Shareholders demand growth rates above 20 percent and recent disappointments have driven Microsoft's shares into a downward spiral. Do nothing or engage in war. Under the do-nothing option, Apple can still fight against a slow introduction of XP with a superior product, a monopolistic power over 22 million users, and some tricks up Mr. Jobs' sleeve. More important, Apple makes the bulk of its money through the sale of machines and is able to extract a handsome profit margin thanks to the fact that, inside the Mac niche market, Apple behaves like a monopolist. Apple maintains a close reign in all added-value functions and exercises a similar close control over the compatible hardware and software.
Consumers are willing to pay a premium for owning a fashionable and better-targeted machine.
If the supply of these machines fragments, consumers would end up with the bigger part of the added value of the deal. By selling its new operating system to Intel users, Apple could be cannibalizing its own market. Besides, Apple selling Macs is a proven business with decades of bumpy experience, as opposed to Apple balancing this with a software provider business model. On the other hand, Apple is in a precarious position. Its market segments are eroding.