Apple puts the ball in Microsoft's court

Apple's new free software and upgrade strategy is seen by analysts as an offensive and a defensive move to challenge Microsoft.

Apple's decision to give away OS X upgrades and other software, including the iWork productivity suite, is seen as both an offensive and a defensive move that challenges Microsoft to respond.

Apple is banking on a continuation of the bring-your-own-device (BYOD) movement, where workers choose their own hardware rather than letting IT decide what they can use. As part of its strategy, the company is putting a free iWork suite on all of its new devices, and it hopes that move will generate interest in the software among people who use iPad tablets at work -- and that they will then try to persuade their IT departments that Microsoft's Office suite isn't needed on every machine.

Gartner analyst Carolina Milanesi called Apple's decision to offer iWork free on new iPads and iPhones a defensive one that aims "to get users to be more engaged with their [Apple] devices."

"Apple's concerned about the enterprise and Windows 8, where software selection is still largely in the hands of IT managers," Milanesi said. "Apple wants to keep its sweet spot in the enterprise, and counter moves by Microsoft to try and slow the iPad influx there."

Those moves by Microsoft include an aggressive pitch that its Surface tablets are more productive for business users than Apple's iPad, and the bundling of a scaled-back version of Office with the $499 Windows RT-based Surface 2.

Meanwhile, Office on every device is Microsoft's past-present-and-future strategy, best evidenced by Office 365, a subscription service that lets businesses and consumers put the suite on up to five mobile devices and five PCs or Macs assigned to an employee.

Apple will count anything it can do to disrupt that business model as a win, said Patrick Moorhead, an analyst at Moor Insights & Strategy.

"It's an opportune time to catch Microsoft off base. Apple would like to disrupt [Microsoft] before it gets to a more service-oriented model," said Moorhead, who describes Apple's free software push as an offense-minded, long-term strategy.

Apple is leveraging the trend in mobile, "where the expectation is that software is basically free," said Moorhead. "Microsoft currently charges for major [OS] upgrades, but over the long term, that's going to make Microsoft's business model look odd and strange and expensive."

Perception is everything, Moorhead stressed.

If businesses and consumers are constantly reminded that Apple offers free software, free services and free upgrades, eventually that will sink in and make them wonder why Microsoft asks for payment -- even if, as both Moorhead and Milanesi noted, iWork is no Microsoft Office.

But Ross Rubin, an analyst at Reticle Research, says Apple's free software strategy doesn't pose much of a short- or long-term threat to Microsoft. "There's discrete value in [Microsoft's] larger releases" such as the one from Windows 7 to Windows 8.1, which currently costs about $115 on, he said. "Microsoft will continue to make the case that, 'We charge for Windows because there's premium value associated with it.'"

That's not to say Microsoft won't give away software: It did just that with Windows 8.1, a free update.

In fact, Rubin believes that Apple's moves were at least partly a reaction to a free Windows 8.1.

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on

Copyright © 2013 IDG Communications, Inc.

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