John Paczkowski

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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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