3 ms·

> By going free, Apple has acknowledged something that’s been true in the industry for years: Software is a means to sell hardware. What? How has this "been tr

by r0h1n 13y ago

> By going free, Apple has acknowledged something that’s been true in the industry for years: Software is a means to sell hardware. What? How has this "been true in the industry for years"? Maybe its true for smart phones & tablets, that too for just the OS, but how does he go from there to all software and all hardware?

kbutler 13y ago
This is actually basic economics - reduce the price of your complementary goods. Thus, Apple wants to drive the software cost to zero, to increase sales of hardware (this includes apps). Google wants to drive the software and hardware cost to zero, to increase ad viewing. Amazon wants to drive the software and hardware cost to zero to sell more content.
- theorique 13y ago
  As Joel Spolsky said: "commoditize your complements". http://www.joelonsoftware.com/articles/StrategyLetterV.html http://www.joelonsoftware.com/articles/StrategyLetterV.html
  - netcan 13y ago
    I'm not sure if that includes the complements that you yourself produce. At least that's not what Joel argues. There are business models (eg, razors & razor blades) where you commoditize one to sell the other, but commoditizing complements that someone else now makes at razor thin margins is the coup.
    - theorique 13y ago
      I think it can be both. For example, in the Apple context, they commoditize software (including operating systems, mobile apps, and desktop apps) in order to make their platform attractive and appealing, and then make their money through high profit margins on hardware sales. An operating system is a special case of software, since it's so much more intimate with the Apple-designed and controlled hardware than most (any?) other applications. In this case, creating their own software is a cost that makes money indirectly, by making their hardware and their platform more attractive. And certainly, more apps and cheaper apps (commodity) available for Apple computers (non-commodity) is good for Apple, whether those apps come from Apple themselves or from external developers. (Obviously having both is good for different reasons - in house, you have more control; external apps create a developer base with lock-in).
- r0h1n 13y ago
  Before we get into hand-picked examples, let's define what the "industry" is. Is it smartphones & tablets? Is it PCs? Is it e-commerce? Sure, Apple has an incentive to give away its OS free, because its virtually indivisible from its own hardware. Google derives the bulk of its revenue without any hardware being sold. When it does sell hardware (the Nexus phones or Moto devices), it gives away Android of course. But then it gives away Android for free to everyone else but for an entirely different set of strategic reasons. Amazon is primarily an e-commerce company, and then maybe a cloud computing one. Hardware doesn't play much of a role in either case.
- Samuel_Michon 13y ago
  > Apple wants to drive the software cost to zero [...] Google wants to drive the software and hardware cost to zero [...] Amazon wants to drive the software and hardware cost to zero But where does that leave Microsoft? It makes most of its profits from Windows and Office products. For enterprise, this probably isn’t a problem, as most of those customers pay Microsoft for seats, not software versions. For the consumer market however, I don’t think Microsoft can afford to charge for software upgrades much longer. Perhaps Microsoft’s strategy is to convert those users to subscribers: have them pay one annual fee to get support and the latest releases of Windows, Office, and online storage.
bluecalm 13y ago
Let me correct it for the author: > By going free, Apple has acknowledged something that’s been true in the industry for years: software is a means to sell hardware for hardware companies Apple being one of them.
deleted 13y ago
[deleted]

by r0h1n 13y ago

kbutler 13y ago

This is actually basic economics - reduce the price of your complementary goods. Thus, Apple wants to drive the software cost to zero, to increase sales of hardware (this includes apps). Google wants to drive the software and hardware cost to zero, to increase ad viewing. Amazon wants to drive the software and hardware cost to zero to sell more content.

theorique 13y ago
As Joel Spolsky said: "commoditize your complements". http://www.joelonsoftware.com/articles/StrategyLetterV.html http://www.joelonsoftware.com/articles/StrategyLetterV.html
- netcan 13y ago
  I'm not sure if that includes the complements that you yourself produce. At least that's not what Joel argues. There are business models (eg, razors & razor blades) where you commoditize one to sell the other, but commoditizing complements that someone else now makes at razor thin margins is the coup.
  - theorique 13y ago
    I think it can be both. For example, in the Apple context, they commoditize software (including operating systems, mobile apps, and desktop apps) in order to make their platform attractive and appealing, and then make their money through high profit margins on hardware sales. An operating system is a special case of software, since it's so much more intimate with the Apple-designed and controlled hardware than most (any?) other applications. In this case, creating their own software is a cost that makes money indirectly, by making their hardware and their platform more attractive. And certainly, more apps and cheaper apps (commodity) available for Apple computers (non-commodity) is good for Apple, whether those apps come from Apple themselves or from external developers. (Obviously having both is good for different reasons - in house, you have more control; external apps create a developer base with lock-in).
r0h1n 13y ago
Before we get into hand-picked examples, let's define what the "industry" is. Is it smartphones & tablets? Is it PCs? Is it e-commerce? Sure, Apple has an incentive to give away its OS free, because its virtually indivisible from its own hardware. Google derives the bulk of its revenue without any hardware being sold. When it does sell hardware (the Nexus phones or Moto devices), it gives away Android of course. But then it gives away Android for free to everyone else but for an entirely different set of strategic reasons. Amazon is primarily an e-commerce company, and then maybe a cloud computing one. Hardware doesn't play much of a role in either case.
Samuel_Michon 13y ago
> Apple wants to drive the software cost to zero [...] Google wants to drive the software and hardware cost to zero [...] Amazon wants to drive the software and hardware cost to zero But where does that leave Microsoft? It makes most of its profits from Windows and Office products. For enterprise, this probably isn’t a problem, as most of those customers pay Microsoft for seats, not software versions. For the consumer market however, I don’t think Microsoft can afford to charge for software upgrades much longer. Perhaps Microsoft’s strategy is to convert those users to subscribers: have them pay one annual fee to get support and the latest releases of Windows, Office, and online storage.

bluecalm 13y ago

Let me correct it for the author: > By going free, Apple has acknowledged something that’s been true in the industry for years: software is a means to sell hardware for hardware companies Apple being one of them.

deleted 13y ago

[deleted]