Apple feels the squeeze from Linux

SEC filing highlights Apple's fears

James Middleton, vnunet.com 03 Dec 2005

Apple Computer has quietly voiced its concerns about the growing threat it faces from Linux in the desktop market. The Californian manufacturerÕs concerns emerged in its Form 10-K filing with the US Securities and Exchange Commission late this week. The 10-K is an annual report on the companyÕs business, and an effective disclaimer on factors that may affect the companyÕs future performance.

In this case, Apple concedes that the personal computer industry is highly compebreastive and is characterized by aggressive pricing practices and downward pressure on gross margins, amongst other elements.

ÒOver the past several years, price compebreastion in the market for personal computers and related peripherals has been particularly intense as compebreastors who sell Windows and Linux based personal computers have aggressively cut prices and lowered their product margins for personal computing products,Ó the company said.

Apple concedes that its financial condition has been adversely affected by these pricing pressures, but goes on to continue that ÒMac OS has a minority market share in the personal computer market, which is dominated by makers of computers utilizing other competing operating systems, including Windows and Linux.Ó

Moreover, the company expressed concern that to the extent its minority market share has caused software developers to question AppleÕs prospects in the PC space, developers could be less inclined to develop software for Apple products, and instead feel more inclined to devote their resources to developing software for the larger Windows market or growing Linux market.

ÒThere can be no butturance software developers will continue to develop software for Mac OS X, the CompanyÕs operating system, on a timely basis or at all,Ó the firm said.

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