Windows 365 Could Offer Apple Silicon Virtualization Alternative

Originally published at: Windows 365 Could Offer Apple Silicon Virtualization Alternative - TidBITS

Microsoft’s forthcoming Windows 365 service promises to let you stream Windows from the cloud to a Mac or iPad. It could be a win for those looking for an x86 Windows solution on an M1-based Mac.

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This actually seems quite clever. Apple should create a competing product.

Maybe, but I don’t think it fits within Apple’s business model.

Microsoft is a software company. Their goal is to get as many people as possible using Windows and Office (among others). Cloud-hosted virtual PCs serves this end because each user is running Microsoft software and is paying for that usage.

Apple is a hardware company. They don’t make money from macOS except as such usage encourages purchases of Mac hardware. Cloud-based Macs doesn’t encourage the purchase of new hardware, except by Apple (for use in these clouds) and that hardware won’t be the devices sold in retail stores.

So while it might be useful for you and me, I don’t think it’s something that will interest Apple.

I wonder whether people know about macminicolo.net or macstadium.com or macincloud.com, which provide remote access via VNC or RDP to a physical or virtual Mac servers on the cloud.
–e.

Hardware has been increasingly important to Microsoft’s bottom line for decades. Xbox consoles, controllers, headsets, battery packs, etc. Surface and add ons, including knockoffs of Apple pens. Hololens and VR accessories. Keyboards, mice, cables, and whatever they call their AirPod knockoffs . Speakers and Smart Speakers that I don’t remember the names of either.

They’ve also been partnering with NEC and others on 5G hardware/software communications technologies, and they’ve been partnering with Dell and other hardware companies on cloud servers and Azure services for IT operations for businesses of all sizes. IIRC, they’ve recently been emphasizing edge computing. They are #2 in cloud services, behind Amazon.

Under Satya Nadella, Microsoft has evolved into a greatly diversified company, even more so than Apple.

I was curious what the actual numbers were here, so I looked at Microsoft’s Annual Report for 2020. It would take some calculating to work backward from the percentage increase to figure out how the pieces of the pie are divvied up.

https://www.microsoft.com/investor/reports/ar20/index.html

(Search on “Revenue increased $5.2 billion or 13%.” to find these details.)

But it seems pretty clear that Surface revenue, Gaming revenue, and Search Advertising revenue are a relatively small proportion of Microsoft’s overall earnings. They’re lumped in with Windows in the More Personal Computing segment. In 2020, that segment was about a third of Microsoft’s earnings (along with Productivity and Business Processes and Intelligent Cloud).

In that More Personal Computing segment, Windows revenue went up $1.9 billion (9%), whereas Surface went up $457 million (8%) and Gaming went up $189 million (2%—content was up but was dragged down by a significant decrease in Xbox hardware revenues). Search Advertising revenue went up $112 million (1%) but there’s a comment about it being essentially unchanged when excluding traffic acquisition costs.

The money from Surface and Gaming is not chump change, of course, but compared to Office Commercial going up $3.1 billion, LinkedIn going up $1.3 billion, and Server products and Cloud Services going up $9.4 billion, it seems pretty clear that the bulk of Microsoft’s money comes from Office, cloud services, server software, and Windows.

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Except that Apple is trying to grow its services revenue. I’m not saying whether I think this would be a good idea, but I can see how Apple could benefit from essentially selling MacOS as a service. If, for instance, you had to have a Mac to use the service, they could avoid cannibalising their hardware sales, but make extra revenue from people who occasionally needed more power or an extra machine on a short-term basis. (Again, this is theoretical, it might not make much sense in practice).

Your argument makes sense, but it’s the same argument that was used to justify Mac clones.

Sure, it has the potential to increase macOS usage, but it could simultaneously kill Apple’s hardware sales.

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I think we need to acknowledge though that the times have changed. Back when there were clones Apple had almost zero services, it was clearly a hardware company. But no more.

These days it’s Apple itself that seems no longer satisfied being a hardware company. They apparently don’t want to wait 2 years for people to upgrade their iPhone or 5 years before getting a new Mac. They appear rather hell bent these days on not living off of hardware. It’s Apple itself that’s constantly pushing the whole services spiel, as if only suckers tried to grow their business with hardware. I’m not at all saying I agree with that (I don’t), but it does very much feel like the new Apple isn’t so keen on being a hardware company anymore because somehow they think you need to show 20% y-o-y growth in order to stay relevant and they don’t believe they can do that with hardware.

If indeed Apple is headed towards all these services and trying to make 50+% revenue with that (instead of iPhone like in the past, and Mac before that), perhaps that also means they’d be more open to running macOS/iOS and/or their apps through other alternative conduits. Not saying it’s likely, but I would say it’s more likely these days than 20 years ago.

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I think there’s multiple orders of magnitude between what Apple has and the cloud/service infrastructure that Microsoft has with Azure and Amazon has with AWS. Unless Apple is in a position to build out its own infrastructure significantly, I don’t think it’s going to compete with the big two on that front. Apple is still at the point where it’s a customer of services like Azure and AWS, not a competitor of those services.

Dave

Things have been looking a whole lot better for Microsoft every quarter so far in 2021, and they recently posted their 3rd quarter results. Here’s a quarter to quarter comparison; they’ll be posting q4 in just about a week:

Xbox Content and Services +32%
Azure: +50%
Surface +12%
Office Commercial Products and Cloud Services: +14%
Office 365 Commercial: +22%
Office Consumer Products and Cloud Services: +5%
Windows OEM: +10%
Windows Commercial Products and Cloud Services: +10%
Server Products and Cloud Services: +26%
Search advertising excluding traffic acquisition: +17%
Dynamics Products and Services: +26%
Dynamics 365: +35%
LinkedIn: +25%

Apple is still by far the world’s most valuable company, and Microsoft remains #2. But the gap has closed a little bit.

https://www.microsoft.com/en-us/investor/earnings/FY-21-Q3/press-release-webcast?ranMID=24542&ranEAID=nOD/rLJHOac&ranSiteID=nOD_rLJHOac-rna7zYtJWDXDTzkziqVR0Q&epi=nOD_rLJHOac-rna7zYtJWDXDTzkziqVR0Q&irgwc=1&OCID=AID2200057_aff_7593_1243925&tduid=(ir__3bc0pny3qokfq2s1uoql3muax32xufzrz6om1xiq00)(7593)(1243925)(nOD_rLJHOac-rna7zYtJWDXDTzkziqVR0Q)()&irclickid=_3bc0pny3qokfq2s1uoql3muax32xufzrz6om1xiq00

Steve Jobs launched services to sell Apple hardware. He also realized that the recurring revenues services earn would be a big boost to Apple’s bottom line, and the boost from services gets bigger every year. Would iPod have been as successful as it initially was without iTunes? And iPhone, iPad and Watch without apps? Not many people replace their hardware every year, and services are a huge incentive that keeps them locked in to the Apple ecosystem. And the profit margins on services are stratospheric compared to hardware. Next to iPhones, services are the second biggest revenue generator among all of Apple’s products, and services’ revenues keep growing. Services are a very big reason why Apple became the first trillion $ company, and the first two trillion $ company.

I wasn’t saying it’s a good idea. But as @Simon says, Apple is a very different company now. All I’m saying is that it doesn’t seem a crazy idea that they might one day try something like this, in the context of Apple in 2021. Xcode Cloud is already a step down this path.

There is, but we’re talking about a service, not the infrastructure behind it. Apple could offer MacOS as a service and use AWS/Azure/something else to power it. I believe that’s what they already do with iCloud (and presumably the upcoming Xcode Cloud).

Again, I’m not passing comment on whether any of this is a good idea. Just that it seems within the realms of possibility as something Apple might consider.

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I would be wary of Apple offering a virtual macOS cloud service on the chance that it would be a big success and push the traditional Mac desktop into oblivion. A failed product could hurt things too.

The clone experiment should have been tried differently and many years earlier than it was, but then again, Apple was altogether brainless on achieving respectable PC market share.

The keys to success for the Mac are superior software and, probably still, competitively priced computers. Just like always. Relatively few people buy the topmost-end hardware.

Likely, the real money to be made continues to be in cloud service infrastructure. If some virtual macOS was mated in some unique and spectacular way with a business targeted cloud service (although I don’t know what that would be), then it could be a success for Apple, probably not so much for me.

Organising files and folders in Office 365/OneDrive is a headache.

Mac clones were an unmitigated disaster, and it remains a business school textbook case of what not to do. Apple only made about $50 for each clone license, and cannibalized its own sales:

It turned out that Mac users were switching to cheaper and better clones, or switching to PCs rather than upgrading Macs. In the days of computer retail stores, Macs were being shoved away or replaced by clones. Developers stopped upgrading and building new stuff for Macs. And the clone manufacturers had even better advertising and PR campaigns than Apple, probably because they were making more money.

Abandoning the clones was the first thing Steve Jobs did when he returned to Apple, and it was a brilliant move. He returned focus to creating and building unique, highest quality, innovative, easy to use hardware and software, built from top quality chips and components. No more bargain basement Macs, and especially after the introduction of iMac and free productivity apps, even better software and user experiences. Job’s focus on quality and exclusivity are the reason why Apple became the first trillion $ and the first $2 trillion company in history.

You make it sound like Jobs used the Mac to make Apple a trillion dollar company. The Mac treaded water. The clone experiment was badly executed. That is clear. Turns out people really love their phones. Outside of the U.S., Apple gave up market share on the phone after crushing the market and one can argue either way whether this is best.

Apple had lost more than $1.6 billion dollars during Gil Amelio’s reign of horror, and was more than $150 million in debt and a month or two away from declaring bankruptcy in 1985 when Jobs rejoined the company and immediately put the kabosh on clones. And in order to kill the clones, Apple had shell out substantial sums to pay off the cloning companies that held licenses to build Macs. Jobs quickly and totally revamped the Mac product line, including making Macs the first computer hardware line to stress digital communications with the iMac. Killing the clones and developing superior hardware and software revived Apple and Macs from what was widely considered inevitable death.

Steve died in 1997, and by that time Apple had just become the world’s most valuable company. Apple was the first company hit the $1 trillion watermark in 2018. This was, and still is, a truly remarkable turn around, and the strategies Jobs initiated, including expanding the hardware product lines and building services, were central and critical to achieving this accomplishment. IMHO, Jobs’ #2 guy, Tim Cook has been more than a worthy successor. He’s taken Jobs’ strategies and run with them, making Apple the first the $1 and $2 trillion company.

P.S. Profits and market share are not the same thing. When clones were available, Macs had neither. After Jobs killed the clones, Macs became very profitable once again, but their market share never grew substantially vs. PCs. And now that Macs are built with Apple’s very own M chips, I’ll bet that Macs are becoming even more profitable with minimal or slight gains in market share. And premium priced iPhones and iPads crush the competition in revenue and profits.

Alright, let’s put an end to the history discussion. The topic is Windows 365 as a virtualization alternative for Macs using Apple silicon.

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I respect Adam’s request to end the history discussion which may have finished away. However, we should make the correction that Jobs died in 2011 and returned as CEO in 1997.

I expect Windows 365 virtualization service to be a smart move by Microsoft, and, if well done, could eventually result in business PCs being replaced by “terminals”. Running Windows virtualization on a Mac will otherwise be a plus for new Macs and iPads. For now.