Apple may have announced multiple new iPads and Macs at its Tuesday media event — plus a gaggle of updated apps for both — but the single thing I found most eyebrow-raising at the launch wasn’t a new product. Instead, it was a price. Or, more exactly, the lack of one: OS X 10.9 Mavericks, the new version of the Mac’s operating system, will be a free upgrade — even for folks who have older Macs and/or versions of OS X prior to Mountain Lion.
The company also announced that it’s making the new version of its iWork productivity apps a no-extra-charge bonus for buyers of new Macs, as its iLife creativity suite has always been. (People who already had Macs — including ones who had paid for past versions of iWork — will need to pay for the new versions.) The move to bundle iWork with Macs, along with the announcement last month that the iOS versions of iLife and iWork would be free to buyers of new devices, means that Apple is essentially exiting the business of trying to make money from direct sales of consumer software. Instead, it’ll use it as an inducement to sell more hardware.
On a superficial level, there’s nothing profoundly new about a computer operating-system upgrade being offered for free. Just last week, after all, Microsoft released Windows 8.1 as a free update. Despite its modest version number, it’s a meaty update and a big deal for Windows 8 users.
But I don’t think anyone believes that the fact that Windows 8.1 is free means that every Windows upgrade from here on out will be a freebie. Most of Microsoft’s Windows revenue comes from copies of the operating system pre-installed on new PCs, but it still wants to make money from updates and other copies of its operating system sold in stand-alone form. (As a boxed product, Windows 8.1 Pro isn’t free — it lists for $200.)
Then there’s Office. Microsoft bundles it with the Surface 2 tablet, an offer which is reminiscent of what Apple is doing with iWork. But Microsoft is even less likely to start giving away Office willy-nilly than it is to make Windows upgrades free. If anything, its strategy for Office is moving in the opposite direction, as it’s rolled out iOS and Android versions of the Office apps that are only available to people who pay a monthly fee for the Office 365 service.
For Apple, however, giving away software isn’t an epoch-shifting move — even though it charged $129 for OS X upgrades as recently as 2007, and once sold iWork for $79. Business model-wise, neither OS X nor iWork sits at the center of Apple’s world, as Microsoft revolves around Windows and Office; as long as people buy Mac hardware, the company will make money. And getting a lot of good bundled software and future updates as part of the deal is yet another reason to consider choosing a Mac. (If nothing else, you should consider it when doing the math on how much value a Mac offers compared to a cheaper Windows PC.)
But for Apple — and people who buy Apple products — there’s another benefit to Mavericks and other software being rolled into the price you pay for the company’s hardware. It should result in a much higher percentage of users being on the most current, complete possible version of the platform. The more up-to-date and homogeneous the user base, the more Apple and third parties can build highest-common denominator software that supports the latest features, rather than worrying about supporting people who are a version or three behind.
It’s the same strategy that Apple has followed so successfully with iOS updates all along; it’ll be fascinating to see if it works just as well with Macs.
Even if Microsoft unaccountably wanted to do something similar, it wouldn’t work. Windows is inherently fragmented, because so many of its users — businesses, especially, but some consumers as well — choose to stick with older versions for reasons that have little or nothing to do with the sticker price of the new versions. Which leaves us with a world in which lots of people use Windows 8/8.1, lots of people use Windows 7 and lots of people still use the 12-year-old Windows XP — three operating platforms whose differences are as striking as their similarities. And that forces software developers who want to support Windows to come to their own conclusions about just what “supporting Windows” means.
In Windowsland, so many people have no interest in swiftly moving to the newest version of the operating system that it might not radically change the game if Microsoft offered to give away Windows 8.1 to everyone who owned a PC that was technically capable of running it. But I do wonder. iOS updates are free. OS X updates are free. Android updates are free, once your carrier makes them available. It’s kind of how software is done these days.
At what point does charging for software — the business model Microsoft has followed so successfully for almost 40 years — start to look like an unsustainable anachronism, at least in the consumer market?