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Myths of Snow Leopard 7: Free?!

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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

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51 comments

1 John Muir { 07.01.08 at 7:48 am }

The family pack is one of the best consumer loyalty deals going. My first Mac came with Jaguar, and has been upgraded to Panther, Tiger and Leopard using family packs ever since, along with relatives subsequent machines. Quite simply it’s a killer deal. I’ve easily laid down more for RAM than the full software licence costs in those five years!

When a Windows using friend recently picked up an iBook from eBay for his wife, I let him have one of the now unused Tiger licences. This involved popping in the disc and starting the computer while holding C. Once the fresh install was done he started pestering me to get it activated. Activated? I pointed out that we hadn’t even needed to type in a damn serial!

A comment on the previous article is quite right about Snow Leopard: it seems the confusion over its relationship to Leopard has a lot to do with the Intel thing. Apple made a big deal out of Universal Binaries and portability, yet don’t want to have to double up their testing and support efforts on increasingly outdated machines. So what to do? The aggressive thing would be to drop PPC in the next major release, making those long-time users (like me) who they’ve treated so well feel a bit stunned. The lazy thing to do (think Microsoft) would be just to sit around and wait, so that 10.6 is years out anyway. Instead, what they’re doing is giving us a parallel release. 10.5 for “the rest of us” and 10.6 if you’re in the know. That way it’s 10.7 which leaves all the PowerPC’s definitively in the cold, in several years, and built on major efforts battle-tested with 10.6 in the meantime.

In short: 10.6 = $129, won’t likely set any sales records, not aimed to irritate the PPC user-base, but will be something quite substantial as we’ll see in the years ahead.

I just wonder if there’ll still be minor updates (like today’s 10.5.4) for 10.5 while 10.6 is receiving them? Tiger may be supported right now, but is on 10.4.11 forever.

2 Perry Clease { 07.01.08 at 7:55 am }

Do you think that Snow Leopard will have some sort of way of freezing out users who are not running on real Macs? I am thinking that Apple may want some way of stopping the Mac clones

3 simon { 07.01.08 at 8:00 am }

I agree with the article… Only because Snow Leopard will trigger me getting a new mac over my iMac G5 finally – there just seems to be some really compelling reasons to change re. performance, finally.

An observation though about the ‘no new features’ – having full Exhange support built into the Mac OS is a big big big feature from where I’m sitting! Especially if you are in a corporate…

I only recently discovered this site and there’s some
fantastic articles on it – thanks a lot…

4 unscriptable { 07.01.08 at 9:29 am }

Interesting post, Dan. :-) You’ve opened my eyes as usual.

However, I think that you have ignored the latent value of Grand Central in this article. It’s true that as a pure feature, it’s not going to queue-up customers at the stores on release day. However, once the pro apps and even iLife are upgraded to use GC, we’ll see some seriously increased demand.

Incidentally, that’s the feature I want most. Anybody who uses iLife or the pro apps to manage their digital lifestyle will want it, too. Just the thought of being able to master a DVD in under 40 minutes on my 2.6GHz MBP (rather than 4-5 hours) makes me impatient.

… or being able to import/convert my camcorder’s MP2 video files to iMovie’s preferred DV format in real-time rather than wait 10 minutes …

If early implementations of CUDA and other similar technologies to GC are any indicator, that’s the kind of performance boost we’re going to see with Snow Leopard.

5 viking82 { 07.01.08 at 10:09 am }

Hi, i think it’s a good article as always.

I’d just like to point out though that when comparing retail OS pricing the Mac OS X boxed copy should really only be compared with upgrade copies of Windows as every Mac ships with OS X and OS X can only be installed on Macs. (legally)

That has been sort of mentioned in the article but is worth pointing out when comparing prices…

On another note i’d be really interested how Snow Leopard + iWork “NextGen” compare with Office Mac and whether it will force ActiveSync or MAPI Exchange into the Entourage product…

6 lmasanti { 07.01.08 at 1:30 pm }

quote:
“5. Snow Leopard Will Be Worth More than $129 To Those Likely to Buy it.”

As for today, buying a Mac Pro with 2 Core Duo at 3.0 GHz is $800- more than a 2 Core Duo at 2.8 GHz: If we get a 10% increase in speed, we are saving like $671- buying Snow Leopard!

(I know it is not “so simple”, but I bring it as a “proof of concept”)

7 whmlco { 07.01.08 at 1:37 pm }

I’m not sure that Apple will want to only upgrade a small subset of “interested” people. After all, it doesn’t do much good to provide new technologies to developers if there isn’t a base capable of supporting that software.

8 John Muir { 07.01.08 at 1:51 pm }

@whmlco

Good point. New technologies in Snow Leopard are primarily for developers, and developers need customers to sell to.

It won’t be such a small subset though. It will be all new Macs come 10.6′s release. Add to them the minority who will (like many here) buy the upgrade for their capable machines, and you have the tastiest two slices of market for most developers.

The whole Snow Leopard story still seems an unnecessary complication to me at some level though. Apple could have touted Exchange support as a significant Time Machine, Spotlight or Exposé style new feature when they were ready to launch the new cat; and in the meantime just keep the WWDC attendees well informed about the deeper stuff Daniel is covering.

9 lmasanti { 07.01.08 at 2:11 pm }

quote:
“The whole Snow Leopard story still seems an unnecessary complication…”

Do we remember the “Top Secret” features in Leopard?
How do you think that Apple can keep a big part of the press speaking of the next release without giving away any detail?
You get it: “It will be a no-features-release! So we do not have any thing to speak of!”… but you can begin to speculate…
(I think it is called free publicity.)

10 John Muir { 07.01.08 at 2:26 pm }

@ lmasanti

Good idea. But I don’t think it’s particularly effective for their interest.

Jobs focussed the whole of the WWDC keynote on iPhone, iPhone, iPhone. What little was said about Snow Leopard was just a pointer to the closed session later that day, and of course the resulting sparse press release.

I’d quite forgotten about the old Secret Features! This time round, it seems they’re promising just the opposite…

11 pecos.bill { 07.01.08 at 3:16 pm }

“…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…”

Saying “printing money” is the same thing as saying it is wildly profitable…… for an OS. Compared to the gross revenue that hardware brings in, it doesn’t compare. They’re totally different leagues.

I can see the retail price staying but Apple offering decent/steep discounts to those who have those never-used coupons.

12 johnnyapple { 07.01.08 at 3:45 pm }

In the most recent 4 quarters Apple has sold nearly $2 billion in software. As a percentage of overall revenue it’s only about 6%. I don’t know if I’d say Apple doesn’t make much on software. $2 billion makes them one of the worlds largest software makers.

13 johnnyapple { 07.01.08 at 3:53 pm }

Although Apple does not split revenue and profits for hardware vs. software with regards to Mac sales, every Mac comes bundled with about $200 worth of software. At retail value that’s another $1.7 billion in software revenue – at least that’s one way to look at it.

14 JulesLt { 07.01.08 at 3:56 pm }

It would be interesting to see that stats for O/S versions and upgrade sales – I’m guessing that as more people buy Macs, the ratio is falling, as they move increasingly into the market that doesn’t upgrade anything ever, and couldn’t really tell you if their machine ran Leopard or Tiger.

I’m guessing most of the upgrade sales will be to Pro users, whereas most of the hardware growth is at the other end (Macbook / Air). Especially if it coincides with pro app upgrades / new apps like Phenomenon (presumably Quicktime X is being developer for Apple in-house use as much as anything else, and I would also presume that Apple need to decarbonize their pro apps to get to a 64-bit GUI).

Watch the doom-mongers seize on the lack of interest – ‘has Apple’s crown slipped?’.

15 tundraboy { 07.01.08 at 6:08 pm }

Daniel, the term ‘predatory pricing’ means pricing at extremely low prices in a bid to drive out the competition. Microsoft’s retail pricing policy for Vista is thus the total opposite of predatory. It is better described as ‘monopoly pricing’. Although in my surlier moods I’d describe it as ‘shameless profiteering’.

16 lmasanti { 07.01.08 at 8:11 pm }

“I’d quite forgotten about the old Secret Features! This time round, it seems they’re promising just the opposite…”

That’s the trick. As you forgot about the Secret Features you’ll forget about the No Features either.
We are still too close to WWDC. That (and Dan’s articles) is what is carrying this conversations out.
After July 11th, everyone (including us) will be speaking of the good and bad of the iPhone II and will not remind anything about lots/non featurities desease.

17 danpoarch { 07.01.08 at 11:16 pm }

I think that there’s an interesting timing issue here. Right about the time that Mac requests will start to hit corporate IT departments like a tidal wave, IMHO, there will be this new version of the system that is “Exchange Server Compatible.” [echo, echo, echo] Corporate IT managers seem to only recognize the word Exchange on packaging so they will wipe their brow, with their Vista logo towel, and purchase a bunch of licenses for those pesky Mac people. We might see a huge bump in sales if only because it says EXCHANGE on the box. They might think about backlighting it with an LED, just to make it “pop.”

I’m only half kidding.

18 StrictNon-Conformist { 07.02.08 at 12:27 am }

Here’s where you go beyond reason and straight into self-serving, people-bashing hype:
“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.”

It’s one thing to believe strongly in something, it’s yet another to go and paint the majority of users of something you label in one or more ways as inferior people, and calling them thieves. Sure, there’s a certain number of pirates of Windows, but there’s also a number of OS X thieves, too, and I know at least a couple that willingly steal it to run on non-Apple hardware. Unless you can provide a study that demonstrates that over half of Windows users are thieves or would-be thieves, you really should hold back on labeling the majority as such.

What’s important to remember is this eternal truth of operating systems and hardware: it doesn’t matter how ideal you think either one of them is, or both together: without end-user applications that people want to use and actually do use for their desires and needs, the hardware and the software are only useful for consuming resources in terms of time, money and energy, and contribute essentially nothing to humanity. If the OS is too hard to work with, it won’t gain enough traction: if the hardware is too hard to work with, it won’t gain traction: if the hardware is too expensive to work with for those needing it, it won’t gain traction: if the software is too expensive for people that want/need it, it won’t gain traction. Apple has past examples that demonstrate all of those to some degree or another, and those examples occupy landfills. But, that’s just Apple, and they’re far from the only company with such things in their histories. So, too, was the other company that Jobs brought about in the same field: sure, was great hardware and software, but… well, fortunately, it’s been brought back into the fold to where the unwashed masses can afford to take advantage of it, after a long delay and a lot of work to make it more management-friendly for mere mortals.

19 beanie { 07.02.08 at 3:05 am }

John Muir wrote:

“The family pack is one of the best consumer loyalty deals going…When a Windows using friend recently picked up an iBook from eBay for his wife, I let him have one of the now unused Tiger licences.”

I think family pack is limited to 5 household computers. Does your friend’s wife’s computer stay at your home? If not, your friend is using a pirated copy of Tiger.

20 gkc { 07.02.08 at 6:53 am }

Daniel said: “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.”

I bought a single copy of Leopard in order to get media to install under our 200 user licence. That’s 200 legal installations from a single sale. Are those licences counted in the total sold I wonder?

21 John Muir { 07.02.08 at 7:29 am }

@beanie

Correct: it’s per household. Fortunately, we don’t use any Tiger Macs here now at all, so they essentially “have” the licence instead of me.

Our Leopard box upgraded a neat five machines precisely. Nice!

22 John Muir { 07.02.08 at 7:38 am }

@StrictNon-Conformist

What you describe, it seems, is a free market. Sadly, that is not so for operating systems. Try going into a retailer and asking for a PC of your choice with the OS of your choice on it. If your choice is anything but Vista, you may be in for a hard time.

Note that the market is yelling and screaming for XP when it’s a choice between that and Vista. But as the sole supplier of both, Microsoft can put a bullet through the baby’s head no problem.

Vista is languishing with the worst reputation for any version of Windows I can remember. It is wasting resources like you described above. And besides for buying a Mac or going out on a limb with a Linux home-build or an ultra low end Linux powered machine (not available in any stores near me), people will have no choice but to keep buying it.

For most people, it’s never even made apparent to them there *is* a choice. Just row upon row of computers, every single one of them running Vista.

Here’s a good exercise: find a non-expert user on Windows and ask them what version they’re running. When you can’t get that out of them, ask them what “operating system” they choose. Put a hand to your jaw to catch it from dropping when they come out with “HP”, “Dell”, or “Vaio?”

23 zaxzan { 07.02.08 at 8:03 am }

Hola Dan.

While I would like to post a sober thought regarding the upcoming OS variant Snow Leopard … er … like … ummm …

Yeah, well anyway, being a total dork, I have been following your posts vis-à-vis your Spanish adventures on “Twitter” and thus, at the moment I am more interested in how you are able to trip the light fantastic – El baile flamenco style, getting smashingly “trashed” at night on cruzcampo and vino de verano while still getting in some spectacular sightseeing AND still able to push out excellent commentary.

Salud, Arriba, Abajo, Al Centro, y Adentro! To you “Twinkle-toes” – Don’t forget to order a pan con aceite for brekie, yummy.

PS – Snow Leopard = Essential and evolutional streamlining of the fundamentals.
I am perplexed as to why some people find the process of logical maturation a rationale for angst?

PPS – See what I did with the “sober” gag? … Ok, sorry! I’ll get me coat and be off then.

24 John Muir { 07.02.08 at 8:14 am }

@zaxzan

He had the new articles stacked up, already written, so with just a tap on the old iPhone (or a word to the interns in Krasnodar!) they would appear, like clockwork.

Got to like this internet thing. Used to be a real pain telegramming articles in from abroad!

25 Lucky { 07.02.08 at 2:54 pm }

I just wanted to say that I bought Leopard because I respect Apple and the way it treats users. I could have easily downloaded a DVD image from somewhere no big deal.

I never bought anything Microsoft and I’ve been a Windows user for more than a few years. I’ve used Windows since Windows 95 and had 95, 98, Me, XP and Vista.

Great posts, Daniel.

26 Another Look at the 10.6 Value Equation | The Mac Night Owl { 07.02.08 at 9:30 pm }

[...] to the Snow Leopard upgrade policy, commentator Daniel Eran Dilger had it right in his blog in a recent commentary. You see, Apple’s main business is selling hardware. So even if a lot of you don’t buy [...]

27 davebarnes { 07.03.08 at 12:49 pm }

John Muir is spot on. The Family Pack.
Our family owns 5 Macs and we will be upgrading to 10.6 at an expected price of $45/computer.
This (for us) is about the same as zero$.

28 danieleran { 07.05.08 at 12:43 pm }

@StrictNon-Conformist:

I know you like playing devil’s advocate, but the idea of Windows PC piracy is not controversial. Also, I very explicitly pointed out that Leopard was widely pirated as well, based on the numbers Apple set out.

If you can find 25 home users with 100% complete, valid software licenses out of a random selection of 1000 Windows PCs, I’d pay you a million dollars. I have worked on thousands of PCs from affluent home users to small businesses to corporate and institutional settings and outside of machines under strict IT control, absolutely zero have not been full of pirated software.

You may as well argue that there is no evidence that the earth is round.

29 retnuh { 07.06.08 at 12:41 am }

@StrictNon-Conformist

Having worked as a PC tech years ago, Win95-Win98SE timeframe in a small shop ~6 people, there was countless times that we’d be asked to just install windows for them because the customer didn’t own one. Or they’d return with a friend or relative’s copy. If they were buying new hardware or upgrading a hard drive we’d try and get them an OEM version. But I’d say 75-85% of the customers fell into the “pirate” category.

It basically fell into the misunderstanding that a computer just comes with an OS and why should they have to buy it. The same percentage always questioned why it was a line item on their invoice.

30 gus2000 { 07.06.08 at 11:13 am }

I was a non-conformist until everyone started doing it.

Interesting that so many “suckers” bought the Leopard Family Pack when they could have just passed around the single-use DVD.

31 John Muir { 07.06.08 at 12:26 pm }

Yup, definite “sucker” here. I would have been much better off messing around with a keygen and an activation patch for Vista or XP…

/snark mode

32 hodari { 07.07.08 at 7:04 am }

No Muir – you do not need a keygen and activation patch. You need the Volume Licence CD from Microsoft. It does not require activation. The onus is on the licencee of the Volume CD. You can install it as many time as you like.

33 hodari { 07.07.08 at 7:05 am }

StrictNon-Conformist well said! – thanks

34 hodari { 07.07.08 at 7:09 am }

John Muir “What you describe, it seems, is a free market. Sadly, that is not so for operating systems. Try going into a retailer and asking for a PC of your choice with the OS of your choice on it. If your choice is anything but Vista, you may be in for a hard time.” – Not true. There is an entire street called computer plaza – they will configure a PC for me with the OS of my choice that includes all variant of Windows, LINUX, SOLARIS and the ones you do not know like CONGO BONGO MONGO TONGO etc…..

35 hodari { 07.07.08 at 7:17 am }

John Muir “Vista is languishing with the worst reputation for any version of Windows I can remember. It is wasting resources like you described above.”. I think you are wrong. I have been using it for the last four months now when I bought a VIAO VGN-TZ37GN which beats the Macbook AIR another story for another time. I think VISTA is exceeding well designed from an OS pont of view and the interface the candy stuff that MAC users including myself at one time would die for is way modern and sleek ie the AERO Glass effect.

36 gus2000 { 07.07.08 at 10:40 am }

Be gone, Troll. Return to your bridge.

37 tehawesome { 07.08.08 at 6:04 pm }

It seems to me that the whole “no new features” thing is a smokescreen to cover up the fact that Exchange support is the single biggest feature of any OS X release from a business perspective. It’s like, “now we’ve got the OS itself working as we and you would like, now we’re ready to go to work”. OS X is a good citizen on the network, the apps are in place, the hardware is not alien to your average IT department (“hey guys, you can run Windows on this stuff if you rally want, you can’t say it’s full of weird technologies any more”) and now it’s ready to plug into existing infrastructure with minimal additional requirements for software support: I’ll bet any money that plugging Mail.app into Exchange is going to be ridiculously simple. Snow Leopard represents Apple making a big push into the business space, based off all the little steps that have been taken over the last seven years. Given news of Mac sales showing huge gains in the face of Vista’s poor reception the platform is obviously gaining mindshare, and Snow Leopard must be Apple’s shot to cement that in terms of building business outside of specialist graphics and video markets. Huge growth in that arena wouldn’t be such great shakes in the overall computer market, but still enormously valuable, and Apple really has nothing to lose here.

38 bregalad { 07.10.08 at 7:53 pm }

Apple is somewhat lucky that Microsoft has such high profit margins on Exchange. Otherwise MS would never let anyone connect to an Exchange server with anything other than a Windows based machine. As it stands they don’t really care if it’s Dell paying $40 for an OEM copy of Windows or Apple paying some undisclosed sum for access to the proprietary Exchange protocols as long as they get to sell another $1000 pack of client access licenses.

I see a lot of tiny victories slowly adding up. Eventually even IT departments will be so comfortable supporting Macs that, should a strong competitor to Exchange appear, they might just abandon Windows completely.

Provided Apple starts taking security more seriously (I CHMOD’d my ARDAgent to protect myself and now Remote Desktop won’t even launch) they could be a little snowball at the top of the mountain that eventually crushes the entire Microsoft village below.

39 dizzyj { 07.14.08 at 12:50 pm }

Nice article, although point four seems off-base. It seems more likely that Apple doesn’t load their retail versions of OS with nasty anti-piracy measures not because they target a premium (and thus, somehow more honest—a debatable point at best) market, but because they target a market that has no significant hardware alternatives.

Compared to other OSes, OS X rapidly deprecates old hardware, ensuring a small market for potential pirates. While the hardware requirements for XP and Vista are not insubstantial, it can be run (often badly, but still run) on G3/G4-era hardware. While a small number of people might illegally be porting OS X to non-Apple hardware, those people are technically sophisticated enough to defeat anti-piracy measures, so not worth addressing.

The cost of anti-piracy measures is high in terms of consumer satisfaction. For Apple, the benefits are miniscule compared to revenue lost due to piracy.

40 LunaticSX { 07.17.08 at 3:54 am }

“Compared to other OSes, OS X rapidly deprecates old hardware, ensuring a small market for potential pirates.”

Huh?? Clearly you do not have a significant amount of experience with Macs.

I’ve got an original PowerMac G4/450 from the middle of 1999. It came with Mac OS 8.6 and it runs just great with 10.4.11 Tiger, which is the last OS officially supported on it. It runs Leopard, too, with a hack. Apple gave that machine 8 years of official OS support from when it was introduced until Leopard was released last year.

Leopard is officially supported on machines as old as the “Quicksilver” PowerMac G4s from July of 2001–more than 6 years prior to the release of that version of Mac OS X. When Snow Leopard comes out next year those “Quicksilver” G4 will also have achieved 8 years of official OS support from Apple. In fact, because of the way Snow Leopard is being positioned differently from previous versions of Mac OS X, there is a lot of speculation that 10.5 Leopard will continue to get updates, which would result in that hardware actually getting more than 8 years of official OS release support from Apple.

It’s also important to note that with Mac OS X the oldest hardware it officially supports doesn’t wind up being barely usable. Instead, the new OSes actually run quite well and frequently IMPROVE the performance of the older hardware.

It’s quite well known that Apple PC hardware has a significantly longer lifespan than other PC hardware in terms of being fully usable with more recent Mac OS versions and third party apps.

Older generic PC hardware may continue to be usable by being repurposed to run Linux, but that’s a completely different story.

It’s Microsoft OSes that truly rapidly depreciate older hardware. Can anyone imagine running Windows XP on a machine that is older than 2001, the year XP came out? Similarly, it’s hard to imagine anyone actually enjoying running Vista on hardware older than its original release date, in November 2006, or even its general public release date, in January 2007.

41 John Muir { 07.17.08 at 12:38 pm }

@ LunaticSX

Correct.

I did actually try XP on a 1999 vintage laptop once, and to say it was a painful experience is but a polite understatement. Horror, pain and anxiety, all while just trying to run a plain and unremarkable OS. One released when that K6-II was just two years old in 2001.

Meanwhile I’ve run Tiger on two 1999 Macs, a 400 MHz iMac and a 400 MHz B&W G3. Runs like a charm. An OS from 2005 running nicely on six year old equipment.

The idea that Windows is kind to old hardware is a load of bull. I wouldn’t be surprised if it arose during 2001-2007 while XP was all there was, and made new hardware look lacklustre. Little did they know what Vista would bring!

42 Ephilei { 07.17.08 at 3:02 pm }

I agree Apple won’t; it’s not Apple’s style. But they should.

Running the latest, greatest OS incites word of mouth for Macs and word of mouth is the biggest marketing boost. Apple should get its OS into as many hands as possible because those hands will only multiply sales as so many sales are switchers. Raising Mac sales 2% would bring in more money than selling individual OS copies.

Secondly, with iPhone, Apple is in an important historical place where they can woo developers. The more users running 10.6 and few running <10.6, the more attractive the platform.

43 rufwork { 07.25.08 at 7:45 pm }

“1. Selling Snow Leopard for Less Would Make Selling 10.7 at Regular Price Rather Difficult.”

10.1 was a free upgrade if you went to the store to pick it up. 10.2+ seem to have sold fairly well.

44 John Muir { 07.25.08 at 8:29 pm }

@rufwork

There was actually a lot of whining at the time 10.2 came out. It was right then that the “OS X update tax” myth became established, asserting that Apple charge everyone for regular service packs while MS drops them for free. Even with Tiger lasting for years, that myth hasn’t entirely subsided. All caused by 10.1 being a free “update”, and 10.2 costing the full $129 irrespective of any previous versions you had.

10.6 will cost $129.

45 rufwork { 07.25.08 at 10:35 pm }

@Muir

Yes, but did whining mean fewer sales?

That said, I can’t argue your final comment.

46 John Muir { 07.26.08 at 8:01 am }

Well here’s a chart of Mac sales, quarter by quarter, for the last decade:
http://lowendmac.com/musings/08mm/art/mac-sales-by-qaurter.gif

(Unfortunately misspelled, but I’ve seen the data charted before and it’s accurate!)

Jaguar sits in the middle of that time frame, from 2002-2003. Mac sales were essentially flat-lining at that time.

What isn’t in those numbers, I’ll admit, is retail copies of Jaguar. If you can dig those up and compare with Panther then we’re talking.

I should also point out that one of the Macs sold in the Jaguar era was my very first one. A 12″ PowerBook I happen to still be using this afternoon! But the surge of sales only really came about with Tiger.

47 tgl { 07.28.08 at 1:47 am }

> Big surprise: lots of people are stealing Leopard.

Daniel, I think you might have miscomputed this. Doesn’t Apple recognize OS sales revenue over multiple years? (I can’t immediately find a statement about this, but they certainly do that for some products such as iPhone.) If so, your numbers do not prove that lots of thievery is going on.

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