At yesterday’s iPad event, CEO Tim Cook followed Apple’s announcements that iLife, iWork, and even Mavericks would be free with a simple statement: "We are turning the industry on its ear." It was a shot at Microsoft — one that Microsoft tried to deflect today — but it also had a less obvious second target: Google.
Until today, Apple’s software agenda leaned more towards the Microsoft model — offer premium software and ask consumers to pay for it. But now, it leans more towards Google’s — offering software for free (albeit without ads). Apple is betting that it makes enough money on hardware to be able to offer competitive software that’s both free to use and ad-free.
It looks like a bold new move for Apple, but in truth, it’s actually an old one. Back in 2007, at the peak of Apple’s "Mac vs. PC" marketing campaign, the company ran an ad called "Out of the Box." In the ad, Mac discusses how he’s about to make a home movie, with no setup required. PC, on the other hand, needs to download some drivers before he can do the same. With yesterday’s announcement, Apple is putting all its apps back in the box to mount another forceful marketing push — a push that takes on its chief competitors in a single swipe. Except now, the key battleground is the iPad, not the Mac.
Tablets have become increasingly powerful, and talk of iPads, Surfaces, and Android tablets becoming "real" productivity machines is reaching a fever pitch. Microsoft’s Surface tablets ship with a free version of Office, which lets the company market the device as a new kind of productivity machine that’s half laptop, half tablet. Google’s Chromebooks come with Google Docs, and Google’s Android tablets have free access to QuickOffice — though of course that’s not as powerful as the competition.
Cook's pricing of iWork seems to say that there’s validity in Microsoft’s marketing
"These are really incredibly rich apps and we’ve only scratched the surface of what you can do them, and they’re all free," said Apple CEO Tim Cook, after introducing a revamped iWork. Cook essentially said that there’s no big money in major software anymore, which is a direct shot at Microsoft. Tim Cook also docked Microsoft for asking customers for $199 in exchange for an upgrade to Windows 8. While Cook was largely dismissive of Microsoft’s "no compromises" strategy for the Surface, his pricing of iWork seems to say that there’s at least some validity in Microsoft’s marketing: consumer tablets should come with free productivity apps.
For its part, Microsoft’s vice president of communications Frank Shaw published a blog post that attempts to downplay the importance of Apple’s move, writing "So, when I see Apple drop the price of their struggling, lightweight productivity apps, I don’t see a shot across our bow, I see an attempt to play catch up." Debates about the relative merits of each software suite aside, it’s obvious that both companies see productivity as the next great tablet battleground.
"When I see Apple drop the price of their struggling, lightweight productivity apps, I don’t see a shot across our bow."
Apple has also affirmed that software should be ad-free, while Google’s business is built on web services supported entirely by ads. Google Docs doesn’t yet have ads in it, but it’s no gamble to hypothesize that it someday will. By offering its apps for free, Apple is extending its holistic view on computing and cementing its place as a hardware and services company. Apple has always mostly made money on hardware, but with its latest announcement, it’s taking that philosophy to the extreme. iWork may not have as many features as Office and may only be getting started competing with Google Docs when it comes to collaboration, but Apple is betting that the average consumer doesn’t know the difference.
And as with a lot of things Apple, marketing is a huge part of the game. The iPad Air bundled with a free iWork suite cuts off many of the arguments those other companies have been trying to make to customers considering a Surface tablet, Chromebook, or Android tablet. Plus, the company can once again claim that your Mac (and now your iPad and iPhone) can do everything that the modern person might need — movie editing, photo book-making, spreadsheets, and word processing — right "out of the box."