Austin Leeds published a piece titled “Apple, AMD, and the Potential for New Mac Clones” over at Low End Mac today, and as soon as I read the title, I sent it to Instapaper. I just finished reading his article, and boy, I want some of whatever he took before coming up with it.
Let’s break this down, mind-blowing bit by mind-blowing bit.
With Apple rumored to be in the midst of talks with AMD, the possibility of AMD-powered Macs is very real, if far off. Let’s face it - Intel’s chips are becoming more the staple of cheap, hot PCs than AMD’s pricier and cooler offerings.
Intel has beaten AMD soundly for years in both number of units shipped and in the minds of consumers. Market researcher shows that AMD’s CPU market share has fallen from roughly 22% to roughly 18% from Q1 2009 to Q1 2010.
At the end of last year, PCMag took a look at the two companies’ 2010 offerings. The gist of it is that at best, AMD is matching what Intel is doing. As far as the claim of “AMD is in high-powered machines,” I just can’t find much to support it.
Among the PCs in our house (we have three), only one has been almost trouble-free throughout its entire existence - a Compaq Presario 5340 that we bought back in July 1999. Up until this summer, our old battle-axe ran almost perfectly with its old 400 MHz AMD K6-2.
Compared to our other two (a white box with a Pentium III and the dreaded 2.2 GHz Intel Core Duo-based HP Pavilion a6400f with it’s integrated Intel GMA 3100 graphics - read the Amazon reviews), the Compaq was cool, quiet, and generally agreeable to work with. Right now, it’s been gutted in preparation for a total overhaul - motherboard, power supply, and all - but once again it will be powered by an AMD processor, this time a 2.9 GHz quad-core Athlon II.
I drove a Saturn in college, and traded it in after the dashboard climate controls caught fire while I was driving down the road. Does that mean all Saturns on the road are pieces of crap? Hardly.
Also, the dude bought a HP Pavilion without reading customer reviews?
The possible switch to AMD could have more wide-reaching effects than a simple change of hardware configurations. While Apple’s hardware (iDevices excluded) was once the thing that set Macs apart from PCs, with the OS playing a secondary role (remember the old DOS-compatibility cards?), the Mac OS has come to be a major selling point in its own right since Apple’s 2006 move to Intel CPUs.
I don’t think most consumers know — let alone care — what kind of processor their computer has in it, except at the moment of purchase. OS X has been the main selling point for the Mac since it debuted. Which was years before the move to Intel.
Back in the G3 and G4 days, Apple pushed the fact that the IBM-built PowerPC chips inside the Macs could blow away Intel chips. Since then, the company hasn’t made a big deal about the silicon inside their boxes. (Except for when the first Intel-based iMacs and MacBook Pros were announced.)
In other words, the computer hardware is no longer as important as the OS it runs.
When you buy a PC, you are buying hardware from one company and software from another. Not so with Apple. With Apple, it is about hardware and software. They sell the complete package.
AMD processors are featured in precious few PCs, but those precious few are a privileged few. AMD’s 2009 market share was 2.3% compared to Intel’s 14.1%, and many AMD CPUs end up in higher-end PCs (like our old Compaq - a multimedia PC in its day). AMD also has ATI under its belt, ensuring compatibility between their CPUs and GPUs.
So, the AMD market is small but impressive - similar to Apple’s.
Without a doubt, Apple’s market share is small and impressive. But that doesn’t make them stupid. Apple has gotten first-access to several Intel chipsets (mainly for the Mac Pro), and bounced back and forth between Intel and NVidia GPUs as they see fit. Apple’s a player.
Bear with me here - this is merely speculation: By using AMD’s small market to its advantage, Apple could license out Mac OS X for use on a select few AMD-based OEM desktops and laptops. AMD could then enforce this by providing those select desktops and laptops with special BIOSes or, more likely, a specialized EFI that would allow Mac OS X to run on them. I wouldn’t put it past them to include the Mac startup chime somehow.
It’s not even good speculation. Any hardware manufacturer can use AMD chips if they want. HP, Dell and Lenovo all offer models powered by AMD silicon.
If the price is low enough, these Mac clones could sell like hot cakes, increasing the number of Mac OS devices on the market. Developers would have more incentive to create Mac software, consumers would have fewer reasons not to buy Macs, and, in turn, Apple’s mobile line would increasingly prosper (if it’s possible to top the sales they’re achieving already).
Low prices is one of the reasons Steve Jobs canned the Mac clone project in 1997. Here’s Dan Knight:
Apple sold 4.5 million Macs in 1995, a level it wouldn’t reach again for a decade. With the clone program in place and competition from Windows 95, that dropped to 4.0 million in 1996 and 2.8 million in 1997. That was the year the word “beleaguered” became widely attached to the Apple name.
Hard numbers are not available, but it’s generally estimated that the clones accounted for about 15% of all Mac OS computers sold in 1997, the last year with multiple clone makers. If this is correct, Apple could have sold 3.2 million Macs in 1997 if they’d kept the market its alone. Still beleaguered, but a 20% drop in unit sales is better than a 30% one.
[…]
One of Jobs’ first projects after returning to Apple was renegotiating the clone licenses to increase Apple’s royalty on each unit sold. The increased royalty would have made it impossible for Power Computing, Motorola, Umax, and the others to continue undercutting Apple on price.
The clone manufactures built better machines for less money. What would prevent that from happening today? If Apple placed artificial restrictions on clone hardware, they wouldn’t sell very well. And without it, companies like Dell (a company who has said they would run OS X on their hardware if they could) would build budget boxes and sink Apple’s hardware division.
My favorite part is that Leeds linked to the Dan Knight piece. Whoops.
If the iPad sells well (mission accomplished!), Apple has a device that it can depend on for revenue. Currently, iPads are outselling Macs almost 2:1. That’s not counting iPods, iPhones, or Apple TVs (the latter two of which are due for an update soon). Apple has a huge mobile market that could potentially sustain the company without the Mac hardware line, at least for a while.
That means Apple is free to experiment.
It’s true that the iPad is a smash hit with customers. But the margins on such devices are thin compared to the beefy ones the company enjoys with its Mac line. This chart is from the quarter before the iPad was released, but it’s easy to see that Macs make up a sizable chunk of Apple’s income. While the iPhone makes up a considerable amount of Apple’s revenue, it’s important to remember they sold many, many more iPhones.
Apple isn’t going to jeopardize what pays the bills.
If there is one thing Apple doesn’t do, its to experiment. Everything the company does is calculated. Yes, Apple makes mistakes. But they don’t wing it.
Think about this for a moment. Neither the iMac or Power Mac/Mac Pro lines have had a major chassis change since 2004. Yes, the iMac went from plastic to aluminum and changed screen sizes, but there was nothing as revolutionary as the change from the iMac G3 to the iMac G4 to the iMac G5. The ball stopped at the G5, and Apple hasn’t yet picked it up.
Apple’s laptop offerings have been pretty constant since 2001: Low-end plastic (iBook, MacBook), high-end metal (PowerBook, MacBook Pro). The sizes haven’t changed much either: 13.3", 15.4", and 17". The last 12- and 14-inchers were discontinued in 2006, and Apple’s never looked back.
The only two completely new Mac designs since 2004 are the Mac mini and the MacBook Air, and the future of the Air is not looking too hot at this point.
Agreed, but why would Apple look to outside companies to design new, flashy hardware? Apple’s design is years ahead of what anyone else is doing. I don’t think Dell could whip out some sexy new hardware just because they could run OS X on it.
You can wax eloquent about the Mac’s superior engineering, aesthetics, or the environmentally friendly aluminum and glass design, but when it comes down to your average consumer, here’s what catches them:
- • No viruses.
- • Can also run Windows.
- • Works with [insert glorified peripheral here].
- • Looks cool.
- • No viruses.
- • Good price per use.
- • Works perfect with iPod/iPhone/iPad.
- • Did I mention no viruses?
Most of those things apply to the OS, not the hardware. And yes, the no viruses thing really hits people.
Yes, OS X is superior than Windows. Why share it?
That aside, I do think consumers care about the Mac’s “engineering, aesthetics, or the environmentally friendly aluminum and glass design.”
Apple pushes the green angle because their customers respond to it.
I think Mac clones are a distinct possibility. Then again, Apple’s a tough company to second-guess. After all, everybody thought the MacBook Air refresh was coming last month.
The Mac benefits from having its hardware and software built by the same folks. Apple has proven that the model works for them. As a result, the Mac is a great, virus-free computer. Yes, they can be more expensive than a budget PC box. That’s fine — and it hasn’t hurt the company’s sales. The Mac is still popular, even in a recession.
The clone program is as dead today as it was the morning after Steve Jobs killed it. Apple makes software to sell hardware. That’s been the company’s stance since the early days, and it has worked for the company ever since.
I’m sure Austin Leeds is a nice kid. He’s just wrong about Mac clones.