There was news earlier this week that Apple will be providing its latest operating system, Mavericks, for free. It is apparently good news to just about all Mac users. There are also sure to be some people that may wonder whether this is a strategy against Microsoft. Just a couple of days ago, Microsoft announced that it would not charge consumers who upgrade their OS from Windows 8 to Windows 8.1.
For most consumers, there is nothing more important than an acceptable price point. Who doesn’t want to have a free meal? Apple began to drop OS prices starting with version 10.6 of Snow Leopard, which at the time was around $29 for the upgrade. It keeps getting lower and lower with each new release. Version 10.8 is currently $19.99. It’s well known that the operating system and Office suite are very significant products for Microsoft. They have been a primary source of Microsoft’s revenue to date. However, the OS and Office business is shrinking. There’s considerable agreement that what Apple is doing is having a huge impact on these Microsoft products.
Besides the free OS, Apple also announced that iLife and iWork are both free for consumers who purchased the latest Mac and iOS devices. So how will Apple then make a profit? Apple has established an excellent ecosystem with the Appstore for developers and consumers. This business model consists of advertisements, in-app purchases and cheap apps. With billions of consumers and probably hundreds of thousands of developers in hand, it is pretty easy for Apple to make money.
Also, the effective marketing of the booming mobile market is having a big influence on the PC market. Apple, as the pioneer of the smartphone, is trying to fuse their mobile OS and desktop OS with consistent experiences. To this end, it seems Apple decided to make the desktop OS free, just like the mobile OS. It is also a good approach to try and attract more consumers to the Mac platform, especially when comparing it to Windows’ price.
So, Apple is making a profit with hardware and services and this is Apple’s unique business model. Let’s think about what Google is doing. Google’s Nexus series may be the cheapest mobile devices in the world and its Android operating system is even open-source. The OS is provided to transplant to any hardware, including mobile devices, TVs, vehicles, fridges, and so forth. So, even Google is about the service and not making money on the OS. For example, most apps in the Apple or Google platform are free now. They instead depend on added value in apps or ads for income. Another typical example can be seen in telecommunications. Here consumers sign up for a service contract for a period of time to get a cellphone for free. Instead of paying for hardware they pay for service – they pay for their call and data usage plans each month. This is an established business model in telecommunications that earns them more money.
In the end, the competition between these giant companies benefits consumers. It spurs new technology and changing business model that address consumer wants. Perhaps it has even ushered in the age of the free operating system.