Daniel Eran Dilger
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The Unrealized Potential of Apple’s Hybrid Platform: Mac, iPod, iPhone, and TV

Daniel Eran Dilger
Back in 2006, I wrote a series of articles looking at the iPod, the as yet unreleased Apple TV, and the unannounced iPhone, and described them all as a single platform that would grow alongside the Mac. I assumed that the three new products would make up a new platform based upon the iPod.

That assumption led me to think that Apple TV would be essentially an iPod with TV output; I also described the G6 iPod as a conventional iPod with mobile communication features. I was wrong about both products being glorified models of the then existing sense of the iPod.

Throughout 2007, it was progressively revealed that the future of all three products (iPod, iPhone, Apple TV) would bake together into a single platform, but rather than being an iPod sidecar to Apple’s Mac motorcycle, they’ve all piled onto bikes of their own built upon the same engine.

In other words, rather than having a Mac business with an accessory iPod franchise bolted on the side, Apple now has four independent vehicles tearing up the road in parallel:

  • The Macintosh desktops, laptops, and servers
  • Apple TV
  • the iPhone
  • the iPod Touch and other existing fleet of iPods

While my ability to foresee the future is certainly fallible, my forecast of Apple’s platform position is particularly interesting in that the platform convergence I described–before having a full picture of what was happening–actually worked out to be more cohesive than I originally surmised.

The various components of this new expansive platform will benefit more from shared code and resources than I had optimistically observed back in 2006, before all of the details were public.

Generation 6 iPods

Generation 6 iPods
iPod, iPhone, iTV: Apple’s New Platform
Device Problems In Search of a Solution
iPod, iPhone, iTV: Why Apple’s New Platform Works
iPod, iPhone, iTV: How Apple’s New Platform Works

iPhone By Any Other Name Sells As Swift.
This reality began to fall into place when Apple announced that the new iPhone would be running OS X. Pundits initially insisted that this was merely a marketing gimmick along the lines of Microsoft’s Windows branding, which has been applied to various products with very different architectures, from DOS to NT to CE to a variety of “Windows Everywhere” initiatives that intended to brand copiers and other office equipment with Microsoft’s Windows logo despite their using disparate, unrelated technologies.

The Windows brand didn’t turn out to be as strong as Microsoft had hoped. None of the CE, smartphone, office equipment, or other Windows Everywhere initiatives have turned out to be financially viable at all, leaving Windows confined to the company’s desktop and server products.

However, the iPhone really is a Macintosh, albeit running on an ARM processor and using a Flash-based architecture rather than booting from a conventional hard drive. It has the same kernel, the same frameworks foundation, and shares human interface guidelines and gestures that make it a cohesive relation to the latest Macs running Leopard.

So are the iPod Touch and the Apple TV, both of which prove that Apple doesn’t need to use a hyped brand association to sell its technology or deliver products that actually work.

OS X vs. WinCE: How iPhone Differs from Windows Mobile

OS X vs. WinCE: How iPhone Differs from Windows Mobile
The Spectacular Failure of WinCE and Windows Mobile
Windows 95 and Vista: Why 2007 Won’t Be Like 1995

The Many Splendored Mac.
From that perspective, it is noteworthy that Apple not only sold a record number of Mac desktops and laptops to hit a record 2.3 million units in the winter quarter–up dramatically from the flat line of around 700,000 Macs per quarter the company was stuck at for four years after the dotcom crunch in 2000–but that it has augmented those sales with another 2.3 million iPhones in the quarter.

That means Apple actually sold over 4.6 million Mac-based devices in the quarter, in addition to the unit numbers of the iPod Touch and Apple TV, both of which are part of the same platform.

That number isn’t just a contrived manipulation of statistics, but actually matters because the it helps put into perspective the scale of shared efforts Apple is now managing and benefitting from.

 Wp-Content Uploads 2008 01 Macsales-080123-1

Best Quarter Ever: a closer look at Apple’s record Q108 earnings

Shared Development Resources.
Mac OS X is no longer just a software development effort that services a static installed base of around 25 million specialized PCs. That installed base is now growing rapidly and in new directions, and features developed for one product line are finding their way back into others. Apple is now realizing significant economies of scale, and using its relatively small development circle to introduce hot new products with innovative features across a wide range of hardware applications.

Improvements Apple makes to the Mac OS X XNU kernel for mobility and battery efficiency in its iPhone will flow back into the Mac, refining the battery life of laptops and the efficiency of desktops. Low level multicore support driving performance in Xserves and Mac Pro workstation products will also cast an engineering halo downstream. The multitouch features that were designed for the iPhone are now showing up in the MacBook Air, and will percolate across Apple’s laptop line.

Similarly, efforts Apple invests into Apple TV are shared with Front Row and iTunes in general on the Mac. As the company expands its offerings, each node of the network becomes more valuable. Further, the investments of third party Mac developers to master Cocoa development will be rewarded with new opportunities in the mobile space on the iPhone and Touch, as well the option to develop new modules for Apple TV. New development interest in the iPhone will also bathe the Mac OS in new talent.

Apple TV Promises to Take 2008

Competitors Lack a Similar Platform Flexibility.
The various competitors Apple positions its products against don’t share this same software synergy. Microsoft ships far more copies of its desktop platform, but that software hasn’t shipped on anything else apart from the Xbox consoles and buyerless UMPCs.

WinCE/Windows Mobile lacks much meaningful overlap with the desktop operating system of the same name, and the desktop Windows isn’t even universal across 32 and 64-bt hardware, or between IA64/IA32 processor architectures the way Mac OS X is on the CPUs it supports.

Nokia sells far more phone sets, but its Symbian OS can’t even scale to serve as the OS for its Touch-like Internet Tablet, which has to run Linux. Worldwide, Symbian is split between three principle vendors, Nokia, Sony Ericcson, and NTT DoCoMo, each of which manages its version a unique software platform.

Sony sells hardware running Linux, Symbian, and Windows, enjoying no shared engineering efforts. Motorola, HTC, and others sell their phones running either Linux and Windows Mobile.

Ten Myths of Leopard: 10 Leopard is a Vista Knockoff!

Ten Myths of Leopard: 10 Leopard is a Vista Knockoff!: 64-bitness
Readers Write About Symbian, OS X and the iPhone

Off the Charts.
Apple not only has a cohesive software strategy, but is rapidly expanding its unified platform. The company has transitioned from selling around 3 million Macs per year as it did between 2001 and 2004, to selling 11.6 million Mac-based devices in calendar year 2007: 7.6 million Macs and well more more than 4 million other Mac-based devices such as the iPhone, Touch, and Apple TV.

In March of last year, I estimated sales of around twelve million Mac-based devices for 2007, based on a forecast of 6.5 million Macs, an overly enthusiastic 2 million units of Apple TV predicted by analysts, and an expectation of 3.5 million iPhones.

Apple actually sold well past expectations for Macs and iPhones. While it didn’t break out individual unit sales figures for the Apple TV or Touch, it sold far more than a half million units to bump the total number of Mac-based devices well over my estimated 12 million for 2007.

Apple exceeded the expectations of my forecast despite the soft sales of Apple TV, making the parallel estimation of 18.5 million sales for 2008 easily believable as well, particularly given that Apple TV has been given a far wider and more attractive feature set for the new year.

Note that neither years’ forecast figured in sales of the Touch, which hadn’t been released when I put the numbers together. It would be hard to imagine Apple sold fewer than three million Touch units in 2007, and even the most pessimistic of wags have estimated that Apple has sold at least a half million Apple TVs. That pushes the total number of Mac-based devices north of 15 million for the calendar year.

All of this growth in the Mac platform comes despite the fact that Apple only offered the iPhone in the second half of 2007, and the Touch only in the final quarter. This year, the company will be selling units through all four engines throughout the entire year.

It wouldn’t be unthinkable for Apple to blow out more than 20 million Mac-based devices this calendar year, a tremendous increase from 3 million just a few years ago and well off the chart I posted last March (below).


Inside Apple TV

But Wait, There’s More.
While the iPhone and Touch are really mobile Macs, they’re also iPods. That means they don’t need the halo, they are the halo. Both are selling rapidly in the US at relatively high price points for iPods, and growing Apple’s market share dramatically in international markets.

Last year and particularly in the winter quarter, Apple upgraded iPod buyers into sales of full featured luxury units, and still sold more units than it did the year before, when it was featuring simple economy models at lower prices and lower profit margins. Additionally, the most expensive iPod model wasn’t even counted as an iPod sale, as the iPhone was put in its own category.

 Wp-Content Uploads 2008 01 200801222317

Analysts and investors have complained that Apple should be selling more iPod units, failing to take into consideration that more units at less revenue can easily result in less profit. Just ask Dell and HP, who have been specializing in blowing low value, disposable ewaste PCs into the market at razor thin profit margins, or in some cases at a loss.

Sony and Microsoft are also fighting to give away subsidized video game consoles at a loss in order to build an impressive platform comprised of the most units.
Apple has been unique in upgrading its users to buy higher end products that can be sold at a sustainable profit, while still maintaining market share and growth, and while increasing revenues and profit margins, even while facing stiff competition from rivals.

Apple’s strongest iPod competitor hasn’t been Microsoft’s Zune, but the very low priced MP3 players from SanDisk, which sell in respectable volumes commonly for less than $100 and rely on SD cards for storage. Even so, Apple has maintained its dominance in both the low end with the Shuffle, and across the range from Nanos to the Classic and Touch.

That’s not because of the wag-invented idea of iTunes monopoly tactics, but because Apple works to deliver strong, desirable products. While Microsoft gets lots of airtime, it is only even attempting to compete in a higher end, lower volume market that is currently dying. Apple is intentionally killing off the classic iPod to replace it with a new iPod platform serving as a WiFi mobile platform for applications.

Forrester Research: Epic Terror of iTunes and Apple TV

Competing with Itself.
Apple introduced the iPod back in 2001 as a 5GB hard disk player, besting existing models by offering much faster FireWire sync rather than the prevailing USB 1.0. It also delivered smart sync software that helped to simplify the iPod itself by delegating library organization to an attached computer. After building that business over several years, Apple branched out in music sales, Flash RAM players, and then video playback and the TV sales and later movie downloads that supported them.

Apple’s strategy hasn’t just been planting new seeds however; it also uproots its existing crops to make more room for new ones, continually working to obsolesce its own products before rivals can.

For example, Apple killed the popular Mini with the introduction of the new Nano as soon as the company was able to deliver a Flash replacement to its hard drive based ultra-portable model. Last fall, it repositioned the flagship iPod as the Classic, and introduced a new video-playing Nano to replace it on the low end, and the Touch to replace its future on the high end.

Rather than just taking away capacity to change the game, Apple has employed sophisticated software to make storage capacity less of a central feature. With smart playlists and automated syncing in iTunes, the new Flash based iPods can be kept loaded with fresh content without needing a complex hard drive and suffering from the problems inherent to delicate mechanical parts housed inside a mobile device.

New iPod Reviews: 3G iPod nano, iPod classic, iPod touch

The New WiFi Mobile Platform for Applications.
During its conference call with investors, Apple executives made it very clear that the company sees the future of the iPod not as a linear progression of new MP3 players with slightly higher capacities and the occasional new feature, but as a new WiFi mobile platform for applications. This was already evident, but Apple had to emphasize this because too many people simply weren’t getting it.

Apple detractors had long been trying to talk down the iPod as a commoditized product that Microsoft would soon replace with a clone bearing its own logo. While Microsoft hasn’t been able to accomplish what it set out to do in copying the iPod, its failed strategy has been rendered even more irrelevant by the fact that it has only attempted to copy where Apple has been; Microsoft appeared oblivious of the iPods’ obvious future. Did Microsoft really think that the technology announced for the iPhone in January wouldn’t find its way into the iPod line?

As a casual observer, I have to admit that even I didn’t anticipate that Apple would release a product like the Touch within just months of the iPhone’s release. That’s aggressive risk taking, and follows the pattern of Apple’s historical efforts to replace satisfactory products with advanced models even before there is any drop in attention.

Were Apple more conservative, it might be able to coast along on past efforts and fully monetize investments already made. The risk with such a strategy is that a competitor could take advantage of that pause and exploit it, as the tortoise did to the hare.

Zune vs Nano

Why Microsoft’s Zune is Still Failing
Winter 2007 Buyer’s Guide: Microsoft Zune 8 vs iPod Nano

The Risk of Risk Aversion.
That’s exactly what happened in the late 80s, when Apple under John Sculley and Jean Luis Gassée stopped releasing rapid new product introductions and began trying to pull profits from the Macintosh at minimal effort. That conservative strategy allowed the company to earn top profits for a number of years, but it also enabled Microsoft gain a foothold with a far more inferior, copycat product.

Once established, Microsoft could leverage its broad sales volumes to incrementally solve the worst of its outstanding technical problems; it continued to do this over the next decade. Apple was caught blindsided, and left with a niche market offering little growth potential. Lower volume sales and slow growth meant Apple couldn’t invest in efforts to rapidly advance its product, and progressively fell behind.

Its efforts to gain market share through licensing also failed for being too little, too late. By 1995, Apple was falling apart as Microsoft was establishing itself as a fierce monopoly dominating the PC space. It took Apple nearly a decade to recover, even under the very capable hands of an impressive board and management team.

Why Apple Failed
Platform Crisis: The Lazy Dinosaur: Sculley’s Legacy

The Turning of The Tables.
It is now Microsoft sitting on top of a market that is dying. The growth in desktop PCs is stagnant, and the best hope for expansion is in China and third world markets where the software market is not only riddled with piracy, but where there simply isn’t any potential for selling $500 copies of Office and $400 copies of Windows. Incidentally, buyers in those same markets are willing to pay $600 and up for unlocked iPhones.

Microsoft has worked to syphon off the most profits it can from its existing niche, raising the cost of Vista dramatically even while consumers and corporations have demonstrated little interest in the product.

While Microsoft lumbers along like a dinosaur and its Windows Enthusiast wags praise it for being so big and impressive, the climate is changing. New throngs of consumers aren’t rushing to buy cheap desktop PC boxes with an expensive operating system, sending PC unit growth into the single digits.

Even Microsoft’s brightest star, the profitable high end US gaming market, is being overshadowed by the clouds of increasingly bleak economic conditions that will put a damper on the enthusiasm of minimum wage gamers who save up to buy $1000 video card upgrades and $60 games at regular intervals.

Microsoft is competing against itself, but only in marketing its PC gamers the less profitable Xbox 360 consoles that have neither expanded the gaming market nor helped boost the company’s bottom line. The company has only lost money on its investments in gaming and entertainment, and has only shuffled around unit sales in its niche gaming market rather than expanding it dramatically in new directions.

Sales of the 360 are actually slower than the original Xbox, and the new model is running out of momentum just as Sony’s PlayStation 3 is picking up speed. Real market growth in consoles is being syphoned off by Nintendo’s Wii, which eschews the expense of the HD consoles to present gameplay attractive to a wider demographic.

PlayStation 3 vs. Xbox 360 vs. Nintendo Wii
The Next Generation Game Consoles
Nintendo Wii vs Sony PlayStation 3 vs Microsoft Xbox 360: Q2 2007

Apple’s Recession Strategy.
Microsoft’s bleak outlook in PCs and gaming platforms contrasts with that of Apple, which is headed into a dimmer economy with brighter prospects for its rapidly growing platform that has successfully been branching off into new product categories at every opportunity.

Apple is eating into corporate sales with MacBook Pros, swallowing workstation sales with its Pro applications (Logic is the Office of musicians; Final Cut Studio is the Office of filmmakers), aggressively biting off education market share, and dramatically tearing into consumer sales. Apple is riding the keen interest in laptops sales, the company’s payback for investing in mobile development back in 2001 when the US economy last soured.

The iPhone is aggressively pouncing on rivals and the iPod Touch is stalking out expansion into foreign markets where the iPhone isn’t yet available.

Apple’s retail outlets are doing booming business, and serving as conduits for rapid sales of what will be the next PC: the handheld WiFi mobile platform for applications that cost less than $500. While Windows PC makers are struggling to sell dinosaur ewaste PCs for that price at a loss, Apple will be offering state of the art handhelds and smartphones that no competitor has yet come close to matching, and doing so at a sustainable profit..

Further, while Apple’s Macintosh systems in the late 80s weren’t so obviously different from cheaper, low end PC clones to the casual observer, Apple’s iPhone and new iPod lineup are dramatically different from knockoff players and phones that typically cost the same amount.

Future Outlook for Apple in Q2.
The market hasn’t yet reflected an accurate understanding of Apple’s future prospects. While the media has worked hard to play down Apple’s success as a problem, fearing that the company won’t be able to sustain it, reality offers more reasons to be optimistic.

First, it’s important to remember that Apple originally shocked the market by releasing its historically conservative guidance for the winter quarter well above what analysts were expecting, despite being headed into difficult economic prospects.

As reader Jon Tilneys noted, “The bit about expectations that everyone has forgotten – including you Dan it seems – is that after the Q4 2007 results there was a big issue made about how Apple had, for the first time ever, guided above Wall Street. In October, the Street consensus guided for Q1 08 at just $8.58 billion in revenue and earnings of $1.39 per share.”

As Apple delivered beyond its guidance, the expectation of Wall Street ramped up over a billion dollars, and Apple still outpaced what analysts hoped to see. Their expectations for Apple’s Q2, the quarter ending in March, is now exceed the company’s guidance of $6.8 billion, which would be another record quarter for the company and a significant increase over last year’s record of $5.26 billion.

Analysts, Investors Take Apple to Task For its Best Quarter Ever

Apple’s Conservative Guidance.
Also interesting is the margin of conservative outlook Apple provides compared to the results it has been able to deliver, even during an economic downturn. Tom Shaughnessy wrote to note his figures on the subject:

“In fiscal 2007, Apple did 7.1 billion in their first quarter and 5.26 in the second. That yields a ratio of 1 to .74. In fiscal 2008, Apple did 9.6 billion in their first quarter after projecting 9.2 billion which was perceived at the time as considerably aggressive. They outperformed their aggressive projection by 4.3%.

”Yesterday Apple projected 6.8 billion for the second quarter of fiscal 2008. Given the company’s logical approach and historical record of under projecting and outperforming, I increased their 6.8 billion projection by the same percentage in which they outperformed their first quarter projection. That suggests the second quarter might reasonably come in at 7.072 billion.

“If, for discussion’s sake, we can grant the possibility that Apple will do 9.6 in the first quarter and 7.072 in the second, we discover a ratio of 1 to .736. Yesterday, Apple in essence predicted consistent year over year growth all the while shouldering the responsibility to do so impacting performance measured against the best quarter in the company’s history and in the face of a media firestorm declaring a paralyzing recession.

”Can it be the collective reporting on this matter has abandoned facts for agenda? How can this be? Hmmm, trying to picture in my mind the requirements to bring a class action against the mass media with the sole intent to force journalism majors to take remedial math courses and to tie their compensation to their test scores.“

Shaughnessy also charted out the climb of Apple’s revenue and profits, which offers an interesting portrayal of the company’s performance over the last four years.

Pasted Graphic 1-2
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What do you think? I really like to hear from readers. Comment in the Forum or email me with your ideas.

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  • zorkerz

    I enjoyed this post alot. I have not read as many in full recently. I like the economic analysis. I first started reading with your histories of different parts of the market at different points. I get tired of hearing apple all the time I tend toward open source and linux, mostly ubuntu these days. Thanks for the articles

  • http://www.sistudio.net studiodave

    As always it is great to see the expansion of the platform explained. I would like to see some writing about the Microsoft Sync that is in the new Ford cars these days. How much was MS and how much was Ford? Does it work? I always hear them say , Choose songs. Make Calls and more… what’s the and more? is there any more? For me I never want to select each song I always use shuffle from a playlist of songs that have not been played in 90 days.

  • elppa

    Of course sync won’t bloody work.

  • Jon T

    Nice one Dan.

    As said recently to a BBC journalist:

    “Can you spell E C O S Y S T E M ? Everything Apple is now doing revolves around OS X and Quicktime. iPhone, iPods, Macs and TV. The ecosystem that is OS X is only just getting going. There are going to be myriads more products of all shapes and sizes delivering content to users at home, at work and on the move.”

    Loved the bit about “Logic is the Office of musicians; Final Cut Studio is the Office of filmmakers”, you can also add that Aperture is now definitely the Office of Photographers…

  • http://johnsessays.blogspot.com John Muir

    Nice charts. I hadn’t realised just how little profit Apple were turning back in 2004 … it looks dangerously close to zero in retrospect!

    Thinking back about 2005 in particular has me wondering. It was certainly a great year for the iPod (5G video iPod and the first nano) but why did Mac sales begin to surge then before the Intels appeared in January 2006? Could it be all the attention Apple were getting for the Intel transition annoucement actually having some kind of effect on the non-tech world, once it percolated through the media? Obviously Apple’s stores were growing quickly too, but I’d like to see someone work that intriguing year out now we have a good perspective on it. Always seemed to me that 2006 should have been the biggie, yet those charts reinforce that the surge started back in 2005…

    @ Jon T

    Careful not to overlook Adobe Lightroom there! Whenever John Gruber at Daringfireball mentions them in comparison, it seems Adobe have more to be pleased about. No disrespect to Aperture, but it’s not in the same position as other Apple Pro apps quite yet.

  • http://homepage.mac.com/johnnyapple johnnyapple

    “my ability to foresee the future is certainly fallible” seems almost apologetic. If so, no need to apologize. You were right on with regards to predicting the huge expansion of OS X devices.

    I like to predict the future too, so here you go. For calendar 2008…

    9.5 million Macs
    12 million iPhone
    19 million iPod touch
    1.5 million Apple TV

    42 million OS X devices

    Compared to 5.65 million in 2006

    Cocoa developers, start your engines.

  • beeko

    What about the TimeCapsule and Airport Extreme are those not also based on OSX? I could see apple selling 1 TimeCapsule for every 5 Macs.

  • http://homepage.mac.com/johnnyapple johnnyapple

    TimeCapsule and Airport Extreme are not OS X. I haven’t got a clue what unit shipments are or will be. They are a significant slice of the Apple pie though.

    Sorry for the cliché. I couldn’t help myself.

  • Steve Nagel

    Great piece of work. Now that Carl Howe is moving on, it’s nice to know I can get my financial analysis related to Apple here.

  • John E

    This post has a lot to it! kinda wanders all over the map, tho.

    i’d boil it down similar but a bit different. There are two ways to look at what Apple has done:

    yes, as Dan outlines it has transformed the Leopard OS – in full-sized and condensed versions – into the foundation of a whole new generation of Mac hardware, including the iPhone, Touch, and AppleTV, that are more capable and can evolve more flexibily then their competition now and in coming years.

    but the user doesn’t see this OS much except on the Mac computer. what the consumer sees is different. The consumer sees a unified cross-platform layer of UI software, the iTunes layer that controls the iPhone, Touch, and AppleTV directly and all the media content of the Mac. and Apple is now trying to add Safari as the parallel cross-platform control interface for web content as well, starting with iPhone and Touch, which is why it bothered to port it to Windows last year. expect to see much more work on Safari-optimized web-based apps in the future, such as Google’s growing suite, YouTube and all that other web stuff Apple is featuring on iPhone, Touch, and AppleTV.

    what Dan’s post missed is the importance of this cross platform unified media/web interface Apple is creating. but after all there are still many times more Windows PC’s than Macs in consumer use, and will be for the forseeable future. so without it, the iPod would never have been a success to start with. it’s no coincidence that AppleTV works with Windows PC’s too. this is very fundamental strategic planning by Apple, just as important as the OS that powers it.

  • http://sparkplug9.com John Koetsier

    Best article I’ve read on Apple strategy. Technology industry, look out!

  • daniel.lucas

    John E said:

    “what Dan’s post missed is the importance of this cross platform unified media/web interface Apple is creating”

    Funny you should say that because I got the impression that the whole idea behind the post (and its title – “Apple’s hybrid platform”) was precisely to reinforce that point.

    One interesting difference I see between Apple and M$ is that the former gives Windows users a taste of Apple software and simplicity by making full blown versions of just a few of its apps, namely iTunes and Safari (Bonjour, if you like). Microsoft on the other hand, make several watered down versions of many more of their apps. Office suite, Messenger, Remote Desktop.

    One is a delicious starter that makes you want more. The other is a disappointing main course that puts you off having dessert.

  • gus2000

    The question I have is: When will Microsoft’s hubris catch up to their bottom line? The Win/Office monopoly is still raking in the dough, and they even sold ludicrous numbers of Vista licenses. If Apple is picking up market share, then shouldn’t their competitors be shrinking?

    While I feel it’s bad karma to bask too long in das schadenfreude, I would really enjoy the self-validation and vindication that follows seeing Microsoft post a quarter in the red.

  • purejadekid

    Dan’s point about the iPod classic line being on its way out and the future iPod direction involving the mobile/web/application platform gave me a few ideas.

    Imagine a world without the iPod classic (or the classic stops growing in capacity past 160GB). What’s the easiest way to deal with having a large library (say, 1/2 TB or more… arbitrarily large) if you have an iPod touch or iPhone? (even a few years from now when you have 16,32, or 64GB…)

    Well, if I were in that situation (speaking as a developer) I would write my own Kitchen Sync App (TM) that let me access (browse) my music from my home machine (like back to my Mac). Assuming the SDK is powerful enough to allow modifying music in the iTunes library on the iPhone, short of DRM issues :-(, if I was in a place with the bandwidth (WiFi) I could stream or sync albums/videos on the go.

    Imagine traveling with an iPhone (and no laptop), arriving at a hotel, plug in your iPhone to charge, log in to the free hotel WiFi, fire up Kitchen Sync (TM) browse your home music/media library for some different albums (or sync smart playlists for fresh music), hit Sync, and wake up the next day with another 5-10GB of different music.

    Or set the Kitchen Sync (TM) App to shuffle and listen to more than 16GB of songs/albums off your home machine without any intervention. In fact, it could be automated to move large numbers of songs/albums that you haven’t heard recently on its own, filling a given amount of space (say 5GB) when WiFi is available (and, say, you aren’t browsing with Safari).

    Suddenly, the price of flash RAM doesn’t matter, and the iPod classic 160GB has less “capacity” than the 8GB iPhone.

    If Apple doesn’t add this capability to iTunes/iPhone, then I will (or any other Cocoa developers out there: this is a plea to steal my idea and/or the name Kitchen Sync).


    Wow I just convinced myself to buy an iPod touch instead of an iPod classic.

  • Robb

    I was discussing something similar with a friend while we were going over some of the features of the MacBook Air. Development and new technologies in the iPhone and iPod division can be transfered to the Mac and vise-versa since their running OS X. Apple is in a unique position in that it has the advantage of developing both the hardware and software and supporting both.

  • L

    Video is going to push the need for capacity. Classic, or a Classic/Touch fusion will stick around for a while. I’m pondering a Nano for cheap, convenient, portable TV playback and can’t decide between the cheaper 4GB, or the 8GB Nano. iTMS isn’t the only source for video. Too bad Apple doesn’t/won’t support MPEG-2 playback and DVD ripping. I have plenty of MPEG-2 videos and DVDs, but iTunes won’t one-click important them. QuickTime will playback MPEG-2 with the playback component, but such is not available for iPods.

  • TheViking

    One issue missing in the equation, all those PC owners running Mac OS X on their relativly new PC using “adjusted” Mac OS X (OSX86) software. At some point they will probably be the factor which will close Microsoft down, with or without Apple allowing it in their licence agreement.

  • Steve Nagel

    While the Classic might be on the way out, I hope the Nano will stick around for a while. The lanyard iPod has its own niche as a workout and walkabout device, and it will be always the lightest, thinnest, cheapest solid state Mac. Just lose the click wheel and add a multitouch pad, and it will live forever!

  • daniel.lucas

    It would be nice if iTunes and iPods could playback anything Quicktime was capable of playing. That might even stimulate development of new Quicktime components for the Windows version.

  • hrissan

    Yes, many people come to Hackintosh first running Leopard on their new PCs. In this way they can try before they buy, so hackintosh works as a “trial” or Shareware” of its own kind. Congratulations, Apple! :)

  • runenfool

    Unfortunately while MS might be getting beaten solidly in the consumer space by Apple I think they are doing very well (and growing) in the enterprise space.

    Microsoft Office and Windows are still pretty much a monopoly in those environments, with a stronger than consumer land presence in browsers. Sharepoint, Exchange, Windows server all seem to be growing inside big corporations. I think this trend will only increase as Microsoft releases enterprise class versions of things like ERP and CRM products. (Not sure how IIS or .NET or SQL Server are doing inside enterprises).

    Since Apple doesn’t play in this space, and there is more inertia there I doubt we will ever see MS go away in big companies – and thats a lot of money going their way.

    [Apple certainly isn’t competing in the Enterprise, but Microsoft isn’t doing so well as you describe. Pundits like to talk a lot about Exchange, and Microsoft has successfully sewn up a lot of businesses with all-MS solutions, but Sharepoint has been a poorly rolled out failure, nobody takes IIS seriously outside of shops that have sold their soul to Redmond, and Microsoft is pitted against the encroachment of Linux, which while nothing special in the desktop area is a huge force in servers.

    Apple is sticking to its strongholds in education and media/publishing/broadcasting, and growing products that will have potential to move into corporate circles in the future. If you look at what CNET/IDG wags are complaining about, you can easily pick out the most significant threats to Microsoft in business: Linux, the iPhone, Google.

    If you look at Microsoft’s revenues and profits, it makes a lot of money from Windows, Office and Servers, but its profits come mainly from Office and Windows. Servers are a struggle, because the company actually has competition. There’s little room for Microsoft to grow dramatically anywhere, and it already charges sky high software licensing fees from its Enterprise users. It looks a lot like the old IBM (which incidentally is now pushing Linux). – Dan]

  • http://www.cyclelogicpress.com Partners in Grime

    Wow, impressive article! Loved the graphs, too.

  • galevin

    Really enjoy your articles. You offer a unique point of view, and I appreciate your insights.

    I am pretty tech-savvy, but I have no expertise in operating systems. I’d be interested in the details of why, despite the fact that the various Apple devices are not running exactly the same OS, they can be said to all be running OS X, while at the same time the different versions of Windows should be considered to be different OSs. Isn’t this pretty much a judgement call?

    If not, what is really shared between the Apple OSs vs. the Microsoft OSs? How much of the code is actually shared (common code), vs. shared and then customized? What specific components or functions are therefore the same, or very similar?

    [There is little similarity between WinCE and the WinNT kernel used in Windows NT/2000/XP/Vista. WinCE largely obsolete and even Microsoft is promoting using its desktop OS for use in embedded and handheld PCs, the very target WinCE hoped to hit. Microsoft is still stuck selling WinCE based Windows Mobile phones and media players. It has none of the functional overlap that Apple has in the new Touch/iPhone, desktop Mac OS X, and Apple TV.

    The Touch/iPhone use a ported kernel and share much of the same software, including the same WebKit rendering engine. Microsoft has different, very large groups working on every product in far more isolation. That’s part of the company’s problem. – Dan]

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  • surferfromuk

    OSX runs on a device I can fit in my pocket – only those who truly appreciated the complexity involved in accomplishing such a feat will ever truly understand just how incredible that is. A ‘new wave’ of technology has really just begin…

    Which leads me to…

    I wonder how Microsoft & Nokia are getting on trying to ‘bolt’ transparency effects, fluid animated screen transitions and true multi-tasking into their ‘pocket sized’ devices.
    Vista can hardly run on a 2.0ghz Core Duo with 2gig ram let alone a sub 600mhz ARM processor.
    It’s laughable – and yet the ‘cheesy eye-candy’ skin they drop onto a slightly modified Windows 6 Mobile codebase will easily convince another wave of ‘payroll journalists’ that Microsoft have truly delivered ‘the iPhone killer’.
    Hopefully by then Gen 2 iPhone will be out and once again they’ll look like the yesterdays men they really are.

  • 3199cc

    Great article as usual and despite my past criticisms I respect you for calling the facts as they are.

    My worry however, is not that Microsoft will ever compete with Apple in the consumer electronics arena. My worry is that Microsoft will actually get its s**t together for Windows 7.

    What if Microsoft actually took the time to make an OS that could compare to OSX? The first Mac I ever owned was a G4 cube with OS9 which was the biggest disappointment. OS9 crashed as much as Windows at the time and froze even more.

    My point is that you are writing off Microsoft in the same way that Michael Dell and company wrote off Apple. Again, I don’t know what they will or won’t do but I think it would be extremely foolish to write off Microsoft engineers as less brilliant than Apple engineers.

    Truthfully, I am concerned that Microsoft has the ability to deliver an operating system that people might be happy with some day. If they do deliver a revamped version of Windows with new workings under the hood that can utilize resources even nearly as efficiently as OSX and be stable, Macs MIGHT have a problem. (Don’t get me wrong, I am writing this from Blackbook, and I have an iMac Alumnium and a Mac Mini) For if someone can get a $499 piece of ewaste with an LCD and a version of Windows that actually works well, people should be a little concerned about Apple’s computer business.

    Again, these are just my thoughts and I find it hard to believe that a company with the business sense of Microsoft won’t realize the perfect storm about to sink its ship. Maybe their business sense hasn’t been the best in the past, but there’s no more excuses for them going forward in light of more recent developments in the economy, the industry, and consumer taste; and they know it.

    For the record, I do own one Windows PC which I built in the Pentium 4 era, and since then I have been using Macs exclusively.

  • pa


    MS tried to come up with the OS you are describing, with Vista. They had to gut the best parts and limit it to some GUI and security enhancements in order to have a hope of shipping it in the first decade the new century. There is the issue of compatibility with existing applications and the dominant share of the market that makes it impossible for them to do this. A new file system, for example, would impact their entire desktop and server platform. It might be relatively easy for the typical consumer to switch, but incredibly difficut and expensive for a larger corporation.
    The second issue of a $500 (at today’s prices) computer that can compete with Apple’s offerings is not a major worry either. The manufacturer of such a machine would have to surrender a large percentage of the sale – and this is retail, mind you – to Microsoft for the OS and spend half as much extra on Office. Apple can throw in the OS and extra applications and charge only $70 for it’s “office” software. So, companies like Dell and HP would have to sell 10 times the units Apple says and still not match Apple’s profits. Believe me, no PC maker likes to sell $500 computers. There is just no profit in it.
    However, Dan’s point about including the iPhone in the Mac OSX platform illustrates that Apple has found a way to sell $500 (or $400, in this case) units for a good profit. It may be possible for Linux based devices to compete in this segment, but definately not possible for Vista based devices for at least 3 more years when computing power at such scale is fast enought to accomodate Vista. By that time Apple will have 50 million devices in the market, and offer better speed and functionality for less than any Vista-based device could hope to offer. I think the age of vaporware is gone. Bill Gates’ last keynote at CES is an evidence of this. The number of consumers switching to Macs is another.
    I would turn your concern on it’s head and ask, what do you suppose Apple plans to do with its $18.5 billion on cash? Will it buy Adobe and kill off it’s Windows products? Will it buy Sun and get an instant foothold into corporations to which it can then sell desktop units in mass? I think Ballmer and Microsoft investors have a great deal more to worry about Apple’s strategies than we do about the surface or the little box with a wire attached to it, that I can point to a building and find out the last time I was there.

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