09 Nov 2008
Mac OS X 10.6 for $30
Frasier Speirs posted a thought experiment last week about Apple giving away Mac OS X 10.6 “Snow Leopard” for free. Mac OS X 10.5 “Leopard” is sold for $129, but it’s unclear from Apple’s 10-K how many units they’ve sold. While I don’t think that a free 10.6 is likely, I could see Apple choosing to sell the OS upgrade for a very low price point, like $30 for both desktop and server. Anyone interested in upgrading would upgrade for that amount.
Apple only makes 6% (~$2B) of its revenue from software and services, and that includes many products beyond OS X. And the company has $25B in cash now. Wall Street would love to see that money used in a stock buyback, but Jobs clearly stated in the last earnings call that the cash would be used on product development. Using its supply of cash to subsidize 10.6 purchases would certainly be more useful than a stock buyback program. Apple could cut support for 10.4 and 10.5 quicker and invest more resources into 10.6+ features.
Fortune’s Apple 2.0 brought up a very interesting point about how Apple might deal with its cash: “Of course, Steve Jobs may have better ideas than Toni Sacconaghi about what $25 billion can do. The last time Apple’s stock fell this sharply — plunging from nearly $40 a share in March 2000 to $7.44 in December 2000. Jobs used the cash he had on hand to start a chain of Apple Stores.”
Google subsidizes an amazing variety of services with ad revenue. Perhaps subsidizing its operating system would make sense to Apple in its current financial position.