Firstly, let me say, I've never liked Dvorak much, and I've been keeping up with him via TWiT and still do not agree with much of what he has to say..
He recently published this article on the topic of Apple considering moving over to Windows and discontinuing OS/X. I think this is absolutly rediculous. Apple has spent billions of dollars and invested so much time to build a powerful and reliable OS, why dump it? And Apple as already done a ton to hastle developers by making them rewrite much of their software.. this is the third time now? Thats no joke, especially with large programs like MS Office and Adobe's Photoshop. Doing a 360° on them again is not good for business relations.
Now to my key point, which no one seems to have noticed, is that I believe Apple is actually moving towards being a software company. I'm not sayting they will drop hardware, or even cut their efforts in that area, but they are ramping up their software market more and more all the time. People don't seem to understand that software is where the money is. Its a much higher margin market. Sure the initial R&D process for software is generally more costly, and I'm torn on the support costs of software vs. hardware, since Microsoft has been very successful at outsourcing their tech support to the OEMs as an example.
But after you develop the software shipping costs are very low, and demand is very high. You can move a 100,000 copies of an OS that sells for $129 a pop for less than a $1000 generally speaking. (I know im just pulling some random numbers from my ass, but I'm trying to paint the picture). Now try selling something like an iPod Shuffle, which may cost $129 a pop too, but could you move 100,000 of them for less than a G?
I realize theres much more to it then this, but software is clearly a higher margin market. Microsofts net profit margin for last year was 31.60%, and that was with very quiet year, with no major releases, and huge investments in things that have yet to see and impact on sales (Vista, Office12, Xbox 360).. Apples net profit margin was a much lower 9.9%, and that was with pretty well their best year ever, with huge iPod sales, growth in the PC and laptop markes, and market dominating iTunes.
When you get to a point where Microsoft is, where people just NEED your software, you're in such good condition because you can ship a $300 OS, or $600 an Office suite for little to no cost relatively speaking. And you can do it more regularly. Software can be updated to provide better performance, more security, newer and better features all the time, but the hardware underneath, doesnt change a whole lot, or as quickly, at least for an office environment. (Where I work, we still use computers that are 6-8 years old, but have seen software change 2-3 times in that period).
And Apple is in such a good place right now with OS/X. They actually have a setup where people will pay $129 every 12 to 18 months for an update to the OS. Microsoft would kill for something like that. I'm thinking that was the idea with Windows XP. Make a few changes to an OS, and crank it out within 18 months of the last release to get another $150 or whatever they charge for the upgrade. Thats what they'd love, a stable and reliable source of income. I think they've learned a valuable lesson with Windows Vista, in that they were far to aggressive with it. I think in the future we'll see them pull back on the amount of changes they do and the time spent between OS releases and try for a more stable release schedule of 12-18 months.
This is just my little rant. I believe software is the future, and I do not think Apple will drop their hardware market, they also see the profitabilities in software and are moving to take a bigger share of that market.
He recently published this article on the topic of Apple considering moving over to Windows and discontinuing OS/X. I think this is absolutly rediculous. Apple has spent billions of dollars and invested so much time to build a powerful and reliable OS, why dump it? And Apple as already done a ton to hastle developers by making them rewrite much of their software.. this is the third time now? Thats no joke, especially with large programs like MS Office and Adobe's Photoshop. Doing a 360° on them again is not good for business relations.
Now to my key point, which no one seems to have noticed, is that I believe Apple is actually moving towards being a software company. I'm not sayting they will drop hardware, or even cut their efforts in that area, but they are ramping up their software market more and more all the time. People don't seem to understand that software is where the money is. Its a much higher margin market. Sure the initial R&D process for software is generally more costly, and I'm torn on the support costs of software vs. hardware, since Microsoft has been very successful at outsourcing their tech support to the OEMs as an example.
But after you develop the software shipping costs are very low, and demand is very high. You can move a 100,000 copies of an OS that sells for $129 a pop for less than a $1000 generally speaking. (I know im just pulling some random numbers from my ass, but I'm trying to paint the picture). Now try selling something like an iPod Shuffle, which may cost $129 a pop too, but could you move 100,000 of them for less than a G?
I realize theres much more to it then this, but software is clearly a higher margin market. Microsofts net profit margin for last year was 31.60%, and that was with very quiet year, with no major releases, and huge investments in things that have yet to see and impact on sales (Vista, Office12, Xbox 360).. Apples net profit margin was a much lower 9.9%, and that was with pretty well their best year ever, with huge iPod sales, growth in the PC and laptop markes, and market dominating iTunes.
When you get to a point where Microsoft is, where people just NEED your software, you're in such good condition because you can ship a $300 OS, or $600 an Office suite for little to no cost relatively speaking. And you can do it more regularly. Software can be updated to provide better performance, more security, newer and better features all the time, but the hardware underneath, doesnt change a whole lot, or as quickly, at least for an office environment. (Where I work, we still use computers that are 6-8 years old, but have seen software change 2-3 times in that period).
And Apple is in such a good place right now with OS/X. They actually have a setup where people will pay $129 every 12 to 18 months for an update to the OS. Microsoft would kill for something like that. I'm thinking that was the idea with Windows XP. Make a few changes to an OS, and crank it out within 18 months of the last release to get another $150 or whatever they charge for the upgrade. Thats what they'd love, a stable and reliable source of income. I think they've learned a valuable lesson with Windows Vista, in that they were far to aggressive with it. I think in the future we'll see them pull back on the amount of changes they do and the time spent between OS releases and try for a more stable release schedule of 12-18 months.
This is just my little rant. I believe software is the future, and I do not think Apple will drop their hardware market, they also see the profitabilities in software and are moving to take a bigger share of that market.
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