Apple’s free software is all about playing hardball

Some may have been excited about a new iPad or Mac yesterday, but not me. What stood out most to me yesterday at the Apple press conference was the news they’d be giving away the latest version of the Mac operating system, OS X Mavericks, to anyone who has a Mac.

Not only that, they’re also giving away free copies of iWorks with ay newly purchased Mac or iPad.

What’s the deal? Doesn’t Apple want to make money?

Sure it does, but it’s clear the company has learned that while it can make money selling software, it’s bigger business is in hardware.

What does this move to free software mean? A couple thoughts:

  • With Apple starting to making serious headway into the enterprise market, they feel by offering both its OS and free productivity software they can further inflict damage on Microsoft.
  • The company is further exposing the lack of Office on iPad. Granted, Microsoft is using Office as an enticement for Surface 2 buyers by giving it away for free, but with the shift towards tablet computing Microsoft is seeing a growing threat from low-cost or, in the case of Apple now, free productivity suite options.
  • The company is stating that its bread and butter is hardware, and software revenues can be obtained through its app market where it takes a 30% cut on all sales.
  • The company may also be adding value to their hardware to make it higher value, which is part of an increasingly two-tier hardware market in the tablet space.

All in all, pretty fascinating move by Apple and I look forward to see how Microsoft reacts over the next few months.

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Wolf

Michael Wolf

Chief Analyst NextMarket Insights

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