Can Snow Leopard end the Mac cloning problem?

When computers for personal use were introduced in the 1970s, it was common practice that the computer’s hardware and its main operating software (which, back then, usually involved not much more but a simple command line driven interface for standard I/O operations or a BASIC interpreter) were delivered by the same company. As a full package, the combination of hardware and software made up “the computer”. Even during the 80s, when computers became much more powerful and hence useful to end users, computer companies from the early days still hold true to the basic principle of developing their own hardware and software. Think of the Mac, the Commodore Amiga, the Atari ST or the countless other computer systems of the time, all of which were made unique not only because of their hardware specs, but mainly because of the things the computer’s operating system would let the machine actually do.

There was of course one other company, which thought up a business model that was rather different. This company solely devoted itself to developing only the operating system, which it would license to any hardware manufacturer that was willing to pay for it. Obviously, this company’s flagship product, MS-DOS, became rather popular and soon evolved into the defacto standard for computer operating software. Although the system was among the least advanced of all operating software efforts of that time, as a result of not capable of doing much advanced stuff it required inexpensive hardware to run on. This quickly lead to a huge growth in sales, and hence in the availability of third party sofware. Microsoft laid the groundworks of its imperium, and formed the foundation for spin-offs of their popular DOS operating system in the form of its many Windows iterations. The companies that sold these DOS- and Windows-compatible computers (increasingly refered to as “PCs”) basically had no possibilities to differentiate themselves from their competitors on other things but price.

The general public quickly embraced this world of interchangeable, compatible and low priced computers, which in less than a decade lead to the fall of all computer companies that sticked with their proprietary hardware and software combinations. Most went bankrupt, in many cases after a short while of trying to jump on this PC bandwagon themselves. All companies, but one. Only Apple kept faitfull to its idea that a computer product is more than a generic piece of hardware equiped with a generic operating system. To them, the combination was more than the sum of its parts: by ingeniously crafting the hardware and software to work as tightly integrated as possible, they kept themselves alive in a world where all of their competitors had long given up.

Microsoft invented the “operating system as an OEM-product” and “operating system as an after market product” propositions, and became so successfull with it, that roughly 9 out of 10 of the world’s current computers run an iteration of their operating software. It is interesting to note however, that Microsoft is the only company that I know of which markets a proprietary, in-house developed operating system to third party hardware vendors. There is no other company that does the same thing (I don’t count the various Linux-distributions of recent years, as they are not developed by a single company nor marketed on the terms of a single company).

Because 90% of the world’s computers run an operating system that was not developed by the company that made the computer hardware, many people became familiar with the Microsoft business model. So much, in fact, that they began to believe that this practice (letting one company create the hardware and another one the software) is the only valid and ethical way of doing business in the computer world. They completely ignore the fact that, in the view of others, in order to present a customer with a complete and polished user experience, the hardware and software should not be seen as individual parts that can obtained from anyone, but rather as an integrated product developed by a single group of people.

In today’s world, Apple is the only major player left which markets its computer products based on this principle. This is a rather perplex finding on its own, as one would imagine that other companies would see the competitive benefits of developing and marketing their own fully in-house designed computer product. Alas, a practice that was common in the 70s and 80s has now died out, with the sole possible exception of that little company in Cupertino, California. Apart from some exceptions in its past (mainly during the period of Steve Jobs’s absence), it never sold computers with an operating system it did not develop itself, nor did it sell its operating system to other hardware manufacturers. This strategy makes Apple unique in the world, and proved to be very, very successfull for the company, both in terms of money (Apple is one of the richest computer companies) and product quality and user experience (Apple is generally considered to deliver the most well-crafted pieces of computer equipment in the industry).

However, as I said, many companies have grown so accustomed to the Microsoft-model of independent hardware and operating software sales, that they feel that Apple should do the same with their Mac OS X system: license it to other hardware companies. Of course, this would totally abandon Apple’s one and foremost advantage over its competitors. First, it would make their line of Macintosh-computers lose their prime unique selling point, and second, it would force them to create software to run on the wide variety of hardware platforms so that they would have to give up on the advantage of “knowing your system” to take maximum advantage of it. In short it would lead to an inferior product from both a commercial as well as a quality point of view.

It makes me wonder what people are thinking when they suggest that opening up OS X to other companies would benefit Apple, as it obviously would only lead to the problems that I stated above. However, what really hits me is when people say that Apple “has no right” to “keep its OS to itself”. It saddens me that those people have such a short term memory in that they forgot that combining hardware and software was common practice, until that one company successfully changed this idea. The Microsoft-way of thinking became so dominant that they now blame other companies, with other strategies, for not following Microsoft’s example.

I often think of other industries when discussing this issue. When I buy a car from the Ford Motor Company, I have no choice but to buy a completed product. I cannot “demand” from Ford to deliver me just the chassis of the car, since I inted to buy the engine from Renault and the wind shields from Volvo. If Ford, Renault and Volvo decide not to market individual pieces from their vehicles so that I can assemble my own car, I just have to respect that. Everybody undestands this.

But even in a slighly more computer-related comparison: What if I would ask Nintendo to deliver me the operating software from their Wii console, so that I could run Wii titles on the hardware of my liking? Or what if I like the menus and interface of my Philips TV, so I ask the company to sell me the software so that I could implement it in my Sony TV?

Almost everybody would understand that it’s up to the manufacturer of a product to decide whether or not they want to sell parts of their products individually, or just as a complete end product. And almost everybody would respect this company’s decision. However, due to the Microsoft doctrine, many people seem to believe that this does not hold true for a computer company and its hardware and software components.

And now, partly due to the fact that Apple switched to Intel-architecture in their computers several years ago, we have arrived at a time when several small startup companies are trying to bend public opinion and legal clarification to their benefit by selling computers bundled with the Mac OS X operating system.

Apple explicitly sells OS X retail copies for users of Apple branded Macintosh computers to upgrade their OS to the latest version, and it states this requirement in the End User License Agreement (EULA) that comes with the OS X product. Some of these companies argue that, at least according to EU legislation (which often tends to favor the consumer), a company cannot restrict what a customer can do with a product after he or she has bought it. In other words: When someone legally buys a retail copy of Mac OS X, he should be able to with it whatever he wants, including installing it on non-Apple hardware.

Although the verdict is still out on the legal value of these claims (both in the US with Psystar as the main vendor of Mac-clones, and in the EU with the new contender PearC from Germany), it got me thinking. If the fact that Mac OS X is sold as a boxed retail copy in the stores is in fact a large contributor to the believe of these companies that they can bundle these lawfully obtained DVDs with their non-Apple products, then why wouldn’t Apple simply stop selling OS X as a physical product trough retail?

The next version of the Mac OS, called Snow Leopard, will be a strange duck anyway. It is merely considered an upgrade to the current Leopard system. It will include a lot of under the hood optimizations to benefit from the current multi-core CPUs and the increasing, but often idle power of a systems graphics processor, as well as better integration with Microsoft Exchange servers, but it offers little to no “visible” new end user features. As a result, there has been a lot of debate in the Mac community on how Apple should sell this new version to its customers. Most agree that the usual upgrade fee of $129 is probably to much to ask for in this case. Should Snow Leopard be a free upgrade, of perhaps sell for a less than the usual fee? As Snow Leopard will most likely break the current pricing tradition, why not break with another tradition as well: the boxed retail version.

In this day and age, most people have a fast internet connection, so that it would be easy to deliver the upgrade over the wires. Most Apple customers already have an Apple ID for usage with the iTunes and App Stores, so the payment infrastructure for a digital delivery of Snow Leopard is already largely in place. And even if a user, for one reason or another, is unable or unwilling to download the entire upgrade over the Internet, Apple could set up a mail delivery program so that after the online payment is made, a user could request a DVD to be delivered to his house for a small handling fee. Compare this to the exchange program that Apple had in place for Mac OS X 10.4 Tiger, where users could requests CDs instead of the DVD that was in the box, in case they had no DVD drive.

In any way, this would eliminate the sale of the next version of Mac OS X to people who do not yet own a Mac computer. As a result, there is simply no way for Mac cloning companies to bundle a legally obtained retail copy of Mac OS X with their computers.

When done right, this should not harm sales. Every potential buyer of a Mac OS X retail pack already owns a Mac, so in essence every potential sale can be treated as an “upgrade” from the version that is currently installed on the Mac (please note the huge benefit that Apple has in this respect due to its combined hardware/software business model). And even the in-store impulse buy can be taken care of by selling “upgrade packs” that essentially contain nothing more than an authorization code to initiate the download (comparable to the current retail box for Apple’s MobileMe service). Just don’t put a DVD in a box that might give others the false idea of freedom to do with it whatever they want, such as bundling it with non-Apple hardware.

Please note that I fully understand that this would not impact the home tinkering of users trying to install Mac OS X on their PCs. These so-called “Hackintosh” projects will surely keep existing. However, also in these cases it is important to note that there is no way these users could have legally obtained a copy of OS X to run on these unauthorized machines, as OS X would simply no longer be available as an after-market product. This would make Apple’s case much stronger should it come to a court battle. But I think that this is not as much of a concern for Apple as is the sale of computers pre-equipped with Mac OS X. A court decision in favor of these companies completely destroys the entire business model that the company has built in 30+ years, with obvious dramatic effects.

Snow Leopard will bring some interesting times. Not only will it advance the world’s most innovative computing platform to yet again unseen levels of user satisfaction. I also think that Snow Leopard will mark an entirely new way for Apple to distribute major upgrades of its OS to its customers.