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Can Microsoft Complete With Free?
OS X is free. Free-as-in-beer, not free-as-in-speech. Last Tuesday Tim Cook announced that Macintosh OS X 10.9 would be free to just about everyone who could run it. Any Mac owner with a computer fast enough (dating back six years or more) could immediately head online and download 10.9 Mavericks, upgrading their system to the latest software for free.
Not content to throw a little dirt at Microsoft’s lucrative practice of expensive Windows upgrades, Cook also announced that Apple’s newest iLife and iWork packages would be free to anyone purchasing a new Mac. The revelation continued through the week when users who had not just purchased a new Mac noticed that they could download the newest versions as free upgrades as well. In one fell swoop Apple had just cut the revenue streams from some of their more lucrative software packages, making the Mac even more appealing than it was for many users.
For Microsoft it wasn’t great news. While Windows can be purchased as a stand-alone product, OS X’s cost is essentially defrayed by each user purchasing an Apple computer. Microsoft’s options here are limited: it can’t drop the price of Windows to $0 without making serious changes to how it monetizes its other products; Windows and Office are the cash generators that make Microsoft what it is today.
That said, OS X and iWork/iLife going free isn’t much of a threat to Windows and Office. While Windows upgrade pricing can feel predatory and certainly needs to be adjusted, it seems unlikely that there will be a mass exodus of Windows users to Mac simply based on saving a few hundred dollars in software every few years. Similarly, those who use Office will most likely not find iWork to be the complete replacement that they need; I say this as a user writing on a Mac in Pages.
Where Microsoft continues to take damage is in the cumulative PR blows dished out by Apple on this front. Windows 8 and 8.1 haven’t been received well by the general public or by the tech media, and having to pay expensive licensing fees for what amounted to a difficult-to-use paradigm shift has left some users with a bitter taste in their mouths. It’s not that Microsoft needs to compete on price, but that it needs to compete for the hearts and minds of users. One thing is certain: if Windows 9 doesn’t make up some serious ground in usability and if Microsoft doesn’t see fit to adjust their pricing, it may be the drive that some users need to checkout a MacBook or a Chromebook.
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