No, OS X isn't free -- but that might not matter for Microsoft

commentary Should Microsoft panic because Mac OS is free? Not really. It's not really free. Plus, the cost of the OS is less an issue than the price of hardware.

Mavericks for free -- if you've already paid for a Mac.

I've read a number of headlines talking about Apple's new policy of giving OS X away for "free" and how that might harm Microsoft's future. A reality check is in order.

OS X, also called Mac OS, isn't free. Even if you want to buy that argument, it's unlikely to be a major factor in shifting people from Windows to Mac. The price of an operating system is a sideshow compared with the cost of hardware, and more importantly, when you consider the shift from PCs to tablets.

How 'free' isn't really free
Let me deal with the "OS X is free" myth first. It's not. Go over to the Apple Store now and try to download your free copy of the latest version, Mavericks. If you're not using a Mac, you can't. And if you are using a Mac, you paid for that Mac. You only get Mavericks for free if you have purchased a Mac.

Getting the operating system included along with the price of a computer isn't getting it for free. That's instead covering the cost of OS X within the price of a Mac. Moreover, if you haven't upgraded to Snow Leopard, the OS X released in 2009, you'll need to spend $20 to do that first, to then get your "free" Mavericks upgrade.

Don't get me wrong. I love, absolutely love, that Apple has made the Mavericks upgrade free for those who have purchased Macs. I'll love it even more if it turns out the next version of OS X is also free. I already loved that Apple released major updates of its desktop operating system for far less than the price Microsoft does for Windows. This just makes me like Apple even more.

Compared with hardware, the OS costs little
But I also paid a lot more for my Mac than I did for my PC. When you take into account the cost of the hardware, the idea that consumers might find Windows to be "outlandishly high" -- as Fast Company wrote -- is laughable.

Windows 8.1 -- also free, if you have Windows 8.

Looking at the prices for various computers offered at the Microsoft Store, you can get a Windows laptop for $400. The cheapest Mac is going to run you $1,000. That $600 difference would pay for five years of Windows updates, assuming the upgrades were always the $120 list price that Windows 8.1 goes for. That also assumes that every year, Microsoft will charge for an update -- which isn't always the case. Just last week, Windows 8 users going to Windows 8.1 got that upgrade for the low, low price of...free.

I don't think someone debating between a Windows laptop and a Mac laptop is really pondering the extra $20 they'll save because of Apple's new free upgrades policy, not when they're already looking at a $600 or more difference. That free upgrade isn't going to move the needle in pushing them to the Mac decision. Something else is.

What that is, I don't know. For me, I moved to Mac laptops years ago because I appreciated the good build quality, the great screens that I look at all day. I still preferred Windows as an operating system and stayed with that until last year, when I found, ironically, OS X gave me back the traditional Windows experience I felt that Windows 8 took away.

But that's me. And that's me because the computers I purchase are work expenses, so I can be less price-sensitive than a regular consumer.

The shift toward tablets
What we do know about regular consumers is that they don't seem to be debating the "Mac vs. Windows" question. They buy Windows much more than Macs, as they long have. The real debate consumers seem to have, and the real issue Microsoft faces, is whether they go tablet vs. PC.

Let's take the Mac vs. Windows issue first. For the third quarter of 2013, who sold the most PCs worldwide? Not Apple. It didn't even make the top-five list put out by IDC. People bought more from Lenovo, Hewlett-Packard, Dell, Acer, and Asus.

Apple does much better in the US market, but even there, IDC puts its sales of desktop and laptop devices at less than half that of the leader, HP. Dell outsells it nearly 2-to-1 as well.

To blame? IDC noted earlier this year that Apple was seeing desktop losses due to tablet sales. Indeed, the entire desktop space has seen a drop in purchases, as more people are going tablet. Gartner expects tablet sales to eclipse PC sales by 2015. So does IDC.

The current iPad lineup announced this week.

That's great news for Apple, of course. It's the tablet leader. But it also comes back to the whole cost-analysis issue, for the consumer.

If someone is pondering whether to spend $1,000 on a computer, does a free $20 OS upgrade in the future make a difference? Almost certainly not. That's not what's going to push a consumer from PC to Mac.

In contrast, someone with only $500 to spend on a computing device faces a real choice: tablet or computer? And if a tablet looks like it can do all you want in what seems to be a forward-looking format, that's the nudge.

The battle is for the tablet purchases. That's what Microsoft's push with Surface is all about. Can it convince people that it has tablets that are as good as the iPad -- and more?

Chromebook - a best-seller on Amazon

So far, that hasn't seemed to work. And one reason might be that for the cost of buying a Surface Pro -- $900 -- you could buy both a Windows 8.1 laptop as well as the latest iPad Air, giving you the best of both worlds. And yes, you can buy the Surface or Surface 2 for $350 or $500, respectively. But those are Windows RT devices that don't deliver the full Windows 8.1 experience. Compromise isn't a great selling point.

Closer to free: Chromebooks
As for desktop computing, perhaps the real threat to Apple and Microsoft is Google and its Chromebook.

Once, Chromebook was something I couldn't imagine being usable for "real" work. But I've found it has become far more robust as I've used it more this year. For those with casual computing needs, but who want a more traditional desktop/laptop environment, Chromebooks are even cheaper than Windows machines. Perhaps that's one reason why the top-selling laptop on Amazon is a $250 Samsung Chromebook.

If it's really a battle about being closest to free, a Chromebook gives you access to all the free Web-based apps that Google provides, as well as those anyone provides, in a traditional computing format that's half the price of even low-cost Windows machines. And yes, the updates are free.

Postscript: I forgot to add my usual disclaimer, and seeing the comments getting heated, I thought I would do that now. I don't care what computer you use. This column isn't meant to say that Mac is better than Windows or that Chromebook is better than both. Whatever works for you, works for you -- and whatever you want to pay, it's your money. You're the best judge on how to spend that.

The column is focused on whether "free" makes a difference to future Mac sales. My view is that it won't. That given the price of the Mac, the upgrade cost was hardly a factor before, so "free" doesn't make a difference now. Instead, the real threat to the Mac, and Windows machines, are tablets. We see that already, and I documented that above. And, perhaps for the traditional laptop space, Chromebooks will start to rise.

 

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