Why I think Apple does what it does.

I was recently asked a question. That question was why does Apple do the things they do and why do they hold such tight controls over their hardware and software? Why not just let others make Macintosh computers and compete on a level playing field; mano e mano and let the best computer win? I’m here to answer that question and yes, I’ll be a little long-winded and possibly might miss a fact or two. However I think my logic is pretty solid.
Apple’s computers are of high quality, but they have painted themselves into a corner. They can’t afford to let others sell OS X-based computers without losing the very tight control that they are so famous for. As it stands now, most of profits that Apple makes still come from their Macintosh line (though only a fool would discount the very real profits currently being made from the various iDevices and percentages of sales through iTunes for content and apps) which means they cannot allow anyone to steal that market away from them.

The way their EULA (End User License Agreement) is written, you cannot LEGALLY build an Intel-based computer and try to sell them! It hasn’t stopped a few people from over the years from trying (PsyStar comes to mind) and getting smacked down pretty hard. I doubt anyone at Apple cares if you go out and buy a bunch of parts from NewEgg or TigerDirect and install OS X on it though that of course is against the EULA too. Now, I don’t read EULAs either (unless I can’t sleep) but I bet if you looked at what passed for their OS EULA mid-90s and what they have today, it would be a different document indeed.

A little history. I know this will be long-winded, but stay with me as I do have point.

Mid-90s Apple had just made the decision to allow other companies to make Macintosh clones with the unwritten understanding that these companies would concentrate on the low-end models, leaving Apple the high-end cream. The thought (at least what Apple thought) was that the cloners would help Apple increase their market share by offering low-cost Macs to users who would eventually buy Apple’s higher-end line. PowerComputing, Radius (which later sold their license to UMAX), and Motorola (which was the only one of the big three allowed to sub-license their StarMax design) began selling Mac Clones. Naturally they had no intention of staying in the low-cost, low-margin end of the pool. They used more Windows PC standard equipment than Apple had ever allowed. PS/2 ports for keyboards, mice, and printers instead of Apple’s own ADB ports, ATA based hard drives and controllers instead of SCSI which while faster (than ATA) made no real appreciable difference to the average user and cut their costs considerably. Then they went for blood and started selling high-end PPC604 based computers just like Apple was, but being able to accept lower margins AND using lower cost materials were able to sell similar computers at 25-50% lower than Apple could. Instead of increasing the Mac’s market-share, all they did was reduce the total number of computers that Apple was able to sell.

By the time Jobs came back to Apple, they were bleeding red ink far faster than any potential hardware breakthrough was going to be able to fix. So Jobs killed the Newton, he killed the Performa, Centris, and Quadra Mac lines, reducing the overall number of models (which were so out of control that no one knew exactly when new models were coming out, so people held off from buying making the problem even worse), but none of that was going to save the company. He needed the time for the NeXT OS to be ported to the Mac AND still be backwards compatible with the Classic OS (still at OS 7.6 at this point), but the cloners were choking the company. What came next was the realization that Apple COULDN’T compete as a hardware vendor for their own OS AND allow any other company to also sell Macs. That’s when he made the decision to rename OS 7.7 to OS 8. The cloners ONLY had a license for OS 7 and this was how Apple was going to kill them off (that and buy the biggest of the three PowerComputing). It was a ruthless corporate decision and it set the tone for things to come.

The profits Apple makes from the Mac gives them the money to experiment and take a lot of bold chances. It allowed them to do the iPod and not worry if it didn’t make money for them right away while they tinkered with the formula (which ended up being iTunes) to make it the dominant MP3 player. It allowed them to experiment with things like the AppleTV (which I think they have big plans for beyond the iTunes extender it is now) and not worry that it isn’t making them much money. It let them do things like the Airport series of WiFi routers, it let them take their time with the creation of the iPhone and iPod Touch, the iPad (which I’ll talk about in a moment), take chances with OS X that they couldn’t have done without complete control of the hardware it was running on. One day Apple may allow others to make Macs, but on that same day they will stop making them themselves and it will in essence be the death of the platform. Not right away, but within 5 years of it. Apple will still make OS X, but won’t care nearly as much as they should about it which is what happened to Microsoft and how they lost their way (though they seem to be coming back to that with Windows 7)

Now we come to the present. Apple is very successful and has loads of money in the bank. The can afford to take chances that no other company in tech right now can do. What do they do? They come out with the iPad which admittedly while pretty cool isn’t all that much BUT it shows promise for what can come next. Think about the original Macintosh…little more than a toy with a GUI but look where it went and all the other competitors it left in the dust. Don’t look at the iPad for what it is now, think about what it will be in 5 years.

Apple makes a lot of decisions I don’t agree with, some of them hurtful overall to the technology market at large (and to their customers as well sometimes), but technology as a whole NEEDS companies like Apple to test the waters to see where things are leading to.

I don’t always agree with what Apple does, but I usually understand why they do the things they do.