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Apple vs. microsoft free software and the battle for hearts, minds and market share

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Last month’s Apple launch event shook up conventional thinking when the company launched its latest product. No, I am not referring to the iPad Air, although that did make a promised appearance. The big news on October 22 was the new operating system, Mavericks and, more specifically, the decision to offer it up for free.

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Apple vs. microsoft free software and the battle for hearts, minds and market share

  1. 1. 118 GlobeAsia December 2013 Technology CJGUNTHER/EPA Apple vs. Microsoft: Free software and the battle for hearts, minds and market share This was a momentous announcement by any measure, matched only by the next statement: that the iLife and iWork suite (as well as all future software and OS updates) would also be provided free to customers purchasing new Apple devices. Perhaps least pleased with the developments were the folks over in Redmond, Washington. Microsoft has been on the ropes of late, and Apple’s move must have them reeling. While Windows 8.1 was released as a free update, Microsoft has never released a full-blown new version of its Windows OS to the public for free. Further, Apple’s iWork offer is a direct assault on the Office suite, currently one of Microsoft’s main breadwinners. This is a game-changer of course, because while Apple builds all its ast month’s Apple launch event shook up conventional thinking when the company launched its latest product. No, I am not referring to the iPad Air, although that did make a promised appearance. The big news on October 22 was the new operating system, Mavericks and, more specifically, the decision to offer it up for free.
  2. 2. December 2013 GlobeAsia 119 by Jason Fernandes   away free because the net effect is still positive for them. To be clear, Apple never charged a great deal for its OS upgrades in the first place. The last upgrade was sold at a mere $19.99 and the one before that at just $10 more. As many an app developer has learned, there is a world of difference between low-cost and free. Several potential customers have fallen into this chasm and Apple seeks to close the gap. In merely lowering the cost to free, Apple has effectively pulled the rug out from under its competition while only hurting itself mildly and in the short term. Apple can still thrive on its device sales alone and need not rely on its software as anything other than something to sweeten the pot for potential hardware customers. If this weren’t bad enough news for Microsoft, Apple is also trying to be competitive in the productivity space with the release of iWork to new customers for free. Microsoft has dominated this area for a long time but is also in the midst of a precarious shift to a subscription model. Apple’s move could complicate things for Microsoft as it works out this delicate change. In many ways Apple is playing catch-up to Microsoft here because Microsoft was the first one to bundle the Office suite onto the Surface for free. Apple has taken it one step further however, by making the same true with its desktop offerings. Unfortunately for Apple, the new move is unlikely to hurt Microsoft since Office is the most popular productivity suite in the world and iWork pales in comparison. iWork has always had a reputation as a light productivity suite and it never quite punched in the same weight class as Office. Going free is not going to make it any better-featured and so to businesses, and anyone other than casual users, Microsoft Office will remain an essential. Things could change however, if iWork evolves into a full-featured business productivity suite over the next few years. Microsoft couldn’t do it Perhaps the biggest concern for Microsoft is that fragmentation is a way of life in the Windows ecosystem. Quite a few (particularly enterprise) customers avoid upgrading their operating systems for reasons that are completely unrelated to the cost of the OS itself. Many Windows 7 and even Windows XP users remain on those operating systems solely to avoid the steep learning curve and compatibility issues they would experience if they upgraded. These problems ensure that the Microsoft OS ecosystem remains so fragmented that developers have varying ideas on what constitutes Windows “support” and many make it up as they go along. The fact that many Microsoft users would not upgrade their operating systems, even if the next version were free, makes things complicated for developers and also ensures Microsoft’s helplessness in the matter. iWork going free puts Microsoft in the delicate position where it has to modify its core Office business model, and still maintain a stream of revenue from one of its few consistent cash cows. own machines, Microsoft (with the exception of the Surface) does not build any, and thus cannot use its software as a loss leader for its hardware. This is bound to put the screws on an already teetering Microsoft to come up with something, and quickly.   What’s in it for Apple? The important thing to remember is that Apple is not only giving away Mavericks, but is actually spending money in terms of bandwidth fees and the like to deliver it to the consumer. This of course begs the most obvious question: why? The answer can be summed up in one word: fragmentation. Or rather, the lack thereof. It is in Apple’s interest for the greatest number of its customers to be uniformly on the latest operating system. This enables programmers and app developers to focus on a single OS, rather than spend time to ensure backward compatibility. This is precisely the strategy Apple has followed to great success in the mobile space. Apple has managed to dominate the energy and talents of app developers precisely because developers have realized that designing for iOS allows them to reach the greatest number of users with the least amount of programming resources. In the short term, Mavericks itself is unlikely to affect things greatly. However in the long run, this could lead to developers choosing en masse to focus on the Apple ecosystem, thus making things very difficult indeed for Microsoft. Apple can afford to do this Apple has spent valuable R&D dollars to develop a product they will give
  3. 3. 120 GlobeAsia December 2013 Technology Did the ground just crumble? Microsoft does have options. It’s no secret that Microsoft is aware the “software in a box” model is on its way out. The company has been experimenting with moving to a subscription-based model on software for a few years now and all this does is increase the urgency. In the short term Microsoft does not have anything to worry about simply because the Office suite is so popular and full-featured that the company is unlikely to lose many users to iWork. The fact is, though, estimates say Microsoft currently needs to generate $80 million daily from Office. iWork going free leaves little breathing room and puts Microsoft in the delicate position where it has to modify its core Office business model, and at the same time maintain a steady stream of revenue from one of its few consistent cash cows. Still, Microsoft has weathered the likes of OpenOffice and there is no indication that iWork will be any different. Microsoft’s recent heavy investment in hardware is also an interesting trend. Microsoft’s tablet offerings the Surface and Surface 2 include the Office suite, indicating that Microsoft increasingly sees its hardware and software business as intricately interlinked. Microsoft’s recent acquisition of Nokia and a new stake in Dell also offer clues as to Microsoft’s plans. To combat Apple in the OS space, Microsoft might work more closely with Dell to produce a more unified product consumers are willing to spend on. Microsoft, and indeed technology in general, is slowly moving towards an era where there is greater integration between hardware devices and the software they run on. Those of us in the tech industry live in interesting times. For many years, Microsoft and Apple battled until it seemed Microsoft had won. Then Apple slowly started to resurrect itself. Today Apple is a behemoth and For years, Microsoft and Apple battled until it seemed Microsoft had won. Then Apple slowly started to resurrect itself. This latest shot across the bow from Apple has, if nothing else, signaled the return of the tech wars of the late 20th century. Microsoft is struggling. This latest shot across the bow from Apple has, if nothing else, signalled the return of the tech wars of the late 20th century. The game just got interesting again. As Apple moves into the business of providing free software for its hardware, its plans will not go unchecked. Microsoft is watching Apple’s moves closely, and will likely use its increased influence with hardware manufacturers like Dell and Nokia to create and promote its ecosystem as a whole, instead of software and hardware as its individual components. Apple’s move was ground-breaking because it finally has consumers considering the total cost of ownership of their devices. Free updates in perpetuity are a potent promise for a consumer and must not be discounted. Your move, Microsoft.   Jason Fernandes is a tech commentator and the founder of SmartKlock.

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