Apple Inc. (NASDAQ:AAPL) revealed more than just an array of new products yesterday. It also revealed a new pricing strategy which includes offering free software, including free upgrades for OS X Mavericks and free iLife and iWorks suites with the purchase of a new iOS or Mac device.
Apple takes aim at Google’s free offerings
Competition in software has been increasing over the last few years. Apple Inc. (NASDAQ:AAPL) faces not just Microsoft Corporation (NASDAQ:MSFT), but also Google Inc (NASDAQ:GOOG)’s free software. One of the things Google’s suite of productivity software is known for is file syncing and sharing.
Apple Inc. (NASDAQ:AAPL) is now trying to move in on the rising popularity of Google’s products, not only by making its own software free, but also by adding collaborative editing features to its Pages as well as new syncing and sharing capabilities for its iWorks apps. Aside from Google’s products being free, they’re also integrated with the company’s Android mobile operating system, and there’s little doubt that Android’s gain is also driving gains in Google’s productivity software
Apple versus Microsoft
And then there’s Microsoft Corporation (NASDAQ:MSFT). According to CNET’s Richard Nieva, Microsoft has such a large portion of the market share in productivity software that it doesn’t even track its share. Apple Inc. (NASDAQ:AAPL) noted in its presentation that Microsoft 365 costs users $99 per year.
Microsoft is preparing to launch Office on Apple’s iPad, so Apple’s decision to offer software free is likely aimed at heading that launch off at the pass before Microsoft gains a foothold on iOS. It’s unlikely that Apple Inc. (NASDAQ:AAPL)’s pricing strategy will have a major effect on Microsoft’s cash cow that is Office. Microsoft has such a large portion of the market that even Google’s free software hasn’t been able to take a huge chunk out of it. Besides, in my experience there are a few things Google’s software does better, but many others which Office does much better.
Apple’s move to free software could be “natural”
At least one analyst notes that Apple Inc. (NASDAQ:AAPL) already upgrades its mobile operating system free, so taking this to desktops and laptops may be the next logical step. After all, Chuck Jones says most of Apple’s new Mac users are probably already using iPhones and / or iPads.