It licensed the Mac OS to run on non-Apple computers. The likes of Power Computing, Motorola, and others began to make Mac-like clones. They were not Macs, but they would run Mac OS and Mac apps. It was like getting a Mac but paying less than Apple charged for similar hardware.
Apple Won’t License OS X Ever
The theory behind Apple’s licensing arrangement for Mac OS was simple but flawed. The idea was to have a few manufacturers build Mac clones so the Mac market would expand much as PCs did years earlier.
If Microsoft could license DOS and then Windows to PC manufacturers, then why couldn’t Apple do the same with Mac OS?
As much as I would have enjoyed the purchase of a non-Apple Mac at much less than Apple’s storied high margin prices, there was just one flaw to the whole Mac OS licensing theory.
The numbers didn’t add up. When Steve Jobs returned to Apple in 1997 one of his first actions was to kill Mac OS licensing agreements with Power, Motorola, et al. Why? The numbers didn’t add up.
Microsoft doesn’t sell PCs. It sells Windows for PCs. All PCs. That’s a level playing field because that’s what Microsoft does. It sells Windows OS and Windows apps. Software.
Apple makes money the old fashioned way. Hardware. For every Mac clone sold back in the mid-1990s, Apple lost a few thousand dollars of revenue by trying to make it up on a $50 (or whatever it was) licensing fee.
Do the math. It doesn’t work. It didn’t work then (which is why Jobs killed the program). And it won’t work now. Yesterday, MacDailyNews raised the issue again regarding OS X:
Imagine if Apple then executed a controlled licensing program (Apple approval required) of OS X to interested parties. OS X is now just a fraction of Apple’s revenue stream, yet it is the only serious alternative to Windows. Apple no longer needs OS X exclusivity to survive. By licensing OS X correctly and at this crucial time, Apple cause extensive damage to Microsoft and Windows.
There is a serious alternative to Windows and Windows PCs already. It’s called the Mac. It comes with OS X. That’s a key point of differentiation.
What happens if Apple licenses OS X to run on less expensive Dell or HP or Lenovo computers? Apple might make $50 in revenue for each unit that other manufacturers sell. But for every OS X equipped PC sold, Apple also loses revenue because that customer isn’t in the market for a Mac. That money went elsewhere and Apple got very little in the exchange.
As it is now, every Mac sold, and they’re selling in record numbers these days, sells for well over $1,000. Apple’s gross margins are around 35-percent, which means Apple pockets hundreds of dollars in margin for each Mac sold. Compare that to $50 for each PC sold running OS X.
The math doesn’t work. For every PC running OS X sold Apple would get a measly $50 licensing fee, but lose out on both the hardware revenue and profit.
Apple’s objective is not to kill Microsoft or Windows (although they may make a special case about doing bodily harm to Google and Samsung). As Steve Jobs said, the OS wars ended a long time ago. Apple lost. Microsoft won. Move on.
Apple’s penalty for losing to Microsoft was to become the most valued, most profitable technology company on the planet. Apple is centermost in the mobile revolution while Microsoft flounders. Why bother to license OS X when the heart and soul of Macs, iPhones, and iPads are reaping huge dividends for Apple?
OS X will not be licensed to other hardware manufacturers. Ever. I wrote this yesterday on my blog and received a call from a friend who suggested that Apple could license an inferior feature-limited version of OS X or iOS and keep the Mac and iPhone and iPad differentiated from the competition while collecting licensing fees.
There’s already an inferior, featured limited lookalike for OS X and iOs. They’re called Windows and Android, respectively.