How a Free OS Will Pay Off for Apple

Mavericks_FreeFor Apple, offering its new OS X Mavericks operating system to Mac users for free isn’t a new idea, but a return to an old one.

Back in the day, the company regularly issued OS updates at no charge, allowing them to be freely redistributed. Apple ended that practice in 1997 with the launch of Mac OS 8.* Now, some 16 years later, it is embracing it again, and for a very good, very simple reason.

As Craig Federighi, Apple’s SVP of software engineering, said during Apple’s Tuesday media event, “What’s most important to us is seeing Mavericks in as many hands as possible.” CEO Tim Cook echoed this remark later, and refined it: “We want everyone to have access to all our best features.”

So, Apple wants its Mac customers — all of them — to have its latest desktop operating system. And it wants this not so much because it’s good for consumers — though obviously it is — but because it’s good for Apple. Indeed, offering Mavericks for free gives the company a host of benefits and competitive advantages that likely made forgoing whatever money it might have made by charging for the OS relatively easy.

  • Releasing Mavericks for free generates immediate customer goodwill; Apple is now giving away to Mac owners the software for which it once charged.
  • Releasing Mavericks for free will undoubtedly accelerate its adoption. That’s good for Apple and its developers, which together can focus their efforts on supporting and building apps for the most current version of the Mac OS rather than worrying about legacy ones. It’s also good for consumers, who get more cool apps to play with. “Cynics will no doubt allege that it is meant to induce upgrades of older equipment that struggle to handle the new OS,” BTIG analyst Walter Piecyk said. “But the company has been touting the benefit to developers of having a high percentage of iOS devices on the latest OS. There’s likely a similar benefit to driving OS adoption on PCs and laptops as well.”
  • Releasing Mavericks for free defines Apple as a company that sells an integrated product experience — not hardware and software separately, but a combination of the two that it touts as superior. As CEO Tim Cook said last year, “The one thing we do, which I think no one else does, is integrate hardware, software, and services in such a way that most consumers begin to not differentiate anymore. They just care that the experience is fantastic.”

And, if that experience is fantastic enough, people will pay a premium for it.

Which is really the whole point of Apple’s return to this free-pricing strategy. Because ultimately what the company is doing here is using software as a means to sell premium hardware.

“This is all about adding value to the hardware and delivering a compelling experience across the board,” Gartner Research VP Carolina Milanesi told AllThingsD. “Hardware needs software and apps to come alive and lock consumers into the ecosystem.”

This is precisely what we’ve seen with iOS. Indeed, in taking Mavericks free, Apple is really just mirroring the strategy it has long used for its mobile OS. Free with device; free immediate upgrades. Software becomes a differentiating factor for hardware that often commands prices higher than those of the competition. So, too, does the promise of free updates in the future. Buy into the Mac ecosystem now and, as Cook said, you will always have access to Apple’s best features. And that’s increasingly important these days, when other big players like Google are offering their software gratis.

“The era of charging separately for hardware and software and expecting the user to assemble and install them is coming to an end,” said Yankee Group VP Carl Howe. “As of today, Microsoft now remains the last and only company that explicitly sells its operating system separately from a hardware product. I believe that users will increasingly see buying hardware and software from different vendors making as much sense as buying your car engine and transmission from different companies.”

* That makes Mavericks the first free Mac operating system since 1991’s System 7. (As Macworld’s Jason Snell notes, OS X 10.1 was also offered for free, but only for a single month.)

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39 comments
DesigningGenius
DesigningGenius

It's going to be interesting to see what Microsoft's response is to a free os.

BaoDNguyen
BaoDNguyen

Upgraded to Mavericks last night.  I like it.

torontodan
torontodan

If I had half a trillion dollars in the bank, I'd give away an OS for free as well.

TheRealCBONE
TheRealCBONE

Does anyone really think Microsoft wouldn't offer windows for a pittance to users if they could get away with it? Regulators would destroy them for it. Apple gets away with it for now because their market share is still so dinky.

Czar
Czar

 The argument that a free upgrade will induce a new purchase is specious.  A new Mac is delivered with a new OS anyway.  The customer may decide to upgrade with a new purchase, or just live with what they have.  What wonderful goodwill Apple has put forward.  With it free, I can use my money to update Pages or something else Apple offers.  A true win-win.

Performance on my MB pro is incredible.  It is like a new machine.  No memory issues, I can now delay the purchase of a higher ram capacity for the foreseeable future.

demodave
demodave

"Which is really the whole point of Apple’s return to this free pricing strategy. Because ultimately what the company is doing here is using software as a means to sell premium hardware."

... what the company is doing here is using *user experience* as a means to sell premium hardware.

And the reason that it will pa off for Apple is that Mac OS and iOS will *not* be made available on anyone else's hardware, so anyone who *does* want to update their user experience with newer hardware is gonna have to buy an Apple product.

On to some random musings about my now tangentially ralated hardware situation:


Me, personally, I am happy with the power of my 15" 2010 MBPro, but not so much with the weight.  That weight would have the most influence on anything User Experience in hardware for me today.  Just about any laptop (I really consider the 2010 15" more of a "portable" than a laptop) that I were to buy from Apple today would definitely have more power, probably longer battery life, and weigh less, even if I went with a 15" Retina MBPro.  What I'm really waiting on is the next Air refresh so see where the screen sizes fall.  Apart from the power cable that is typically hanging from the wall, I'm almost always completely unwired, so I don't know if I *need* ports (or how many I may need).  (For example, I was interested to see CAT5 internet (ethernet) fall off one of the configurations this year.  I might want to find some way to get a Bluetooth to connect to a midi controller?  That might get me toying with my keyboard more....)

KenEsq
KenEsq

How much did Microsoft charge to move from Win 8 to Win 8.1

How much did the service packs for XP, Vista and 7 cost?

This is nothing new...just Apple re-branding what has been happening in the industry forever. Mavericks is no more a new OS than Service Pack 1 was for XP. 

The cost of OSX is built into the hardware as is the cost of the iOS.

Mac-Harry.de
Mac-Harry.de

Why does Microsoft not offer 365 for free?

Why cost Windows 8 apprx. 200 US$?

Why is XP to Win 8 not for free?

Why is Office 365 for Surface nit for free?

Umgf. OK, no more Microsoft in my enterprise. From this day we choose Apple. That's not less expensive, it's also more innovative and GOSCH always for free. I do not have the chance to choose because it attracts me so much!

TheRealCBONE
TheRealCBONE

A smart response would be free windows for OEMs that agree not to bloat up their devices and a discount on Office. A Microsoft response will be to talk crap about Apple, hurry up and fail faster by not dropping prices on anything, insisting on requirements that aren't in their best interests, not listening to customers, and shooting themselves in the feet.

BMcNeal
BMcNeal

@torontodan You're missing the point:  They could have just as easily continued to charge for their OS, after all, how many companies – especially the successful ones – take a strategy that, short term, actually results in them earning less money?

Which is exactly what Apple is doing.

KenEsq
KenEsq

@TheRealCBONE Windows does cost a pittance when you consider the vast majority of installs either come with new hardware or are purchased by corporations at very low prices under licensing programs.

There have been anti-trust actions for bundling of software with hardware. IE with Windows, and years before that IBM was sued over their early word-processors being tied to their hardware. 

BMcNeal
BMcNeal

@TheRealCBONE Any evidence of that?  Probably not, because it's nonsense.  What regulators in the US and Europe got on Microsoft in the past was bundling Internet Explorer with their browser, effectively forcing users to use their browser, increasing it's marketshare.

Though if you can find one instance with regulators going after Microsoft because of what they charge for the applications, I'd like to see it.

DesigningGenius
DesigningGenius

@Czar  I've actually been considering a new Mac for a while and this update is a ton of initiative for me to upgrade. Especially since I will be able to get iWorks with the Mac included.

Clubber
Clubber

@Czar I think they are trying to get Windows converts. Since their products are more expensive than a junker/average PC, an Mac purchase can be justified by the notion that it will last longer. It costs 50% more, but will last 2x as long (in theory). Giving away the latest OS is a tribute to that. Anyway, that's how I see it.

harveylubin
harveylubin

@KenEsq "How much did Microsoft charge to move from Win 8 to Win 8.1"

How much did Microsoft charge to move from Win 7 to Win 8? Or Vista to Win 7? Or XP to Vista?

$$$, that's how much.

Going from Mountain Lion to Mavericks is a major system upgrade... it's not an update like from Win 8 to Win 8.1, or service packs.

Going from Mountain Lion (or even from older operating systems like Snow Leopard, or Leopard)  to Mavericks is totally free!

Clubber
Clubber

@KenEsq Can you list the major new features that were introduced in XP SP1?

Mergatroid69
Mergatroid69

@Mac-Harry.de On the Surface 2, you do get Office with Outlook free...Office 365 subscription runs appx $100/yr USD, so if you got a Surface 2, it pays for itself...you are welcome...

FridolinGroenemeyer
FridolinGroenemeyer

@Mac-Harry.de Because MS does not charge a premium for the hardware.

DesigningGenius
DesigningGenius

@LeBoeuf @DesigningGenius lol no. Windows 8.1 isn't a new os. It's just an update. Mavericks is a complete upgrade from Mountain Lion and more so if you're on an older system.

DesigningGenius
DesigningGenius

@TheRealCBONE That's exactly what I mean! Is Microsoft going to have a logical response or are they going to be Microsoft about it?

TheRealCBONE
TheRealCBONE

@KenEsq @TheRealCBONE The reason the anti-trust actions occur are because their market share is so high. If it were even higher (a natural consequence of their software price dropping to nothing), it stands to reason there would be more scrutiny with larger consequences for real or perceived missteps/abuses. 

TheRealCBONE
TheRealCBONE

@BMcNeal @TheRealCBONE Regulators wouldn't go after them for the particular price. They can charge what they want. The results of charging a very low price would cause the regulators to scrutinize them and take action.

TheRealCBONE
TheRealCBONE

@BMcNeal @TheRealCBONE Microsoft sells business licenses, OEM licenses, and Office. That's where their Windows money comes from, right?

They give Windows out for free or Materials + S&H. They charge if you want Office on it, they charge you to buy stand-alone Office, otherwise it's free. You think they wouldn't have an even larger share than they have now? You think once they became the actual de facto OS, regulators wouldn't step in if they tried to change, add, or remove anything of consequence when they have 99+% of the PC market? They can barely fart now without a regulator checking into it.

Czar
Czar

@DesigningGenius @Czar Yeah, I got a Macbook 13" 2012, last year.  It operates very well indeed with Mavericks.  

I even have an old Mac-mini, which I upgrade the CPU to run Lion.  Like me it is getting long in the tooth and so I hope to get a newer mini to be able to run Mavericks on it.  Would enjoy setting up a server for VPN and such.  

My purchases are always refurbished from Apple- I never drive a new car (or Mac) off the lot - that is for folks with money to burn.

TheRealCBONE
TheRealCBONE

@Clubber @Czar I agree. People only buy new stuff when their previous hardware is broken. Businesses aren't going to spend Mac money unless they have to for some reason. I wouldn't be enticed to buy a Mac because the OS I've already got installed on it is free for someone else. That doesn't make sense. I would expect the new Mac I'm buying to be cheaper since the OS was free, and it won't be. 

KenEsq
KenEsq

@harveylubin @KenEsq Harvey, please there was no charge for any of the Windows service packs. Windows 8.1 from 8 was every bit as much of a full OS upgrade as moving from 10.8.5 to 10.9.0. 

Yes, you can upgrade from older revs of 10.x to the newer one...if Apple allows it on your specific Mac hardware.

edubb
edubb

@Clubber Can you list the new features in Mac OS 10.1? It was released around the same time as XP SP1. 

Just sayin'

BMcNeal
BMcNeal

@TheRealCBONE @BMcNeal Not sure I buy that.  Microsoft would more than likely be able to charge what they want for their productivity apps, and American regulators wouldn't blink an eye.

Why not?  Mainly because they haven't done so before, and it's not locking in anyone to their ecosystem, which 'free' tends to do.

DesigningGenius
DesigningGenius

@TheRealCBONE @Clubber @Czar They actually are cheaper, depending on the Mac you buy. And I don't buy a Mac because they are cheap. If I was to buy a $500 PC I'd expect exactly that a cheap computer that can't do what I need it to. Macs have a premium price tag bc they are good machines.

harveylubin
harveylubin

@KenEsq @harveylubin

"Windows 8.1 from 8 was every bit as much of a full OS upgrade as moving from 10.8.5 to 10.9.0."

WRONG!

Going from Windows 8 to 8.1 is the equivalent of going from OS X 7.0 to OS X 7.1. It's an incremental upgrade.

Going from Windows 7 to Windows 8, is equivalent to going from Mountain Lion to Mavericks.

Clubber
Clubber

@KenEsq @Clubber >The most notable new features were USB 2.0 support and a Set Program Access and Defaults utility that aimed at hiding various middleware products

Not much in there. Can you name some major new features in Mavericks?

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