Why Dan Frommer and Scott Moritz Are Wrong on iPhone Sales

Daniel Eran DilgerSilicon Alley Insider's Dan Frommer says Apple's announcement of reaching its million mark goal in iPhone sales three weeks early is actually bad news for Apple and is convolutedly "below plan." He also says the announcement only props up the speculative conjecture by Scott Moritz of the Street that Apple's iPhones sales are somehow woefully below expectations. They're wrong, here's why.The PremiseFrommer wrote that Apple isn't selling iPhones as fast as planned and is set to only sell around half of its 2008 goal.His premise revolves around the idea that if Apple were selling iPhones at "a constant rate," a million phones in 74 days would be five million per year. However, because it sold over a quarter of those in the opening day and a half at the end of June, Frommer calculates that sales of the remainder in the 72 days since the first of July mean that Apple is only hitting a "3.6 million annual run rate."By the end of 2008, that would only result in 5.8 million units instead of the ten million goal Apple. [Silicon Alley Insider: Apple's iPhone: 1 Million Is Below Plan]Strike One: The Run Rate Myth.The most obvious problem with that idea is the fact that devices don't sell at a constant “run rate." Apple's iPhone sales took off at launch much faster than the original iPod due to the fact that a swell of early adopters were ready to buy it after being convinced over six months of anticipation. At the same time, many potential buyers held off on plans to buy the iPhone until they could read reviews and get a real sense of how it worked. Many were also locked into contracts with Verizon or Sprint. With only six months of advanced notice, it will still be a few more months before the majority of buyers who want an iPhone even get the chance to buy one without having to pay outrageous fees to cancel their existing mobile contract. iPhone sales are also now taking on the network effect of the iPod, as early adopters show their friends. All these factors have difficult to estimate impacts upon sales that make trying to figure a static “run rate�? a very simplistic and pointless exercise.However, there is another factor that simply blows the entire idea of a static “run rate�? out of the water. Last November, I predicted that sales of the Zune would bomb that winter because Microsoft had failed to critically examine Apple's historical sales patterns. Sure enough, the Zune was thrown against the rocks by Apple's riptide. Frommer's idea ignores that same reality by imagining that iPhone sales will schlep along at a linear pace. Had Frommer tried to calculate an "annual run rate" for the iPod based on a portion of third quarter sales at any point over the last half decade, he would never have been close to accurate. That’s because Apple’s iPod sales roughly triple every winter quarter.In 2002, it sold nearly as many iPods in its winter quarter as it did the first three quarters combined: 219,000In 2003, it actually sold more iPods in its winter quarter than in the first three combined: 733,000In 2004, it again sold more iPods in its winter quarter than in the first three: 4,580,000In 2005, it sold more than 4 million units every quarter, but still sold nearly three times as many in the winter: 14,480,000.In 2006, it sold more than 8 million units every quarter, and then sold over 21 million in the winter quarter.In 2007, it has maintained quarterly sales between 10.5 and 9.8 million per quarter.[Strike 3: Why Zune will Bomb this Winter]Strike Two: The Have it Both Ways Myth.One particularly annoying bit of analysts' talk about Apple's expectations is that they can't seem to decide if Apple's projections are bad because they are conservative lowballs, or if they are bad for being overly enthusiastic figures the company won't be able to reach. They often try to describe them as both, loading contempt on both sides of the scale. This makes them look very foolish. Do they think we have no memory, or are they just changing their stories back and forth in sheer desperation?Frommer tried to argue both sides at once in the same article. Recall that Apple only ever gave two iPhone sales goals: one million by the end of the first quarter of sales, and ten million by the end of 2008. In his piece, Frommer suggests Apple will only be able to sell 5.8 million iPhones by the end of 2008, based on that fallacious "run rate." That would be just over half of Apple's ten million goal. However, he then says that Apple's immediate short term goal was an unimpressive low ball, no doubt because Apple reached it three weeks early.Apple's stated goals must be a greatly frustrating logical conundrum for Frommer, because even at a “run rate" of one million in a quarter, Apple could only ever hope to sell six million iPhones by the end of 2008, another five quarters later. No wonder he's faced with trying to say that the immediate goal was too low and the longer term one is too high! Frommer needs to stop trying to pound round facts into square holes just so they can be stacked up like bricks the way he would like them to be.Strike Three: The Market Bearing Price Myth.While Frommer and Moritz are enamored with the idea that iPhone prices could only be cut if sales were in crisis, a variety of obvious market realities don't support that simpleton idea. Between now and the end of 2008, Apple has just two holiday seasons. If it wants to dramatically exploit its historical potential for selling roughly three times as many gadgets during the winter season, it makes sense to trade off unit pricing for volume sales, even if it could perhaps sell fewer at a higher price and make more short term profits doing so.Such a strategy isn't unique. Microsoft and Sony currently lose money on their new game consoles in desperate bids to establish their gaming and HD video playing platforms. Even so, this year they both cut prices again to accelerate volume demand. Nintendo purposely aimed low to capture volume sales using a more attractive price point. Given high demand for the Wii and extremely constrained availability, Nintendo "should" seemingly raise its console price and profiteer. It hasn't. While prices are clearly linked to demand, it is a common fallacy to think that the "right price" is always the highest the market will bear. Jobs' 99 cent pricing in the iTunes store is clearly not the top price consumers will pay for downloads. Music labels are fuming that other licensees such as Verizon will collect $2.50 or more for portions of a song sold as a ringtone. Jobs wants media prices low to induce volume sales and attract buyers to the legitimate market for music and movie downloads. Labels and studios want "market pricing," in part so they can jack up the price of popular music to exploit consumers, and in part so they can exploit artists by threatening to release their work at lower tiered prices and signal to the market that their careers are over.[Universal vs Apple in the iTunes Store Contracts][Nintendo Wii vs Microsoft Xbox 360 and Sony PS3]This All Happened Before.Dial back the clock twenty years, and you'll discover that Steve Jobs also fought with Apple CEO John Sculley over the price of the original Macintosh. The desire to use an expensive but pioneering amount of RAM and a futuristic new processor had inflated the price of the Mac, but the design team was still able to deliver it at a fairly attractive price point of $1,995. Scully determined that the Mac would still sell at $2495, delivering high profits to fund splashy advertising. Nothing on the market was really similar to the Mac apart from Apple's $9,995 Lisa. VisiOn for the PC similarly cost nearly $10,000 and did far less. Sculley thought that the market would bear anything Apple might charge. Andy Hertzfeld recalled on Folklore.org that in October 1983, "Steve Jobs strode into the software area one evening, looking angry. 'You're not going to like this,' he told us, 'but Sculley is insisting that we charge $2495 for the Mac instead of $1995, and use the extra money for a bigger marketing budget. He figures that the early adopters will buy it no matter what the price. He also wants more of a cushion to protect Apple II sales. But don't worry, I'm not going to let him get away with it!'"Jobs fought Sculley over the price increase, but Sculley prevailed. Sure enough, Macs did sell well out of the gate to early adopters at the higher price, but sales then began to stall. While Jobs couldn't cut the price for the original Mac to induce wider adoption in the mid 80s, he could choose to cut the price of the iPhone early and use interest in the iPod Touch to ramp users toward the iPhone. That price cut will dramatically boost sales this winter, just as iPod price cuts and feature refreshes do every year.Apple will earn less profit on individual hardware sales of the iPhone, and may even earn slightly less money overall this quarter than it might have selling the iPhone at $599. However, a $399 iPhone will dramatically boost the company's sustainable subscriber revenues and devastatingly cut into stationary rivals like Palm and the Windows Mobile licensees, giving them little opportunity retool and strike back with copycat products.  [Price Fight - Folklore.org][Office Wars 3 - How Microsoft Got Its Office Monopoly]Strike Four: The Myth of Unlimited Availability.Another problem with idea that iPhone sales were in crisis--and that a price cut is a conspiracy to hide the truth--is that Apple sold out of iPhones in many of its retail stores throughout the first three weeks on sale.Carl Howe of Blackfriar's Communications tracked iPhone availability every day through July, and then animated the results in a movie that depicts just how constrained iPhone inventories in Apple's retail stores were. So not only did Apple meet its 94 day goal 20 days early, but it did so despite having no or few iPhones to sell in many of its stores during the first 21 days. Price isn't just related to demand, but also to supply.That also demonstrates the fallacy of Scott Moritz' assertion that Apple secretly planned to sell a million iPhones in a day and a half, and was sorely disappointed after failing to do so. How could Apple have planned on selling a million units in one day when it didn't even have a million units on the shelves of its stores during the first month? Remember, Moritz wasn't saying Apple had a delivery problem in getting enough units to stores as Nintendo is experiencing with its constrained supplies of the Wii. Instead, he tried to suggest that interest in the iPhone was far below Apple's estimates, and buyers were leaving it on the shelf like Windows Vista. The result, he claimed, was that "rivals were rejoicing."The only real rejoicing by rivals was that Moritz was volunteering to repeat the talking points handed to him by Verizon shill Roger Entner of IAG Research. Just hours before Apple announced it had sold a million units, Moritz tried to get some traction out of the idea that Apple had dropped the price in desperation to find another half million or so customers over the next three weeks. Apple isn't the typical tech company being run by visionless bean counters. It it were, it would have continued selling $600 iPhones at least through the end of September and then announced that it had sold its million. Apple had to push out new iPods in early September and fit the iPhone into the price range because next month it will be rolling out Leopard and a series of new software updates. Apple feeds the press in small, consistent, and regular feedings so reporters know what to write. If Apple were a big stupid company such as, say HP, it would parade out a mix of dozens of consumer and business products all together in one big event, and nobody would ever hear about any of it. HP did.[Why a million iPhones in 74 days is better than you think- Blackfriars][HP's marketing this week: fashionable but ineffective - Blackfriars][Unraveling Anti-Apple Panic: the iPhone Launch Success] [More on Scott Moritz and the Jim Cramer Misinformation Engine]Strike Five: It's Too Late to Deny the iPhone.The most comical part of Frommers’ analysis is that he’s trying to stuff a cat back into a bag and explain that there was never really any cat, long after everyone in the room heard the purr and pet the thing. Sorry, but the windows of opportunity to doubt the iPhone have long since closed.Real Windows Enthusiasts were aware of the need to deny the iPhone well before its release. They all chimed in with reasons why the iPhone wouldn't work, wouldn't offer what consumers want, and wouldn't sell well, all hoping that their non-stop misinformation campaigns would act as a self-fulfilling prophesy. They failed miserably.John Dvorak began his smear campaign immediately, appearing on CNBC to say that the iPhone was "trending against what people are really liking in phones nowadays, which are those little keypads.�? He explained, “The BlackJack, the Samsung, the BlackBerry obviously pushes this kind of thing. The Palm, all of these. I guess some of these stocks went down on the Apple announcement, thinking that Apple could do no wrong. But I think Apple can do wrong, and I think this is it." Reader Jim Barrow sent in a link to a MarketWatch article from March, where Dvorak scribed a rambling diatribe entitled "Apple should pull the plug on the iPhone." He offered no factual basis for worrying that the iPhone might not work out apart from the offhanded comment that "there is no likelihood that Apple can be successful in a business this competitive," words which echoed Dvorak's 1984 observation that "the Macintosh uses an experimental pointing device called a 'mouse.' There is no evidence that people want to use these things."In April, Dvorak inflamed his 'pull the plug' rhetoric further in a TWiT podcast, where he reported to an audience of hundreds of thousands that the iPhone only delivered "40 minutes of talk time" and "the interface fouls up constantly.�? Dvorak said that his inside information on the iPhone came from a "guy at Cingular who’s testing the product," adding, "he’s telling me confidentially and I shouldn’t be telling anybody."[John Dvorak: How Wrong Can One Guy Be?][Readers Write: Don't Write About John Dvorak Anymore]It'll Be the Death of You.Dvorak was joined by Rob Enderle, who called the iPhone “damned�? and “not a very good phone�? at every opportunity in the months before its launch, despite not really knowing anything about it, or even ever offering any rational criticism. Instead, Enderle appealed to fantasy fears of sexual assault, murder, and the violent death of children, all of which he suggested might somehow be related to the iPhone. Unaware that a password protected iPhone--or even a unauthorized unit without a configured service plan--can still be used to make emergency phone calls, Enderle wrote about, "an emergency situation where, say, a woman was being raped and couldn’t call for help because she didn’t remember her iPhone password." As I understand, with a Windows Mobile phone, even if the unit crashed while trying to place the call, at least the victim could use it like a brick as a blunt weapon. Enderle also feared that being unable to take out the battery would somehow making recharging it impossible, resulting an a scenario where one might end up on “the wrong side of town�? with a dead iPhone and be murdered because of it. Being on the wrong side of town was apparently the source of most murders prior to the arrival of the cell phone, which somehow made it safe to be in bad neighborhoods. For those who unfazed by the prospect of one's own own grizzly death in relation to the iPhone, Enderle appealed to his readers to please think of the children, particularly the potential for their brutal decapitation in an iPhone-related collision. "If you are buying this phone for a child or another member of your family," Enderle warned, "please emphasize that entering data on this phone while driving is dangerous." In contrast, operating the slide out keyboards of an HTC brick phone, or using both hands to thumb type on a BlackBerry may or may not save your children as they drive off an embankment, but at least you'll know they didn't die at the hands of Apple's "damned" iPhone.[SCO, Linux, and Microsoft in the History of OS: 1970s][Mac OS X vs Linux: Third Party Software and Security]Pure Concentrated Evil with a Multitouch Screen.Brian Lam of Gizmodo published an impassioned plea to boycott the iPhone shortly before its launch, due to the fact that Cingular had purchased the AT&T name, a brand Gizmodo's writer correlated with "monopoly tactics" in the late 70s. Gizmodo hasn't ever called for the boycotting of Verizon Wireless, which is well known for its anti-consumer tactics and which shares just as much blood with the old AT&T as its Baby Bell sibling Cingular, nor has it ever urged the boycott Microsoft products due to "monopoly tactics." Gizmodo also failed to boycott any other GSM phones that are tied to AT&T.Gizmodo's Lam and Enderle then teamed up with Slate's David Sessions in an article purporting to expose Apple's rated battery life for the iPhone. Sessions complained about the attention the iPhone was getting, and tried to dismiss Apple's announcement of a two fold increase in battery life over what was originally advertised. Unbelievably, Sessions and friends could only explain away the iPhone's jump in talk time by crediting its glass screen, saying that "glass transmits light more efficiently than plastic." That and some witchcraft.However, all of these individuals sharply reduced their squirt rate of false information after the iPhone's successful launch. In day and a half, Apple sold 270,000 iPhones compared to the 500,000 Palm OS Treos, 1.03 million RIM BlackBerrys, and 1.51 million Windows Mobile phones that were sold worldwide in the first 90 days of 2007.Apple has since nearly matched highflying RIM in sales during July, despite being limited to a single carrier and only offered for sale in the US. At this point, denying the iPhone is like saying the Earth is flat. It might be fun to do at a Renaissance Faire, but pretending to seriously doubt reality is not a good career move unless you work for the Street--or perhaps Rupert Murdoch, as Dvorak does.[Secret iPhone Details Lost in a Sea of Hype and Hate][iPhone Sales vs Zune, Palm, RIM, Symbian, Windows Mobile]And Now: a Warning.Let it be known that anyone who publishes further misinformation or blows out similar inanity will risk being instantly awarded a Zoon on the spot. No complicated voting, no tedious application process. New Zoon nominees will be rubber stamped with the same effortless fast tracking as the ECMA declaring Microsoft technology as an international standard.In fact, I’m going to totally Zoon Dan Frommer and Scott Moritz right now, as well as John Dvorak, Rob Enderle, Brian Lam, David Sessions, and even Roger Entner. And John Sculley. And while I’m handing out an intellectual property construct that costs me nothing to distribute, I will also award Steve Jobs with a Zoon for the whole two month “just kidding�? iPhone pricing situation, although I might take half of it back if I get a $100 coupon that doesn’t force me to spend $500 to actually use it. So let that be a warning to you out there on the Tubes thinking about how to linkbait an article at the expense of the progress of technology. I have a rapid firing gun full of Zoons and I’m not shy about cranking them out. Be sure to post any nominees.What do you think? I really like to hear from readers. Comment in the Forum or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast! Submit to Reddit or Slashdot, or consider making a small donation supporting this site. Thanks!

• RoughlyDrafted Magazine... on September 12, 2007
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Microsoft's Mojave Attempts to Wet Vista's Desert

Daniel Eran Dilger Nearly two years after Windows Vista was finally released, Microsoft has remained unable to shake off its reputation as being slow, incompatible with existing hardware and software, and generally a poor and overpriced product that nobody wants. Microsoft is now trying to reverse Vista's bad reputation by insisting that the software's problems are not technical but rather just the fault of ignorant customers duped in part by Apple's “Get a Mac” campaign. What's Vista's real problems, and will Microsoft's “Mojave Experiment” help solve them? Blame Apple! Microsoft CEO Steve Ballmer has joined Windows Enthusiast pundits in theorizing that Vista's image problems are primarily the result of Apple's advertisements that regularly poke fun at the problems in Vista. The company has now taken aim at shooting at the messenger with a $300 million ad campaign. In July, Brad Brooks, Microsoft's VP of Windows Vista consumer marketing, addressed the company's business partners at its Worldwide Partner Conference, saying, “We've got a pretty noisy competitor out there. You know it. I know it. It's caused some impact. We're going to start countering it. They tell us it's the iWay or the highway. We think that's a sad message.” Another sad message Brooks had to deliver was that Vista's problems aren't really the fault of Apple. “We broke a lot of things,” Brooks admitted. “We know that, and we know it caused you a lot of pain. It got customers thinking, hey, is Windows Vista a generation we want to get invested in?” Vista: Pay it Forward! Brooks also noted that “Windows Vista is an investment in the long term. When you make the investment into Windows Vista, it's going to pay it forward into the operating system we call Windows 7.” Pay it forward? Is Windows 7 going to be a free upgrade to Windows Vista users, in the same way Apple is expected to offer the next Mac OS X 10.6 Snow Leopard release to existing users of 10.5 Leopard? That's highly unlikely, as Microsoft can't sustain its egregious profits collected through the Windows monopoly by giving away updates for free. Windows Vista raised the price of Windows, putting a new definition on the phrase “pay it forward.” Myths of Snow Leopard 7: Free?! Microsoft Admits Windows Vista Mistakes, Criticizes Apple Ads - InformationWeek Reality Impairment at Microsoft Talking out one's ass appears to be a job requirement for all Microsoft executives, starting at the top. A serious case of reality impairment has resulted in the paradox of the company both admitting that Vista is flawed and “broke a lot of things,” while at the same time maintaining that Vista's reputation is entirely the fault of stupid customers and a comically unflattering portrayal by its competitor. In the “Mojave Experiment,” Microsoft plans to dispel the notion that Windows Vista is problematic and incompatible by publishing a series of videotaped interviews with users who arrived with negative impressions of Vista and left excited about the new operating system. This was achieved by presenting the users with a demonstration of “Mojave,” a new operating system that Microsoft later revealed to be Vista, much to the surprise of the interviewed users who'd heard so many bad things about it. However, the Mojave Experiment is so full of false information and saccharine gloss that it couldn't possibly appeal to anyone smart enough to turn on a PC. Even setting aside the fact that the ad experiment basically seeks to blame users for being dumb, the attempt by Microsoft to paint over Vista's problems is transparent and flawed, for a number of reasons. What's wrong with Mojave. Microsoft can't seem to decide whether it wants to admit that Vista has problems or not, and its waffling back and forth just makes the company look increasingly disingenuous. Is Vista a poorly launched, flawed product that the company is working to fix as quickly as possible, or is it awesome and wildly successful and just the victim of bad press? Microsoft tries to tell both stories at once, which is purely dishonest. In contrast, Apple said from the start last year that its Apple TV product was a “hobby” attempting to break into a difficult market. Critics lambasted it for not immediately taking over the market like the iPod had or iPhone later did. Apple's more recent problems in launching MobileMe were quickly noted by the company along with the intent to address complaints about it rapidly. Microsoft isn't alone in being able to stumble, but its complete lack of candor makes it hard to understand if the company realizes that it even has problems to solve. With Vista, Microsoft has issued a flurry of giddy press releases claiming widespread adoption based on the number of licenses sold and naming it “the fastest selling operating system in Microsoft history,” ignoring the fact that Windows sales are increasing simply because they are tied to PC sales. Microsoft has no competition in the PC operating system market due to its monopoly position, so it could release Windows Wet Toast and still sell it faster than XP and ME and 98 Special Edition and every other version of Windows in the past that was tied to an increasingly younger and smaller hardware market. Vista Sales to Non-Users. Many of Vista's “sales” were free vouchers distributed with PCs sold in the holiday season prior to its launch. Even more than a year and a half later, PC makers continue to put Windows XP on their systems, even those sold with a Vista license, while corporate users almost always remove the default Vista to install an earlier version of Windows. There's also a busy third party industry developing around removing Vista for consumers. In late July APCMag cited Jane Bradburn, a manager for commercial notebook sales at HP, as saying, “From the 30th of June, we have no longer been able to ship a PC with a XP license. However, what we have been able to do with Microsoft is ship PCs with a Vista Business licence but with XP pre-loaded. That is still the majority of business computers we are selling today.” The arrangement is supposed to end by January 2009, but HP is trying to extend the deadline because customers simply don't want Vista installed. EWeek also noted that between April 2007 and May 2008, its survey of business users indicated that Vista climbed from 2% to 5%, but that Windows XP jumped from 74% to 83%, three times the adoption of Vista. That growth came from migration from older versions of Windows. Even in its wildest projections, EWeek says Vista will only reach 28% adoption in businesses by the end of 2010. CNET reported that a Jully 2008 survey by systems management appliance company KASE found that 60% of companies surveyed have no plans to deploy Windows Vista, a ten percent increase in disinterest from late 2007. A full 42% were actively exploring Vista alternatives, and 11% had already made the switch to Mac OS X or Linux. Microsoft is simply lying about the level of Vista excitement, and it's gotten too obvious for the company to continue to do so. XP still killing Vista in sales volume: HP 60 percent skipping Vista, so Ballmer looks to Apple | The Open Road The Truth Is… oh Look a Distraction! At the same time, Microsoft notes on its Vista website “we know a few of you were disappointed by your early encounter. Printers didn't work. Games felt sluggish. You told us—loudly at times—that the latest Windows wasn't always living up to your high expectations for a Microsoft product.” That's some brutal honesty for a company with a knack for spinning wild fantasies about fictitious product enthusiasm for a product never actually put to use in many cases. At the same time however, in trying to refute away Vista's real problems, Microsoft uses a variety of tactics that just return to blind fantasyland. Microsoft is a Marketing Company, not a Tech Company. The company plays its Mojave Experiment hand on a new website, incidentally designed using Adobe Flash rather than the company's own Silverlight. Despite the site's oddly designed, usability-impared interface, it's still possible to pull out lots of details from the experiment that say as much about Microsoft's crafty, misleading marketing as they do about its technical problems, underling the simple fact that Microsoft is first and foremost a marketing company that flogs third rate technology products. Mojave took 140 people and asked them to score Windows Vista. The average response was 4.4. After demonstrating Vista SP2 under the name “Mojave,” respondents ranked Vista at 8.5, a stunning improvement. But what were they ranking? Microsoft notes that “many said they would have rated it higher, but wanted more time to use it themselves.” That sounds good at first blush, but it really indicates that the responses were biased by hyped up enthusiasm rather than facts, and that participants realized it, reserving their final judgement until they could actually see more. The “Mojave Experiment” What does Mojave Prove? Mojave tries to represent that Vista's bad reputation is the fault of ignorant consumers who have heard bad things that aren't true about Vista, and have made up their mind without getting the facts. At the same time however, Microsoft also publicly admits that Vista “broke a lot of things” and that specifically, “Printers didn't work. Games felt sluggish.” Did Mojave clear up mistaken notions for participants, or did it just erect smoke and mirrors in a carefully controlled demonstration that skirted around Vista's real problems, including those Microsoft admits? That's a question that answers itself. Mojave didn't send uses home with Vista in a Mojave package and then ask them how well it worked with their existing peripherals and games, or how fast it was in comparison to their existing PC software. This is Not the Droid You're Running Vista On. Instead, Microsoft sat them down in front of a HP Pavillion DV 2000 with 2GB of RAM. That's what HP called its “entertainment powerhouse” laptop, although HP only shipped it with 1GB RAM. Microsoft maxed out the RAM for the purposes of the test, making the laptop a bit more expensive than its usual street price of around $1050. According to Windows enthusiast Joe Wilcox, PC laptops actually cost $700, “half as much” as Apple's laptops. At least that's the Average Selling Price for consumer retail PC laptops according to NPD's Stephen Baker, compared to Apple's $1500 ASP. Wilcox insisted that his spin on NPD's figures couldn't possibly be biased because he wrote his article on a MacBook Air running Leopard. However, his $2,700 laptop did help drive up Apple's stellar ASP for its laptops well above the entry price for Mac Books, discounting his theory that revolved around the assumption that every Mac buyer pays the average price of all the laptops Apple sells. Wilcox and Microsoft are both disingenuously dancing on both ends of the truth. Many consumers are actually buying cheap laptops at Target that can't run Vista ideally, while Microsoft demonstrates its Vista on a considerably better equipped system in the Mojave Experiment to suggest that Vista doesn't have the performance problems that users have heard about from the majority of their peers who bought cheap PCs and are seeing Vista run particularly sluggishly on them. Should You Pay Twice as Much for a Mac? I Did! You Get What You Pay For. The fact that Apple sells more high end laptops to pro users at retail, and that it does not sell anything in the range of the cheap junk being hawked at big box retailers like Wilcox' Target both result in Mac laptops fetching a higher ASP. That fact also means that Mac buyers will be happier with their purchase and have a more favorable impression of Mac OS X because they're running it on a better system. That's all obvious stuff. However, selling people cheap laptops that don't work well, and then demonstrating a fake “new operating system” that appears to work well when running on a faster machine full of RAM is simply a dishonest bait and switch scam. Wilcox does nearly admit that PC makers are already stretching their credibility as they attempt to sell cheap boxes based on price alone, citing Baker as saying, “We aren't seeing any particularly substantive moves down in price on the Windows side, either in desktops or notebooks.” PCs can't get cheaper because they're already unprofitable and consumers are already disgusted with their performance when running the increased overhead of Vista. Wilcox also sets up a tilted comparison between a Dell PC desktop with integrated graphics and an iMac with dedicated graphics and claims a price advantage for Dell, although noting that, while “Dell offers more for less than the iMac,” “that 'more' also means Windows Vista, which won't satisfy some shoppers.” Why Aren't Shoppers Satisfied with Vista? Like Microsoft, Wilcox and his Windows Enthusiast pundit friends can't seem to decide if Vista has any real problems or if it's all just an unfair taint suggested by Apple's Get a Mac ads. However, while Apple has taken shots at Vista's incompatibility with printers and other hardware and its scarce updates that have been few and far between over the last year and a half of its being on the market, Apple also notes in its Get a Mac ads that Macs can run Vista, and can run it faster than PCs. So Apple isn't inventing and publishing false reports on Vista, it's merely advertising its Mac hardware as superior to PCs. The Vista flaws Apple's ads have referenced are flaws Microsoft itself has admitted to its partners, so the Get a Mac umbrage frequently voiced by Windows Enthusiasts is both hypocritical and ridiculous. However, in the Mojave Experiment, Microsoft downplayed those well-known faults by only carefully demonstrating certain features on a high end machine, and without actually exposing Mojave/Vista users to 'a lot of things Vista broke,' 'printers that didn't work', or 'games that felt sluggish.' It Can't Even Print. In response to complaints that Vista doesn't work well with existing PC hardware, Microsoft's Mojave website says that “the Windows Vista Compatibility Center lists compatibility status for over 9,000 products (5,500 devices and 3,500 software programs).” It even notes 2,000 printers, 200 scanners, and 500 cameras specifically. That sounds good until you realize that Apple ships support for over 3,100 printers in Mac OS X Leopard, a product that is targeted primarily toward education and consumers and which is not expected by users to run on any old hardware that might be in use by PC users. Vista is supposed to run on 95% of the world's PCs, and yet it doesn't even match the printer drivers that ship with Leopard, a number which does not include all of the third party drivers available for the Mac. Oh, but there's more. Not only did Microsoft dance around the truth to feed its Mojave Experiment participants a carefully controlled stream of garbage, but it also inadvertently revealed more serious problems related to Vista, which I'll consider in the following article. Did you like this article? Let me know. Comment here, in the Forum, or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast (oh wait, I have to fix that first). It's also cool to submit my articles to Digg, Reddit, or Slashdot where more people will see them. Consider making a small donation supporting this site. Thanks!

• RoughlyDrafted Magazine on August 13, 2008
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Myths of Snow Leopard 7: Free?!

Daniel Eran Dilger Apple's limited comments on Snow Leopard, the next version of Mac OS X due in about a year, have opened the playing field for rampant speculation. Here's a look at a series of myths that have developed around the upcoming release. The seventh myth of Snow Leopard: Apple will have to give Snow Leopard away for free if it lacks many marketing features. The idea of Snow Leopard being a maintenance release rather than a feature release has resulted in speculation that the company should or perhaps will have to offer it for free or at a greatly reduced cost. This is probably not the case, for a number of reasons. 1. Selling Snow Leopard for Less Would Make Selling 10.7 at Regular Price Rather Difficult. If Apple sold Snow Leopard at a steep discount as an apology for not adding fluff features, it would deflate the perceived value of Apple's operating system software. Additionally, the main group to benefit from Snow Leopard will be owners of recent, 64-bit Macs who are likely to willingly pay full price to fully unlock the power of their existing hardware. Everyone else is just as likely to just wait for Snow Leopard until they buy their next new Mac and are able to take full advantage of its advances. Snow Leopard's relatively limited audience means that any reduction in its price would have a limited impact on boosting retail sales volumes. At the same time, it would only make selling the next release of Mac OS X harder while offering less incentive for users to buy a new Mac. Keeping the retail price of Snow Leopard unchanged wouldn't help set any new sales records for a reference release of Mac OS X, but would help induce sales of new Macs, because buyers would think of new systems as including an additional $129 of software for free. 2. Apple Doesn't Actually Make Much Money From Software Anyway. Before Snow Leopard's details were released, I suggested that Apple would likely ship a full price reference release around the first quarter of 2009, if for nothing else, just to continue raising the funds needed to invest in regular new operating system development. Unlike Microsoft, Apple only earns direct profits on retail boxes of Mac OS X; it does not sell bundled licensing to other hardware makers. Microsoft's software licensing model allowed it to continue making money on sales of Windows XP for years despite minimal feature enhancements over the last half decade. Without a Microsoft-style monopoly to automatically sell its software, Apple is forced to actually deliver a product that is good enough to convince the market to go out of its way to choose to buy it. While Apple's Mac OS X doesn't generate direct licensing revenue, it does add value and differentiation to the company's machines. Apple works hard to trumpet the retail interest in Mac OS X at every release, but the painful secret that Apple itself would never advertise is that its software sales are not incredibly profitable, particularly in comparison to its Mac hardware sales. In the final quarter of last year, Apple brought in $9.6 billion, almost entirely from Mac and iPod hardware. It “only�? earned $170 million from sales of Leopard in the final quarter; subsequent retail box OS sales quickly dropped down to $40 million in the next quarter of early 2008. Of course, pulling in those extra millions in software upgrades is a great bonus. However, Apple is not a software vendor; it is only making some extra cash on the side for the OS it develops primarily to sell its new hardware. As Steve Jobs once observed, Apple's OS sales are like “printing money.�? Apple sells Mac OS X at retail only to help recoup the money it invests in developing it. If it were wildly profitable to sell the OS, Apple wouldn't be silent on the issue of licensing Mac OS X to other hardware makers. Apple hasn't even entertained the idea of licensing Mac OS X on systems in markets it does not compete in. Mac OS X exists to sell Macs. That indicates that, outside of bragging rights, Apple doesn't desperately need to work on delivering volume sales of Mac OS X at retail. Apple isn't selling Mac OS X against Vista, it's selling its Macs against Windows PCs. The only good reasons to lower the price of a product is to: induce volume sales to broaden its installed base. Apple is doing this with the new $199 iPhone 3G, as Sony has been with its subsidized PlayStation 3. However, Mac OS X (and Snow Leopard in particular) has a finite market, so again, dropping the price would only cut into revenue dramatically while generating minimal additional sales. Anyone who really wants it is going to pay whatever reasonable price is being charged. compete against direct or indirect rivals. Mac OS X has no direct rival. It has no indirect pricing pressure from Windows because nobody directly chooses one OS over the other in a shopping comparison. The retail price of Mac OS X does not add any cost to a new Mac versus a PC, and Windows considerably more expensive already anyway. Apple doesn't have to deeply discount Snow Leopard to reach customers. Why OS X is on the iPhone, but not the PC 3. Apple Would Rather You Buy A New Computer Than Give Away Mac OS X. Most of Snow Leopard's features announced so far exploit the potential of new and forthcoming hardware. The primary purpose of Mac OS X is to distinguish Mac hardware from PCs. Selling it at retail only helps Apple pull in some extra revenue from users who are not ready to buy new hardware. There are two alternatives to buying a Mac OS X upgrade at retail: not upgrading at all, or buying a new Mac. Mac OS X retail sales only compete against users' price sensitivity; it has to be priced cheap enough to sell users on buying it, because it is a largely optional purchase. Apple would happily sell users a new Mac rather than a Mac OS X upgrade. However, the company would just as happily sell full price Mac OS X upgrades to everyone it can, ensuring that those Mac users remain satisfied and more likely to buy a new Mac in the future. Deferring a $2000 computer sale to sell a high margin $129 software product is not a problem. Delaying the potential purchase of a new Mac by offering a $20 upgrade that costs $10 to distribute makes no sense. While most people who are interested in buying a new computer aren't going to delay their purchase just because they can buy the newest version of Mac OS X at retail, giving Snow Leopard away certainly wouldn't help sell new Macs in the near term, and doing that at cost or at a loss would be ridiculous. The last time Apple delivered a free reference release of Mac OS X was 10.1. That was a follow up to the original commercial debut, and mostly supplied missing features and stability fixes to help bring Mac OS X closer to parity with the classic Mac OS. Apple couldn't sell it at full price because nobody was even using Mac OS X at the time beyond a small group of early adopters. The company desperately wanted to induce adoption by any means necessary, so giving away a substantial reference release of Mac OS X made sense. It wasn't until the following 10.2 Jaguar release that Mac OS X became Apple's mainstream OS. It now makes no sense for Apple to give away its development work because it isn't in the same desperate position. Mac users who aren't going to upgrade unless the software is nearly free are not worth Apple's attention. They are likely to just steal it anyway. 4. Apple Doesn't Bother Trying to Sell to Thieves. Apple sells Mac OS X just as it retails music: it markets both products toward premium buyers at reasonable prices rather than attempting to force thieves to pay for a product they only want to steal. Microsoft failed in the music business with Windows Media because it tried to do just the opposite: force everyone to pay through the nose for expiring subscription music by using egregious DRM. Microsoft couldn't force the thieves to stop stealing, and premium customers weren't interested in being treated like thieves. Microsoft used that strategy because it has seemed to work well on the Windows PC desktop. However, that is entirely due to the company's monopoly position. Consumers don't have a choice in PC operating systems, and that lack of competition is reflected in Microsoft's predatory pricing: it sets the retail price of Windows desktop upgrades between $200 to $500 Microsoft can set a high retail price because it knows most people will just get Windows unwittingly with new hardware; the company reports that 80% of its Windows revenues come from people buying new PCs with an OEM copy of Windows on it. Relatively few people ever buy Windows at retail, which is part of the reason why the Vista launch parties Microsoft attempted to throw simply fell flat. Premium, price-insensitive users who need to buy a retail license will bite the bullet and spend whatever Microsoft charges. The company can also offer special deals to anyone that might be price sensitive, removing any pricing liquidity from the overall market. It's nice work if you can get it. Microsoft got it in part through “first one is free�? marketing that leveraged software piracy. Throughout the 90s, Microsoft tolerated piracy of Windows because it helped the company achieve market dominance. Now that it holds an overwhelming monopoly on the PC operating system market, it has started policing its software licensing with online activation and its Windows Genuine Advantage spyware. Apple's smaller market means piracy doesn't really benefit the company. Even so, it does not police Mac OS X licensing with DRM, activation procedures, or spyware because it only sells to premium customers rather than trying to tax the entire PC market. The majority of Microsoft's customers are thieves that would only pay for Windows if they had no choice. Apple's customers have voluntarily chosen to buy from the company; offering them regular advances at consistent prices allows the customer to decide if they want to upgrade or not. Microsoft's Plot to Kill QuickTime 5. Snow Leopard Will Be Worth More than $129 To Those Likely to Buy it. The key benefit Apple has marketed in Snow Leopard so far is Exchange Server support. How much is that worth, and who would pay for it? Microsoft charges Mac users $500 (a whopping $350 premium over the regular version) for the version of Office 2008 that includes support for Exchange. Why is Microsoft ripping off the customers who are using its own server software? Microsoft knows that the organizations who have chosen Exchange are not price sensitive. Those customers already pay absurd licensing costs for its server and client access licenses, so they are likely to also shell out crazy amounts of money for a slightly less awful version of the Entourage Mac email client. If Microsoft can get away with charging businesses and education users $500 for Exchange support in Office 2008, Apple will have no problem selling those same customers an overhauled operating system that adds Exchange support for Mail, iCal and Address Book for just $129. What about home users who have no need for Exchange? Outside of those that want to buy every new release, that segment of the market is unlikely to buy Snow Leopard. We know this because they largely didn't pay for Leopard. Road to Mac Office 2008: an introduction Road to Mac Office 2008: Entourage ‘08 vs Mail 3.0 and iCal 3.0 Who Bought Leopard? In 2009, Apple will have an opportunity to sell Snow Leopard for $129 to an installed base of around 23 million Intel Mac users. Dropping the price won't make much of a difference in how many copies it sells because people who want or need it will pay $129. The real secret is that only a minority of Mac users actually upgrade at retail. Consider the Leopard launch. Apple's $170 million in Leopard revenues reported in its debut quarter is only enough to buy 1.3 million copies at retail price. A third - a surprisingly high percentage - of retail packages were family pack versions, meaning Apple actually sold fewer boxes than that at full price. Of course, lots of those retail boxes where sold to retailers at lower wholesale prices and then marked up by the retailer. (Incidentally, Information Week's Antone Gonsalves reported that Apple sold “170 million copies of Leopard,�? which would be more than the number of Macintosh computers the company has sold over the past three decades. Several other sources repeated the same idea. “Operating systems traditionally sell very well the first quarter they are available, but then loose [sic] steam very quickly. Apple sold 170 million copies of Leopard in the first fiscal quarter, but that number dropped to 40 million last quarter, the CFO said.�?) Apple actually reported selling 2 million copies of Leopard in the first weekend. It did not continue to report how many additional copies it sold after that initial figure because Apple didn't want to highlight the fact that most of the people who bought Mac OS X in the quarter did so over the first weekend. That weekend figure also probably included shipments to stores, further padding the number with marketing muscle. More recently, the company indicated that of the 27.5 million installed base of Mac OS X users, 37% are running Leopard. That would be 10.1 million Macs running Leopard. Apple has sold roughly 4.6 million new Macs in the last three quarters with Leopard pre-installed. That means “only�? 5.5 million Macs have been upgraded to Leopard. But Apple didn't earn something like $709 million by selling 5.5 million boxes for $129 or more. It only reported $210 million in total revenues in Leopard sales over first six months, and has sold less than $40 million worth of Leopard since then. That's less than $250 million in total retail software sales. Clearly, a lot of retail boxes are getting applied on multiple Macs using the family pack or are simply being installed on multiple Macs contrary to the license agreement. Big surprise: lots of people are stealing Leopard. So of the 27.5 million Macs that perhaps could be using Leopard, “only�? 37% have been upgraded, and about half of those got Leopard by buying a new Mac. That's great compared to the percentages of retail software upgrades for Windows, but indicates that setting a lowball price for Snow Leopard wouldn't have a major impact on new sales; it would only leave money on the table that Apple could otherwise earn from a reasonable charge for its software work. There's another angle on the value of Snow Leopard: it's not just an operating system. The next myth will take a look. WWDC 2008: New in Mac OS X Snow Leopard Myths of Snow Leopard 1: PowerPC Support — RoughlyDrafted Magazine Myths of Snow Leopard 2: 32-bit Support Myths of Snow Leopard 3: Mac Sidelined for iPhone Myths of Snow Leopard 4: Exchange is the Only New Feature! Myths of Snow Leopard 5: No Carbon! Myths of Snow Leopard 6: Apple is Out of Ideas! Myths of Snow Leopard 7: Free?! Cocoa for Windows + Flash Killer = SproutCore Apple’s other open secret: the LLVM Complier Ten Big New Features in Mac OS X Snow Leopard I really like to hear from readers. Comment in the Forum or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast! Submit to Reddit or Slashdot, or consider making a small donation supporting this site. Thanks!

• RoughlyDrafted Magazine on June 30, 2008
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Leopard and the History and Future of Mac OS X on PowerPC

Daniel Eran DilgerHow long will Apple continue to support existing models of Macs in the latest version of Mac OS X? Previous versions of Apple’s OS have drawn the line for officially supported Macs based on practical considerations, rather than just being arbitrary or artificial. Here's what the past suggests for Mac OS X Leopard and the version that comes after it.The Post-Copland Crisis.Apple carried along official support for the 1986 Mac Plus through Mac System 7.5.5 in 1996. That established an expectation for Mac users that any new Mac System Software would be able to run across a decade long generation of old hardware. Further, Apple had only begun officially selling System 7 as a retail product a few years earlier; many Mac users continued to think of the Mac operating system as something that was available for free, as it had been in the past. That unreasonable support expectation combined with the sense of entitlement held by Mac users had helped to complicate Apple’s mid-90s failure to deliver Copland as a successor to System 7 between 1993 and 1995, and would continue to dog the company in its plans to provide a significant system software update after Copland was mothballed. Faced with the task of maintaining full backward compatibility for both existing applications and a wide range of hardware--but without any assurance that a significant number of Mac users would actually pay for the upgrade--it’s no wonder why Apple was stuck at System 7 for over a decade (Mac OS 8 and Mac OS 9 were only retoolings of the System 7 operating system released in 1991), and why plans to completely overhaul System 7 with Copland and Gershwin failed.If Apple had the luxury of operating outside of a real market economy and could simply rely on guaranteed future sales at high retail prices, it could have plowed along for twice as long and eventually released something, as Microsoft did a decade later with Windows Vista. As Windows Enthusiasts like to point out, Vista will eventually get deployed no matter how bad it is. [The Secrets of Pink, Taligent and Copland][Has Leopard Fallen into a Copland-Vista Conundrum?][SCO, Linux, and Microsoft in the History of OS: 1990s]Spindler’s Complications.By 1990, Apple CEO John Sculley had recognized that Apple needed to set a reasonable minimum hardware threshold for its operating system releases and to figure out a way to get Mac users to fund the expensive operating system development the company was doing. At that time, both Microsoft and IBM were charging PC users around $100 for retail copies of Windows or OS/2, neither of which were even really usable.Figuring out how to actually accomplish those goals never got done at Apple. Instead, Sculley’s successor Michael Spindler attempted to imitate Sony by releasing ranges of Mac hardware under a variety of vaguely Latin sounding names--Quadra, Centris, and Performa--and a series of confusing, nondescript model numbers. Starting in early 1994, Apple also underwent a complex transition from its original 680x0 Macs to PowerPC hardware. Since much of the original Mac software was written in assembly language, the transition relied on emulation of the existing Mac System Software, which further complicated efforts to deliver significant new features without breaking existing software or prematurely cutting off support for existing machines. Non-PowerPC Macs continued to be sold into 1996.Spindler’s Apple also began plans to license the Mac software to other hardware makers in late 1994, including APS, Bandai, DayStar, Motorola, Pioneer, Power Computing, Radius, and UMAX. That effort skimmed off the cream of Apple’s profitability and handed it to the cloners, leaving Apple to service the low end of the market at Sears with its Performas while also funding the development of nearly profitless Mac System Software to support an increasingly wide range of hardware. [Why Apple Failed]Simplifying the Mac Hardware Lineup Around the G3.When Steve Jobs returned to Apple in 1997, the company's product line was all over the place, although efforts were already underway to simplify things. Apple had only just discontinued the last of its 680x0-based Macs a year earlier. Under Spindler replacement Gil Ameilo, Apple had also scraped together a "Unity" release of System 7, newly rebranded as Mac OS 7.6. That release officially extended support back to all "32-bit clean" Macs, which included the eight year old Mac IIci from 1989.The installed base of Mac hardware not only spanned across two hardware platforms--680x0 and Power PC--but nearly each individual Mac model from Apple had also used its own highly customized and often uniquely quirky hardware design. The cloners were also introducing subtle differences in their own machines, too.Despite using the very modern PowerPC processors and Open Firmware, Macs in 1997 still incorporated old Mac ROMs to maintain software compatibility with the existing Mac OS. After taking control of Apple in the middle of that year, Jobs announced the release of a highly simplified product line using the new G3 processor. The G3 was such a significant leap over earlier PowerPC processors that even the entry level G3s were faster than the top of the line models Apple had been selling. So while Apple had a confusing array of eight different major PowerMac models at the beginning of 1997, by the end of the year it only had two: a desktop G3 and a tower G3. It also shipped a G3 PowerBook.[How CPR Saved Apple]Mac OS X 10.0 - 10.2: G3 Only.The introduction of the G3 processor created a clean line between it and the wide array of odd PowerPC hardware designed prior to 1997. The G3 also signaled the end of the line for the various models built by Mac cloners, who all refused to license new versions of the Mac OS at terms Jobs deemed reasonable. The G3 was also the first PowerPC processor optimized to run Mac software. That made it an easy minimum target for Mac OS X, which remained in development through 2001. In the meantime, Jobs bought out Power Computing--the largest Mac cloner--for $100 million, and terminated other clone agreements by releasing Mac OS 7.7 as “Mac OS 8�? in mid 1997. That revision also became the first edition of the Mac OS to really be successfully sold at retail; over 1.2 million copies were sold within the first two weeks. The next fall in 1998, Apple released Mac OS 8.5, which was the first version to be PowerPC-only, limiting support to Macs sold over the last five years. In 1999, Apple shipped Mac OS 9. The new Apple had proved it could plan, ship, and sell regular releases of an operation system. The next task would be shipping Mac OS X as a major new leap past the classic System 7.Between 2001 and 2002, the 10.0 to 10.2 versions of Mac OS X limited support to the G3 desktop Macs, including those first introduced in late 1997. It did not support the original PowerBook G3 unveiled alongside the G3 desktops however. The first supported PowerBook was the "WallStreet" revision introduced in May of 1998. That maintained the roughly five year support window for machines to be updated with new versions of Mac operating system software. [Apple Sells 1.2 Million Copies of Mac OS 8 - Apple][Leopard, Vista and the iPhone OS X Architecture]Mac OS X 10.3: New World Macs Only.After moving its hardware line to the G3, Apple next delivered a revised "New World" platform which modernized the Mac's hardware and removed its old hardware ROMs, replacing them with “ROM in RAM�? software loaded from disk. The first New World model was the first iMac in 1998. The beige G3 Macs from 1997 were replaced with a single new "blue and white" G3 in early 1999, which used the same translucent plastic as the iMac. Apple shipped its first "New World" laptop in the Lombard PowerBook G3, distinguished by its translucent bronze keyboard. In July 1999, Apple released the iBook.The release of Mac OS X Panther 10.3 in 2003 extended support back to Macs with G3 processors and built-in support for USB. This wasn't due to an actual requirement for USB, but rather a shorthand way to describe a cutoff for the support of the significantly different architecture of "Old World" Macs designed prior to the iMac, as all New World Macs also provided support for USB. Panther retained a roughly five year support window for existing Mac models.Mac OS X 10.4: Modern New World Macs Only.In 2004, Mac OS X Tiger 10.4 retained support for most New World Macs using G3 processors, but required support for built-in FireWire. Again, this wasn't related to a need for FireWire ports, but rather a way to exclude support for the earliest of the now five year old New World Macs, which Apple decided would not run Tiger acceptably, including: the original 1998 iMac.the original 1999 iBook.the 1999 "Lombard" PowerBook G3.These five year old machines can still run Tiger using XPostFacto, a third party enabler designed to force Mac OS X to run on earlier systems. However, significant differences in their hardware--coupled with their limited performance--prevented Apple from officially supporting them.In the case of the Lombard PowerBook, its DVD drive was never supported for movie playback under Mac OS X because the system did not have the power to decode DVD video in software; under Mac OS 9, it relied on a hardware decoder. Rather than holding up Mac OS X to develop custom support for the obsolete hardware decoder in the now half-decade old Lombard PowerBooks, Apple told its users to continue using the playback software it came with. [XPostFacto: OS X for Legacy Macs - Other World Computing]Mac OS X 10.5: 867 MHz Processor Required.For Leopard, Apple is specifying an 867 MHz G4. That excludes support for the now functionally obsolete G3s, and draws a line down the middle of the 2001 "Quicksilver" PowerMac G4s, excluding support for the 2001 G4 Cube and the first three generations of the Titanium PowerBook G4 up to late 2002. This again maintains official support for five to six years of Mac models.This break roughly corresponds to the arrival of the G4+, a revised version of the G4 with support for L3 cache and improvements to AltiVec. It is also near the line for supporting Quartz Extreme and the higher end Core Image, both of which are technologies used to delegate graphics work to the video card. However, Core Image is not a requirement for using Leopard; such a requirement would exclude support for all G4 desktops and laptops prior to 2003. Leopard Looms Large.That indicates Apple is being fairly liberal in officially supporting older models in Leopard. The obvious reason for this is that Apple wants to sell Leopard to as many Mac users as possible, even more than it wants to use Leopard to sell new Macs. Between 2001 and 2002, Apple sold just over 6 million Macs. From 2003 to the present, Apple has sold about 23 million Macs. Apple wants to target the broadest possible market for Leopard, so excluding support for older machines is done with some hesitation. By extending support back into 2001, Apple is selling to an audience of nearly 30 million versus 23 million.At the same time however, the likelihood of selling retail copies of Leopard to users of older Macs begins to drop as six year old machines go out of service or are no longer viewed by their owners as needing brand new software. This spring, analysts estimated an installed base of around 22 million active Mac users, an increase of 6 million over their figures from 2005.[Mac install base estimated at 22 million pre-Leopard - AppleInsider][Market Share vs Installed Base: iPod vs Zune, Mac vs PC]Is Leopard the Last Hurrah for Power PC Macs?The reports of PowerPC's obsolescence have been greatly exaggerated. Last year, the rumor was that Leopard would be released only for Intel Macs. This year, with Leopard looming on the horizon, the new rumor is that Mac OS X 10.6--possibly named Lynx or Cougar--will be Intel-only. However this is only uninformed speculation. When this rumor came up earlier about Leopard, I posted the article, “Unraveling The PowerPC Obsolescence Myth.�? It pointed out that Apple would not release an Intel-only Leopard for an audience of the roughly 3 million new Intel Macs sold in 2006 when it could reach an installed base of around 20 million Macs with a Universal Leopard.It noted, “If Apple continues to sell new Macs at current rates, it will be 2008 before Intel Macs begin to outnumber PowerPCs, and that assumes that every year, 4 million old PowerPC Macs will be destroyed. There will be a significant proportion of PowerPC Macs still buying software well into 2010, and the market will accommodate them.�?[Unraveling The PowerPC Obsolescence Myth]Why the Mac OS X Backward Compatibility Window May Increase.Apple’s Mac OS support troubles back in 1996 related to the support of multiple platforms, a wide variety of different models, and an inability to effectively market the Mac OS. Those issues are no longer factors today. Despite Apple’s maintenance of dual platforms since the transition to Intel began in 2006, technology has erased the barrier as a real problem.The majority of the installed base of around 22 million Macs is PowerPC; less than 10 million are Intel Macs. Apple has started to sell dramatically more new Macs at a faster rate over the last couple years--displacing the PowerPC majority more rapidly--but there will still be a lot of PowerPC Macs well into 2010. Worrying about 10.6 or even 10.7 being Intel-only shouldn't be among anyone's greatest concerns. By 2009, the likely ballpark release date of Leopard's successor, the trailing end of officially supported Macs would include over 8 million PowerPC Macs sold since 2004, even more machines--and more recent models--than Apple is targeting now by reaching back into 2001 to support QuickSilver G4s in Leopard. Further, supporting machines from 2003--including the first G5s--will be no difficult stretch, because the Mac architecture didn't change dramatically between 2003 and 2005 in the way that it rapidly did between 1997 and 2000. In addition, Mac OS X hardware dependancies have been designed to degrade gracefully. For example, the acceleration framework and Core Graphics libraries make use of specialized hardware if available, or simply run on the general purpose CPU if it isn’t.It's also interesting to note that prior to 2000, Macs weren't sold with Mac OS X because it didn't yet exist. That means earlier versions of Mac OS X supported years of Macs that were never really designed to run it, while Leopard still supports the vast majority of the machines anyone ever bought with the expectation to actually use Mac OS X. New generations of Mac OS X will have fewer reasons to exclude support for existing hardware, leaving the support line tied to practical performance.[Why Apple hasn't used Intel processors before]Intel-Only Not Necessary.Around 11 million Macs were sold between 2003 and 2005, and all of them were PowerPC. It would be foolish for Apple to simply exclude that audience in the next revision of Mac OS X without good reason. As it works out, there really isn't any good reason for Apple to ditch PowerPC. Apple's Universal Binaries architecture makes it relatively easy to maintain support across multiple platforms. It's not like the move from Motorola 680x0 classic Macs to PowerPC, where old 680x0 software was emulated at significant cost on PowerPC, and new PowerPC code couldn't run at all on 680x0 Macs. That situation left developers to wonder which they should invest their support in and for how long. Universal Binaries means there isn't any tough choice to make.Universal Binaries not only support PowerPC and Intel, but also make supporting 32 and 64 bit architectures easy. Leopard supports all four Mac platforms in the same software release:32 bit PowerPC G464 bit PowerPC G532 bit Intel64 bit Intel Microsoft faces big problems in migrating its users to 64 bits, because it has no seamless architecture to waltz its 32 bit Intel users onto 64 bit hardware. Instead, Windows users have to obtain a separate 64 bit edition of their operating system, new 64 bit drivers, and new 64 bit applications. Supporting both is problematic, and deploying software across both is also trouble. Even Microsoft hasn’t delivered its portfolio of applications for its 64 bit versions of Windows. Microsoft faces enough troubles selling Vista, let alone its deferred plan to deal with 64 bits and EFI at some point in the future. Apple already has both issues covered, allowing it to concentrate on more interesting tasks. [How Apple’s Firmware Leapfrogs BIOS PCs]Applications that are Intel-Only.For Apple and third party developers using Apple's Xcode tools, supporting both Intel and PowerPC architectures is really no more difficult than supporting just Intel Macs. In fact, Apple has also ported Mac OS X to the ARM architecture for use in the iPhone and the iPod Touch, demonstrating that it can flex its multi-platform muscle in several directions, not just as one-time, disposable transition plan. Universal Binaries isn’t a crutch, its a powerful deployment technology.There are only three types of developers that will have any reason to deliver Intel-only Mac apps:Companies like Adobe, which base their applications on their own custom, internal cross platform architecture. Since Adobe maintains its own system that is based on Intel-centric development, its new apps such as Soundbooth aren't ever going to appear for PowerPC. If it used Xcode’s Universal Binaries, this would not be a problem. Xcode doesn't target Windows though (at least not in a way Adobe can use!), so Adobe rolled its own system.
Software designed for Windows and ported to Intel Macs using a WINE-like engine. This is how EA is porting its new games to the Mac. They are actually Windows games running on a thin portability layer that emulates the Windows APIs. Since games don't integrate into the desktop UI, a full Mac port isn't very valuable for users or worth doing for the developer, particularly since the Mac gaming market is still pretty small. Porting over Windows games is far faster and keeps new releases in sync so that Mac gamers will have access to new titles sooner, and won't miss features such as network play. 
Environment emulators and other software tied directly to the x86 architecture, including Parallels. These can't be ported to PowerPC for the same reason that it makes no sense to port Virtual PC to Intel. Apart from running Windows--which is tightly bound to the 32-bit x86 architecture--there is really very little software that needs to run on a specific processor.For most other software, including the vast majority of what makes up Mac OS X, it really isn't difficult to deliver both PowerPC and Intel versions, so as long as there are PowerPC Macs around, there'll be PowerPC software. That makes it extremely unlikely that Apple would drop support for PowerPC in the next generation of Mac OS X after Leopard.Maintaining and Growing the Mac Installed Base.What about the argument that Apple would prefer to “force�? users to buy a new Mac to get the latest system rather than simply upgrade their existing hardware? Consider that Apple’s Mac profit margins are around 20% or less, while its Mac OS X margins are closer to Microsoft’s 80% Windows margins. [Office Wars 2 - Microsoft’s Outrageous Office Profits]Mac users paying to upgrade to Mac OS X are likely to buy a new Mac eventually as a replacement, so Apple’s delaying that hardware sale for a profitable software upgrade makes more sense than forcing existing Mac users to go out and buy new hardware, which might involve comparing a new Mac against a PC running Windows.The more Macs that can run the most recent version of Mac OS X, the more attractive the target is for third party developers. Apple wants to maintain the majority of Mac users on the latest version of its software. In contrast, Windows Vista is competing against Windows XP, and the fact that Microsoft only earns 20% of its revenues from (the much more expensive) retail box sales indicates that most PC users upgrade when buying a new PC. More Mac users pay to upgrade their software.That fact contributes toward making the Mac platform far more valuable than Windows; despite having only 3% market share of the entire world’s production of PCs, Apple makes more money on hardware sales than Dell with its 15% share of the market, and--after including Microsoft’s tremendous losses from its non-monopoly businesses--made half as much money in software as Microsoft did with its 98% share. Windows Enthusiast prefer not to think about this.Even stripping Apple of its iPod revenues, which PC pundits love to do, the company still earned $4.4 billion on its Macintosh business last year, over a third as much Microsoft brought in from its entire Windows, Office, and server operations combined. Apple’s 2% of the PC market doesn’t seem so small anymore. [Can Apple Take Microsoft in the Battle for the Desktop?][Market Share vs Installed Base: iPod vs Zune, Mac vs PC]What do you think? I really like to hear from readers. Comment in the Forum or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast! Submit to Reddit or Slashdot, or consider making a small donation supporting this site. Thanks!

• RoughlyDrafted Magazine on September 30, 2007
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Will Google's Android Play DOS to Apple's iPhone?

Daniel Eran Dilger Today's broad array of smartphone operating system contenders are offering lots of potential answers to a problem that only requires one. It appears the market has two options ahead: either pool generic hardware makers behind a single operating system and deliver a smartphone marketplace that resembles the Windows PC market, or watch them fall to a dominant leader and have a smartphone market that resembles Apple's iPod ecosystem. This decision isn't going to be made by a class of intellectual elite, or by government mandate. it's going to be made by the market itself. Here are the factors that will influence the outcome, either marginalizing Apple's iPhone into a niche as the company has twice experienced previously at the hands of DOS in 1981 and Windows in 1991, or positioning it as the dominant leader as Apple has achieved for itself with the iPod since 2001. The third segment in this series looks at Google's Android and the Open Handset Alliance as a possible “DOS-attack” against Apple's iPhone. Subsequent segments will look at Nokia's newly opened Symbian and other mobile contenders challenging the iPhone. Will the iPhone Meet its Match from a Modern Day DOS? Will Windows Mobile Play DOS to Apple’s iPhone? Will Google's Android Play DOS to Apple's iPhone? Will Symbian Play DOS to Apple's iPhone? Google Acquires Android. In 2005, Google purchased a startup named Android, which had been in business for nearly two years. The secretive startup was known only to be working on software for mobile phones. It was being run by a who's who of mobile industry veterans, including Andy Rubin, the founder of Danger. Rubin had earlier worked at WebTV along with Chris White and Andy McFadden, both of whom had also joined Android. Richard Miner of Orange and Nick Sears of Tmobile also brought their mobile provider experience to Android. At the time of the acquisition, Google didn't announce any plans for Android and instead only told BusinessWeek, “We acquired Android because of the talented engineers and great technology. We're thrilled to have them here.” It appeared that Google was only going to be expanding its search services for mobile phone users, along the lines of the Google SMS answer system it had recently released. Google Buys Android for Its Mobile Arsenal - BusinessWeek Windows XP Media Center Edition vs Apple TV: The Fall of WebTV The GPhone Myth. As reports began to leak out about talks between Google and hardware makers throughout 2007, rumors began to fly about “the GPhone,” a competitive offering that was supposed to take on the iPhone. Some phone enthusiasts hoped Google would jump in to rescue the struggling OpenMoko project and turn it into a viable project that could attack Apple's new smartphone. In October 2007, I printed the Great Google GPhone Myth, taking apart the idea that Google would be directly competing against the iPhone, and describing that Google was really working on a free alternative to Windows Mobile as a conduit for getting its search and related services on a broader variety of mobiles. Google's services were already on the iPhone. In November, Google played its hand: it had organized a consortium of companies called the Open Handset Alliance to develop open standards for mobiles. The first product from the group would be Android, a mobile operating system built on the Linux kernel. Google wasn't getting into the phone handset business at all; it was only making sure that its mobile search products would not risk being marginalized by the threat of Windows Mobile on phones in the same way Microsoft had been working to leverage its PC monopoly to push Google search off the Windows desktop. The Great Google gPhone Myth Introducing Android: Leader of Linux. Two weeks later, Google released an early version of the Android software. On top of a Linux kernel, Android uses a specialized version of a Java Virtual Machine that takes Java language code and turns it into what Google calls “Dalvik bytecode” rather than Java bytecode as a standard JVM would. This allows Google to leverage existing and familiar Java language tools without paying Sun for a Java license. Like Mac OS X and its fraternal iPhone OS, Android includes a variety of open source libraries, including SQLite and WebKit. On top of that, Google developed a series of frameworks that handle the tasks Cocoa Touch does on the iPhone. Android also bundles a set of applications. While Apple adapted its existing Mac OS X to work in a mobile environment to create the iPhone OS, Android is more like a customized Java environment running on a specialized mobile Linux variant: elements of maturity in an otherwise experimental new platform. What is Android? -Google Android was by no means the first mobile OS using Linux. Both Palm and its amputated ACCESS software arm have Linux-based mobile platforms. Nokia has Maemo, which it uses in its Internet Tablets, and also recently acquired Trolltech and its Qtopia mobile Linux platform. Motorola has teamed up with MontaVista Software to use its Mobilinux. Intel created the Moblin project for mobile Linux, aimed at Internet devices. Google's OHA also isn't the first consortium to attempt to standardize a mobile Linux platform. The OSDL started the Mobile Linux Initiative to define requirements for hardware; the Consumer Electronics Linux Forum (CELF) then worked to define various phone profiles aimed at the Japanese market; the Linux Phone Standard (LiPS) Forum tried to do the same thing in Europe. In 2007, LiPS was folded into the new LiMo Foundation, along with the OSDL. All of these committees have had some overlap and some complementary features. Several of Google's OHA partners are also LiMo members, including NTT DoCoMo, Wind River, and Motorola. So why didn't Google just join LiMo? “LiMo, very candidly, wasn't moving fast enough,” OHA board member John Bruggeman told CNET. Google hopes to herd the Linux cats into a progressive, structured platform that can battle against Symbian and Windows Mobile to succeed as the new DOS of smartphones. Will Google fracture or unify mobile Linux? The Presumption of the Necessity of DOS. The previous segment examining Windows Mobile pointed out how the PC industry as a whole assumed that Microsoft's desktop Windows monopoly would easily take over dominance in the MP3 player market, pushing Apple into a niche position. This was expected because DOS had pushed Apple's early computers into a reduced role starting in 1981, and Microsoft had repeated this again in 1991 when the DOS world migrated to Windows, effectively pruning Apple's Macintosh into a Bonsai platform. The inability of one company to dominate any product category has been frequently repeated by PC industry pundits as a given, despite the fact that history is full of examples of this happening. Sony dominated personal music players for two decades under the Walkman brand even while equally large competitors tried to push it from this position; Nintendo has similarly owned handheld gaming despite ill-fated efforts to grab a piece of its pie by products running a generic platform such as Microsoft's WinCE (Gizmondo), Linux (GP32), and Symbian (N-Gage). In fact, outside of the Windows/DOS PC, there are actually few examples of a generic platform taking over an industry. Nearly every other consumer-facing product uses proprietary platforms: car makers, stereo equipment, appliances and so on typically all use designs custom to their maker. The paradox of the Windows PC market has been that Microsoft's broadly licensed software supposedly saves hardware makers from investing in software development while ensuring compatibility, when in reality it adds significant costs to PC makers while limiting their ability to differentiate themselves. That explains why PC makers have been perpetually merging together and going out of business while Microosft has rolled in money over the last two decades. Parallel efforts to copy Microsoft in broadly licensing an operating system have regularly failed: IBM's OS/2, Apple's Mac OS, Palm's PDA OS, even Microsoft's own efforts to duplicate Windows dominance in other markets, from copy machines to PDAs to smartphones to SPOT watches to music players. The closest copy may be Symbian, but its customers are partners, not simply consumers of a generic third party's operating system as Windows licensees are. That indicates it is not necessary to duplicate the dominance exercised by Microsoft over the PC industry in the smartphone market. Google's Android and Symbian exist more as technology sharing pacts among manufacturers, but both aspire to take Microsoft's DOS role among smartphones. However, the idea that Apple's iPhone must be dethroned by a modern-day DOS, whether Windows Mobile, Android, or Symbian, is not just debatable, but does not sync with the reality of more recent events. Apple's recent history of the iPod further refutes the idea that a software analog to Microsoft is needed. The iPod Emergence: Apple & Pixo vs IBM & Microsoft. Apple's iPod in 2001 made no effort to clone the DOS business model; it actually did the opposite. When Apple entered the market, there were a number of existing MP3 devices using custom software, hardware designs, and DRM codecs. The iPod used off the shelf components to deliver a custom MP3 player using third party software, but Apple also added its own technologies: easy to use sync with iTunes, a fast Firewire interface that made uploading music far faster than the prevailing USB 1.0, and an attractive industrial design. With the iPod, Apple played the role of IBM in 1981, using Pixo's embedded operating system to enter the market quickly, just as IBM had used DOS. The difference was that Apple didn't direct any market attention toward Pixo and added a lot of value on top of that core embedded OS. A modern day Compaq couldn't simply clone the hardware and license Pixo to run on it in order to compete against the iPod, because the iPod was much more than just generic hardware running Pixo software. As the iPod developed, Pixo's role diminished and was eventually displaced. Just like IBM, Apple jumped into a new market just as demand was beginning to explode. Apple made MP3 players far more attractive to a general audience by delivering greater playback capacity than most entry level devices offered, along with an ease of use that encouraged buyers to jump in at the higher end of the market. That left Apple with not only the lion's share of the market, but also by far the most profitable segments of the market. Two decades prior, IBM badly fumbled its play with the early PC and ended up irrelevant in the PC world by the late 80s, sideswiped by Microsoft's DOS and the cloners who were licensing it in parallel, notably Compaq and later HP and Dell. Steve Jobs had witnessed that happen, and was determined to not let it happen again to Apple. Rather than being manipulated by a software middleware vendor as IBM had, Apple worked to incrementally develop the iPod market itself. After consuming the hard drive-based player market, Apple took on the Flash RAM-based market with a tiny hard drive system used in the iPod Mini, and followed up with Flash-based devices of its own in the Nano and Shuffle. This allowed Apple to progressively serve an increasingly wider market, incrementally growing upon an established foundation. With the iPod, Apple became, in effect, an IBM with its own internal Microsoft. Microsoft's Failure Despite Features. In contrast, Microsoft entered the music player market by promoting music player hardware reference designs around WinCE. However, it was unable to ship a finished design until the iPod had become firmly established around 2005. Later branded as PlaysForSure, the devices were sold by various hardware makers and all purported to support the same DRM and the same music subscription services while also offering a broader array of hardware that presented video before the iPod did, supported wireless before the iPod, and so on. Despite these unique features, all of those PFS designs still failed. Microsoft blamed the failure of PFS upon its music store and hardware partners and decided to take Apple on itself in 2006. It relaunched a Toshiba PFS player as its own device under the Zune brand, adding WiFi music sharing features and a larger display than the current Pods had. It failed dramatically as well. Did Microsoft's attempts to float a new DOS among music players fail because of Apple's success, or due to Microsoft's own problems? The failure of the Zune, which followed the iPod model rather than the DOS model, seems to suggest that Microsoft itself was to blame. Consider too that Microsoft's Windows Mobile phones, which use the same underlying operating system as its failed PlaysForSure music players and the Zune, had similarly flopped even before Apple could release a charismatic phone equivalent to the iPod. Of course, when the iPhone was released, it hit Windows Mobile hardest. The iPhone made Windows Mobile Smartphones look ridiculous and underpowered, and made Windows Mobile Pocket PC phones look clumsy and awkward, despite the fact that they both supported a variety of features the iPhone didn't, including the ability to edit documents, capture video, send MMS, and so on. Simply adding on features did not enable Microsoft to compete against Apple. The only conclusion that can be drawn from all this is that competing against Apple requires more than just having a feature arsenal. Microsoft's failures in themselves do not necessarily mean that Google's Android will fail in its attempts to float its own smartphone platform. Why Microsoft’s Zune is Still Failing Microsoft’s Zune, Vista, and Windows Mobile 7 Strategy vs the iPhone Will Google Succeed where Microsoft Failed? Microsoft's demonstrated inability to successfully enter consumer markets for MP3 players and smartphones has given observers little faith that the company will somehow turn things around in late 2009 when its next generation of devices are expected to be released. However, prior to that the first fruits of Google's efforts to build its own smartphone operating environment will arrive. Will Google's Android take over Microsoft's crown as the “DOS vendor” among smartphones? Supporters of Google's Android project point to some parallels between Android for smartphones and Windows on the PC: Android will allow hardware makers to differentiate in ways that can offer features Apple can't (or doesn't want to); it should allow software developers to offer features Apple does not allow on the iPhone; it embraces open, hobbyist experimentation in ways that Apple currently isn't; and it opens the potential for content providers that Apple is not interested in allowing. Openness is Android's key competitive feature. Will all this openness allow Google to unseat the iPhone to become the primary platform developers want to participate in, and subsequently soak up the market for third party hardware makers that Windows Mobile serves? While Google currently has no market share due to the fact that no Android phones have yet shipped, it does have broad vocal support from a variety of the same kinds of hardware manufacturers that supported DOS and Windows and helped to make those platforms successful in the desktop PC market. HTC and Android. The first Android phone is expected to be the HTC Dream; Taiwan's HTC (High Tech Computer) also manufactures Palm's Treo Pro phone as well as many of the most visible Windows Mobile devices. In addition to models produced under its own name, HTC also sells Windows Mobile devices under the Dopod brand, as well as no-name phones branded by providers, such as AT&T, Orange, Sprint, T-Mobile, Verizon Wireless, Vodafone, and others. HTC will also be building the XPERIA X1 Windows Mobile phone for Sony Ericsson. HTC was quick to throw its support behind Android despite its long term alliance with Windows Mobile. Why would it so enthusiastically support an unproven platform from a company that has no experience in consumer hardware platforms? One can only assume that HTC is not happy with the current state of Windows Mobile, and desperately wants another “DOS” to succeed where Microsoft's has so spectacularly failed. As an Original Design Manufacturer for Palm, HTC watched as Palm adopted Windows Mobile in place of the Palm OS and subsequently fell even deeper into crisis. Palm's only successful phone since has been its Palm OS-based Centro. HTC undoubtedly sees Android as its ticket to becoming the next Dell, but without a similar dependance upon Microsoft. Android for mobile phones is essentially playing the role of Linux for PCs, except that it has the backing of a major company behind it. Can Android Take on the iPhone with Openness as its Feature? As great as this sounds, it's important to consider that Linux on the desktop has made no significant progress in eating into Windows dominance after a decade of trying. Being open, free, flexible, and decentralized hasn't been enough of an advantage to get consumers to migrate from Windows to Linux in any fraction of significance. Similarly, in the music business, Linux-based MP3 players have had no impact on the iPod, despite offering more features, flexibility, support for additional codecs, and so on. In the mobile phone area, Linux enjoys a sizable portion of the smartphone market, but this is almost entirely due to phones sold by Motorola in China, where the advantages of Linux' openness are void. Motorola's Linux phones offer nothing to users in terms of openness or flexibility, and are really no different in terms of features than other appliance 'feature phones' based upon closed operating systems. And again, a key problem with assaulting Apple in a feature war is that neither the iPod nor the iPhone became popular by being “highly featured.” They both delivered perhaps 80% of the functionality found in all other devices in the market. Rather than trying to match every feature and cater to every niche as Microsoft had with Windows Mobile, Apple's devices did a few things very well at launch, and incrementally developed into full featured devices that still lack some of the more unique features of their competitors. Further, in terms of openness, the demographic that embraces Linux' characteristic freedoms is not the same as the demographic that buys smartphones in quantity and then pays for data service. This is a critical fact to consider because a big part of the iPhone's success stems from the fact that it is being pushed by mobile providers who want to capture the cream of the market willing to pay a premium for data services. The Frankenphone. Combining the fractured aesthetic of HTC's Windows Mobile phone hardware with Android's software, based upon Linux' perpetually unfinished DIY openness and Google's Java-like development platform, will not result in a product similar to the iPhone. Instead, it will look a lot like phones that have already failed in the market. Apple's advantage comes from slick hardware designs with a close attention to detail, combined with software that purposely does less so that it can do what it does better. Even Apple's own conservative attempts to broaden its software capabilities with iPhone 2.0 have resulted in instability problems that can be blamed upon both Apple's early releases of its phone operating system and software from inexperienced third party developers new to the platform. Would the current frustrations with iPhone 2.0 be somehow mitigated by additional openness that also embraced all kinds of variables from different hardware makers with less quality control than Apple, a loose committee of additional cooks working to serve up operating system features targeted at every possible conceived need, and a wider third party software group with fewer constraints on illegal behaviors? The Failure of Open. While it is politically unpopular to criticize the well meaning efforts of open source contributors, the failure of Linux on the desktop, the failure of the vaporware Indrema game console, and the failure of the OpenMoko project to deliver a workable phone within a year of its deadline all underline the serious problems open development faces in the world of consumer oriented devices. Open has simply failed to deliver on its promises in the world of consumer hardware. OpenMoko was supposed to release its first mobile phone to consumers for $250 several months in advance of the iPhone. When the iPhone shipped, the group then announced new plans to get its phone out by the end of 2007. Instead, this spring the group announced new plans to move to an entirely different development platform, and ship its phone mid year for $400 with limited functionality and incomplete software outside of basic GSM phone features. Linux's notable successes, from Motorola's Linux phones to the Tivo DVR to Linksys Routers, have often come without any associated openness or freedom, and were instead delivered simply to provide their manufacturer with a free kernel to build upon. This indicates that while Linux may find its way into an increasing number of smartphones, it will likely not be accompanied by the glorious freedom of an open development environment Google has said it would offer with Android. Apple iPhone vs the FIC Neo1973 OpenMoko Linux Smartphone Can Google Succeed Where Open Has Previously Failed? Despite “openness” being Android's strongest competitive feature compared to Apple's iPhone, Google recently revealed that its wide-open development model is intentionally gravitating towards a closed association of top tier partners due to practical considerations. In July, Google accidentally sent out a notice that revealed that it had been seeding private SDK updates to only a subset of its contributors, angering those who believed that Android would be as open as Linux on the desktop or the OpenMoko project. Further, Google has restricted initial development to higher level APIs just as Apple did, further indicating that Google itself realizes that being wildly open to impress a minority of hobbyists will not result in the commercial success of its new platform. That serves to neuter Android's primary advantage over the iPhone. Without delivering on the premise of being wide open, Android is really just a less mature set of Java libraries used to create a specialized binary that runs on a Linux foundation. Unlike Apple's iPhone, Android phones won't have a slick user interface developed by professional artists, nor the iPhone's legacy of mature software development frameworks crafted over the last thirty years, nor the iPhone's tightly integrated hardware with award winning industrial design, nor its marketing power tied into the iPod and Apple's retail stores. Android won't be an open iPhone, it will only be a Windows Mobile phone with a better kernel that runs specialized Java software instead of Win32 or .NET code. Don't expect consumers to be impressed by that. The Biggest Missing Feature. There is one remaining factor that strangles to death any last remaining hope that Android might assassinate the iPhone and assume the crown of the “DOS of smartphones.” That is: Android delivers zero price advantage to consumers. In 1981 and 1991, consumers who wanted Apple computers faced the sticker shock of a somewhat arrogant price tag. Apple sold its computers, as it still does, at the higher end of the market, but there was simply far more range in prices available. In 1981, that meant the Apple II was $2600 and the new Apple III was $3500, even before you added a monitor. On the low end, Commodore sold its far less powerful, but “still a computer” Vic-20 for $300, while IBM entered the market with the IBM PC at $3000. Over the next few years, Apple focused on delivering additional sophistication at the same price, releasing the $10,000 Lisa and then the $2,500 Macintosh. IBM continued selling PCs in the same $3,000 to $10,000 range, but other DOS PC vendors began selling machines at prices that ranged as low as $1500. That left Apple with a roughly $1000 price premium over low end PCs. The products weren't really comparable, but consumers only saw the huge price difference. In 1991, Apple was still selling moderate to high-end Macintoshes for $3,800 to $10,000; the crippled Mac LC was $2500, and obsolete-at-birth Mac Classic ranged from $999 to $1500. Windows allowed PC makers to ship a functional $1500 PC and claim a rough approximation to Apple's $2500 entry level system, maintaining that apparent $1000 price premium. Today, pundits are lucky to find a Dell or HP system that is even a couple hundred dollars less than a comparable Mac. However, in the smartphone business, the iPhone 3G is now the same price, if not less, than generic competing phones on the market. Even more significant is the fact that the price of the phone hardware is nearly nothing compared to the cost of the service plan. This fact simply eases any price premium that could cause buyers to flock to a smartphone running a generic operating system over buying the iPhone 3G, regardless of whether it runs Windows Mobile or Android. 1990-1995: Planting Software Seeds Android Partners Have Already Failed. That same pricing principle similarly prevented buyers from considering many of the alternatives to the iPod. While Apple's original iPod models were more expensive than many of the first MP3 players on the market, they were price competitive with models offering similar features. By 2004, it was Apple who was undercutting MP3 competitors on price. Microsoft offered zero price advantage when it began selling the Zune, a major factor in its failure, but Microsoft simply couldn't out-price the iPod; it was already losing money offering the Zune at the same price as the iPod. Apple now has tremendous market power in buying RAM and other components that will prevent any competitors from being able to offer a huge discount over the iPhone's $199 price tag. Even if competitors were to give their phones away, they would only offer a $200 discount to users who would then still need to pay the same mobile fees to use the phone. Android's other partners, including Samsung and LG, have already failed to capture any significant market share in the music player market. Are they going to maintain their position as smartphone makers now that they face similar competition from Apple, its iPod ecosystem, its iTunes Music and Apps Store, Apple's retail store experience, and other factors that are pushing the iPhone? If they can, it is not obvious how partnering with Android will help. Other Problems for Android. Android was announced in early November 2007 and was followed with an early preview SDK within a couple weeks, a month ahead of Apple's initial announcement of the iPhone 2.0 SDK. However, between March and July 2008, Apple delivered nine progressive releases of its SDK, opened its App Store, and sold 60 million apps, raising $30 million to support iPhone software development in just the first month. It has since released three more SDK updates to developers related to iPhone 2.1, which is expected next month. Android just published its first open SDK beta update earlier this week, warning developers that “applications developed with it may not quite be compatible with devices running the final Android 1.0.” Additionally, Android still has no phones available. By the time the HTC Dream is expected to launch, Apple will have an installed base of around ten million iPhone (and iPod touch) users supporting software development through iTunes. The business model for selling Android apps is no better than that for selling jailbreak iPhone apps: there is no iTunes Apps Store to promote them, so users will have to track them down on their own. Android developers also have no real freedom that jailbreak iPhone developers lack. The only difference is that there are ten million iPhones to sell jailbreak apps to, and currently zero Android phones. If selling a jailbreak iPhone app sounds like more trouble than its worth, imagine trying to sell Android apps to a non-existant audience. Now add the official iPhone App Store into the mix, where publicity, promotion and profits are booming. What platform is going to have the most applications? How many users will flock to a smartphone platform with no apps? The wisdom of releasing a desirable phone and achieving a significant installed base before releasing an SDK makes a lot more sense in retrospect. Additionally, while Apple has a decade of experience in shipping regular updates to Mac OS X and its Xcode developer tools, Google has only shipped a random assortment of web-oriented SDKs (a number of which have been abandoned) as a tangent to its core business of selling advertisements. When the Android SDK 1.0 is finished later this year, developers will not only lack an installed base to sell their apps to, but will also have no high profile market for selling their apps in, and subsequently no financial incentive to develop applications that add value to the Android platform, just like Linux on the PC desktop. Around the same time, possibly within the next month, Apple will be shipping its second major OS release: iPhone 2.1. Apple will also be upgrading its entire user base to the new software so that developers will have a cohesive platform to target. This mirrors the efforts Apple has taken to upgrade its Mac OS X users to the same reference release. Mobile developers will be seeing money pouring in via iTunes while crickets chirp in the Android section of various mobile online stores. Apple’s iPhone Vs. Other Mobile Hardware Makers: 5 Revenue Engines Same Same, But Different: DOS Model Problems. Android developers will also have a series of other problems to manage. Like Windows Mobile, Android is intended to support everything, from BlackBerry-style keypad phones with a small touchscreen to the simple Windows Mobile Smartphone form factor lacking a touch screen to iPhone-like full size touch screens. Also like Windows Mobile, Android phone makers will have the option to leave off Bluetooth, WiFi, GPS location services, graphics hardware acceleration, and so on. Each Android phone will also have unique camera hardware, support for different video and audio codecs, and varied support for other differentiating proprietary services demanded by mobile operators. This will force developers to to make complex decisions regarding the lowest common denominator they choose to support. So while the iPhone will have a cohesive feature set, a managed software environment, and a functional market, Android will be a loose federation of hardware makers selling the same random features found on Windows Mobile today, with a chaotic development environment that lacks any central market for users or developers. And it will be run as an experiment by a company with no experience in consumer hardware or platform development. The Missing Tap. One specific example of the “DOS model problem” is that Android currently does not support multitouch. It's not touched on in the API, and Google quietly tap dances around its omission. Why no multitouch? Because multitouch screens are expensive, and most OHA hardware members are more interested in making a profit in a competitive phone market rather than impressing consumers as Apple did with the iPhone. Most existing smartphones, even those trying to directly rival the iPhone, use a stylus driven, pressure sensitive tap screen or a simpler, cheaper touch technology that lacks support for sensing multitouch. The iPhone's screen can actually sense up to five fingers at once, but the primary feature multitouch offers on the iPhone is the two fingered tapping and the pinching effects everyone associates with it. Android could certainly support multitouch if there were a demand for it, but that's the point: Google knows that its hardware partners are cheap and unlikely to put out hardware that actually competes with the iPhone. Instead of using expensive technologies that deliver clever yet largely invisible functionality, OHA members, just like PC makers, are far more likely to add flashy, impractical gadgety fluff that's cheap to tack on, such as slide out keyboards, neon tubes, and scratch and sniff stickers. That's how you impress gullible nerds on the cheap. Google itself is blowing smoke and erecting mirrors to distract from the reality that it being a “DOS vendor” means supporting bargain basement hardware from penny pinching duplicators. Android has been demonstrating some “wow” features such as a Street Maps app that pans around based on an internal compass in the demonstration phone. The problem is that that kind of thing only makes for a fun demo. Nobody needs to twirl around their phone in the air to see a view of the other side of the street, but everyone who has used an iPhone will wonder why they can't pinch to zoom out. Even worse, most Android phones aren't going to have a compass built into them, so Google is demonstrating features most Android users won't be able to use. That Sounds Like Microsoft… Google's design decisions are beginning to look a lot like Windows Vista; rather than actually working to make laptops boot faster, Microsoft came up with the idea of adding a small screen to the back of Vista laptops so users could check their email without having to wake the system up. But this was a stupid idea for a number of reasons, the most obvious being that most users just want a laptop that boots up quickly. Few laptops got the mini screen, but every user who tries Vista on their laptop will wonder why it doesn't boot up as fast as Mac OS X Leopard. In the same way, Google is advertising features for Android that most users won't ever see in their actual phones while ignoring things people will expect based on their exposure to the iPhone. Android is simply selecting the wrong features. Android will offer the advantages of supporting MMS, recording video, and the list of other features Windows Mobile already supplies. Those features didn't stop Apple from firing past Microsoft in the smartphone arena however, just as the Zune's highly touted WiFi and screen didn't phase iPod buyers. Incidentally, just months after the Zune, Apple had not only demonstrated a larger display but a higher definition multitouch screen, and not only WiFi, but functional WiFi that could be used to browse the web or check email. This suggests that Apple, with its faster release schedule, won't stay behind any of the leading features potentially offered by Android for very long. Android partners, however, will find it as difficult to catch up with Apple's unique features, just as Microsoft has been stymied to keep up with Mac OS X, the iPod, and the iPhone. The underlying reason: both Google and Microosft are tasked with maintaing support for a huge variety of hardware options demanded by all their partners. Apple has the unique circumstances to do only what it needs to do itself. Android in Windows Mobile's Shoes. Like Windows Mobile, Android faces a difficult market. In the US, it competes against the popular BlackBerry in corporate markets and the iPhone among consumers. Worldwide, it competes against entrenched market leader Nokia. The difference is that Google, unlike Microsoft, has no in. Windows Mobile was adopted by Windows-bound IT shops despite its weaknesses. Nobody has any preexisting reason to try an Android phone apart from hobbyists and open software enthusiasts, a demographic that has done little to move Linux on the PC desktop. Google also lacks Microsoft's installed base; it's starting from zero. The smartphone industry initially doubted Apple's chances of making much progress with the iPhone, despite the company having the Mac platform, the iPod, retail stores, platform development experience, marketing savvy, industrial design prowess, and so on. Google doesn't have any of those things. Mobile Providers vs Android. Apple also started with an exclusive partnership with AT&T, a three legged race that demanded effort from both. Google is hoping that hardware makers handle the hardware details and that mobile providers will be excited to sell its Android phones. While hardware makers such as HTC clearly appreciate having found a free alternative to Windows Mobile, it's not obvious why providers would be excited about Android, as it promises an openness that most mobile providers strongly oppose. AT&T took a big risk in getting behind the iPhone, as the phone encouraged users to use email rather than fee-based SMS and MMS, it supported WiFi for data access, and it bypassed AT&T's MEdia Net services to plug into iTunes instead. Verizon refused to parter with Apple and grant it those kinds of concessions. Is AT&T going to take a similar risk to partner with a phone that is not exclusive to it, and is Verizon now going to open its arms to support phones that do not exclusively support BREW, VCast and its other proprietary services? While Android may well eat into Microsoft's Windows Mobile business by stealing away its hardware makers, it seems unlikely that Android will ever serve as more than free alternative to Windows Mobile in a market where Windows Mobile is increasingly irrelevant. Android may have the dubious distinction of swallowing Microsoft's mobile business the same way Microsoft ate up the Palm OS, but even if it accomplishes that goal, Google will likely find itself unsustainably hungry immediately afterward. It will also find itself swimming in a shark tank of hungry rivals, including Nokia's Symbian, RIM's BlackBerry, and Apple's iPhone. Symbian is the final generic platform vying for the opportunity to play DOS in the smartphone market. The next article will examine Nokia's chances in its bid to match Microsoft's PC dominance in the mobile market while setting out in a new venture to copy Android's open software model. Did you like this article? Let me know. Comment here, in the Forum, or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast (oh wait, I have to fix that first). It's also cool to submit my articles to Digg, Reddit, or Slashdot where more people will see them. Consider making a small donation supporting this site. Thanks!

• RoughlyDrafted Magazine on August 24, 2008
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Forbes' Fake Steve Jobs Is Also Fake On Apple

Daniel Eran DilgerDaniel Lyons is the author of the Fake Steve Jobs blog and a columnist at Forbes. After developing a reputation for attacking bloggers, open source, and any alternatives to Microsoft, Lyons has shed his skin to escape from one scandal while at the same time squirming into position to choke the truth out of his next victim: Apple.Reader Marc Elson sent in a link to Lyons' “Snowed by SCO,�? an article Lyons wrote to both apologize for and marginalize his years of articles in Forbes that misrepresented the issues in the SCO Groups' attack on Linux. He blamed his reporting on bad information he'd been fed by SCO. It's easy to backtrack now that SCO is toast; in fact it's rather impossible not to. However, neither Lyons nor Forbes can erase the years of false information and misleading spin they published, which not only idealized SCO but also lambasted any individuals critical of the company. He described anyone supporting Linux as religious folk "convinced of their own righteousness."While fighting for SCO, Lyons also attacked “bloggers�? in a front page article in Forbes that screamed, “they destroy brands and wreck lives. Is there any way to fight back?�? as if everyone who writes on the Internet operates as a class that can be summarily judged and dismissed at once. [Snowed By SCO - Forbes]Daniel In the Lyons Den Again.Lyons' lack of hesitation in throwing out poorly conceived attacks is getting him into trouble again. He seems to be working frantically to spin together a bizarre new tale of how Apple is going to simultaneously be torn apart by the can-do-no-wrong Microsoft while also turning into a shadow of the evil monopolist itself, threatening us with its fearsome dominance.Lyons resurrected the identical, wholly illogical conundrum of a paradox posited last year by Windows Enthusiasts, principally Paul Thurrott, who spoke in fear of a threatening monopoly position achieved by Apple's iTunes while--puzzlingly--also describing Apple's music business as a pitiful failure that could never withstand the market dominance of Microsoft. Is it part of a new Forbes campaign? Lyons' new work echos other regular articles from Forbes writers, all attacking Apple and reality in the same breath:Presenting Apple TV a supposed flop, despite its profitably outselling the TiVo this year without incurring the tens of millions in losses TiVo has suffered in the last quarter and in every one of the last several years.
Promoting MusicNet Digital's failed Microsoft partnership in selling music against iTunes and describing the Zune as something other than a spectacular failure. Even the most giddy Zune fan sites are appalled by Microsoft's lack of support in providing updates and fixes for the Zune's major failures. How is Forbes framing it as some kind of sleeper hit?[The iTunes Monopoly/Failure Myth][Scott Woolley Attacks Apple TV in Forbes, Gets the Facts Wrong][Forbes Prints Insanely Self Serving Attack on iTunes by MediaNet CEO Alan McGlade]When Cost Is No Object: Microsoft Media Center.Reader Robert de Bie forwarded a link to Lyons' breathless accolades over Microsoft's Media Center software, which opened with the line, “Guess who's got the slickest software for handling TV, movies and music? Not Apple.�?Lyons compared using a Mac and Apple TV with a PC running Vista Ultimate with Media Center features and an Xbox 360 to relay content to a TV. He raved that the Microsoft solution “can do things with digital media that even Apple can't match.�? That's true, as Media Center is principally a DVR, a software version of the TiVo; Apple doesn't sell anything the works like a TiVo to record TV. However, Lyons only noted in passing that “Microsoft charges $400 for Vista Ultimate--$300 too much,�? failing to add up that a Mac comes with free Front Row features. Apple TV hardware costs $300; it supplies ultra fast 802.11n wireless and, at a minimum, a 40 GB hard drive.In contrast, an Xbox 360 with a 20 GB hard drive costs $350, and another $100 for slower 802.11b/g wireless. So as a wireless media extender, the Xbox 360 costs $450 (50% more), but gives you half the disk capacity and slower networking.Additionally, the required Media Center software that costs another $400 in Vista Ultimate doesn't magically provide you with a TV tuner, so you still have to buy one.In other words, all the money you throw at Microsoft only gives you software that is otherwise free. Without having to pay for all that software licensing, you can go buy whatever TiVo-like TV tuner for the Mac fits your needs, and solve the problem for hundreds of dollars less.Of course, what Apple wants you to do is go without a TV tuner and an expensive cable subscription and simply buy the TV and movies you want to watch from iTunes. Of course, that's not necessary to use Apple TV; you can also rip your own DVDs or even use it to manage your home movies and free podcasts, something Media Center isn't really designed to do because there's no money in it. Don’t forget that there are more fees involved with Xbox Live services, and that TV downloads are more expensive. You’ll also need to pre-purchase Microsoft’s points, converting your cash into Microsoft Live currency that’s subject to change. And once you buy Xbox Live TV shows, don’t expect them to play on your Zune or Windows Mobile phone the way iTunes content plays on Apple’s iPods and iPhone.Of course, when Microsoft sends writers all this equipment to try out for free, then it’s easy to gush over how great it all works and report, "No crashes, no reboots, no blue screen of death. Stunning," as Lyons did. Had he actually been forced to pay the $840 premium to actually use Microsoft’s system, perhaps he’d sing another tune.While Lyons is certainly entitled to his opinion, he should at least present the facts correctly. Outlining any Microsoft product without a consideration of its true cost is always a mistake, because the true cost is almost always hidden. Lyons also wrote “Microsoft's system supports high-definition video; Apple TV does not,�? a line that isn't true. Content from iTunes isn't yet available in HD, but the Apple TV does support HD video from other sources and comes equipped with support HDMI, which only the newest Xbox consoles have. Considering that Microsoft has barely sold any new Xbox 360 units this year, fewer than 20% of installed Xbox users even have HDMI outputs. [Windows XP Media Center Edition vs Apple TV][Forrester Research: Epic Terror of iTunes and Apple TV]Big Brother Says: Apple is the New Microsoft.Since publishing that “Media By Microsoft�? article a couple weeks ago, Lyons has ramped up his attack on Apple into a web of false information that approaches his SCO shilling. He even exploits his popular Fake Steve Jobs blog for dramatic effect.Lyons starts his newspeak reporting, ironically enough, in an article titled “Big Brother,�? with a comical juxtaposition of Apple's 1984 Macintosh ad and a modern screenshot of Jobs presenting the new 3G iPod Nano against a huge video screen of his own image. Lyons had earlier published the images on his Fake Steve Jobs blog after a reader had submitted them.This is funny stuff, because in both images, there's a greying white man with glasses on a huge TV screen talking. But in 1984, the man is talking about universal ideology to a numb audience, while in the modern scene, Jobs was talking about changing the market for mobile video with a 6.5mm device, and the crowds were enthusiastically applauding.There was one other amusing similarly however: shortly before eating the hammer thrown by the Macintosh girl in orange hotpants, the 1984 Big Brother screen says, “Our enemies shall talk themselves to death and we will bury them with their own confusion. We shall prevail!�?In 2007, Jobs has said some similar things about Microsoft, but the Macintosh hammer is actually being thrown at Vista. So while it’s not exactly the same thing, it is a funny coincidence. Along those lines, Lyons provided some examples of how, as an enemy of Apple, he can talk himself to death and be buried in his own confusion.[Big Brother - Forbes]Here's What You Believe.So far, we've just covered the photos on the article. Once Lyons started writing, it was like SCO all over again. He says early iPhone buyers “were threatening to take to the streets again--only this time with pitchforks and torches. They were furious because Apple Chief Steve Jobs slashed the phone's price to $400 from $600, making early adopters look like suckers.�?If Lyons really wants to make up garbage and rewrite history, he should confine himself to Wikipedia where he can't do any damage. The people complaining about getting what they paid for were a whiney minority amplified by a desperate press trying to find something wrong with the most successful electronics product launch in history.Anyone who thinks buyers who paid $600 for the iPhone to get the hottest new device available--and who ended up with a phone that cost less overall than even the $99 Motorola Q, and further got a $100 refund credit--are “suckers�? needs to reevaluate what being a sucker might mean. Perhaps paying Microsoft $850 for the equivalent of a $300 Apple TV with less storage and a slower network, and then still needing to buy a TV tuner is a better example of being a “sucker.�?The only difference is that Lyons didn't get a free iPhone from Apple, but did get a bunch of Microsoft Media Center stuff to try out without having to pay for any of it as the rest of us would have to do, were we inclined to let Microsoft control our TVs.[Ten Fake Apple Scandals: 1 - Phony Rage About iPhone Price and Profits]The SCO Shill Lines Up Behind Microsoft, AT&T, and the RIAA.It might not be a surprise that a writer who identified SCO as safe to cheerlead for because of its seemingly legitimate corporate position would similarly jump at the opportunity to weep crocodile tears for some of the other most reviled companies doing business on the planet. Lyons is apparently not very smart about picking corporate favorites.“It looks like an anti-Apple backlash has begun,�? Lyons wrote, noting that NBC Universal pulled out of iTunes to partner with Microsoft's Windows Media DRM-based Amazon UnBoxed store. He didn't mention that NBC also partnered with Fox in setting up a joint Microsoft store, and then went solo on its own website trying to offer ad-encrusted, Microsoft DRM-ed, exploding content. No doubt all of those efforts are going to work out well for NBC.Lyons also said “Vivendi's Universal Music Group also reportedly won't renew its contract with Apple,�? with