Two years ago, I wrote about ”Google, Android and diffuse business models”. I didn’t like that Google and Android have created a kind of mystified business model, and compared to Apple and Amazon, which both have business models that are easy to understand = you get from where they get their money.
A lot has happened since then. Yesterday, Apple held an event and announced that they are giving away their new OS, Mavericks, for free, and they are also giving away iWork and iLife for free. That is so totally, mind-blowingly amazing! It makes me very happy, and I feel like they really reward their customers. Read the article about ”Apple’s Free Software Gambit Means War With Microsoft”, Forbes.
At the same time, I still understand where Apple gets its money; there’s no mystery. Apple sell computers and iDevices. They have created an ecosystem in which the Apple ID is the key to buying apps in the App Store, music and videos in iTunes, and books in iBooks. You can buy stuff from any of your Apple devices. They have made it so easy to use their Apple devices that people really do use them, and they are happy and content with the experience, which is not true for Apple’s competitors. Apple also started to sell ads.
Apple has created inspiring working conditions for the app developers. One crucial point is that Apple has encouraged and rewarded a new culture among its users, which means Apple users tend to upgrade anything that can be upgraded as soon as possible. Well, not everyone, but the majority is, and that makes a difference when it comes to keeping Apple devices secure and free from viruses and malware. It also encourages developers, since it makes it fun to develop for the future rather than yesterday.
On top of that, Apple has built a culture among its customers to pay. Apple users like to pay for music, videos and apps. Getting paid is attractive to any developer who spends weeks or months programming.
And now Apple starts to give away OS and software for free… One could say it’s a bad thing, considering what I wrote above – maybe it will change the Apple users’ attitude into demanding more stuff without paying? At the same time, Apple’s business model is still easy to understand. We can see several sources for income: hardware, music, videos, books, apps and ads. Apple gives away software for free because they can afford it and because it will make their customers happy and even more loyal, which means they will continue to use their Apple devices in ways that bring in revenue for Apple anyway. So, I think this is a very cool move from Apple.
What makes it even more interesting is how Microsoft has been fighting over the last few years. Microsoft just don’t know what to do. The company used to live in a happy world where it was the king, and then a little iPod began to challenge its empire in ways it had never dreamed of. Yes, I think it started with the iPod and iTunes – that was the beginning of Microsoft’s disaster.
Today, Microsoft is a software company with a sinking flagship: Windows. What do I, as an Apple user, know about Windows? I know that Windows users don’t like updating because they don’t trust newer versions and know what it’s like to struggle with software that doesn’t work and invites viruses. If they decide to update, then they get confused when they have to choose from all the alternatives. Updating means problems in the Windows world, whereas in the Apple world, it’s joy. Windows is Microsoft’s ecosystem, and it doesn’t work as well as it used to. The glory days are over.
We know that many PC/Windows users bought iPhones, followed by iPads, and now they are starting to understand what fun it can be to use digital devices, and their expectations of what a computer should deliver have increased. Many people have kept their PCs because they need to work with Microsoft Office, and they can’t do that on an iPad.
Microsoft understood that they had to change something, so they started adding hardware to their product mix: the ”iPad killer” Microsoft Surface, and, together with that, the OS Windows 8 for both computers, tablets, and phones. But the problem is: not many want those products. I have met one young man who was happy about his Nokia Lumia smartphone with Windows 8, but he also said, ”Of course, there are not so many apps”. ”Not so many apps” means less income for Microsoft and less joy for the users. Since there are not many Windows 8 users, developers are not keen to develop app versions for it.
Now Apple give away the new OS, Mavericks, and iWork for free… The given question is: What will this mean to Microsoft? I’m sure this is the last push a couple of confused Windows users need to make the jump to Apple. It’s so easy to migrate from Windows to Apple, and so rewarding. If they have to send documents back to some remaining Windows users, it’s a piece of cake with the latest version of iWork – you just send the link, and the recipient can choose which file format to use. So, not many issues remain for the Apple user.
Microsoft is left with a bucketload of problems to solve… do they even have an understandable business plan to follow? I bet they don’t.
Kodak, Blackberry and now Microsoft. Apple has disrupted many business models. I am sure there will be an end to the Apple era someday, but right now it’s Apple that’s surfing the waves, and I think they will do so for at least five years. At some point, there has to come a competitor that has found a new and better business model, and it’s impossible to guess what it might be, because when it comes, it will be so new and bold that the whole world makes happy sighs, just like they did when the first iPhone was shown to an audience.
