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When you install an OS X application from a .dmg file, it is very typical, when you mount/open the .dmg, to see the application's icon followed by an arrow pointing to the "Applications" folder, a bit like this:

CoolApp => Applications

Hinting you that you should drag & drop the application into the Applications/ folder.

However for a lot of applications, like Skype, you can just drop it anywhere you want, like on your desktop.

For some application, you're not even forced to enter the root password of the system. Yet even these application typically suggest that you drop the app in the main (system wide) Applications/ folder.

Besides making the application available to all users (which isn't that great an argument on systems having a unique user account), what else am I missing if I'm simply installing the application in some folder of a regular user account (that is: not system-wide)?

I guess my question really is: are correctly designed OS X application guaranteed to work even if you do not drag them to the system-wide Applications/ folder?

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For the vast majority of properly-designed Macintosh applications, deploying to the /Applications folder is not necessary.

However, it is considered a best practice. When someone is working on your Mac (EG, one of the employees at the Apple Genius Bar), having your applications located in a single, sane, system-recognized place makes life considerably easier for them. It's also plausible that a poorly-designed app may misbehave when not installed to /Applications, although I've not typically found that to be the case. Some newer apps are detecting when they're launched from somewhere other than /Applications (typically the .DMG from their download) and automatically installing themselves correctly.

If you want to quickly access an application which is deployed in the /Applications folder (or you simply don't want to dig through a zillion entries to find the app you want), I recommend using Aliases (Command-L in Finder), and placing the Alias wherever you like. For example, I use Dock folders ("Stacks") full of Aliases for all my app-launching needs, with folders for Development, Productivity, Multimedia, Games, Internet, etc.

Whenever someone asks a question such as this (or, alternatively in the Windows world, "do I need to use the 'My Documents' folder for my files"), I always ask back: Do you have a genuine, critical need not to do so? One which isn't addressed by the in-box aliasing ("shortcut" in Windows) mechanism?

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It is indeed unnecessary. It is best though to drag them out of the .dmg (diskimage) they are in onto a folder in your hard drive. Otherwise you'd have to keep the disk image and mount it every time you want to launch the app. But as John said, it's a handy practice, keep stuff in easy to find places. Normally they would be self-contained and run from anywhere. I only put some applications that I know my wife will not want to use anyway in my own Home/Applications folder (which also is a standard place) for apps I don't want to install system wide. This is similar to my having a /bin directory there for my own command line programs (utilities I wrote myself e.g.) to not "pollute" the system too much. So if you want to install it for one user only, put it in that user's Applications folder in his home directory. It's a location expressly for that purpose...

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