The Remaining (post Leopard) Three Barriers Preventing MacOS Corporate Use

Rob Enderle

With the release of Leopard now days away, I think it is important to look at the reasons not addressed by Leopard that keep the Mac OS blocked from the corporate desktop.

 

Leopard will address the two most widely cited reasons why Mac isn't used by corporations: Interoperability and compatibility with Windows. We'll see if the product stands up to the rumors shortly, but indications are that Leopard will nearly seamlessly drop into Windows shops and will likely be vastly more popular with small and medium-sized businesses as a result. However, large enterprise shops will continue to have serious problems with three aspects: Single Source, Trust, and Stability.

 

Single Source

 

Corporate and government shops have a requirement to competitively bid large capital equipment purchases, and this has increasingly worked against both mainframe and UNIX platforms. However, because there was no choice, variances were both possible and common. In addition, for much of the time both of those platforms existed, the requirement to not do single source was vastly weaker than it is post-Enron.

 

It is a variant of this problem that forced Intel to license x86 to AMD and create the competitor it is now trying to put out of business, and it goes to the heart of why Dell went to AMD and Sun recently went to Intel for PC solutions.


 

Although, initially, Apple could be competitively bid, once in place, the differences in the platform make realistic competitive bidding problematic, and it is much easier to bid common vendors against each other.

 

Trust

 

Through much of the '90s Apple had an enterprise sales and support group. Unfortunately poor financial performance during this time forced it to abandon this segment, and it left a number of very large companies high and dry when it did so. This was also largely true with large government, and both entities are very concerned that if they adopt an Apple platform that Apple might abandon them again, particularly given the uneven success with the iPod (After more than 20 years Apple has only 2.5 percent of the PC market; after less than 10 years, it has more than 88 percent of the MP3 market.)

 

There is a broad realization that were a company to make a commitment with Apple and then Apple were once again to abandon the segment, the key decision makers would be viewed as negligent given this past history. Trust is very hard to rebuild and while IBM, which had a similar problem in the early '90s, proved it could be done, it took it five years and it didn't have to overcome the perception that it is largely a consumer electronics company.

 

Microsoft clearly has trust issues as well, but IT is unlikely to switch one trust problem for another, particularly if they increase their personal risk by trusting a company which seems to be spending vastly more resources on MP3 players than on corporate initiatives. Stability

 

Corporations like to be kept in the loop with regard to what is coming, and they want assurances that platforms will remain stable for at least 12 months. Apple has historically been unwilling to share future plans and it can't assure stability without that disclosure.

 

The other vendors in this space, from hardware to software, conform to this requirement in order to win business even though it does create competitive risks for them as well.

 

The PC stability requirement goes to the need to reduce as much complexity in a large shop as possible. This is because these shops have thousands and often hundreds of thousands of PCs. Any variance, when you have this many of anything, can make the result almost impossible to support with a relatively small number of people.

 

Enterprise IT shops ask for and get up to 18 months of PC stability from the other PC vendors and have grown to require it. These firms are used to asking even their very largest vendor companies comply with their policies, and Apple's likely refusal to do so will probably prevent their being accepted as a viable corporate desktop vendor.

 

Apple Market Share Gains - Linux Impact

 

I do think Apple will gain share in business, but the vast majority of this will be in small to medium business and small to medium government, including parts of education which is once again showing interest in the platform. In many cases, this will be as an alternative to Linux which has not trialed well and also falls victim to a number of shortcomings on the desktop which make it vastly less attractive than the Mac OS for this use.

 

It will be interesting to compare market penetration on the desktop between the Mac OS and Linux, both of which are UNIX variants, against what is an unprecedented Windows weakness in the business segment. Linux should be stronger in business than Mac OS but, as mentioned in the Dell Linux piece that preceded this one, it lacks adequate revenue, profit and has too many different versions to be as successful as it otherwise might be. Linux's potential in the consumer market is tied to embedded use, where it has similar problems but appears to be more successful.

 

Apple's physical limitations, as the only hardware vendor selling the Mac OS, will probably be the major barrier for growth (50 percent per year is the typical limit for a hardware company) over the next few years, which may make much of this discussion pointless anyway because Apple is likely to reach physical limits, if it can execute, with its consumer and small business gains anyway.



Add Comment      Leave a comment on this blog post
Mar 27, 2007 5:25 AM Mark Mark  says:
You are too hung up on hardware. Who cares about that when you have $600 invested in hardware and $6000 invested in software. To steal a campaign slogan, it's the software, stupid.These large companies that are buying hardware direct from the OEM buy their software direct from Microsoft. Who is their competing vendor for that? Microsoft refuses to license their technology so a second vendor could emerge, despite having been ordered to do so after being adjudicated a monopoly. So what's different?It's the software, stupid. Reply
Mar 27, 2007 5:29 AM Rob Enderle Rob Enderle  says:
Actually the OS comes through the OEM. You only get upgrade rights through Microsoft. OS and hardware have been tied together since the very start. Only with Linux is this different and there the economic model clearly isn't working for the desktop suggesting this tie in actually works. For good or ill, Microsoft represents the common standard which allows you to bid HP against Dell. Something the UNIX folks never really were able to get to work. For the desktop, it is actually still the hardware. The OS is still vastly less expensive and CIOs would likel to keep it that way. Reply
Mar 27, 2007 7:58 AM Mark Mark  says:
Why do you pretend that choosing Mac OS locks a company into a single vendor, while choosing Microsoft products is any different? Sure, you can buy Microsoft from either Dell or CDW, but either way, you are still locked in to a single source for the software, which is far more of an investment than the hardware. You can buy your Macs from the local Apple Store, or you can order it from CDW, so you have as much choice as you do buying the Microsoft product.Moreover, consider the way Microsoft has consistently made each new version of its software use a new, incompatible format for the files it produces, so that you are forced to update all your applications, and they are only available from Microsoft. There you are, stuck with a single source. Meanwhile, Apple has consistently made each new version of its software use a standard format for the files it produces, and has provided tools that allow Mac software to import and use data saved in Microsoft proprietary formats and convert it to standards. And if you decide to abandon both companies, and go with Linux, you still have to pay Microsoft for a copy of their OS that you don't even get, because they force the computer makers to pay for a license for every computer they sell or they don't get any.Who do you really want to entrust your business to, the single source who has consistently abused its monopoly to limit your choices, or the single source who has consistently promoted choices and open standards? Reply
Mar 27, 2007 10:26 AM Rob Enderle Rob Enderle  says:
Large companies dont buy from CDW they typically buy direct from the OEM. The requirement is to competitively bid so they need the same OS, so they can easily switch between vendors if the bid result requires it, and recall that much of the bid may have to do with the services the vendor supplies.What is interesting with this post is it completely glosses over Apples own behavior. Apple refuses to either license out their technology so a second vendor could emerge and will not provide roadmaps which allow a large company to plan for change. Further they have outright lied about future plans with the most recent example being the move to Intel. There could be other big moves in Apples future and a large company has to plan ahead. In short, they need at least two hardware vendors behind the same technology, they need to be able to see where the vendor is going, and they need to be able to trust the vendor (granted they have trust issues with Microsoft as well, but Apple appears worse in that regard not better. Now as far as promoting Open Standards, recall Apple pulled back from Open Source and is being accused of monopolistic practices itself and has, historically, limited choice. So I dont see the last point and think the evidence supports the conclusion that the opposite is true. Reply

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