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December 21, 2005

True, But...

Via Peeve Farm, I found a couple of posts discussing whether Apple's upcoming release of Intel-based Macs capable of running Windows will put Dell out of business. On the pro side is Daniel Jalkut and on the con side is Bob Crosley (who has about the coolest blog banner I've seen yet).

Certainly, Jalkut has a point, as recent high-profile negative reviews have made clear that you can pay high-end prices for a low-end PC if you go with the wrong brand. (Sony is much better, but no-name knock-offs are not much worse than a Dell.) But that's not enough. As Crosley notes, it is businesses — not individuals — that buy most PCs. And Crosley has fingered one of the two big reasons why that is: remote support is easier on PCs. There is another reason, though, why businesses will not switch to Mac: software. There are simply some key business apps that require Windows. Without it, how do you plan on configuring your Checkpoint Firewall 1 firewall? The UNIX console is, I think, abandoned now (Nemo can confirm or deny). But even if not, the point remains: there are some applications with not only no Mac version, but no Mac equivalent.

Now I was deliberately vague in the above commentary, because I did not distinguish between Apple hardware and the MacOS X operating system. It's a near certainty that companies will not switch immediately over to MacOS X — or even within a span of several years. It's possible that MacOS X will gain business software that whittles away at the advantages PCs have in a corporation, but those advances will be useless in tipping a company to running on MacOS until they are all in place. That is a powerful disincentive for software makers.

But there are some ways in which Apple could certainly make major inroads into corporations with their Intel-based machines as a hardware company. The first is that Apple could sell their hardware to businesses touting them as Windows systems. Moreover, Apple could tout them as the most stable Windows systems around, because the Apple hardware is rigorously configuration-controlled, and is not very internally expandable. This combination means that Apple will always be able to thoroughly test their hardware with Windows in ways most PC makers cannot do. Further, Apple can market to businesses based on more reliable hardware than most PC makers can: only Sony is in Apple's league for producing quality hardware. Finally, Apple can market to businesses on the basis of drop-in replacement: an Intel-based Mac-mini would simply plug into the peripherals already in use, with the possible exception of companies that have not yet switched to USB-based mice and keyboards.

Essentially, to get into this market, Apple would have to do three things: stand up a business support division with both sales and service capability to handle the needs of corporations (particularly with regards to predictable delivery of hardware on short delivery notice and flexible financial terms), including Windows technical support; bundle Windows pre-installed (even though companies will immediately overwrite it with their own ghost images, they generally need the license) in their business-class machines, and where they ship a mouse, ship a two-button mouse; and finally, refrain from selling MacOS to the businesses unless invited to do so. The first meets the business need for IT: predictable and dependable sales, service and technical support. The second meets IT expectations: you don't want to surprise desktop IT guys with new ways of doing things. They are remarkably inflexible in the little things. The third is how you keep from annoying your customers. In other words, Apple would have to stand up a parallel business PC company with only minimal overlap (hardware and shared resources like financial and IT departments) with their consumer-oriented MacOS X-based business.

It's a fair bet that Apple could move a lot of hardware that way: companies want good deals, but they also recognize long-term savings as an important part of the purchase decision. Companies buy based on TCO, not purchase price. By doing so, Apple would put some serious cash into their bottom line, growing their company in large leaps. As long as Apple didn't get distracted away from their MacOS X innovation, and the accompanying hardware innovation, there's not a downside there. In fact, the increased sales volume would also make the MacOS X systems cheaper, and give Apple more money to put into software development.

In addition, Apple could simply do what Microsoft has done for years, and claim marketshare based on hardware sales (Microsoft, at least for a time, counted every Intel-compatible CPU sold as a sale of Windows!), which would incentivize developers to at least port to MacOS X. And another fun side effect of increased sales, particularly into businesses, is that hardware developers would have incentives to include Mac drivers for their hardware, which is currently another point of issue for some users.

And then too, something interesting would happen as a side effect. Even though Apple would not be pushing MacOS X to businesses, some of the employees of those companies would begin to buy Macs to run Windows. And some of those would dual boot, and realize the differences between MacOS X and Windows. Whether that resulted in demands upon Microsoft to get better, or users switching to MacOS X, is hard to predict. But what is not hard to predict is that the resulting demand would, one way or another, lead to improved user experience overall.

Posted by jeff at December 21, 2005 2:57 PM

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Posted by: Nemo at December 21, 2005 4:02 PM