Could a Dell/Apple Partnership Work?

About a year ago I had the chance to hear from Michael Dell. He didn’t say much of interest at the time but one comment really stuck in my head. He said “I’d sure like to be selling systems based on OS X.”

Most of the current commentary around Dell (DELL) centers on Linux and Vista. However now that Michael is back in charge he is clearly in a position to at least have a conversation with Steve Jobs and Apple (AAPL) about the potential for Dell to do something with Apple.

It’s hard to picture because Dell has built a company around commodity products and, in many ways, is almost the opposite of Apple when it comes to the industry. However, for all the Apple success they are still just beginning to gain some share in the enterprise.

The attraction for Dell is clear enough; they need to do something to improve their image and restore some quality to their brand name. For Apple the attraction could only be distribution although Apple stores and their own online capabilities seem to be working just fine. Still, what a major endorsement it would be for Dell to announce they would be shifting to include OS X-based systems in their plans.

We have just seen some small movement in non-Apple sources for OS X based systems with the Mac Tablet announced during the recent MacWorld.

Even though I can’t see a clear path to a deal of some sort, that comment from Michael Dell continues to haunt me.

If anyone else has an idea of how this could work please share your thoughts.

Comments

[Malkiel:]

I can think of no technical barriers--If Apple were willing to let Dell put the Mac OS on its machines I'm sure Dell can configure the hardware to maximize it.

We've been talking so much about Linux because we all assume Apple would never license out its OS, but being the exclusive non-Apple hardware licensee of Mac OS at a moment of high dissatisfaction with Microsoft would rocket Dell to the head of the pack among PC makers, carve out a much bigger piece of the desktop market for Apple, seriously damage the Microsoft monopoly, and in general be nirvana for Dell, Apple, and the public. I can't see any downside, but I do see one barrier--Apple has enough free cash to not need to do this, and they may in the end feel fine with their boutique hardware/software business model.

Since Apple is coming out with a newer version of Mac OS this spring, perhaps they could let Dell have the superseded "Tiger" version. That way Mac buyers would still get exclusive access to the latest best version but the rest of the world can get an alternative to Microsoft. And the people working on Linux would have to decide how serious they are about competing for desktop space since their moment of opportunity would be in jeopardy...

2007 Mar 15 10:17 AM

[Julian Ivan...:]

Apple does not need DELL. DELL is the next GTW. This is an insane idea, and backward thinking at its worst.

2007 Mar 15 11:08 AM

[Dan Poarch:]

Well, with all due respect, you need to be more aware of the Apple/Dell history. When asked in 1997 what he would do with Apple, he said, "What would I do? I'd shut it down and give the money back to the shareholders." Admittedly, Apple was in a tough spot in 1997, but it had potential [clearly]. Perhaps this was just competitive bravado, but it's emblematic of his lack of vision.

As well, Dell makes horrible hardware. I could make a longer lasting PC with off-the-shelf electronics and LEGO bricks. They are nothing more than the market-leader in the consumer PC cul-du-sac. A feedback chamber of more oblique options, less quality, that features the overwhelming-website-a... Sorry to be so critical, but I'm convinced that the desktop market will collapse when it's discovered that the PC industry is in a self-destructive race to the bottom. This won't be good for any of us.

How Michael Dell could do anything for Apple, without licking Steve Jobs' boots first, I don't know. They are just plain incompatible. Even Steve's love of surprises isn't enough to tempt him, in my humble opinion.

2007 Mar 15 11:31 AM

[Jon T:]

Michael Dell has been dreaming this dream for some time now, I bet.

Steve Jobs and Apple are becoming verifiable icons that represent quality, innovation and originality.

Which is pretty much the inverse of Dell (and Microsoft too for that matter).

2007 Mar 15 12:33 PM

[Tedious:]

Why doesn't Dell write it's own darned operating system? Remember when computer makers wrote their own OS? Stop buying from Microsoft and make Dell OS 1.0.

Base it on Darwin. Just to ruffle everyone's feathers.

2007 Mar 15 12:36 PM

[holycow:]

What's Apple to gain by this arrangement. Apple can replicate what ever Dell has in terms of set up to service the enterprise if it wants to go after that market. Why give those profits to Dell, which really does little add value to Apple. Apple outsources its manufacturing to Asian countries, so Dell can't contribute there. Dells' not known for support either consumer or enterprise, so I fail to see why Apple should enter into such an agreement.

Apple may not be interested in the enterprise except for servers perhaps and they will play in that market over time, but possibly specialized areas of the server space.

2007 Mar 15 03:06 PM

[jbelkin:]

As long as Steve Jobs is running Apple, the chances are NIL. Steve Jobs remembers every comment and holds a grudge. If Apple ever decided to launch a licensing program, Dell would so far down the list - right below Coleco, Zenith & Packard Bell. Mike Dell is a good sales guy but has no clue about anything else - he ticked off the wrong company & Steve Jobs just to get a laugh. For everyone else, remember this about speaking ill of anyone - it might come back to bite you big time. Dell had its time in the Sun, like every other commodity Pc maker, as soon as your overhead goes up, you're done like Zenith, emachines, packard bell, all #1 in PC sales - all dead. Dell looks to be another dead man walking - as they have failed in EVERY venture outside of selling $300 Pc's - from consulting to servers to routers to consumer electronics - as if the world is holding its breath for a Dell phone.

2007 Mar 15 03:12 PM

[Malkiel:]

To everyone asking the question of what Apple might gain, it needs to be considered that selling already-developed OS software in the box has got to be some of the easiest money imagineable. Tweaking a disc image to a manufacturer's hardware profile and then letting them worry about everything else could fill out a software manufacturer's bottom line nicely with little investment--I'm guessing Microsoft did pretty well over time on $150 upgrade copies of XP through the life of the product, even if they claim they didn't sell a lot. The issue is whether Apple needs the money, wants to change its business model, and of course any quality issues about Dell. But don't believe there isn't a significant potential chunk of change to be made here. Jobs likes to keep up the affectation that Apple is primarily a hardware manufacturer, so if he really believes that, why not license the OS?

2007 Mar 15 05:43 PM

[motto_mth:]

No it wouldn't work. One of the main reasons that many folks just don't understand very well is that Apple is foremost a vertical integrator and user experience company. Thus they aren't just a hardware company or just a software company; it's a symbiotic combination. This is completely opposite from a company like Dell where culturally, they lack any design sense. Michael Dell himself is pretty much a one trick pony (driving down costs at any price without regards for employees and customers; see the ihatedell.net site for tons of examples) who lacks the sort of vision to even be an effective Apple partner and his company would be a disaster to the OS X brand.

So unless it makes strategic sense, they aren't going to license the crown jewels like Mac OS X because controlling the entire widget is how they are able to insure the entire user experience. In the past, they've tried partnering but when the results were sub par, they've ended up doing it themselves. Go back to the original iPod release for Windows when the software they shipped it with was Musicmatch (iTunes Windows wasn't ready yet). Suboptimal experience for Windows users since they also couldn't use the iTunes (Music) Store. Another example is their initial retail partnership with CompUSA (Apple Store in a Store) which resulted in varying degrees of success. They went it alone in order to have better control of the entire experience (remember, they did this at a time when Gateway was shuttering their stores and the economic climate was fairly hostile and so many were predicting the Apple Stores would be a failure just like the Gateway Country Stores in a few years; well look who is laughing now). Of course, there are times went it is nearly impossible to go it alone like with iPhone (the carrier network).

2007 Mar 16 07:14 AM

[Dan Poarch:]

I have to coattail here on the consumer experience tip. The post I'm responding to is absolutely on point.

It is completely unnoticed that Apple launched their stores in the shadow of Gateway's udder failure in the retail market. They were on the wrong teat. Think about Apple's strategy. Libraries aren't organized based on book height or binding width. They're organized based on a reader's [user's] needs. I know a library might feel like a long stretch for a consumer experience metaphor but think about it, computers are about information access.

Technology companies that think about technology more than user experience are doomed to fail. When computers were cool for computers' sake you could make a case for marketing chips or OS capabilities. Now it's about experience and a 15GB Vista install is an insanely bad experience. Michael Dell drinks the stale Kool-Aid and discovered that he doesn't like the taste way too late.

FWIW: I looked at every laptop screen on the Amtrak from DC to Baltimore tonight and do you know what I saw on 5 of 5 [no exaggeration, 5 of 5] Windows screens? iTunes. So even when people are using a PC, they're experiencing Apple.

2007 Mar 17 12:28 AM

[Stustanton:]

When Steve Jobs moved to the Intel chip he knew that his OS would become transportable to the PC platform. I imagine that he has a plan to address the growing presence of that possibility, and maybe (that's a big maybe) Apple could use an exclusive supplier like Dell with a wide reach to address that side of the market.

Apple has a what Jobs calls it's "Unfair advantage" in owning both the platform and OS, and thus can do what Microsoft can only dream about in many agendas. Such differentiation allows Apple it's premium pricing and is fundamental to Apple's agenda. Apple could consider a PC design that retains that unfari advantage containing a circuit board or electronic chip that isn't otherwise available, which allows ownership of an Apple branded PC with Apple OS, as a "dual boot" device along side a Microsoft OS. The benefit is in penetration of traditional PC strongholds, like business, where the PC is embedded in the infrastructure.

If Microsoft is indeed committed to corporate suicide with Vista, its draconian DRM-works and it’s anti antivirus approach, Dell might offer Apple an instant invasion of traditional Microsoft strongholds. Selling dual-platform Apple PCs, at a premium, to government and business, may or may not appeal to the market. But it’s all I could come up with.

2007 Mar 16 11:56 AM

[appleasiseeit:]

<blockquote>Appl... could consider a PC design that retains that unfari advantage containing a circuit board or electronic chip that isn't otherwise available</blockquo...

It doesn't make sense to me, Apple switched from PowerPC to the ubiquitous x86 architecture, and now they would use a custom chip for an Apple branded PC? What kind of economies of scale can you achieve with a custom CPU? If the CPU isn't otherwise available, what problem does it solve for potential customers? You can buy an Intel Mac today, it will run Mac OS X and Windows. Dual-boot, virtualization, you name it…

<blockquote>Dell might offer Apple an instant invasion of traditional Microsoft strongholds. Selling dual-platform Apple PCs, at a premium, to government and business, may or may not appeal to the market. But it’s all I could come up with.</blockquote&g...

As far as I know, Apple is not that interested in the enterprise market. For its part, Dell is waging a never-ending price war, where the only way to gain share is to slash prices. During the latest conference call Dell's CFO said: "We priced aggressively to grow the business with the resulting significant adverse impact to our results." Dell was too aggressive on price; even though the volume of shipments is increasing, revenues are not growing fast enough due to price pressure.

It looks like Dell needs to balance share gains and revenue growth, I think that Mac OS would be great to differentiate Dell's high margin consumer PCs like the $2,999 XPS M2010. But if the goal is to sell 'sleak' PCs in the $1,000+ price range, Apple is already doing fine with its own hardware. Apple doesn't need Dell to sell personal computers at a premium, why should Dell be allowed to siphon Apple's hardware profits? I try to be open-minded but I don't see a Dell/Apple partnership happening.

2007 Mar 18 07:00 PM

[Stustanton:]

I agree, I don't quite see an Apple/Dell partnership, but I'm intrigued and I'm asked in the article to consider it, and all I could come up was this. Apple probably has to do something to keep a PC version of its system from diluting the premium value of its Mac line, so I expect a proprietary chip-set component (not the CPU) in any PC. You must not be able to buy a cheap PC that is a Mac. I think a Dell product would have to penetrate the PC market while preserving Apple's absolute control of its platform/OS combo, be clone-free, command the same price premium as the Apple line. If every vendor in the PC market could sell a PC version of Apple’s OSX platform, the price premium and the freedom to take the hardware and OS combo where no others can follow would be lost. But apple could do it, keep control, and penetrate a huge, HUGE portion of the market. Don’t believe that Apple has no interest in that enterprise market, they just can’t damage their advantage in reaching for it. Apple won’t go head to head against Microsoft, and they don’t need to. They can offer a Dual-boot system, OSX side by side with MS, and let Microsoft die of its own stupid mistakes. But Apple can’t lower the OSX platform to be a commodity-like PC.

I'm intrigued. Might be a good idea.

2007 Mar 20 08:06 PM

[flamingdod:]

I aprecaite your opinion ,, and I guess all of you said the right things about bouth Dell and APPLE

2008 May 21 08:11 AM

[User 239889:]

This is great news!

2008 Aug 13 07:24 AM