At Apple's recent keynote introducing their new Mac OS software and iPad's the company announced that they would be giving away several of their software titles that they use to charge for including Mac OS updates, iWork, etc... . The press lauded this as an offensive move aimed squarely at Microsoft. While I acknowledge that it's a brilliant move and puts Microsoft on the defense, I believe the reasoning behind the move to give away software goes deeper and has not been discussed in the press.
In it's latest quarterly results (announced about a week after Apple's keynote), Apple announced that unit quantities of 3 of their 4 main hardware product lines were either flat or down year over year. Mac unit sales were down 7% and revenue was down 15% year over year. iPad unit sales were flat and revenue was down 13% year over in a tablet market that is experiencing tremendous growth. And iPod unit sales were down 35% and revenue was down 30% year over year.
My premise is simply that Apple giving away free software is a desperate move to try and get some growth in their Mac and iPad product lines. Unfortunately, the press being caught in a reality distortion field refuses to print anything that might be construed as negative about Apple. How can anyone ignore the data that revenue from 3 of their 4 main product lines were shrinking between 13% and 30%?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.