Free updates power Apple's hunt for market share

12 November 2013 by Steve Blum
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Making waves with Mavericks.

Free is worth a two-thirds bump up in Internet traffic. At least if you’re Apple and you’ve decided to give away a new operating system and major apps to go with it. That’s one of the findings in Sandvine’s Global Internet Phenomena Report for the second half of 2013. The Ontario-based company tracks internet traffic around the world, and reports trends twice a year.

According to the report, when Apple released the Mavericks 10.9 version of OS X, an iOS 7 update and new iLife and iWork packages last month – all for free – traffic to its servers jumped to ten-times the normal level. That’s a 67% jump from the six-fold increase in July 2012 when it released OS X 10.8 for $20. Some of the increase is due to a 14% bigger OS X file size and the extra software, but factoring that out still leaves a giveaway-driven traffic increase in the 40% range.

This surge also explains Apple’s strategy: continue to build its customer universe by giving away the dull software plumbing that supports its premium-priced hardware and drives eyeballs to its content-based businesses. The new iOS and OS X versions are ever more integrated, and provide an upgraded platform for selling content and services that can be consumed seamlessly on any Apple device.

Sandvine’s report shows why it’s important to chase content dollars rather than app sales. Netflix accounts for nearly a third of the download traffic on wireline North American networks. BitTorrent’s share dropped from 6% to 4%. Consumers are happy to pay for quick and easy access to the specific content they want. It’s even easier when hardware and middleware are purpose built to support it, as Apple is doing.

Market share is everything: when you’re big, it’s a lot easier to get even bigger.