the current best shot at speed (and it is pretty damn fast). Apple will never be able to offer as wide a range of products as is available on Intel, but they try with customization.

I think you will see Windows on commodity PPC before you see OS X on Intel. If anything, I can see Apple licensing OS X on the PPC. This would still cut into their hardware sales drastically, but it would be "home turf" and the architecture is at least open for any and all comers. The Intel platform is open to Intel and anyone with the millions it costs to reverse engineer it, which so far is pretty much AMD and sort of Transmeta. Even so, I don't see Apple trying to fight it out in a commodity hardware market. The competition would be good, but what happens if Apple loses? Suddenly everyone is screwed since OS X development slows or grinds to a halt. Alternately, Apple could become a software company, like MS. It is possible, but as you said, doubtful.

OS X

[elecngnr]

Jobs was "buying time" with the Microsoft deal and the original iMac to maintain interest in Apple and its perceived viability while software engineers furiously worked to bring Mac OS X to market, which Jobs saw as Apple's biggest bet on the future.

I am personally glad they made the bet. OS X is what brought me back to Mac after over 10 years. I know some older Mac enthusiasts who swear by the older OS's, but those OS's were losing ground. I had to use PC's for the lack of software. They were great if you did graphical layout or things like that. The problem for me was the unavailability of Matlab. I simply had to be able to use Matlab. I needed the fastest way to do that and throughout the 90's that meant using a PC. Once OS X came in, Apple courted The Mathworks to port it to OS X. From my memory, The Mathworks said no, so Apple did the port themselves using X11. Once I saw that Matlab worked on Macs with OS X via X11--and it was both stable and fast, I immediately began shopping for a Mac....and have never regretted that decision.

Re:Apple software is dedicated to apple hardware..

[99BottlesOfBeerInMyF]

I have yet to figure out why they havent botherd to make an OS to run on x86 based systems rather then there mostly proprietary hardware

Heh, x86 is proprietary and closed. Intel reverse engineered it. AMD reverse engineered it. Transmeta has an implementation. Contrast this with the PowerPC platform. IBM wrote most of the specs. It is completely open and documented. IBM and Motorola sell large numbers of systems and their is no barrier for any other company to enter.

In Bizarro world "closed but popular" means "open" and "open, but not as popular" means "proprietary."

If apple botherd to try and spread out into the larger PC market they would slaughter MS rather quick and I woudlent mind seeing it happen. Apples software is limited mostly to apple branded hardware and that limits how well the company can compete.

Yeah because so many companies have done well competing with a company convicted of abusing their monopoly to stifle competition. That is why OS2 and BeOS are so popular. It is especially a good idea to destroy 95% of your income by entering into an overpopulated commodity market where all but one player is losing money at the same time as trying to compete with said monopoly. Brilliant!

Why not RTFA?

[rjung2k]

That couldn't be because they cannibalized another product and its development staff, and pretty much produced a half-baked "brushed steel" version of the same, now could it?

Actually, according to the article, Jeff Robbin (SoundJam's developer) and his team started over from scratch and "pounded out the first version of iTunes in less than four months."

Not sure why they didn't just take SoundJam and re-skinned it, but if it needed to be rewritten from the ground up, there may have been a need for future expandability somewhere...

Exactly!!

[kajoob]

I think you hit the nail on the head. I am seeing a lot of slashdot articles and discussion about "Oh my god, look how small it is! People will line up to buy this!", but for a windows user my entire life like myself my thought was "I've heard so much about OSX I'd like to give it a whirl, now I can finally afford a machine to run it." OSX is by no means perfect, there are some annoyances, but I am so much happier with my new mac mini than my windows box. So much so that I haven't booted my windows box since the day I got my mini.

And to anyone else in my same position who hasn't even tried OSX, the learning curve is surprisingly small. I recommend David Pogue's OSX: The Missing Manual Book which helped translate windows fuctionality to the mac equivalants. Also check out The Top 100 OSX Applications, it has helped me determine what the mac equivalant of my favorite windows software is.

OS X is Job's Trojan Horse for Microsoft

[ElitistWhiner]

...PC user's will have *choice*... they could even have Windows+OS X on the same desktop. And it is *choice* where Apple will dismantle the Microsoft monopoly.

OS X is _NOT_ a monolithic OS, like Windows. Once Apple have OS X prepped and prepared on its modular foundations (no its not all there yet), Jobs will be able to rev OSX thrice for each new release of Windows. In a sideXside environment, OS X is going to look more modern, capable and powerful than Microsoft's aging sibling in the adjoining *window*... developer's will have a choice, user's will have a choice and Microsoft will have no choice... does anybody get it?

Re:Full article without entering anything

[yardbird]

I remember sitting with Steve and some other people night after night from nine until one, working out the user interface for the first iPod. It evolved by trial and error into something a little simpler every day. We knew we had reached the end when we looked at each other and said, "Well, of course. Why would we want to do it any other way?"

-- Jeff Robbin, lead software designer for iTunes and the iPod


What a great quote. If I were an interface designer, that would go in a frame on my desk.

OS X on IBM-branded PPC makes more sense

[aclarke]

I know I'm not the first by any means to mention this here, but the more I think about it, the more it makes sense to me for Apple to license OS X to IBM. With IBM attempting to get out of the home/business PC market with its sale of that division to Lenovo, they have a wide opening in their product offerings. Or at least will have over the next few years as that plan gets executed.

IBM has the advantage of fabricating its own chips, and Apple could keep a portion of its hardware sales by co-designing the IBM hardware and making something off each sale. They would also of course make a software license fee. IBM would make a killing, and given the fact that they have been looking for UNIX-like alternatives to Windows on the desktop for years anyway (witness their Linux R&D) this would really jump-start that effort. IBM would of course continue to sell its Lenovo co-marketed Windows products, thereby making money off both OS choices as it weans people off Windows and onto OS X.

With IBM selling "Apple co-designed" IBM PPC business notebooks and workstations running OS X, it seems to me that this would be a great boost for both companies. It would also probably help spur further R&D on IBM's PPC line which would get us faster computers sooner.