Much has been made of Apple's new price for its operating system: $29.99 is so close to free that (for many people, at least) it is almost unnoticeable. This low price is often contrasted with Microsoft's rather pricier offering of Windows 7.
That contrast is a bit unfair. For one thing, you can only (legally, at least) use Lion if you have already bought far more expensive hardware from Apple. Secondly, Mac OS X went through a number of $129.00 updates since it was introduced - Windows XP was incrementally updated for many years at absolutely no cost whatsoever.
But let's ignore that. Microsoft is greedy and so is Apple, but - for the moment - $29.99 is a heck of a price for an upgrade.
We don't really know, do we? Will Apple be charging $29.99 every year? Every six months? Who knows? And what will we get for our $29.99? Will it be the same incremental changes that so many have shelled out multiples of $129.00 to obtain? Again, we do not know.
What about IOS 5 (the iPhone and iPad operating system)? Will that be free? If that upgrade carries a $29.99 charge, and everybody using one of these devices ponies up (not at all unlikely), that could be a few billion dollars in revenue for Apple. Hard to imagine, isn't it? Even if only 50% paid the tariff, it could still mean more than a billion dollars.
I'm puzzled by that. Perhaps it has some psychological value to combat the perceived perception that Apple products cost more (they do not if you compare fairly - in fact, they often cost less), but as the price of the OS is not stated separately, that value seems week to me.
Perhaps the idea is to put pressure on Microsoft's pricing. As I noted right at the beginning, that might be somewhat unfair - although Microsoft really did rape those poor souls who paid for Vista and then had to pay again for Windows 7. Still, most people had a free ride with XP for almost a decade - and some are still riding!
Could there be a security aspect? While Apple is not plagued with the malware that Microsoft has suffered, their older operating systems are much more vulnerable than Lion. A large and well publicized malware problem could hurt Apple's upward climb - perhaps a low price for upgrades will help encourage more retirement of those (potentially) dangerous versions.
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One problem Apple has had with their hardware is that it is damn good. Until Lion, a five or six year old Mac was NOT a machine most of us would consider as worn out and ready for the scrap heap. Macs held their value well,, which isn't necessarily good for regular repeat sales.
Lion changes that. My 32 bit MacBook Pro, while truly perfectly useable, and in my mind still better than many brand new Windows PC's, has been obsoleted by Lion. Supposedly there are hacks that would let me get around the software barricade that prevents me from using it, but Lion's demands on CPU and memory would make any such end run a miserable experience. This leaves me with the choice of staying with an older, definitely less secure OS, or digging up the cash for something new. Ayup: I'm saving up my poker winnings right now.
Is the built in App Store likely to make so much extra money that Apple just doesn't need $129.00 for the OS? That been suggested, but it seems fishy to me - I can't imagine any accountant saying "Oh, we don't need this income any more."
One thing accountants never object to is bait and switch. The cloud features of LIon may be a good example of that time honored ploy. Yes, they have upped the serving size of what you can get for free, but it may be that the taste of this, although very generous as tastes go, may actually cause users to hunger for more - and they'll pay for it, of course.
Whatever Apple is thinking, I'm happy for this. When my wife would see the $129.00 charges, she'd always ask "Do we really NEED this?". At $30 and under, she usually only asks whether it is software or hardware, and if she does ask about "need", it's in lower case letters (or their spoken equivalent).
I'll also be happy to pay $29.99 for IOS 5 if it comes to that. In fact, I'd be more than happy if it were twice that - though obviously they can never again break the $30 barrier for any software upgrade. For better or worse, that's where they are now stuck. A trap door has closed and only rampant inflation could open it again.
More Articles by Anthony Lawrence - Find me on Google+ 2011-08-06
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Sat Aug 6 19:14:48 2011: 9673 John
I think Apple gains two key things here.
1. A perception that an OS is worth $30. That hurts Windows because Apple has made money on the hardware. Microsoft would be hard presses to drop their prices so low. But people won't think of it this way because they paid for a computer either way.
2. By getting people to upgrade, they can justify dropping legacy support mire and more in their OS and apps. That makes their life much easier. Microsoft has a huge backward compatibility burden on them.
Also, I think OS upgrades are getting less exciting. They may offer a lot, but the buf "Wow!" factor is diminishing. At $30, like you said, you don't need to find a must-have feature to justify the upgrade. The nice-to-haves are good enough.
Sat Aug 6 20:47:26 2011: 9674 TonyLawrence
Though Microsoft does sell to places like Dell and HP for about that price.. I doubt they make much outside of that market anyway, so they probably could lower retail prices.
Sat Aug 6 20:54:29 2011: 9675 John
Good point. They probably could. I'd be curious what kind of money they make on retail sales of the OS.
Maybe with a cheaper distribution channel (like Apple did with Lion and the App Store) they could pull it off.
And, to me, the overhead of their anti-piracy efforts seems like extra overhead for them, both for distribution and support. I've never had to call Apple to ask to have my OS re-activated.
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