The Real Threat of a Mac & Virtualization

The Back Story

Okay, there should be no doubt in anyone's mind that I enjoy commenting on Apple's business strategy, marketing practices and products. You would think that I am guilty of heresy considering I work for Microsoft. Well, I lived with that burden for a few years until I found an entire "underground" community of fellow Mac enthusiasts at Microsoft - they're aptly called "the Mac Users Group". That an enthusiast group for a rival's products can exist at Microsoft should tell you something about the openness of this company. But I digress...

There is no denying that people, not just geeks, are simply enamored with the new Mac Laptops. There are unofficial numbers indicating the Mac's market share at a strong 21% of the Consumer market, and that number is trending on the up. Within Microsoft too, I've witnessed a steady increase in the number of my Microsoft cohorts requesting help with setting up their new MacBook Pro, more people extolling the virtues of Mac OS X. Till last year, these folks (and employees of other corporations) had to contend with owning two machines - while their Mac catered to activities in their down-time, they had to revert to their Windows machine for work-related commitments. They say, "Perception is everything", and this clear distinction between a Mac and a PC led to the Mac being dubbed a Hobbyist platform. Not very flattering if you ask me.

Virtualization - What?

The perception of what a Mac could do changed with the release of Mac OS 10.4, codenamed Tiger. A small company in Renton, WA released a virtualization solution for the Mac called Parallels that allowed users to run Windows in "parallel" to Mac OS X. Via virtualization, you can run Windows-only applications and games on a Mac. That's right - you can run Windows-only applications and games on a Mac via virtualization!

Parallels wasn't the first virtualization solution for the Mac - the other virtualization solution for the Mac was Virtual PC, an abysmally slow product and was taken off the shelves a few years after Microsoft acquired Virtual PC. Windows on a Mac via Parallels didn't run at breakneck speed, but for the first time, owning a Mac didn't come with the associated burden of owning a Windows PC in order to get work done.

In Fall 2007, Apple released the next version of their operating system - Mac OS 10.5, codenamed Leopard. A heralded feature of Leopard was Spaces, a feature that Unix desktops have had for as long as I can remember. Spaces is a way to organize currently opened applications into multiple desktops, and is touted to boost productivity. In my case, I tend to switch between 2 sets of applications that I would organize into 2 Spaces (if I had a Mac at work):
- a Work space with all the work related applications - Outlook, gVIM, Visio and Powerpoint
- a Personal space containing Firefox, Photoshop, Live Writer, etc

As Mac OS X started gaining momentum, the Parallels product for the Mac gained in popularity. VMWare, a big player in the Virtualization space, recognized that Parallels was on to something, and created a rival product called Fusion. VMWare's entry into this market was good news for everyone - it legitimized both the Mac platform and Parallels, it created competition for the incumbent product which made both products better, and it gave Mac owners a choice of virtualization software. The reviews are in for both products, and it's only good news. Barring the minor performance issues people have noticed, they are extremely happy with their Mac purchase, with Mac OSX, and with running Windows via Parallels or Fusion.

What's good for Apple is bad for Microsoft

I've talked about Mac OS X, Spaces, and the freedom customers now have to both work and play on their Macs via Virtualization and Leopard. The marriage of these ideas is what occurred to me last afternoon as I walked out of the office. Here's the scenario that prompted this post:

Roy works at a company that has made extensive IT investments in Microsoft technologies like Exchange and SQL. At work, Roy needs to use products that only work on Windows like Visual Studio and Visio. As his work demands more travel, Roy is given the option of buying either a Mac or a Dell/Lenovo laptop.

Till last year, Roy would almost certainly pick either Dell or Lenovo. Today, Apple is the other horse in this race, and unlike the other two, evokes a visceral response in its owners like no other technology product. If Roy chooses a Mac, he can set his computer up using Spaces so that his Work space has all his Windows-only applications running in, you got it right, a Fusion/Parallels powered Virtual Machine, and his Personal space can be powered by applications that are running natively on the Mac. Switching between the 2 completely disparate environments, hitherto impossible, is now akin to switching between applications via Alt+Tab (it's a different key combination but you get my point). Totally seamless!

The increasing market share of the Mac has 2 distinct repercussions on the Windows business:

1. OS Upgrades
The customer satisfaction numbers for Vista aren't pretty; under pressure from customers, Dell has restarted selling machines preloaded with Windows XP. All the line of business applications that run on Vista also run on Windows XP, so a lot of businesses don't see the need to upgrade to Vista. Adding insult to injury is the fact that Windows XP is cheaper to purchase than Vista is. As a corporate employee that owns a Mac, this tells me that I can continue using Windows XP installed in a Virtual Machine to get my work done.

2. OEM Sales and Windows Volume Licensing
Microsoft makes most of its money selling Windows to OEMs. The new PC you bought with Windows preinstalled sent some more money into Microsoft's coffers. Microsoft gets no money when a Mac is bought, so its bottom-line is affected every time a customer (consumer or corporate) decides to buy a Mac instead of a PC.

It could just be that Microsoft's losses on account of Mac's gains are but a drop in the ocean. Please feel free to drop me a line or post a comment if you have more insight into this.