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Bring back the clones
BIn Apple’s dark days, the almost forgotten mid-1990s, there was a booming business of Mac Clones, Apple-like licensed systems running iOS 7 on RISC-based Power PC chips. The quality and designs were decidedly different from Macs, but the licensing business served as a life-saving revenue bridge between Apple’s stumble in the mid-1990s and the return of Steve Jobs.
Jobs ended the licensing business in 1997 and transformed the Mac into a desirable translucent digital art object.
Since then, the maintIt seized the technical and design specifications of all Macintosh computers as a victim, repositioning them as custom, high-end, aspirational computers – systems that often offered less (at least in terms of specs) for more. Apple fans have long been willing to pay premium prices for something special from Apple, but that has also served to keep the Macintosh in the minority of global market share.
2020, however, was an unusual year (I know, understatement) for Mac’s fortunes. According to IDC, Apple’s Mac business grew 49.1% in the fourth quarter of 2020. Of course, the Mac still ranks only 8% of the global PC shipping market, but that’s 1.2% more than in 2019. MacOS has about 16% market share.
With working from home and remote learning now an accessory, I am confident that Apple’s desktop business will continue to grow in 2021, and Apple will reduce the formidable market positions of Lenovo, HP and Dell.
But there may be another, faster way: Apple’s silicon.
Apple’s staggering success with its first homegrown desktop silicon since the PowerPC chip (which it built with IBM) is more than just an opportunity to get its Mac line off the Intel platform.
Built under Apple’s leadership by the Taiwan Semiconductor Manufacturing Company (TSMC), Apple’s first chip, the M1, exceeded even the sunniest of expectations. In my latest benchmarks, and running macOS Big Sur 11.2.1, the M1’s Geekbench 5 numbers improved over my original tests and are still significantly higher than Intel’s latest 10th Gen Core i CPUs. We’re still waiting for the other shoe to land on Apple’s highest-performing silicon; maybe an M2 capable of powering iMac Pros and Mac Pros.
With these results, Apple demonstrated that it can do this; it can outrun Intel. What it hasn’t done is show how the Mac brand can grow beyond its premium brand status. To do that, Apple would have to start licensing Apple’s silicon, that is, the M1 chip, to third-party companies.
It’s not as crazy an idea as it sounds. I don’t think the moment is better.
Although Microsoft Windows is by far the most popular desktop platform in the world, it is more or less stagnant. Windows OEM revenue grew just 1% last quarter and overall, Windows global market share is declining while Chrome OS is growing (Chrome OS increased 54%, year-over-year, in Q4 2020) . The point is that people are open to change. They are not moving from Windows to Mac because Apple computers are more expensive. Chrome systems are usually among the most affordable computers, but performance, especially at the lowest level, can be disappointing.
Appel silicon, however, offers a new choice opportunity in the Mac landscape. All Apple has to do is start licensing the chips to trusted third-party companies, or even develop a new one (a subsidiary or spin-off). that will follow your design and build guide and start selling more affordable Macs. I bet Apple could even create a scaled-down version of the M1, perhaps calling it the “M1a,” to power mid-range computers that sell for $ 499 (or less) but still outperform Chromebook, Intel Core i3, and probably an eighth-gen Core i5s.
When I shared my idea with former Apple analyst (and someone who knew Steve Jobs), Creative Strategies president Tim Bajarin threw a bucket of cold water on him.
By email, he wrote:
I talked to Jobs about clones and he was completely against that idea. He killed whoever the previous Apple CEO created as soon as he returned to Apple in 1997.
He felt that Apple needed to control its own platforms and drive value through its own software. I wouldn’t trust anyone outside of Apple to help Apple achieve that goal.
Furthermore, Bajarin believes that, with history as a guide, Apple will not share the M1 architecture with my imaginary clone partners. Architecture “is proprietary and will always be proprietary.”
You may be right, but there’s a factor here that could tip the balance in favor of sharing or at least finding a way to accelerate the expansion of the Mac market: services.
Despite all the recent growth Apple has seen in hardware on Macs and iPads, most believe that Apple’s future is tied to services. That’s where Apple is innovating with new offerings and packages, and the growth in service revenue repeatedly outpaces the incremental growth found in Apple’s other business segments.
However, hardware helps drive services growth, and one can only imagine what it would take to bring the Mac (or macOS) market share from 8% to, say, 12% or even 20% for those. Apple service revenue. All Mac clone users would need an iCloud account, many could go for an Apple One bundle, and all of these systems can run iOS apps, another potential revenue generator. Plus, there’s the obvious benefit of license revenue from cloned partners, and ultimately Apple CEO Tim Cook isn’t Steve Jobs, and he could make different decisions.
However, Moor Insights & Strategy principal analyst Patrick Moorhead echoed Bajarin, telling me via Twitter DM that Apple would not consider restarting the cloning program “for the same reason they moved away from enabling a market of clones before. For Apple, it’s about the experience, and the Apple experience is about the combination of Apple hardware, software and services. “
He’s right, Apple enjoys control and Bajarin is right, Apple is not comfortable sharing his secret sauce. But you’re also hooked on growth, and I don’t know how long you can accept incremental (or flat) growth in desktop space when there are so many opportunities.
Bring the clones, Apple, you know you can do it.
