Blackfriars: Leopard Family Pack Cashes in on Customer Loyalty, Honesty

October 24th, 2007 at 3:00 PM - News by John Martellaro

By avoiding copy protection and onerous licensing and activation plus a properly set price for the Mac OS X Family Pack, Apple actually gains financially, according to Carl Howe of Blackfriars Communications on Thursday.

Based on some statistics about what percentage of Apple customers elect to purchase the Mac OS X Family Pack and some basic assumptions, Carl Howe analyzed the financial benefit to Apple by trusting their customers to buy the right version.

After all, a customer could just buy the single licensed copy and install it on every Mac in the household. Many do just that. Apple does nothing to prevent it.

Starting with some data supplied by John Gruber at The Daring Fireball, Mr. Howe set up a spreadsheet to analyze how much money Apple makes by having the policy that it does. The starting point is that a significant percentage of Leopard purchases tracked through Mr. Gruberis Website are Family Pack purchases. The calculation suggested that Apple makes more money by trusting its customers.

"Not using copy protection (which tends to offend loyal customers while doing little to combat actual piracy) and providing reasonable upgrade options is not only good marketing; itis good business," Mr. Howe concluded. "Appleis Family Pack licensing strategy will increase its upgrade revenue about $103 million or 6% over the $1.8 billion Leopard upgrade cycle. And in the process, Apple will cement customer loyalty to boot. Itis just one more proof point that treating customers with respect and trusting them to be honest pays."