Consumer Electronics

Why Apple Wants Its Software to Be Free


Craig Federighi, senior vice president of software engineering at Apple, unveils the new OS X at the Yerba Buena Center in San Francisco

Photograph by Noah Berger/Bloomberg

Craig Federighi, senior vice president of software engineering at Apple, unveils the new OS X at the Yerba Buena Center in San Francisco

Who knew Apple (AAPL) would become such a big shareware company?

Today’s product event in San Francisco will be known more for the introduction of new iPads, MacBooks, and Mac Pros, but what might be even more interesting is how Apple has decided to give away key software for free, including its long-awaited upgrade to Mac OS X, code-named Mavericks.

Mavericks and two other software suites, iWork and iLife, are now available for download free of charge. This continues an ongoing trend at Apple of lowering software prices—the previous version of Mac OS X, Mountain Lion, cost only $19. Compare that with Microsoft (MSFT), which charges $120 for the base version of its latest operating system, Windows 8.1, and $200 for Windows 8.1 Pro.

By going free, Apple has acknowledged something that’s been true in the industry for years: Software is a means to sell hardware. Sure, there are some specialized applications that can command a hefty profit margin, but bread-and-butter applications used in the mainstream are not things you sell. They are things people get when they turn on that shiny new object they just shelled out for.

This runs counter to Microsoft’s DNA as—at least until very recently—a software company. And let’s give Redmond some credit: That strategy worked really, really well for a while. But just as there’s been a shift in interest to well-designed devices (as opposed to the beige boxes that defined the PC era), so has there been an expectation that software be as seamless and costless as possible. Your browser is free, so is Gmail/Yahoo Mail/etc. and Google Maps (GOOG) doesn’t cost anything.

Apple’s strategy here is to get you on a device and with the latest version of its software as quickly and painlessly as possible. Does it want to get caught up in the intricacies of a pricing scheme for OS X Mavericks? No, it does not. Better to just remove price as a consideration and make it part of the device you’re using. Apple Chief Executive Officer Tim Cook likes to talk about the perfect integration of hardware and software that Apple aims to achieve. By making OS X, iLife, and iWork free of charge, it can achieve that goal even faster.

Grobart is a senior writer for Bloomberg Businessweek and the managing editor of Bloomberg Digital Video. Follow him on Twitter @samgrobart.

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