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It was a failure because the clone makers made better, faster, and cheaper hardware than Apple did at the time. These days, Apple and its fans are convinced Apple makes the best hardware evar, and that the sometimes premium prices are more than justified.

If Apple's hardware is as good as everyone says it is, what's the fear for clones all about?

Oh come on, you know the answer to that Thom.
Competition is only good for the market when you are the underdog.

The better and faster part is arguable - some did, some didn't. The important point is that they were cheaper, often through significantly lower profit margins, and it has been proven time and again that in general people would chose cheaper before better. (e.g. "I can live with slightly thicker and heavier plastic laptop if I can save $800.")

Very small part of Apple's current customer base are "Apple fans". Most people buying Macs today are doing so for a myriad of reasons - some think Macs are best bang for their buck, some are trying to get away form Windows, some think Macs are cool and trendy, some need a Mac (for example aspiring iPhone developers), some are just curious. Many of those people have no allegiance to Apple and will not hesitate to ditch them for someone else's cheaper offering.

Once again, it's not a question of the quality of the hardware, it's a question of price-points. Clones don't need to completely steal Apple's sales or run the company into the ground to have a detrimental effect on Apple's business model or on their stock.

It was a failure because the clone makers made better, faster, and cheaper hardware than Apple did at the time. These days, Apple and its fans are convinced Apple makes the best hardware evar, and that the sometimes premium prices are more than justified.

If Apple's hardware is as good as everyone says it is, what's the fear for clones all about? "

The clones admitted to not expanding the base. You're not getting it, but keep dreaming.

If I sell 2 million units, per year, then open up the clone option and total yearly sales for installed OS X is still 2 million/year what the hell went wrong.

What went wrong is that Apple not being a strictly software based company who strong arms OEMs with a toll isn't making a ROI greater than if they did it alone. In fact, they see their gross sales declining.

Order 66?

Yes, this is the basic marketing question here! It is a case of what Michael Porter calls difference without differentiation. That is, being different in a way which your customers do not value. An example might be, for instance, hand polishing the case of every power supply. Its different all right, but it delivers no extra value to buyers.

The clone episode suggests there are two forces at work in the Apple buying decision. One is a desire to get Mac OS. That is a respect in which Apple is different in a way that does deliver customer value. The second is a desire to get the best value hardware available to run it on. This is a respect in which Apple is different in a way that subtracts value.

For the last 20 years, the desire to get Mac OS has mostly outweighed the desire for best value hardware. There has been a period in the late nineties when it did not, so the attractions of Mac OS have limits.

It was clear when the clones were available that the attractions of having hardware and software from the same source were very limited in their appeal. This too was a difference without differentiation. Apple customers say, after the fact, that its uniquely valuable. Its probably best understood as the result of cognitive dissonance. When offered the choice of whether to pay a premium for it or not, with their own real money, they choose in large numbers not to. Large enough numbers to threaten the viability of the company. This is a fundamental and very important fact about the Apple market.

If you add all this together, the Apple marketing strategy can be characterized as follows: to force the customer to buy something very many of them do not much want (the hardware) to get something he does very much want (the software). And to keep the undesirability of the hardware within acceptable limits for the strategy to work without leading to a customer revolt.

The very interesting marketing question is whether this is the best way to extract value from the software. I doubt it. You could probably sell the same numbers of OSX copies if you bundled it with dog collars. You would make a profit on the dog collars. But you would almost certainly make more money by marking up the software a little, and not incurring all the costs of making, packing and distributing those silly dog collars.

If it were clear that customers really valued getting their hardware from Apple, there would be no question, the existing strategy would be correct. But given the evidence is that many of them would run elsewhere if they could, it must be very doubtful that forcing them so as to extract hardware margins can be economically rational, compared to a strategy of marking up and extracting the OSX value directly.

No sorry, the Apple Clones did indeed grow Apple's user base. The Apple Market share jumped from 3% to something like 8%.

What the cloners did that Apple couldn't stomach and didn't try to compete with, was eat Apple's lunch by introducing better units on a faster time table.

All Apple had to do was license those designs back and release them under the Apple Brand. Instead, Apple put them out of business and shot itself in the foot.

I was there and saw the damn numbers. I was there listening to the Clone vendors acknowledging it. These were all internal meetings. If you think differently then you must have been living in a fantasy world.

Then again, it's rare to actually have someone in these forums who has actually worked for any of these Operating Systems companies.

Of course it was a failure. Who in their right mind opens the doors to resellers - and then keeps their prices so high that their own resellers can easily undercut them? "Ill-conceived" would be the polite way of putting it.