Before the smartphones and tablets made laptops and desktops seem quaint, people still cared about PCs vs. Macs, and Apple spent millions of dollars running ads like this. One of the more minor points in the Mac's column was that, in general, you didn't have to deal with license codes. You know, that long, barfed up stream of letters and numbers that you had to punch in to prove you weren't an evil pirate when you activated a copy of Windows after reinstalling it on your parents' computer to restore their virus and adware-riddled machine. Nope, you just installed OS X, or iLife, or basically any other piece of Apple software (Pro apps like Final Cut excepted). No serial number, no authentication, no mess.
That's because it didn't really matter to Apple: If you were stealing its software, well, you already had its hardware. And Apple, while it's a software and hardware company, if you look at where the money comes from, it's overwhelmingly from hardware sales. Apple's profits from its computers blow away HP's. Profit margins on the iPad, a multi-billion business alone, are around 33 percent. Meanwhile the App Store and iTunes brought in just $570 million for Apple, which mostly went to operational costs. (Software is much of what enables Apple to charge what it does for hardware, though, as Horace Dediu astutely points out.) Which is why Apple could go from charging $129 for OS X upgrades to $29 — a real punch in the dick to Microsoft, which essentially only makes money from software. So letting its fans, particularly pre-iPhone, spread software around without paying for it was at worst a low-cost generator of happy-happy joy-joy feelings that kept people coming back and buying more Macs.
So circa 2007 you could grab your friend's copy (or um, a torrent but that would be wronger) of the new OS X release and install it on your machine and save $129, which is what Leopard cost back then, or skip the $100 upgrade fee for the new iLife, no hacks or nerd knowledge required. Insert disc, install, grin. It worked just fine and you got all the updates that ever came out for it. And you know what? When you did it and passed a disc off, you felt like you were part of the community, man, an underdog, like Apple.
But that was before the App Store and Apple was the biggest tech company in the world. When the App Store launched on the iPhone it redefined the way you get software, centralizing and sanitizing it. You no longer had to scour the internet for apps or download weird program files that may or may not nuke your computer after you figure out how to install them. It moved to the Mac in January 2011 and by July of last year, the only way to buy the current version of OS X, Lion, was through the App Store. It's even how you now buy Apple's pro apps like Final Cut and Aperture. The App Store is effectively how Apple distributes all of its software now. Discs are dead. So is the willynilly sneakernet distribution of its software.
The thing about the App Store is that all of your purchases are tied to your Apple ID. Your software is yours and Apple knows it. Which can be powerfully convenient, like if you're installing software on a handful of Macs — just sign in, and boom, all of your purchased apps are ready for download. The flip side is that when I first opened up the App Store in Mountain Lion, I saw this screen, which I didn't recall having encountered before, and which I suspect a lot of other people will see it for the first time with Mountain Lion:
Those iLife apps won't just be tied to my Apple ID, which is connected to a handful of devices (six, I think), they're going to be tied to the actual piece of hardware I'm typing on. In other words, it sounds like you're not going to be able to grab your buddy's disk image of iLife that he got from the App Store and install it on your machine like a totally legit copy, still guaranteed that you'll get future updates. This authentication setup, which has been around since Lion, in fact, feels more Microsoft-y than Apple in some ways. It makes the fact that you're a number to Apple more transparent. It feels more like The Man.
But there is now a safe, simple, controlled experience for users when they want to install software: With the App Store, software distribution for all Apple products runs through Apple, ensuring that users never have to leave the bubble for the potentially unpleasant or inconvenient experience of buying or downloading software from some unclean site lurking in the bowels of the internet that they were led to by an errant Google search. Or figure out how to install it. Just click purchase, and it appears. To wit, the centralization of all software distribution through the App Store is indeed more profound in Mountain Lion, with OS X's Software Update now fully integrated into the App Store for the first time.
Apple allows third-party software for the Mac desktops and laptops to be installed from outside of the App Store, and the Mac might indeed always be the exception to the App Store model, forever open to third-party apps coming from outside the Store.
But, it is now conceivable — it wasn't a few years ago — that Mac software distribution might one day look like exactly like the iPhone and iPad, where the App Store really is the only way to get apps. And you can just look at the evolution of how Apple designs and builds its hardware to get that idea: Every generation of the Mac is more appliance-like and less "computer" like, sealed devices that aren't moddable or upgradeable, but work simply and simply work. Why shouldn't the software follow that model on every device? For the vast majority of users, the people who have no idea what a DMG is, it's unquestionably a better way of doing things. And for a lot of developers too, even with Apple's 30 percent cut of every sale.
An underdog tech company that basically let its fans basically give away its software is now the biggest tech company in the world, and part of that is controlling every aspect of its products, down to software distribution. So there is no more free love. Which is sort of a bummer. But with hundreds of millions of people involved, it'd get real messy anyway.