I happened to catch Leander Kahney on The Cultcast podcast this week expound on how disastrous the whole experiment of cloning Macs was for Apple. Just before Steve Jobs returned to Apple, Apple tried to increase revenue by licensing their Mac operating system for a small fee to other hardware makers who then sold their own version of the Mac. It was great for consumers, but it nearly killed the company.
The problem that cloning created was that the cheaper Mac clones were cannibalizing the premium Mac sales. Apple was earning a small license fee on each clone sold which was almost pure profit. But it wasn’t enough to offset the loss of high-margin Mac sales. The gross margin on one Apple Mac could be upwards of $500. It would take a lot of $50 licensing fees to make up for the loss of just one Mac. Which is why it didn’t work out. One of the first things Steve Jobs did when he returned as CEO was kill the program.
So does any of this sound familiar? The same arguments that were made to push Mac cloning are now being made to encourage Apple to offer their proprietary services or media on Amazon and Android devices. They said Apple could pull in new revenue. They said t would be great for the consumer. They said Apple needs to try something different in the face of plateauing sales. Blah, blah, blah. It’s the same stupidity as 1998.
Macs have always been separate and apart from the sea of PC alternatives. What made them different was two-fold. First, Apple has always believed in using premium components. Second, the operating system and Apple services were designed specifically for Macs and not available on PCs. This bulwark has allowed the Mac to thrive even when PC sales were in a tailspin. Cloning Macs destroyed what made Macs special and was killed none too soon.
Now a very similar mistake is being advocated for today. Many in the Tech world want Apple to offer up their future video media, iOS software, and services to Android and Amazon. It’s the return of the Mac cloning problem. Sure it’s great for consumers. But companies don’t offer up what makes their products special to their competitors. Can you imagine Chevrolet offering Ford the Corvette engine for their Mustang?
As before, allowing Apple media or software on competitors hardware does two things. It makes the competing platform stronger and will result in lost Apple hardware sales.
As I mentioned a few days ago. If Apple feels that it needs to offer a low-cost solution in order to steal market share from Android or Amazon, creating a new brand would be a better way to go. This solution mitigates the problem of losing high hardware gross margins to other manufacturers. Apple gets to keep all the hardware revenue in-house. Plus, iOS market share would increase which would make iOS services an even stronger draw and a bigger revenue segment.
Trading high-margin iPhone sales for a future lower-cost brand could be a potential margin hit. But with Apple’s huge volume and manufacturing expertise, there may be very little to no loss in hardware gross margin at all. This would be the best of both worlds. But even so, Apple has stated in the past, that if anyone is going to steal Apple device market share, it’s going to be from Apple new products. Better Apple than someone else.
Historical perspective is important. Those who are ignorant of history are doomed to repeat it. What is good for the consumer isn’t always good for the company. But all this chatter about Apple allowing their services or proprietary video media on competitors platforms sounds like the resurrection of the old Mac Cloning disaster.
So does any of this sound familiar? The same arguments that were made to push Mac cloning are now being made to encourage Apple to offer their proprietary services or media on Amazon and Android devices. They said Apple could pull in new revenue. They said t would be great for the consumer. They said Apple needs to try something different in the face of plateauing sales. Blah, blah, blah. It’s the same stupidity as 1998.
Macs have always been separate and apart from the sea of PC alternatives. What made them different was two-fold. First, Apple has always believed in using premium components. Second, the operating system and Apple services were designed specifically for Macs and not available on PCs. This bulwark has allowed the Mac to thrive even when PC sales were in a tailspin. Cloning Macs destroyed what made Macs special and was killed none too soon.
Now a very similar mistake is being advocated for today. Many in the Tech world want Apple to offer up their future video media, iOS software, and services to Android and Amazon. It’s the return of the Mac cloning problem. Sure it’s great for consumers. But companies don’t offer up what makes their products special to their competitors. Can you imagine Chevrolet offering Ford the Corvette engine for their Mustang?
As before, allowing Apple media or software on competitors hardware does two things. It makes the competing platform stronger and will result in lost Apple hardware sales.
As I mentioned a few days ago. If Apple feels that it needs to offer a low-cost solution in order to steal market share from Android or Amazon, creating a new brand would be a better way to go. This solution mitigates the problem of losing high hardware gross margins to other manufacturers. Apple gets to keep all the hardware revenue in-house. Plus, iOS market share would increase which would make iOS services an even stronger draw and a bigger revenue segment.
Trading high-margin iPhone sales for a future lower-cost brand could be a potential margin hit. But with Apple’s huge volume and manufacturing expertise, there may be very little to no loss in hardware gross margin at all. This would be the best of both worlds. But even so, Apple has stated in the past, that if anyone is going to steal Apple device market share, it’s going to be from Apple new products. Better Apple than someone else.
Historical perspective is important. Those who are ignorant of history are doomed to repeat it. What is good for the consumer isn’t always good for the company. But all this chatter about Apple allowing their services or proprietary video media on competitors platforms sounds like the resurrection of the old Mac Cloning disaster.
RSS Feed