Return of Mac Clones?

[IJ Reilly]

I hope that was meant as a stupid question, because I think their share actually decreased during the clone program. It certainly didn't come near the levels that they would have liked or would have got had they opened up their OS to all comers early on.

Yes, it did drop. Essentially, the cloner-makers gobbled up a chunk of Apple's hardware market share but didn't add anything overall to the Mac market share. The way this was reported in the media was really frustrating -- that Apple's market share was plummeting. This is what they said, even though the Mac market share was more or less stabile. I think this episode really led the the decline of the Mac during the late '90s for the principal reason that the Mac market was seen by the public to be shrinking rapidly, even though it really wasn't, at least not at first. It turned into a double-whammy.

 

[MacVault]

I would rather see OS X sold to just run on any old x86 hardware rather than actual "Apple-endorsed" clones. Seems like "clones" could lower the perception of quality of genuine Apple hardware. I dun no, just a thought.

 

[shamino]

Remember, IBM used to be a 'hardware' company.

And they still are. They sell workstations, minis and mainframes.

PC clones may have allowed the Microsoft/MS-DOS/PC platform to take over the world, but it didn't do a thing to help IBM. IBM lost the lion's share of the market to all the clone-makers. So much so that they eventually sold that entire branch of the company to some Chinese company.

Microsoft was the big winner in the PC clone market, not IBM.

 

[Lord Blackadder]

The 1995-1997 clones were actually good computers, but they were very similar to Apple's due to the small number of different PPC motherboards available.

Also this period was one of Apple's darkest hours financially, and they were very worried that clones would cannibalize Apple sales.

But most importantly, the clones failed because Steve Jobs returned and he has never showed any interest in loosening Apple's total control over the design and manufacture of all of it's products. It is true that Apple sometimes farms out design and manufacturing work, but they always keep a close eye on things and never allow re-branding (except in the case of the iPod+HP).

Jobs has been pretty consistent in describing Apple as the antithesis of manufacturers like Dell that thrive in the clone-type business to the point of establishing a brand image.

I guess he could easily switch on the RDF and do a 180 on this, but to this date Jobs has always been completely against clones because he has too little control over the products they release, and dislikes the potential for competition.

Right now Apple makes most of its money from the iPods and laptop lines, so hardware is still a big deal. This issue will probably crop up fairly often if the Intel switch is as successful as we hope since PC clone makers will want to get in on the action.

 

[AlmostThere]

Apple still say they make more money from hardware sales. If they make a higher percentage from software sales, then okay, but as a dollar amoung, hardware is apple's bread and butter.

IBm did used to be a hardware company, but now many would consider them to be a slow failure. They may still be fairly famous and respected, but they are a bit of a joke for allowing others to clone them and take their market share from them to the point in having to seel their pc division. Would you want to see apple become a mediocre microsoft, because it would take decades to overtake them and so they would become a poorer version of them if they did move out of hardware.

With a vested interest in all 3 next generation consoles, I think it is hard to say IBM are a slow failure. While it is their services that they really push and advertise now, they still get 2/3 profit and 1/2 revenue from other sources (mainly hardware). Selling their PC division was cutting a loss in a market they were wasting energy competing in, and money better spent in R&D.

But realistically, by 2007, OS X for x86 will be available in nearly every car boot sale and on every shop shelf in any country where copyright enforcement is, well, somewhat under par. Look at where this has taken MS in China. Everyone knows MS, so that's what they are going to buy. Apple need to bridge the alienation that it's software creates and the only (OK, best) way to do that is through use. It works in Apple stores, it work in Apple users. Look at the market this creates for bulk sales of genuine Apple software, especially the biggy, a business tool. Apple need a way to get their hardware on to office desks.

The question is, in terms of a business, how can they reach that critical mass where they sell enough software to cover the losses in hardware.

Of course, this is all assuming Apple are aiming big, but it was SJ who said something about dents, the universe and the reason for our existence

 

[IJ Reilly]

And they still are. They sell workstations, minis and mainframes.

PC clones may have allowed the Microsoft/MS-DOS/PC platform to take over the world, but it didn't do a thing to help IBM. IBM lost the lion's share of the market to all the clone-makers. So much so that they eventually sold that entire branch of the company to some Chinese company.

Microsoft was the big winner in the PC clone market, not IBM.

Of course. IBM never intended the PC to be cloned. IBM lost big when they lost control of the PC hardware market.

 

[AlmostThere]

And they still are. They sell workstations, minis and mainframes.

I know that. Let's not forget chips. But to many in the business world, they are an IT Services company now. That's where they are taking off.

 

[shamino]

IBM did used to be a hardware company, but now many would consider them to be a slow failure. They may still be fairly famous and respected, but they are a bit of a joke for allowing others to clone them and take their market share from them to the point in having to seel their pc division.

IBM didn't "allow" anyone to clone the PC. They never licensed their hardware tech. They sued the clone makers, and ended up losing the suits.

Their big screw-up was allowing Microsoft (the system software developer) the right to sell to third-parties. But at the time, nobody thought this would amount to anything. After all, how many people attempted to make clones of the other computers that were popular at the time (Apple II, Atari 400/800, Commodore 64, etc.) The only other clones that I can think of would be a few Apple II clones, and they were distributed without a license for the OS.

 

[IJ Reilly]

IBM didn't "allow" anyone to clone the PC. They never licensed their hardware tech. They sued the clone makers, and ended up losing the suits.

Their big screw-up was allowing Microsoft (the system software developer) the right to sell to third-parties. But at the time, nobody thought this would amount to anything. After all, how many people attempted to make clones of the other computers that were popular at the time (Apple II, Atari 400/800, Commodore 64, etc.) The only other clones that I can think of would be a few Apple II clones, and they were distributed without a license for the OS.

Yeah, and unfortunately the "conventional wisdom" about how the PC market evolved (conventional wisdom so often being unwise) guided Apple into the disastrous clone experiment. If any company has ever successfully licensed clone products, then I don't know what it is. Nobody deliberately creates competitors for their products, and survives.

 

[steve_hill4]

Why would this be a stupid question? The clone programme may well have increased the Mac marketshare ( even if just a little ) - I don't know the history of Mac marketshare of around 1995 - 1997 - that is why I'm asking the question.


I'll rephrase it - did the Mac OS User base increase or decrease.

Allow me to apologise, I actually meant to put rhetorical question originally. I am sorry if I offended you.

Anyway, I think their marketshare did fall, hence why Steve came back, saw that they weren't only losing money on every clone sold, but it also wasn't having the desired effect and pulled the plug. Having a quick search before hitting reply seems to support this too. I wasn't a big mac fan back then though and even if I was, I would have been too young to remember figures now. Perhaps someone wants to confrim this.

 

[aegisdesign]

Apple makes such beautiful hardware. What would Jonathan Ive do??
QUOTE]

Perhaps he can design software user interfaces?

There's an obvious need for someone doing it at Apple rather than the botched together mess it's developing into now.

 

[shamino]

With a vested interest in all 3 next generation consoles, I think it is hard to say IBM are a slow failure.

IBM is a conglomerate. You can't take success in one division and apply it to the company as a whole.

Their chipmaking division is a great success. Same for their big-iron manufacturing.

Their PC business was in a tailspin and was sold off to the Chinese. Ditto for their printer division (spun off into Lexmark).

I'm not sure how successful their hard drive business was, but they ended up selling that to Hitachi, so it must've had its share of problems.

But realistically, by 2007, OS X for x86 will be available in nearly every car boot sale and on every shop shelf in any country where copyright enforcement is, well, somewhat under par.

Unless Apple's anti-hacking code ends up working. Recent reports say that the latest drops of the Intel system software is much more hard to crack than the initial release.

But this doesn't mean anything. In those places where piracy is rampant, Apple licensing the OS isn't going to boost sales. These people will continue trading pirated copies, whether or not there exists a legal alternative. Just like they do with Windows right now.

The question is, in terms of a business, how can they reach that critical mass where they sell enough software to cover the losses in hardware.

That is the big question. I once did a back-of-the-envelope analysis, and I think the conclusion was that they'd need something like 50% market penetration to make that work.

I don't think Microsoft is going to lose that much of the market. At least not in the next 10 years, which is an eternity for the computer business.

 

[snowmoon]

Seems crazy on it's face.... but....

Hardware margins are just not so attractive anymore ( well computers specifically ). If you look at how apple profits have been breaking down it keeps shifting towards iPods rahter than computers. Based on this continued shift, clones don't seem so insane anymore now does it?

 

[shamino]

Yeah, and unfortunately the "conventional wisdom" about how the PC market evolved (conventional wisdom so often being unwise) guided Apple into the disastrous clone experiment. If any company has ever successfully licensed clone products, then I don't know what it is. Nobody deliberately creates competitors for their products, and survives.

Apple's biggest problem was that they kept on seeing IBM as their main competitor, when it was Microsoft (feeding the PC clones) that was really taking over the market.

By the time they took off those blinders, they were a niche player in a market that they created.

 

[limi]

That's one of the main reasons I just can't see it happening. Could you imagine Jobs doing a demo of a new App on a Dell LCD? Nothing against their LCD's, but they just don't come near to the beauty of an Apple one.

Well, I have owned 4 (count 'em Apple 23" Cinema Displays, and they were all returned to Apple within a week because of bad color reproduction and replaced with 24" Dell screens for 1/3 of the price.

The colors show properly, it has Picture-in-Picture and inputs for everything from SVHS to composite and VGA/DVI (which is what I use), and it has a built-in memory card reader for cameras to boot.

I may have been extremely unlucky and gotten four Apple screens that all had manufacturing defects, but I doubt it. Every 23" Cinema Display I have seen has major color issues.

The 20" and 30" are fine, though - it just seems to be an issue with the 23".

Anyway - the high-end screens of Dell (they don't have a 30", unfortunately) definitely whips Apple's offerings, both on price and quality.

 

[steve_hill4]

IBM didn't "allow" anyone to clone the PC. They never licensed their hardware tech. They sued the clone makers, and ended up losing the suits.

Their big screw-up was allowing Microsoft (the system software developer) the right to sell to third-parties. But at the time, nobody thought this would amount to anything. After all, how many people attempted to make clones of the other computers that were popular at the time (Apple II, Atari 400/800, Commodore 64, etc.) The only other clones that I can think of would be a few Apple II clones, and they were distributed without a license for the OS.

I think apple however knew how to clamp down on the un-lincensed cloners a lot better. IBM made big mistakes in a way and had they been able to control those early clones and wipe them out, it would have been a fairer fight between apple and IBM, Mac OS and Microsoft. Would have been interesting to see who would have won out overall then.

 

[IJ Reilly]

Allow me to apologise, I actually meant to put rhetorical question originally. I am sorry if I offended you.

Anyway, I think their marketshare did fall, hence why Steve came back, saw that they weren't only losing money on every clone sold, but it also wasn't having the desired effect and pulled the plug. Having a quick search before hitting reply seems to support this too. I wasn't a big mac fan back then though and even if I was, I would have been too young to remember figures now. Perhaps someone wants to confrim this.

I already have, in post #53.

 

[DaftUnion]

No, no, and no. Not a good idea.

 

[shamino]

Hardware margins are just not so attractive anymore ( well computers specifically ). If you look at how apple profits have been breaking down it keeps shifting towards iPods rahter than computers. Based on this continued shift, clones don't seem so insane anymore now does it?

Apple's margins on Macs may be less than iPods, but so what?

Companies survive off of profit, not margins. 50% margins on a $100 product is not as profitable as 30% margins on a $3000 product.

And Apple's Mac margins are much higher than the rest of the small computer industry, even if they aren't as high as the iPod's margins.

 

[aegisdesign]

One way they could expand the sales of OSX would be to licence it to niche platforms that Apple aren't doing. eg. the sub-notebook market. I'd love an OQO with OSX on it. Apple aren't going to produce that themselves so there's no competition there.

There are probably other markets like kiosks, thin clients and ruggedised applications that Apple are never going to touch.

 

[IJ Reilly]

Apple's biggest problem was that they kept on seeing IBM as their main competitor, when it was Microsoft (feeding the PC clones) that was really taking over the market.

By the time they took off those blinders, they were a niche player in a market that they created.

Yes, exactly. I discussed this at some length with Guy Kawasaki years ago. According to his business philosophy, every company needs an "enemy," somebody they want to beat in the marketplace. He said their big mistake during the early years of the Mac was choosing IBM as their enemy (hence, the infamous/notorious 1984 commercial). What Apple didn't know then was that IBM wasn't their real enemy. It was Microsoft. Of course in fairness they would have no way of knowing that until 1986-87 at the earliest, at a time when Apple was depending on Microsoft for important software products.

 

[aegisdesign]

I think apple however knew how to clamp down on the un-lincensed cloners a lot better. IBM made big mistakes in a way and had they been able to control those early clones and wipe them out, it would have been a fairer fight between apple and IBM, Mac OS and Microsoft. Would have been interesting to see who would have won out overall then.

The PC architecture was incredibly simple. A very small BIOS and an OS that booted off of tape or disk. All the other parts were off the shelf and the graphics and sound were all on ISA cards anyway.

When MS released MS-DOS separately and the likes of Phoenix producing a clean room BIOS, there wasn't anything they could do.

IIRC there was even a Peter Norton book with a dissasembled version of the BIOS for ASM programmers interested in the innards of INT21.

There were clean room versions of the Mac's ROMs but the OS was never cloned AFAIK. It was a much a harder task to clone a Mac and even an Apple II or CBM64. And with Apple being in control, all they had to do was keep changing the hardware and cloning became impractical.

 

[BenRoethig]

Doesn't make any real sense with the switch to x86. If Apple wants, it can just allow OSX to be run on any PC. Why bother licensing the hardware? Just go for the software sales to existing PC owners.

Most of the money in operating systems is made in OEM sales. With upgrades one person legitimately buys it then about fifty of his friends, co-workers, and family borrows the disk.

If it's true, get ready to see some real UGLY lookin' macs then.

99.999% of the computer buying public cares more that it does what what they want it to. You are a very small, but very vocal minority. Mac OS X is going to show up on non Apple computers. Does Apple want a buggy, hacked version out there that hurts their image and sends people right to vista or do they want a stable, supported version that makes them money?

 

[Stella]

Allow me to apologise, I actually meant to put rhetorical question originally. I am sorry if I offended you.

No offence taken.

 

[Plymouthbreezer]

Let's not do clones Apple.