Apple’s Strategy Holds Future for Operating Systems

Blair Hanley Frank

On February 16th, Apple announced Mountain Lion, the latest update to the Mac OS. It’ll be released this summer, via the Mac App Store, for the paltry sum of $30. This may not seem all that significant, but on the heels of last year’s release of OS X Lion in a similar fashion, I think it signals something bigger happening in Cupertino.

In the past, operating system releases were a huge deal. Upgrading to the latest OS would set you back a decent amount of money, and companies only really released significant updates once every two years or so. Mountain Lion is the second update in two years. While that certainly isn’t new territory for Apple over its history, it’s a definite change of pace compared to the previous four updates to OS X. That raises a question: Why would Apple mess with the existing formula for OS releases?

Apple’s strategy, at least in the short term, seems to be similar to the way they’re handling updates for iOS: instead of pushing out one massive release every few years that costs a lot of money, they’re working on an incremental update system. Mountain Lion is priced at $30, similar to Snow Leopard and Lion before it. That’s a far cry from the multiple hundreds of dollars certain editions of Windows 7 run for at retail.

Ultimately, I think that’s going to turn out to be the better business model. Thirty dollars a year is fairly cheap, all things considered, when it comes to updating your computer’s operating system. If Apple can get its users to pay for $30 updates to their computers every year, that’s going to be a really significant achievement, especially as Microsoft is still trying to convince end users to leave behind Windows XP.

Apple’s method of distributing Mountain Lion is what makes this strategy truly novel. The App Store comes pre-installed on every currently-shipping Mac today. Getting people to part with their money in exchange for the update is going to be incredibly easy. Microsoft doesn’t have anything that remotely compares to the sort of user-friendliness and convenience of the App Store. When it comes time to buy Mountain Lion, purchasing the OS itself will be a one- or two-button process for most people. Assuming that Apple has done sufficient bug testing beforehand, we could be entering an age in which an update to a computer’s operating system will become an impulse buy.

Up until very recently, that would not have been within the realm of possibility. Without the widespread availability of broadband Internet, and the store infrastructure created by iTunes and the iOS App Store, Apple would not be in the position to make Mountain Lion a reality in this form. The real question now is how Microsoft is going to react. The folks in Redmond might be tempted toward continuing to follow the formula, but if they do, I think they’ll be missing out. After all, this is the tech industry. You need to seize opportunities, or be left behind.

Here’s the bottom line: I think the operating system market is going to see a huge business model upheaval over the next couple of years. That means our current model for what we expect in terms of new operating systems will need to change. I wouldn’t be surprised if boxed versions of operating systems go the way of the Laserdisk. Get ready for an age of computing where software “retail” will best be found online.