Apple's Newest Strategy: Freehttp://www.fool.com/investing/general/2013/10/23/apples-newest-strategy-free.aspx Adam Levy
October 23, 2013
Apple's (NASDAQ: AAPL) big event on Tuesday didn't have very many surprises. We got the expected updates to the iPad and Mac product lines; the new OS X update didn't have anything we didn't see at the developers conference in June. What was surprising was that Apple decided to give away OS X Mavericks for free and its next generation of iWork and iLife come free with the purchase of a new Mac.
This is the power of Apple. Microsoft (NASDAQ: MSFT) couldn't give Windows away. Not even Google (NASDAQ: GOOG) gives away software like this. Apple's position as an integrated hardware/software company makes giving away its software potentially more profitable than selling it.
A loss leader
Earlier this year, Apple unveiled iTunes Radio. It almost certainly takes a loss on the service as music streaming is notoriously difficult to make a profit on. Just ask Pandora.
Now, it's giving away its best software. The idea is that providing its customers with the best possible experience for one simple price will help sell more hardware. The software is already priced into the hardware.
Everyone wants to be like Apple
Apple controls the margins on its hardware products, whereas Google is susceptible to the market's demand for ads. While more eyeballs on Google ads is certainly great for the company, there's some market r