Is Apple Turning into a Software Company?
Apple is always being touted as a “hardware” company. This comes from the fact that their real profits come from the sale of computer hardware. The software they write is really just written to facilitate the sale of that hardware. It is believed that their markup on hardware is around 30%; not a bad profit. But in this day of Dell computers that start at $299, most people can’t imagine spending $1500 for a basic Apple computer.
However, the recent announcement about future Macintosh computers running on Intel processors instead of PowerPC processors has really shifted the landscape in my mind. Many people are dreaming about low priced Macintosh computers or dual-booting Microsoft Windows and OS X, but I don’t think either of those are ideas that Apple is interested in. I really don’t see that using Intel chips is going to reduce the price of Macintosh computers significantly. Why would Apple do that if that’s where their money is coming from? And, I’m quite sure that Apple has no interest in you running a Microsoft operating system on their machines. It occurred to me that this might just be a contingency plan.
If you haven’t noticed, for a “hardware company” Apple sure does create a lot of high quality software: OS X, iTunes, iDVD, iMovie, GarageBand, iPhoto, Keynote, Pages, Final Cut, Motion, Shake, etc. Currently, these are only sold to the small percentage of people who own Macintosh computers, which is a pretty tiny percentage compared to those that run Wintel systems. It seems to me that a company with this much software could live pretty comfortably if all of this software was available for commodity hardware. Apple switching to Intel might just be the first step to that end. Think about it, if this Intel plan starts to turn sour, Apple could turn to Dell to create systems that run OS X, and the rest of Apple’s software. This could very easily bring a large enough influx of OS X users on Dell systems to compensate for the profit losses on the hardware. I would expect the prices of things like OS X and iLife to increase to compensate even more though.
As the years go by, this switch to a non-hardware company seems more and more likely to me. Every year Apple tends to use more PC hardware in their Macs, and in my mind, are becoming less integrated and appliance-like as in the days of yore. Personally, it saddens me to see this as Apple is the only remaining bastion of hope for true innovation in personal computing. Let’s just hope that my premonitions of Apple are wrong.
