Apple Computer Sending Out an OS?

Licensing the Mac OS to other manufacturers could dent hardware sales, particularly if rivals offered Macintosh systems at lower price points than Apple. Instead of expanding the market for Macintosh systems, Apple would risk having licensees "cannibalize" Apple's own computer sales, says Shaw Wu, an analyst who covers Apple for American Technology Research, which doesn't do investment banking.

But the company has other reasons. By putting more emphasis on its operating system as opposed to the computer as a whole, Apple would be moving toward competing more directly with Microsoft. While that might be good for consumers, it's not necessarily the best or most profitable strategy for Apple.

"You can make the argument that Microsoft has been fat, dumb and happy, that they haven't had anybody to give them a finger in the eye," says Stephen Baker, an analyst with the NPD Group, an industry research firm. "On the other hand, do you really want to be standing in front of Microsoft once they get a finger in their eye?"

And by licensing the operating system, Apple actually could lose some of its competitive advantage over Microsoft and rival computer makers, analysts say. What sets Apple apart from other PC makers is the Mac OS, the design of its computers and the tight integration between the operating system and the computers. By allowing other companies to build Macintosh computers, Apple would lose some of its unique appeal.

"My overall feeling is that if they open up the OS [to other vendors], it reduces their differentiation," says Rod Bare, who covers Apple's stock for Morningstar. Bare has no position in Apple shares and his company does not do investment banking.

But perhaps the biggest argument against licensing the Mac OS to other vendors is the company's own history. After enduring years of criticism for not licensing the Mac OS when it launched, Apple decided in the mid-1990s to allow an array of tech veterans and start-ups to clone its computers.