by - June 7th, 2004
It's time to fire up the old Enderle Crusher. Rob Enderle, fresh from being humiliated in our heads-up debate, has penned a new piece concerning Apple. Titled "Linux vs. Apple: An Uncomfortable Battle," Mr. Enderle's goal is to look at how and why Apple and Linux are competing with each other in today's market. The problem, as usual, is that many of his premises are wrong. For instance, he makes a big point of saying that Apple's software sales subsidize the company's hardware.
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.
He's got it precisely and exactly backwards. Apple's hardware sales subsidize the company's software, not the other way around. That's how Apple can charge less for the Mac OS than Microsoft charges for Windows, despite having a user base that is a couple of orders of magnitude smaller than Microsoft's. The same is true for products like iLife, for which Apple asks far less than competing products on the Windows side. Mac OS X Server is also far, far less expensive than Microsoft's server packages, again, because Apple knows that it will be selling hardware to run the software.
He just couldn't be more wrong. In fact, I find it difficult to understand how Mr. Enderle could misunderstand something so basic.
Mr. Enderle also suggests that Linux providers will be able to successfully copy Apple's GUI, and that Apple will have a difficult time stopping them from doing so. From Mr. Enderle:
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.
Except that, stunningly, he has it wrong. Apple sued Microsoft for copyright infringement back in the late 1980s, not patent violations, making his comparison moot, at best. Indeed, as John Kheit, our own Devil's Advocate, has explained, the point of Apple's new patent grab for GUI elements is so that it won't have another failed lawsuit should someone decide to rip of either the iPod or Mac GUI.
The same can be said for SCO's lawsuit against the Linux community; most of SCO's suit centers around copyright infringement, not patent violations. It's simply not an appropriate comparison.
Furthermore, I will believe in a successful rip-off of the Mac's GUI when I see it. This is not to say that the open-source community can't come up with a great GUI, or make Linux as easy to use as Mac OS X, it's just that I will view that potentiality as a threat to the Mac's lead in those areas when I actually see it.
When, and if, it comes, Apple will face a new challenge, just as would be the case if Microsoft ever made a good GUI. After all, how many Mac users reading this would cling to the Mac if Windows was actually better? Many, for sure, but not this one, and I think such would be the case for others. My point, however, is that this isn't the case, has never been the case, and frankly isn't likely in the near-future.
There is an even more important theme in all this, though, that I think bears mentioning; I believe there is no "Apple vs. Linux." Yes, there might be the occasional specific battle here and there, but in general, the real war is an issue of Microsoft vs. Apple and Linux. I believe very strongly that a healthy Linux platform helps out the Mac platform, and vice versa.
It's all about mind share. If people think of the Mac as the only alternative to Microsoft, then the Mac remains an outsider, and a second class citizen. Nudge that idea just a little, though, and make the Mac one of two alternatives, and you have people thinking about which one of the three is the best solution. It's a subtle issue, to be sure, but an important one. The better Linux does, the better the Mac can do, too. Perhaps that's why Apple's OS X Server sales, and Xserve sales, have been increasing, even while Linux has also been doing well against Microsoft.
There's more in Mr. Enderle's full editorial, including some suggestions that Apple leave the hardware or software business, tired themes from Mr. Enderle I shattered on previous occasions. That said, his closing sentence is one that Mr. Enderle and I can agree on: "Apple's path is about to become vastly more interesting."