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Apple Takes a Bite out of Microsoft's Business Model

appleApple has announced that its new operating system and Apple productivity suite will be free. So where does this leave Microsoft?

Apple's special event left many underwhelmed. A series of leaks and the unrelenting gaze of the blogosphere meant that there were very few surprises on offer. The iPad Mini got a Retina display, a new thinner iPad was launched, there were some minor modifications made to the MacBook Pro line-up and the newest operating system was launched. All fairly run-of-the-mill stuff.

However, there was one announcement that will have made market watchers look up from whatever it was they were doing; OS X Mavericks and iWork are now free.

This move was a no-holds-barred attack on Microsoft's business model, which still generates a significant proportion of its revenue from software sales.

With Windows 8 retailing at around £50 and MS Office at around £100, Apple's new strategy has firmly put the ball in Microsoft's court and how it responds remains to be seen.

Frank Shaw, VP of communications at Microsoft went on the counter-offensive by saying that comparing iWork to Office was a stretch of the imagination.

He poked fun at the event saying that the RDF (Reality Distortion Field) had extended beyond Cupertino.

He went on to point out that the Surface came with Office, what he called 'the gold standard in productivity software' and said that Apple's lightweight software was simply playing catch-up.

Shaw does have a point; Microsoft Office is still the go to application suite in terms of productivity and when it comes to the enterprise, Apple's iWork does not hold a candle to Office.

While there is now a certain amount of pressure on Microsoft to bring their pricing strategy in line with Apple, the fact is that people will always pay for superior software, which Microsoft Office is.

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