The same holds true with many, but not all, Android-based smartphones and tablets. They come bundled with a handful of Google applications. It looks as if Microsoft is getting into the bundled game, too, and that’s a dangerous game to play.
Differentiation vs. Leverage
For years Microsoft has bundled the Office suite– Word, Excel, PowerPoint, Outlook– with various versions of Windows for PC makers.
The idea here is that Office adds value to the overall PC package and differentiates average PCs from Apple’s Mac.
Apple countered that value by making iWork apps– Keynote, Pages, Numbers– free on the Mac, iPhone, and iPad.
In fact, the Mac is loaded with freeware from Apple– iTunes, Garageband, iPhoto, iMovie, plus the standards of Mail, Safari, FaceTime, Calendar, Contacts, and many others.
Both Apple and Microsoft devotes many tens of millions of dollars to maintaining those built-in apps which add value to the purchase, yes, but also add ongoing costs.
Android-based device manufacturers don’t have to worry about developing and publishing a similar bundle of applications because Google does that for free, so many Android mobile devices are priced far less than Apple’s products.
Apple leverages the apps to help differentiate Mac, iPhone, and iPad from competing brands. Microsoft has been forced to extend the value of bundling to Windows-based tablets to differentiate them from Apple’s products, and Android-based products.
Bundled Software Has A Cost
Apple has even made OS X a free upgrade for Mac users, forgoing the $129 price tag from just a few years ago. Microsoft has dropped Windows pricing for PCs and tablets priced under $250.
The danger here is that both Microsoft and Apple have added costs that manufacturers of Android devices do not. With all smartphones, tablets, and PCs having similar hardware features, how are these products differentiated?
Apple seems to own the premium end of both PC and mobile device segments, while Microsoft struggles to find a niche in mobile while adjusting to the post-PC era in traditional personal computers. Meanwhile, even Android-based mobile devices suffer from an inability to differentiate except on a few hardware options. One Android smartphone or tablet is pretty much like any other.
The danger to Microsoft is that, unlike Windows on PCs, the company has no real sales volume in mobile devices to help offset the cost of bundling Office. Gross profit margins remain small for both Microsoft and most Android device manufacturers, while Apple soaks up the rest of the industry’s profits– on traditional PCs and mobile products.
In product marketing, differentiation is key, and Apple clearly differentiates their entire product line by bundling software. Microsoft is trying to do the same thing but with far less success.