Will Leopard be a Win or a Loss for Apple?

With this one we have a mature Bootcamp offering and a number of strong dual OS alternatives that will run with Leopard and Windows, allowing both OSes to reside on one piece of Apple hardware. We also have some folks, once again, suggesting that maybe it’s time for Apple to consider putting Windows (which after Vista SP1 should run native on Apple hardware) on their hardware officially.

This got me once again thinking about the fact that Apple is a hardware company, much like Sun is, and not a natural competitor for Microsoft. One of the strongest software products on the Mac is Office for the Mac from Microsoft. I think it is time to look at whether Leopard could actually be revenue positive for both companies, and revisit whether it has to hold true that if Apple wins Microsoft loses.

Two OSes, One Piece of Hardware

What got me looking at this differently was a review of what’s happening in education with regard to Apple sales, coupled with what’s happening with Boot Camp in Leopard.

In education, in organizations doing graphic arts and multi-media content creation, Apple sales are up sharply, but so are traditional workstation sales from other vendors. Right now the two systems often co-reside. Folks have to be able to work on both from a training and execution standpoint.

But with Leopard, there is an opportunity to put both Windows and MacOS on the same Apple hardware, reducing the cost of the hardware by half, the power consumption and heat by half, and potentially reducing some of the support costs. I say “potentially” because in a dual OS situation I have seen instances where support problems can be marginally higher.

Given that Windows Vista SP1, which better supports Apple hardware, will benefit from such a scenario, this trend could drive new Apple hardware. And probably drive more expensive Apple hardware than otherwise would have been purchased, Leopard, AND Windows Vista along with related applications for both platforms into related segments.

This could go beyond just education because the same benefits could apply wherever Macs and Windows Machines have to co-reside, which is in many agencies, graphics/Web/content creation departments, publishing, and media editing firms. Under this scenario both Apple and Microsoft benefit broadly with the transition and – rather than fighting each other – would be better served making the related solutions more seamless and interoperable. Happy customers for both are good sources of revenue for both. And while this would probably upset the traditional Windows OEMs, it would give Apple a bidding advantage they’ve never enjoyed.

Should Apple Pre-Load Windows?

The way we have always looked at this was: should they pre-load Windows instead of the MacOS? And the answer has always appeared to be a resounding no.

But, with Bootcamp coming off of beta and into Leopard, they effectively officially support systems with two operating systems. So why not preload both and better ensure what the customer gets works out of the box?

You could argue that if they do this, application developers who are on the Mac would be motivated to just develop for Windows because it would be the most common. But wouldn’t this be true regardless of whether Apple preloaded Windows, as long as it was known the user was using Bootcamp for this?

By preloading, Apple doesn’t increase their exposure, they improve the user experience – and may actually create a strong advantage that could get them into the enterprise.

Next page: Apple’s advantage in the enterprise

Apple’s Possible Enterprise Advantage

One of the things IT has been looking at is dual mode laptops. One mode would be for business and be supported by the IT department. The other mode would be personal and supported by the hardware vendor. This is being most aggressively considered in conjunction with shifting from IT-purchased laptops to employee-purchased laptops subsidized by IT.

In an Apple/Windows dual OS machine the Apple side could be the employee side (where all of their personal stuff resides) and the Windows side could be the IT side (where the software was provided and supported by IT). You could argue that because these are two completely different environments, one can more clearly be kept separate from the other than if you were doing two Windows partitions.

This would create a value proposition unique to Apple. And – this is critical – put them in a clearly advantageous position over the traditional Windows OEM. So where would the exposure be?

Security Exposure Would Need to Be Addressed

Right now Apple does not support the TPM (Trusted Platform Module) and this has become a requirement by most IT shops. Granted most haven’t actually used it yet, but with the advent of the new encrypted TPM-enabled Seagate drives and the continued exposure to SOX and HIPAA disclosure rules, TPMs are starting to get turned on.

I was just at an event with Wave Systems, the leading supplier of software to manage the TPM, and the company appears to be in much higher demand now because of this trend. So Apple would still need to address this with the hardware they plan to offer to large businesses, or this likely won’t work.

Security, unfortunately, remains very important. And these new encrypted drives are currently the only way to be able to represent that a stolen or misplaced laptop has not been compromised, since the user has no control over the encryption because the key is centrally managed by IT. This is a game-changing technology and currently not available, yet, on Apple hardware.

This mostly applies to laptops though and, while security is important on desktops, they typically are physically secured and are more focused on performance. So this exposure only applies to the potential future opportunity of displacing laptops, not to what Apple could do near term with workstations.

Apple Exposure

Once you create the opportunity to do both on a single system and create a competitive threat to a large hardware vendor there will be a focused response.

For folks like HP and Dell, who sell into environments where Apple machines co-reside, they’ll likely come up with an alternative solution. And they’re more capable of supporting multiple operating systems (given they do that with Linux, UNIX, and Windows already) than Apple is.

Should Apple move to block by using licensing language, the EU is already primed to move against the effort, thanks to the recent Microsoft trial. And it can now move much more quickly (and already has Apple on the list of firms they intend to explore).

If, say, HP were to have a hardware solution which could do a better job of hosting both the MacOS and Windows (or Linux), the end result could be a drop in market share for Apple hardware, with a large hit on Apple’s revenue line (though profit margins would likely go up given the OS has a vastly higher profit margin than hardware does).

If this solution were to move to PCs, recall that HP has the closest thing to an Apple-level marketing team (because many are ex-Apple). They have vastly stronger worldwide channels and better economies of scale, resulting from a vastly larger market share. HP is also still rather pissed at Apple as a result of the HP iPod fiasco, where Apple took advantage of HP’s trust and embarrassed HP badly.

Once this door is opened, and it is open, it then becomes a race for who can execute more rapidly. Apple has some natural protection in their loyal base and in their license. But it isn’t unlimited and risk could result.

Biggest Changes

In the end I think Leopard may represent the beginning of one of the biggest changes we have yet seen in the PC space. One where the OS becomes less tied to the hardware and more tied to the tasks you want to perform, and the OS types and versions more easily free float on top of hardware. This will become vastly more apparent when virtualization becomes more common and that, my friends, is a very few short years (months) away.

Leopard may result in one of the biggest changes we have ever seen, the only question is: will Apple benefit the most from it, or be harmed the most by it, long term?