Apple computer: Is Piracy the Pathway to Profits?

[BJ_M]

if you think this sounds like crap - consider this:
Back in the days of Win3.1, there were rumors flying about of revealing Microsoft memos. According to these rumors, Microsoft recognized that Win3.1 was the most pirated piece of software ever. The memos also detailed that Win3.1 never would have reached its current level of popularity without rampant piracy. http://news.com.com/2100-1023-212942.html

Key quote:

Gates shed some light on his own hard-nosed business philosophy. "Although about 3 million computers get sold every year in China, but people don't pay for the software," he said. "Someday they will, though. As long as they are going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade."

The aformentioned incident about Windows 3.1 is most certainly valid. Look at how many people pirated numerous versions of Windows since the early 1990s. This allowed people to become familiar with the operating system. Then, when it came time for people to purchase a new system, what operating system do you think they would have gotten with it (assuming that they had a choice)? Some operating system that was unknown to the general populous, like OS/2, or something that they already knew well because they had been using a pirated version? Since the operating system came with the PC, Microsoft got a fee for that PC sale. So, whereas MS didn't profit from the initial piracy, they still made a sale later on and further addicted the user to Windows.

I still firmly believe that the "crack" for the Kinko's version of MS Office several years ago was planned. For those who don't know or don't remember, U.S. printing franchise Kinko's had a "special" 30-day, full-usage CD for MS Office (I forget the specific version) for something like $5. Shortly thereafter a crack was released that broke the 30-day protection. The change was a simple modification to a DLL file and a huge nuber of these discs were sold. I'm generally not a conspiracy theorist, but if there was a lot of concern for the "protection" of the "demo" software, Microsoft would (or should) have made it more difficult than a DLL file for protection. I also heard nothing afterwards about prosecuting the one who released the crack. So, for a few bucks per cracked disc, Microsoft snared how many hundreds of thousands (possibly millions) of people into Microsoft Office. I'd just about guarantee that the vast majority of those people are still using a version of MS Office. Whether those versions are pirated or not is another matter, but I'll bet that many of them are not.

I really would like to know how much of Microsoft's current dominance is due to past piracy. I'll bet that Microsoft would not be anywhere close to where it is now if there was no such thing as software piracy.

And how many of you have pirated a number of games that we otherwise would not have bought but were so impressive that we purchased what was downloaded and/or purchased any of its sequels or expansion packs? I would think many of us.

An argument made that piracy can under certain circumstances make a product more popular, and Microsoft's dominance is certainly what should be offered as proof of that. I would be willing to bet that Apple would be in the same situation.

It's no secret that the reason for Apple's comeback was the iPod, who's popularity was primarily due to rampant music piracy. Come on, does anyone really think a college kid purchased 10,000 songs for their iPod at $0.99 each?



If you remember the heady days of the first incarnation of Napster chances are you downloaded a song and later discarded the foul bit of pop. Chances are also pretty strong that you downloaded a song and ended up buying the compact disc from your local music store. For me the discarded song was Come on Eileen by Dexys Midnight Runners. I am sure the music industry chalks that up to a lost CD sale, but honestly, there was no way I was ever going to buy any music by Dexy and his intrepid band of late night dashers. On the other and when I downloaded Devils Haircut by Beck I went out and actually purchased the entire CD.

The above is a simplification of how piracy can actually move product. Chances are very good that without the illicit download one less copy of Odelay would have been sold. So, for no great investment on his part, Beck sold one more album that he normally would have thanks to being pirated. Software companies have understood this concept for quite some time. They will grudgingly put up with piracy if it sells more copies in the long or if it prevents a competitor from gaining a foothold. Say, for example, someone company produces a legitimate competitor to Adobe Photoshop. The new product feature all of the pixel manipulating goodness of Photoshop but retails for half the price. In basic economic theory the new product would soon displace Photoshop as the image editor of choice. In reality that is not necessarily the case. If Adobe Photoshop gets passed around on P2P sites there is no incentive for theft happy users to try the new competitor, both are stolen and to the end user stolen=free. Years later the one pirate removes the eye patch and becomes burdened with kids and full employment. Suddenly spending hours on the internet looking for registration codes and illegal copies no longer holds the same appeal, it has become easier and safer just to purchase a legitimate copy.

Which brings us to the question of Apple computer and piracy. You, as a reader of fine Apple oriented commentary, are no doubt aware of the recent announcement that Apple is switching to Intel. This has some interesting ramifications, one of the foremost is that you will now, in all probability, be able download a copy of OS X on a P2P site and run it on any plain vanilla Wintel box by employing some sort of hack. To many Apple fans this is a nightmare scenario. Why they wonder would anyone ever buy another Mac if they can run OS X on a Wintel box?

Before considering why people might still buy Macs even if they could hack a Wintel to do the job let us consider the benefits of OS X piracy. For years interested parties have heard people complain: Macs are too expensive. At this moment most people are thinking about only of the retail price. This is a mistake, the cost of Macs to a fence sitting switcher encompasses much more than the price tag. To get in the world of Mac you have to be willing to take a massive leap of faith. You must be convinced that a Mac will serve all your computing needs admirably and you probably have to accept that as a truth without extensively using a Macintosh. It is also wise to remember that for most computer users it is an either/or decision, not many have the resources necessary to grab a Windows for safety and a Mac just to decide if it a suitable OS. Faced with a decision like that it is not hard to understand why people, time and time again, choose the OS with the greatest amount of familiarity. With rampant piracy suddenly this is not an issue. People can play with OS X on their Wintel box and make an informed decision when they make their next computer purchase. It is not hard to imagine that actually being able to use OS X for a significant period of time might result in more switchers than Apples ads ever dreamed of producing.

Here one suspects Apple will face a careful balancing act. If hacking a PC to run OS X is trivially easy then sales will certainly suffer. If OS X is uncrackable then Apple is basically in the same boat they are now. How does Apple balance these two opposing issues? Why by making the developer version trivial to install on a PC and each subsequent version very difficult. It appears the first phase may already be in place. There are currently rumors of the developer version of 10.4.1 showing up on P2P sites and being subsequently installed on generic PCs with absolutely no hacking necessary. One can rest assured that this will not be the case when consumer ready Intel powered Macs roll out early next year.

We can now return to the question of why people will continue to buy Macs when they could just run OS X on a Wal-Mart PC. The answer s simple: convenience. Remember with Intel Inside Apple is no longer asking users to forsake the Windows platform completely, soon users wont have to choose either/or. Couple that with each OS update likely breaking plain box compatibility (remember that brief period of time when Real sold iPod compatible music?) and suddenly users see Macs as a viable option. The Mac will actually run the software they pirate from work and theyll be getting tired of hacking their PC, once again, just to keep using OS X. Sure there will always be people willing to break out the soldering iron or employ some other complicated method of EULA circumvention but Apple can put up with those diehard hackers to get a larger chunk of the market.


http://applematters.com by Chris Seibold Jun 13, 2005

[Cobra]

That is an extremely interesting take on piracy. It still doesn't justify it.

I wonder - and this might be a silly question - if this version of OS X will run on my AMD system.

[BJ_M]

not at this tme

[Cobra]

That's a real shame. I wanted to get it - I'm a Mac user at heart.

[BJ_M]

PC prices in US are now at and under 300$ -- mentioned somewhere else here

[spiderman2k1]

I had an old post about this about a year ago. This is what I said Gate's would rather have people pirate his software then install a free copy of Linux. Reason why he gets more market share. And if someone gets a computer job they will know windows and that company will pay for the software.

[Faustus]

As was said before your not going to be able to run it on a Generic box. Also the "OSX/Intel" floting around the net is fake. I hear that one of the versions floating around is actually just a 900meg bootable goatse image.

Jobs is way to protective. He'd never use a stratagy that involved this.

[BJ_M]

not Generic, but doesnt have to be an apple box either ..

Jobs has said that the heart of their business is OSX/software , not hardware