The Real Reason Apple is Giving Away its Software

| Particle Debris

When a company, like Apple, makes a bold move, like giving away OS X and productivity apps, it's typically seen as a torpedo intended to sink an enemy ship. So then people argue; that bold move is no torpedo. And they're right. In fact, single, bold actions are more like cannon fire that whittles away at the superstructure of an enemy ship, slowly reducing its ability to function.

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We should all know by now that no single action by Apple can take down a competing company. (Although some articles would have you believe that.) I think what happens is that well read observers take in the entirety of the industry and form a subconscious model of what's going on. Then, when we see a single move by Apple, like giving away Mavericks and iWork, it's like a jigsaw puzzle. The pieces fall into place, and there's an "aha!" moment. We see the dominoes falling in that model in our heads.

But if you ask us to explain why this single cannon shot will contribute to the desired, long term effect, we may be at a loss to articulate the whole mental model we've formed. So I'll try. Here it is.

Cascade Failure

The Surface tablet family has been a miserable failure for Microsoft, and there's no sign that the Redmond giant is getting a clue. As Tim Cook said during the October 22 event about the competition, "They're confused...they chased after netbooks. They tried to make tablets into PCs and PCs into tablets." There is no doubt, Mr. Cook was taking a shot at Microsoft.

As I've written before, after a 2.5 year delay producing its own tablet, Microsoft hasn't created a proper stepping stone to the future with the Surface. The reason is that Apple's iPads (and other tablets) are in the process of dismantling and demoralizing the PC industry. If few companies are eager to build PCs, or can't make any money on the low to moderate end (with Apple seizing the high end with the Mac Pro) then there's an ever dwindling market for Windows. Then, Microsoft Office suffers collateral damage.

Next. What Microsoft doesn't want to admit is that the modern tablet is designed for lightweight apps. It's part of the tablet concept, the cultural meme that we tap, drag and create. Keyboards are destined to go the way of the typewriter. Putting MS Office on a tablet is like mounting a Patriot missile launcher on four meter sailboat.

In a case of bizarre self-rationalization, Microsoft sees a two-position kickstand and USB ports as a decisive advantage -- or they wouldn't tout those features in its TV ads. It sees the complexity of MS Office, in a Post-PC era as a critical, necessary feature, much the way RIM/Blackberry saw email security for business as its unassailable, killer feature. How did that work out?

And so, as Apple's lightweight -- and free -- productivity apps, perfectly designed for a modern tablet get better and better, the market for PCs that utilize Windows and MS Office gets smaller and smaller. Eventually, there will be an inflection point. There always is.

On the other side of the coin, Apple has an interest in carving a bigger and bigger piece out of the PC marketplace with Macs. To be sure, there has been some cannibalization going on with its own iPads, but the way to slow that down is to lower the price of MacBooks and give away OS X and OS X upgrades. That's exactly what Apple did on October 22nd. No more periodic fees.

Consider the mentality of IT managers in a few years. Everything their employees need to do can be done on a BYOD tablet. Faced with the prospect that standard desktop PCs are in less demand, and the ever present frustration as they deal with new Windows versions, they won't be eager to continue the expensive licensing fees -- which Microsoft may have to raise to maintain its revenue stream.

It would be investing in a future that isn't.

Over on the other side of the building, the Mac users in the graphics, engineering and accounting departments are happily upgrading their Macs for ... free. It's just more cannon fire on the other ship's superstructure.

All these shrewd Apple moves have placed Microsoft into yet another bind.

Thanks to Microsoft's crucial tardiness in entering the tablet market, customers have figured out that they don't need MS Office to get routine work done. And that's why Microsoft is in a coffin corner, to use another military term, with Surface. If Microsoft ships Office for iPad, they remove incentive to buy a Surface. If they decline, as they have so far, more and more people using improved, free and compatible iWorks apps realize they can get by without MS Office. Lightweight or not.

When the market for PCs inflects, that is when more tablets are sold than PCs in 2015, and Windows begins its collapse, so will MS Office. The Surface tablet goes down with the ship.

With RIM/BlackBerry disposed of and the weakly positioned Microsoft on the ropes, Apple will be able to focus all of its attention on the rest of the competition.

Now that's a model one can munch on.

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Tech News Debris for the Week of October 21

Will there come a time when we carry on conversations with an intelligent agent in our smartphones -- or something we wear? I think so. And so I believe this next article bears on everything Apple and everything mobile. "The Man Who Would Teach Machines to Think." This is Particle Debris must reading.

If you love beautiful wallpapers, especially astronomy, there are some good ones hidden away in the Mavericks screen saver. I've already copied some of these into my pictures library. They're awesome. See: "Uncover Mavericks' 43 Secret Wallpapers."

There have been several great reviews of Mavericks. I liked mine because it wasn't a user manual. Rather, it was a tour that introduced you to what's important and why you should upgrade. However, if you're of a mind to read something akin to Mavericks, the missing manual, by some formidable and talented writers, here are the great ones I know of.

In the preamble above, I discussed market forces, but I didn't go into the specific issues with Windows 8.x. Indeed, that's another part of the model.

Brian S. Hall, however, does have some pointed observations, taking some serious shots at major players, but dramatically so at Microsoft. So I'll finish this week with his poetic quote from "The Simple Shocking Failures of Microsoft Google Facebook Apple And Silicon Valley."

Windows 8 — and I promise you, I am no Microsoft hater — is so inexplicably, almost painfully user-unfriendly that, and I am serious here, every other thing Microsoft has done right, and every other thing they have achieved, and despite all their money, and ignoring the ascendency of iOS and Android and the rise of iPad in the workplace, the breadth and scale of of the Windows 8 OS failure is such that it could literally take down the entire company."

Takes my breath away. Maybe Microsoft has torpedoed themselves.

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Cannon fire on sinking ship via katu.com.

Sub firing torpedo via Shutterstock.

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Comments

geoduck

{quote} Cascade Failure {/quote} An odd coincidence that you would use that term. I’ve used it for over a decade for when Windows gets balled up and is unrecoverable.

Microsoft sees a two-position kickstand and USB ports as a decisive advantage

I find it interesting that Microsoft is touting USB when much of the rest of the world has moved to wireless for file transfer, via the cloud or otherwise.
[quote}  It sees the complexity of MS Office, in a Post-PC era as a critical, necessary feature, much the way RIM/Blackberry saw email security for business as its unassailable, killer feature.

Exactly! For many years I’ve been telling those, including my superiors, that Office was overkill for, well, the office because we didn’t need pivot tables or legal footnotes, or Ribbons. Finally I see people are starting to grasp this.

as they deal with new Windows versions, they won’t be eager to continue the expensive licensing fees

Example. My company is using an inexpensive external service for web hosting and e-mail. The powers that be around here thought it would be nice to host our own Exchange server. Internal messaging, shared calendars and all that. Then we looked at the cost. For our little office (~50 staff plus another 20 or so functional addresses) it was going to cost around $40,000 of which only $2000 was the actual hardware. The rest was license fees. We then tried Office365 and found it to be kludgy, unstable and unreliable. They have decided to abandon the project altogether. Maybe down the road they will look at it again but it’s almost a guarantee that it won’t be a solution from MS.
The quote from Brian S Hall is wonderful. Another story from where I work. (I’ve used this before so if it seems familiar my apologies).
Where I work the head of IT is a top down died in the wool bleeds MS blue, Microsoft fan. As far as he’s concerned they can do no wrong and that includes the Outlook, the Ribbon, Surface (brilliant in his words), even Clippy was great in his mind. He’s the one who pushed Exchange until he was shot down by those at the top. He announced last month that Windows 8 was a total loss. The company will NOT be upgrading. Period. He’s bought a pile of licenses for Windows 7 and we will keep using them for the time being. Also Office2013 is not to be used. It’s too insecure with the cloud integration and breaks too many of our legacy apps and hardware. He’s also laid in a supply of Office 2010 licenses.
If MS can’t keep people like him on their side what hope is there for the house that Gates built?

Agee

“Maybe Microsoft has torpedoed themselves.”
You mean “…has torpedoed ITSELF.”

gnasher729

“Maybe Microsoft has torpedoed themselves.”
“You mean “…has torpedoed ITSELF.””

Both are wrong.

Microsoft have torpedoed themselves. (In British English).

Maybe we should ask Bill Gates: “Hi Bill, when you released Windows 8, has Microsoft torpedoed itself, or has Microsoft torpedoed themselves, or have Microsoft torpedoed themselves?”

Agee

I don’t believe we’re talking British English here. This is U.S. English and torpedoed ITSELF is correct (Microsoft is a singular organization).

John Martellaro

Agreed on the itself/themselves.  That’s standard usage for us, and you’ve seen me do it before.  In this case, it just didn’t feel right.  So I took some license.

sxotto

Perhaps the strategy also has something to do with the fact that Google has been giving away its productivity software for a long time. I’m finding it hard to justify purchases of Macs for employees who do basics when they could and do use Google Docs. I think Google’s approach may be much more significant.

wab95

John:

I concur completely with your analysis. Indeed, I’ve argued before that Apple are like a fast attack submarine, whose plans and manoeuvres operate in stealth mode, hidden beneath the surface, until they are prepared to strike. Time and again, that strike, while not lethal to competitor as an entity, is often enough, lethal to one of their products or services, and as you and geoduck argue above, sets off a cascade effect that, over time, can sink an enemy vessel (competitor) unless they take corrective measures.

MS, as you’ve pointed out, are in a coffin corner, at least insofar as their mobile strategy is concerned. Indeed, they unknowingly walked their entire core business - Windows and Office specifically - into a kill zone the moment they a) laughed to scorn the iPhone (and later said ‘meh’ to the iPad) and b) opted to withhold Office from the iPad. That strategic blunder had but one origin, tying their future to Windows, a decision that left them disoriented and straying into the kill zone - a place that they still seem slow to appreciate.

It has allowed Apple, amongst their other volleys, to pummel MS’s software business model, which currently defines their lifeline, by giving away OS X and Apple’s suite of productivity and iLife apps. As organisations’ senior leadership (not the dyed in the wool, true blue MS believer IT wonks that geoduck describes - they’re still capable of redefining reality in a way that supports MS) look at the larger landscape of interoperability of hardware assets, security, and both direct and indirect costs (in lost time particularly) of various platform solutions, the value proposition from MS becomes progressively unattractive over time.

Meanwhile, Apple, like to the two proverbial men on the savannah faced with a lion, in which the survivor need not outrun the lion, only his less fortunate mate, Apple need not cheapen any one or another of their products and services, but rather make their overall integrated platform a greater value proposition than that of MS. With this latest OS rollout, combined with their arsenal of hardware and supportive services, they’ve done that. MS can only counter, at this stage, with promises of as yet non-existent products and services that will truly compete, on performance and price, with Apple’s bristling and fully functioning weapons cache. This is a kill zone. MS have got clear out of it, and fast. ‘Kill’ BTW is a relative term. It connotes, in this case, the decline of MS from titan to Lilliputian player in the tech space. For MS, the erstwhile lord of the tech jungle, this fate is akin to death.

I suspect, though I have no inside knowledge of such, that many in Redmond’s leadership look at their current PC marketshare and the penetration of those PCs into the enterprise space, breathe a sigh of relief and assure themselves that their position is relatively secure - at least for now, not unlike the Spanish admirals and royalty who once surveyed their vast armada and, too, thought themselves secure, if not invincible. Security, however, is not a state function, but a system in dynamic flux whose balance can simultaneously destabilise and buttress one or another contending parties’ positions.

Finally, if MS are to have a future as a major player in the post-PC era, they will require more than a simple leadership change, by which is meant not simply a change of CEO, but the core leadership team. They will require a cultural transformation such as they have not seen, perhaps even contemplated; and one so radical that the transformation itself might prove as great a threat to MS’s survival as the combined menace of her rivals, most notably, Apple.

William Murphy

While I laud Apple for making their office apps available for free, they are not as simple to use or necessarily as capable as MS Office.  I use Excel on both Macs and PCs, I use Numbers on Macs and iPad.  Numbers is nice, but difficult to use when it comes to editing formulae.  I have a spreadsheet or two that I made for a class that I teach.  Numbers was fine for entering and logging the data, but when it came down to analyzing the results, I could write the Excel formulae in a fraction of the time that iPad required.  In my opinion, Numbers has a long ways to go to improve its interface.

Lee Dronick

  I’m finding it hard to justify purchases of Macs for employees who do basics when they could and do use Google Docs. I think Google’s approach may be much more significant.

Define basics.

Macs, come with TextEdit which probably meets most users basic word processing needs.

 

ibuck

And if Textedit won’t do it, Macs (and iPads) now come with iWorks, including the more capable word-processor, Pages.

Philip Littlewood

You seem to be, conveniently, overlooking the fact that Windows 8.1 ,which is of a similar scale of update to Mavericks, is also a free upgrade and MS Office is also free on Windows Arm devices.

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