If the vast majority of Apple's active customers are using the most recent releases of its services on Macs, iPads, iPhones, and even the Apple TV, then Apple can innovate faster. It knows who its customers are, and it knows how many will be able to tap into new features and services. This enables Apple to move millions upon millions of customers forward more quickly than any competitor.
The Mac came first, but the iPhone and iPad are what rocketed Apple to the top of the consumer technology mountain. The thing is, while the iPhone was a great phone -- and while the iPhone 5s is still a great phone -- the head-scratching success of Apple's mobile device sales is only partially due to the hardware and OS itself.
Apple's success is all about how well Apple creates, connects and distributes its entire hardware and software ecosystem.
Now the Mac is no longer sitting on the outside, looking in at the party. How'd that happen?
Taking the Leap
When Apple announced that it would offer its next generation of Mac OS X for free, it wasn't just playing the free card. Apple was incorporating the Mac into its ecosystem- building strategy in the best way possible: OS advancement.
While Microsoft ties a cinderblock around its ankles with its varied and confusing versions of its OSes -- along with pricing -- and then dips in a toe to test the buying waters, the whole mess just flounders. However, it's not floundering just because of the price. It flounders because the ecosystem is hard for many consumers to understand, and when it's time to upgrade, the reasons and the hows and costs are a pain to figure out.
Not so with Apple. The company in Cupertino creates just one hurdle for its consumers: buying the hardware the first time at a premium price. If a customer can get over the price, every interaction after the initial credit card transaction makes the purchase better and better over time.
How? Free OS upgrades with new features, for one. It's also the huge world of apps that can be bought through a simple Apple ID account -- and easily installed, and moved around from device to device.
Remember the dark days of buying and installing apps before Apple's App Store? You had to use messy license codes. Upgrades were fraught with error, often different, and costly in ways that were hard to predict.
Sometimes you got locked out of your own apps. What if you wanted to install an application on more than one computing device? Did you have to pay more? Buy a different version? All of this mess was not transferred to the iPhone and iPad world.
When Apple introduced the Mac App Store, it wiped out much of the hassle, but one lingering problem remained: the cost of Mac OS X. Back in the early days of Mac OS X -- starting in 2001 -- a boxed edition would cost about US$129.
Apple subsequently chipped away at pricing, dropping the cost of Lion to $29.99 in 2011, then nudging Mountain Lion down to $19.99 in 2012. Granted, some of the issues with pricing had to do with accounting practices, but the point in 2013 remains: Apple is no longer charging for OS X upgrades.
And this is a very big deal.
Constant Training and Better Connections
The big deal is not so much that it's a blow to competitors -- that's just marketing hyperbole. The real reason this matters is because a free OS X upgrade is just about taking the time to download and install the upgrade. It's not about deciding if it's worth the price. It's not about deciding if you have the spare bucks to do it when you're not sure it's really worth it. Now, because it's free, millions of Mac owners will take the leap. Once they jump, the side effects of a free OS are what will count.
They will interact with their Mac again in an intense, focused way. They'll understand the upgrade process, experience satisfaction when it works, then inspect the new OS to figure out how to use their apps and features.
They will learn about their own systems, all the while figuring out how ancillary pieces like iWork and iCloud start connecting a single new file format into a seamless document creation, editing and sharing environment over iPhones, iPads, Macs and even PCs.
By removing the OS pricing -- and similarly removing the iWork pricing for new Macs -- Apple is getting the cost of the transaction out of the way of learning, of using -- and ultimately, this better enables astounding customer engagement and appreciation for Apple.
Millions of Customers on the Same Release
Suddenly, if Apple has the vast majority of its active customers using its most recent releases of all of its services on Macs, iPads, iPhones, and even the Apple TV, then Apple has the luxury of being able to innovate faster. It knows who its customers are, and it knows how many people will be able to utilize and tap into new features and services.
The same goes for third-party developers. If they don't have to worry about programming and supporting many different operating systems, they can focus on the app itself, the user experience, and their own innovation that's able to take advantage of the latest Apple processor, software and service advancements.
All these little things add up, enabling Apple to move millions upon millions of customers forward more quickly than any other competitor.
I have no idea how much this is worth, but I guarantee that if you ask any software developer if they would rather have most of their customers on new releases or most of their customers on a string of older releases -- you'll get the same answer every single time.
While Apple didn't announce an astounding new product category at its media event earlier this week, Apple has been relentlessly fine-tuning every single part of its business, and all these pieces and parts keep adding up into one simple thing: delighted, repeat customers who actually use their devices.
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