Friday, September 30, 2011

Motley Fool Notices Apple Owns Its OS

In this video, the Motley Fool reveals that Apple has a competitive advantage in not having to pay Microsoft a licensing fee, which results in value and pricing advantages.

Gee, who would have guessed that by acquiring the IP it wanted to deliver to customers, Apple would differentiate itself from beige-box makers not only on product but on price-per-value and ultimately on raw price? And that Apple's multi-language-in-each-installation OS would allow it to sell one version of a product worldwide?

The Motley Fool neglects something worth thinking about: Apple might not need to license the OS, but it needs to license things it bundles with the OS, like Microsoft ActiveSync (at least on iOS devices) and a rich selection of high-quality fonts (particularly on PCs; the reason Apple's font selection on phones is so thin is certainly the margins impact of font licensing for fonts of the quality Apple ships).

The next thing the Motley Fool didn't reach is the hardware: Apple, owning its own OS and providing its developers all the developer tools free-of-charge, is free to swap hardware underneath its software stack with virtually complete transparency to its customers. Sure, developers may have to click a button to build software for multiple platforms, but Apple has made it easy to deliver one software package for multiple hardware architectures. So when Apple decides that it wants to ship ARM chips in some segment of its product lineup in order to obtain a price/value advantage over competitors, Apple is free to do what Lenovo cannot.

The flexibility Apple obtains through its own OS isn't just the price of the OS: it includes flexibility in OEM hardware sourcing, architecture, launch geography, and other concerns that impact margins, supply-chain-management, and addressable market. Apple's control of the intellectual property driving its products is a critical part of Apple's competitive advantage.

1 comment:

mahasiswa teladan said...

hi...Im student from Informatics engineering nice article,
thanks for sharing :)