So I've just read this article at Ars Technica on how Apple can gain significant OS market share. There are various topics to do with Apple that seem to be attached to boomerangs as they just keep coming back no matter how hard you try to make them go away. It goes through all the usual suspects of how Apple has to gain market share to survive and how it needs to do better in the enterprise market, ultimately settling on the old "Apple needs to licence OS X" claim. Now there is nothing wrong with this, if market share was really relevant any more.

Yes. And no. There are two things you need to take into consideration when looking at figures, the absolute values and the relative values. If you saw a figure saying you were 25 times more likely to be hit by an meteor on a Tuesday then you'd probably want to stay in a bunker on Tuesdays, except that in absolute terms the chances are you being hit are still too small to even consider. Conversely, if you were to see a figure saying that deaths caused by a disease were up by 0.5% this year you may think that it isn't too big a problem, except that last year 20 million people died from this disease which means that 100,000 more people died from it this year, and that is no small number.

The same goes for Macs. In absolute terms, yes Macs are more expensive. In relative terms they are far from it. It just so happens that Apple competes in form factors that are inherently more expensive. Compare the iMac to any other all-in-one desktop and it's a damn good deal. Compare the Mac Mini to other small form factor computers and it isn't too bad. Compare the MacBook to other 13.3" laptops and it is very competitive.

The problem here isn't that Apple is ripping off customers, it is that it doesn't have the same range of products as PC vendors. Two of the most common products are the low-mid range tower and the low end laptop (this is generally a 15.4" laptop with specs approaching that of a MacBook). Apple doesn't have computers in these form factors though, so when you see figures like "the average Mac desktop costs $1,000 more than a Windows PC", it isn't because the Apple is fleecing customers, it is because they don't sell the cheaper, more popular types of computer.

So the article at Ars says that Apple should stop focusing on hardware and instead focus on software. Now lets stop a moment. Apple is a publicly traded company. As much as people would like to think they care only about their customers, their legal obligation is to their shareholders and this means trying to make as much money as possible. Now we have that in our minds lets look at what you gain from being a software vendor vs being a hardware vendor.

For simplicities sake let us assume that Microsoft has 96% global market share and Apple has 3% market share (the remaining 1% is for everyone else). Below are tables showing the revenue and profit from Windows and from the Mac for the last 4 quarters, both in absolute terms and per market share point.

NB: Apple doesn't provide profit figures for Macs, so I've used the gross margin figures for each quarter to get the quarterly Mac profits

I don't know about you but I'd rather be gaining $1.6 billion extra in profit for each market share point than $0.136 billion. And this is why Apple is a hardware company.

A lot of hoo-hah is made about the enterprise market. Historically Apple hasn't paid too much attention to the enterprise market and the enterprise market hasn't paid much attention back. Pretty much the only real enterprise scale implementations of Macs have been at universities.

With the iPhone Apple is starting to flirt with the enterprise and Snow Leopard shows signs of adding support for enterprise features. But I don't see Apple pushing too hard to make it big in the enterprise market. For some that may seem crazy, but simple reason is that Apple knows what happens when you try to make it big in the enterprise market: Windows.

Microsoft may have had questionable practices in the past and you may not like their software too much, but you cannot deny that Microsoft has some incredibly talented engineers that can do some great things. The problem is that they're constantly dragged down by the ball and chain that is their enterprise user base

The enterprise market is incredibly slow moving and doesn't like updating software unless it absolutely has to. And by software I don't mean the operating system, I mean the software they use to run their business. As such they want their software to run on the new operating system, which means backwards compatibility. Unfortunately backwards compatibility means that you aren't just supporting older APIs, but also supporting bugs in those APIs. Much like web developers writing websites to work round bugs in IE, desktop developers work round bugs in the Windows APIs.

There's a quote that I remember and always use when talking about this (unfortunately I can't remember where I saw it): "The difference between Microsoft and Apple is that Apple knows the meaning of 'deprecated'". Apple isn't afraid to say, "This is old and buggy, lets take it out so it isn't cluttering up our system." Apple is always looking for ways to improve existing parts of the OS and remove dated parts, Microsoft simply adds a new layer on top. Essentially Apple goes and fixes the cracks in its walls, Microsoft just puts another layer of paint over them.

It is this attitude of Apple's that doesn't bode well for them making it big in the enterprise market. Either enterprise software needs to be updated more frequently or Apple needs to stop removing dated technologies and to be frank, I can't see either of those happening. That is not to say that Apple won't make ground in the enterprise market, I just wouldn't expect them to ever come close to dominating.

So ultimately all these arguments always come down to someone saying, "Well if Apple just licensed OS X to PC vendors it would beat Microsoft." Why does Apple need to beat Microsoft? If Apple was to be in Dell or HP's position they'd have considered that winning. They would have 20% of the market...

...which brings us full circle back to absolute vs relative. 20% of the market may not sound too impressive, when you consider that Microsoft has the other 80% of the market. But imagine you're on a bus with 50 other people. In theory, 10 of those own a Mac. They won't have beaten Microsoft by any means, but they would have won simply due to the fact that odds are you are surrounded by several Mac users wherever you go.

Licensing OS X would boost Apple's market share by a huge amount, but for what? It would damage Apple's profits and open up the huge can of worms that is hardware compatibility. The only possible reason to do it would be to gain market share. But why is market share so important? Because of developers? I don't know if you looked around recently but the Mac is doing pretty damn well developer wise for it's "tiny" 3%.

Maybe it is users who care about it, worrying that the smaller market share means that it will be hard to get help or find software or hardware for the Mac? Maybe a bigger market share will get more people looking. Problem is, market share isn't what gets people to look at a product, if it was then nothing new would ever arrive. People look at a product to see if there is something compelling in it, and the core reason for Apple's success is that it simply offers one of the most compelling products on the market.

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