Many companies are trying to move to a subscription model for their software and Apple really has something going for them in that respect if you think about it. We, OS X Users, are already accustomed to the automatic updating of the OS and like it. dotMAC actually looks nice all in all, even if some might feel it is expensive. What people don’t like is unpredictability; they have nothing against change as long as they like the outcome and know where it is going.
What some people really feel surprised about is that Apple is taking big bucks for the Jaguar release of OS X and they want money for dotMAC on top of that. Where is this going in the future? Can we not trust anything to be part of the Apple package we have grown to like in the future? iTunes 3 was advertised to be free as if this would be out of the ordinary and while it might be in the general software world out there, it’s likely not in the eye of OS X users. The iApps are part of our OS X experience and while iCal is free, the synchronization features with other people need a dotMAC account, giving non dotMAC users nothing more than a crippled iCal.
In Q2 of this year, Apple had sales of 1.495 billion USD and came out of the quarter with 40 Million in profit. Their net operating cash flow was also positive with 44 Million USD. Based on this one can say, relatively safely, that Apple is profitable, as they are running their ship now. What Apple is doing with their recent move is to please some of their stakeholders, including their shareholders, which is something that is without a doubt very important. You need to have an integrated approach to please all of your stakeholders or you will stumble and fall. In the future, Apple also needs more money to push into new markets and extend their R&D and get a good return on investment from their activities. This charging for added features is in that sense a good one.
What people don’t like I believe, is this charging on several fronts for something they have taken for granted up till now. Many companies have long seen that the way of the future is services, not web services mind you, that’s just a small picture, but services in general. In short, this could be said to be giving people what they want, enabling them to do what they want or have to do. I don’t want an OS. I don’t care for the OS. I want something that will let me do what I want to be doing in the best possible way and Apple has been known for being very user friendly. Many believe this is what OS X is all about, or what MacOS was all about. A better way of doing what you do. Less hassle, more fun, more efficiency.
Going further into Apple’s SEC filing for the recent quarter, they had sales of $383 Million for Power Macs, $198 Million for PowerBooks, $448 Million for iMacs and $180 Million for iBooks. Peripherals, software and other sales were $286 Million, which includes things like the iPod. Even if we include all of this as software, that’s an amount that doesn’t seem to hard to beat.
Where does this lead me to? Services and services only. Apple has or had some 2 million iTools, now dotMAC subscribers when it was still free. Let’s play a little game. Let’s suppose Apple were to move into services with force and stop “selling” the OS. It is part of the service. Also part of this service is dotMAC and all iApps. On top of that, you have a community on dotMAC where everybody can go to help, with users helping each other. Apple could give some of the best people some support and special pre-release info and other things to make them happy. Companies could monitor it for questions for their own software. Think of it as a self help or P2P help network. Again, it would be part of letting me do what I want to do. It needs to be frank and peer monitoring will make it as correct as possible.
Would you be willing to pay $10 per month do be part of that? That would be $120 per year, $20 more than the current subscription for dotMAC, and I think a lot of people would do that. At 2 Million subscribers, that would be $240 Million each year, without interruption, predictable, certain. And 2 million subscribers is nothing. Provided Apple can grow their market share they can get several more million using the service, who would be sure they have an up to date product, online storage space, a life-time e-mail, a place for a homepage, a place to put their images and sync their computer. On top, it creates a lock-in for future hardware sales.
There are a lot of added benefits, besides a predictable revenue stream too. They can sell to those people directly, give them suggestions for new hardware and give them the option to kind of sync their old mac and then their new mac to continue working without lots of difficulties. In a sense they would be able to loyalty into their sales package and wouldn’t shareholders just love the notion of seeing each new customer as a customer for live?
About the Author:
Oliver Thylmann is a management student and freelance journalist writing mostly for infoSync, an online publication which specializes in covering the handheld and wireless consumer sectors with a global span. In the past few years, Oliver was running BeNews, the premier news site for the BeOS community.
Interesting. But who can predict what life will be in 20 years ? I used to have an Atari, then got a PC with OS/2 Linux, bought a bebox and finally got a Mac …
How could the shareholders believe such a thing as customres for life ….. That you be imo a bigger mistake then the ones made in the .com days …..
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http://islande.hirlimann.net
Subscriptions seem like a bit of a kluge for getting continued revenue out of a stagnant product. With apple releasing software at quite a good pace i don’t think it is at all necessary. But overall it probably will be best for apple. With the Switch campaign you are getting many people who are used to subscription based models for computing hardware and software in their workplaces (and in some cases homes). Besides being a steady stream of cash it would help to ease windows users into mac os. It’s not my personal favorite, but the best to do.
the ability to obtain new installation media with all updates and fixes included.
For example, I have a license for Windows 2000 Pro and I would love to have a setup where MS would periodically send me new install media with all fixes and service packs already applied. (I know that I could do this via slipstreaming but I would be willing to pay extra for it.)
Even downloading a CD image to burn later would be nice.
It always amazes me that its ok for Apple to exactly what MS wants to. I agree with the statement kobold made “Subscriptions seem like a bit of a kluge for getting continued revenue out of a stagnant product”.. Its right on the money. THen theres this part of the arguement Mr. Thylmann made,, “On top, it creates a lock-in for future hardware sales.” again this is good for apple but bad for MS, makes no sense that the mac community can talk out of both sides of their mouth like that,, that doesnt go for all, but a lot lets say. I dont want to be locked into any platform hardware or software. I want to be able to move my data to the cheapest easiest to use platform at the time.. You almost had me up til the lock in part.
…than for Microsoft.
1. Apple owns both the hardware and the software. It’s easier to automatically upgrade in many cases.
2. Mac OS is virtually the only OS that runs on the Mac. (only techies run Linux on Mac
3. Mac users prefer to do things the easy way. (i.e. push a button and have the machine upgraded!)
I don’t know if this makes sense for you in the USA but for me, being loyal to Apple has a very high cost:
I bought a 733MHz PowerMac for 2300 Euros, about the double I had to spend for a bi-processor Athlon with a DVD player on top. Adding Windows XP still leaves more than 600 Euros in my pocket. All of this to have a system that is running at about half the speed. Ok I like very much OS X and I am willing to pay for this. But c’mon OS X 10.1 was still a ‘beta’ and it is totally unacceptable having to pay 129 US$ to get an ‘upgrade’ that will put OS X performance (aka responsiveness…) to a decent level.
I am willing to help Apple and I really love OS X but I am starting to think that it costs tooooo much
You can make that yourself rather easy by integrating the service packs into the installation data and burn a new CD – that’s not more hassle than getting a complete ISO either…
with MS if they try out subscription and lose some marketshare cause not everyone likes it then they would still be sittin pretty at 80+%, MS has room for failure since they are so far ahead. with Apple, they have, what? ~5% that is a lot of users, but what if half of them didn’t signon to the subscription update (jaguar/10.1 will still run fine)? or what if they left the macintosh completly? apple can’t afford to pissoff that many people.
Whatever happened to building an OS good enough to last years, so that a user doesn’t have to upgrade if she doesn’t want to?
It’s one thing if one is bundling new features into an OS upgrade, and wants to charge money for that bundling. That’s only fair. But if it’s just bug fixes (or service packs), why should someone have to pay for that constantly? Especially if badly written software costs a company or university quite a lot of money (my university for example, which got a bad deal on a software product): if anything the OS maker should be apologizing and bending over backwards to keep the customer.
Oh, but when it comes to the desktop, we have the “lock in” phenomenon, because, since the late 80s, there has been no credible competition for the personal computer user: pick one of two worlds in which to get trapped. I bite my tongue.
If subscription is optional, and upgrading without subscription is possible (for a price, which is only fair), then the computer makers ought to be able to make subscription competitive.
As if these companies don’t make ENOUGH profit… Nothing wrong with profit, God bless ’em for it, but sheesh… Which of Microsoft or Apple is really hurting for money at the moment? or will, in the long term?
Have we gone so far down the wrong path? I remember when buying a Mac *was a subscription*. Remember that one could download, for free, every update until System 7.6?
Why is everyon ok with this? If Mac is selling a “digital hubs” where they supply the hardware and software they should be willing to maintain the software side of things for free, for life. I am not saying they need to add new features for free, but they should release updates for security and any feature that keep current Macs compitable with new ones.
Whoever said that Apple is getting off easy for Microsoft style behaviour is absolutely right. Apple is supposed to be different.
Apple is expensive anyway.
For dotMac, it’s only another $500 over five years.
For OS updates, roughly another $500.
For Apple Office & other tools, perhaps another $500.
So, only $1500 over five years.
For a well-heeled Apple owner, not a big deal.
Apple charges what the market can bear. They’ve found their niche of wealthy people who want what they have to offer.
Yawn.
#m
They could also bundle it for free with an iMac subscription at say $75 / month which includes .mac and a new top of the line iMac every 3 years + lots of extra software apps (like say a new commercial quality game each month…).
… to do what Microsof does. I for one, will not consider getting a Mac, even though I like a lot about their offerings.
But I guess, the majority of the Macintosh users have more money than I do and appreciate the Mac OS experience more than I do. So, who knows, the subscription model may work for Apple.
Of course companies love the idea of the subscription model. They get paid first and deliver later, regardless of the customers or desires, or for that matter, the quality of what they produce. I am aware that not producing quality products will eventually catch up to them, but in the mean time they have my money.
I would much rather pay for the things that I want or need at that time, not before hand with a subscription. For me, the Jaguar release is really not worth $129, so I’ll choose to wait and spend my money later. For someone else, there is value, so they spend the money now.
dotmac is going to start with a fraction of the users that iTools had – a good proportion of which will leave next year when they’re more organised (used a different email address for a year) and the price goes up.
The product is just not compelling at the pricepoint. Add that to the negative PR generated from the introduction and it would take them 50 years to get to a critical mass.
Plenty of knuckleheaded help available on newsgroups and in Apple’s help section – you want people to pay for that now? That you could even comtemplate that Apple has the right to charge for it is even more disturbing. First thing they’ll want to do is bring out buggier products just to drive up support revenues.
They must be desperate for cash. I know this is just speculation, but it seems possible, and .mac is definitely leading in this direction. I love Apple to a sick degree, but I have to say it: Apple is gouging their customers. I’ve defended them and their slow chips and overpriced RAM, and bloated OS and lack of apps for years. I’ve defended them, felt hurt when people insulted them, and faithfully bought only Apple computers and peripherals where possible.
But they are gouging us now. It’s obvious. They are out to rob us blind, because they know we Macheads love them and will do whatever they say. And like Microsoftians, we’ve got too much software and hardware bought already to “switch”. We’re trapped on this platform, and Apple can just milk us like cows until they are satisfied. And Apple’s a corporation, they never will be satisfied. They have to appease shareholders and get ever greater revenue growth. Too much is never enough.
I fear we need to put some work into developing good linux apps – just in case. Or donate money to the FSF. Something. I’ve got all my eggs in one basket here, and it feels dangerous. Dangerous because power corrupts, and I’ve willfully HANDED all power and authority over my buying decisions to a corporation. I’m faithful when I should be objective. I overlook Apple’s many flaws out of “love and devotion”. This is BAD. I *should* buy what works best and for the best price. *That alone* will force Apple to improve. If they KNOW they’ll lose my business if they screw us, they won’t screw us. Heck, they might even bring out the G5’s! Right now they don’t have to release G5’s, since there’s no pressure on them to. People say they’ll leave, but they never do. Right now they KNOW they’ll still have my business even if they screw us, and as consumers, it’s not a good place to be – for us OR Apple. Apple will get more and more draconian and farther and farther behind with their product line. Why work hard to make the best product, when Apple fans drool and rave about the three year old hardware Apple sells as top of the line right now?
Alex L.
Apple has lost me as a loyal user. I have all ready sold my iMac for $200 US. I will not play into Apples new bait and switch tactics. As for cost of .Mac $99 a year is insane. They needed to think this through more closely and should have created a muti tiered system so you could pay for the features you want and dump the rest. I think they should have at least kept the free e-mail available for loyal users. But they didn’t even give a thought to there lower end customers as usual. So I said good to
Apple and did a major upgrade to my PeeCee and went to Windows XP. For now I consider myself happy. I hope Apple is for loosing a loyal customer of over nine years. I said it once before. Apple just shot itself in the foot I hope they have the sense to give to the ER and gett back on track.
Jack Perry:
First, you are paying a lower price everytime, second, you get ALL OS upgrades (major, minor, or bug fixes) that come out within your subscription period.
You don’t seem to see that EVERYTHING these days have short lives. Heck, TechTV just did a report on wheather or not you should buy new hardware when your old stuff breaks, or get it repaired. You’ll find that most hardware these days don’t have removeable panels and such, which make it easily repairable, they are meant to have a short life cycle simply because people constantly want more features, more features means getting newer hardware (such as a PDA).
In fact, it was even a general consensus that places like TV repair shops would be out of business in the not to distant future because of this planned obsolessance.
But then again, you were just bashing and being an outright moron. So you probably won’t take in what’s been said anyway.
I think Steve Jobs is just as ruthless as Gates and Ballmer. It is terribly ironic, but the friendly Apple was the one that almost tanked. Jobs has been waiting for this day – thumbing his nose at Microsoft and doing whatever he wants to with Apple. It is sad because there is no reason to be so ruthless. *Assuming* they speed things, they have a really nice package as it is. There is no reason why they couldn’t have a two tier program with .Mac. Jobs is a brilliant marketeer, but he has, in the past, gone over the line and I think he is doing that again now.
First, this article is pure speculation without concrete evidence, something hardly worth getting your panties in a bunch over. Second, where did you guys get the idea that corporations ever act like charities? Or that they’re obliged to act like charities? I’m amazed by the sense of entitlement I’ve seen on OSNews. The only thing that has betrayed you is your romantic notions about the computer industry, an industry that is in the business of selling office equipment, not creating a just social order.
Its sad many people can’t see beyond this. Apple needs to change their ‘Switch’ shortcut on their webpage to comply, methinks.
Joe User, you are brainwashed and confused. Bait and switch is a tactic which usually doesn’t fool most consumers. However, that being said, the true art of bait and switch goes hand in hand with the ability to con the consumer into thinking that he/she is getting a better deal and/or is obligated to pay more because you are not running a charity.
Like Mr. T would say – ‘Sucka!’
And they don’t care what you think. None of them care. Masses are predictable, individuals are not. D>Edwards, I’m sorry, but Apple doesn’t care if you switch. You are one. Most people won’t switch, they know that. And more people will come.
If Apple starts charging for regular updates to OS X, and only allows credit-card possessing, latte drinking, poodle-owning, yuppies access to updates, I will do one of two things: use my iBook as a frisbie, or wipe the hard disk clean and install Mandrake 8.2 PPC.
CPUGuy:
Au contraire, not everything these days has short lives. I’m still using the Visor I bought two years ago, which has (apparently) already outlasted the iBook I bought one year ago. I’m still driving a car I bought seven years ago (eight now I think) and I see no reason it can’t last longer. The Video Cassette player I bought several years ago works. My parents’ 10+ year old TV worked fine until they dropped it while moving it around last year.
I find it odd that you think I was bashing. After all, I admitted it’s only fair that a company charge for real feature upgrades. I also said that if they can make subscription competitive with buying upgrades, it’s really fair.
If on the other hand they are charging subscription merely as a way to lock in customers, and end up charging them for bug fixes and security fixes, I’m sorry, but that has nothing at all to do with the quality of a product. The very word “lock in” indicates what their goal is.
Apple cannot afford to use this business practice & will benefit if they keep doing what they have been doing the past 4-5 years. Subscription based software is a practice that Microsoft will attempt to use to suck the cash of their huge installed user-base. Apple has only 5% of the consumer desktop market. To expand, they must keep doing what they are doing; making good software, installing their software on good hardware, & probably port their OS to the x386 (seriously, this could boost their install base to 40% in 2 years).
Cisco is a software company that has been effectively using the subscription-based software model on its routers & switches. They obviously (for all intents & purposes) own the Internet router market. Many desktop computer owners will not see the value in paying $25.00 per month to keep their word processing machine up-to-date. I wouldn’t.
Just make the computer into one big broadband network cache, add copy protection, stream all software and content, and sit back and watch as every software developer and content producer jumps on board. You can even throw away those nasty CD and DVD drives. It makes sense to sell software as a service, not just from a greed point of view, but because software production is increasingly taking on the characteristics of a service; steady income and more fine grained updates would serve the industry well and, I think, make for better software.
I bought the originally 128k Mac and that was the last Mac I every bought. Apple’s hardware prices are not out of line. The one area they are weak on is the CPU. Far too many people buy too much CPU for the rest of their computer (hard drive speed, ram…). The 800mhz G4 is about as good as a 1ghz pentium III which a year ago was a solid chip. Given the architecture if Apple has to change CPUs they will.
OS X 10.1 is hands down the best OS on the market today. OS X 10.2 will enhance their the lead. The new technology they are playing with now is likely to mean that 10.3 (or 10.5 or 11 or whatever they call it) will be as much as a decade ahead of MSFT. They charge $129 for their OS, that’s a real value an OS this far ahead used to run more like $1k back when OSes were competitive.
Frankly I think you were getting ripped off much worse during the 90’s then you are today, when you had a slightly better OS but amazingly buggy hardware and expensive applications.
The last line should have ended, “a slightly better but amazing buggy OS and expensive hardware and applications”.
With a global market share of 2.4% and shrinking every day, what sort of “lead” is Apple enhancing?
Wake up, d00d. They are fucking DYING. Their user base is resisting moving to OS X because that big bloated pile of Alticode doesn’t run on the old Macs. So they are forced with a big bucks hardware upgrade. And Quartz Extreme doesn’t work well on anything except a PowerMac with a fancy graphics card. That’s a pretty big upgrade mountain for most Mac folk, especially given the economy.
A decade ahead of Microsoft? Microsoft has more good technology in XP than currently exists in OS X.
Who had fast graphics first? Windows.
Who had good OpenGL first? Windows.
Who has world class anti-aliased fonts? XP.
Who supports USB2 today? XP.
Who has better wireless support? XP.
Who has Serial ATA today? XP.
Who has a better file system? XP.
Who has better multimedia and games support? XP.
Who has an OS that works on 4 processors today? XP.
Who has better RAID support? XP.
Who has better development tools? XP.
It is Apple that is playing catchup to Windows XP.
You must be on the “allthecoolaidyoucandrink.MAC” subscription for $400/yr. That’s the Apple version of “only $1/day” pricing.
#m
> Who had fast graphics first? Windows.
Wrong. Amiga.
> Who had fast graphics first? Windows.
Mac is moving rapidly in the direction of SGI in terms of graphics. Does MSFT have any way to get close to SGI’s graphics performance? No. Does Mac? Yes.
> Who had good OpenGL first? Windows.
True. Who is making OpenGL a core technology?
> Who has world class anti-aliased fonts? XP.
They use true type. They can’t be world class fonts they come from “Joe the font designer”. Mac meanwhile uses postscript fonts that have evolved over centuries. Take a look at the names of the font designers at say: http://www.adobe.com/type/main.html. True Type has always been a cheap knock off of postscript.
> Who supports USB2 today? XP.
> Who has better wireless support? XP.
Beadth of hardware support has always been Window’s strong point. Apple support airport as well as many wireless devices, good enough. As for USB2 they have firewire which is still better.
> Who has a better file system? XP.
Huh? In what sense? Mac has always had a better file system with data + resource forks like OS/2. Read MSFT literature from the late 80’s they agreed this was vastly better than the “extension” system from the days of CP/M. As for as directory structures and performance you ain’t gonna beat BSD on that front.
> Who has better multimedia and games support? XP.
Better multimedia? In what sense? Why do multimedia users consistently perfer Mac?
> Who has an OS that works on 4 processors today? XP.
Again which? Alpha port died, Microsoft and Compaq killed it. It runs on the x86 line and that’s about it.
> Who has better RAID support?
In reality neither of them have good support for advanced RAIDS, compare to stay Solaris. In any case BSD has better raid support than XP.
> Who has better development tools?
Its Unix, which has always been the best development environment out there.
>> Who had fast graphics first? Windows.
>Mac is moving rapidly in the direction of SGI in terms of >graphics. Does MSFT have any way to get close to SGI’s >graphics performance? No. Does Mac? Yes.
Uh, wake up. Microsoft bought and owns all the key SGI patents on 3D.
Every advanced graphics card is available on Windows and not on Mac. For SGI-like performance in 3D apps, look at 3DLabs Wildcat graphics. There is nothing on Mac that compares.
But we don’t even have to do that. Nvidia’s high end cards (the Quadro series) are not even available on Mac. Neither are ATI’s high end (Fire series) cards.
Mac consistently offers slower graphics and CPU performance than Windows for a given price point.
Just because Apple figured out a clever hack with Quartz Extreme doesn’t mean much.
On Windows, you’ve been able to render to a 3D texture for years using DirectX.
>> Who had good OpenGL first? Windows.
>True. Who is making OpenGL a core technology?
For Microsoft it already is a core technology. Many Windows games rely on OpenGL for rendering. Microsoft supports DirectX and OpenGL giving an application/games vendor choice of what works best for them.
Microsoft being a major 3D patent owner, is working on defining OpenGL 2.0.
>> Who has world class anti-aliased fonts? XP.
>They use true type. They can’t be world class fonts they >come from “Joe the font designer”. Mac meanwhile uses >postscript fonts that have evolved over centuries. Take a >look at the names of the font designers at say: >http://www.adobe.com/type/main.html. True Type has always >been a cheap knock off of postscript.
Wow, you are certainly ignorant. Adobe and Microsoft teamed up and merged the best features of Postscript fonts and TrueType fonts (which itself was an Apple/Microsoft collaboration) into what is called Open Type.
XP supports OpenType, TrueType, and Type1 fonts.
And XP supported OpenType long before Mac. I’ve been using Adobe InDesign with OpenType fonts on Windows and creating some great stuff. Mac is a mess when it comes to fonts, especially OS 9.
>> Who supports USB2 today? XP.
>> Who has better wireless support? XP.
>Beadth of hardware support has always been Window’s strong >point. Apple support airport as well as many wireless >devices, good enough. As for USB2 they have firewire which >is still better.
Firewire is hardly “much better” than USB2. Plus Windows has had Firewire support for a long time, nearly as long as Apple.
>> Who has a better file system? XP.
>Huh? In what sense? Mac has always had a better file system >with data + resource forks like OS/2. Read MSFT literature >from the late 80’s they agreed this was vastly better than >the “extension” system from the days of CP/M. As for as >directory structures and performance you ain’t gonna beat >BSD on that front.
Microsoft’s latest NTFS supports metadata attributing and it is damn fast as well. And it has been a journaling file system for a long time. And supports much more hardware than Apple.
Apple doesn’t have anything past HPFS+ right?
>> Who has better multimedia and games support? XP.
>Better multimedia? In what sense? Why do multimedia users >consistently perfer Mac?
Multimedia for the user. Try any PC game vs. a Mac game. The PC game has better speed, better graphics quality, better sound, better controllers, etc.
Even basic multimedia, Windows has better streaming video support, better streaming sound support, better DVD support, etc.
Windows had CDRW support with tons of burning apps for YEARS before Apple ever even offered a CDRW drive on their machines.
And now let’s talk sound. Standard Mac sound? Cheesy stereo using the cheapest possible solution. Almost every PC shipped comes with 6 channel sound and an SPID/F output. Many even come with inputs so you can wire the digital out of your audio right into your PC.
>> Who has an OS that works on 4 processors today? XP.
>Again which? Alpha port died, Microsoft and Compaq killed >it. It runs on the x86 line and that’s about it.
XP runs up to 32 processors on x86. You can get Windows XP Server and run it on a 4 processor box no problem. Windows NT has been working on multi-processor x86 machines for a long long time. Apple has NEVER SHIPPED a machine with more than two processors.
>> Who has better RAID support?
>In reality neither of them have good support for advanced >RAIDS, compare to stay Solaris. In any case BSD has better >raid support than XP.
For consumer RAID, Windows wins hands-down vs. Mac. There are hardly any RAID cards even made for Mac.
>> Who has better development tools?
>Its Unix, which has always been the best development >environment out there.
Uh, Visual Studio is the award-winning development suite that has been the best for how many years running? And the best Java tools run on Windows. The best compilers, the best debuggers, etc. Oracle even moved all their development to Windows because it was decidely superior to UNIX.
#m