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Microsoft to unveil new plans to monetise Windows early 2015

by Mark Tyson on 9 December 2014, 12:35

Tags: Microsoft (NASDAQ:MSFT)

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Speaking at a Credit Suisse technology investment conference in Tuscon, Arizona last week, Microsoft's Chief Operating Officer Kevin Turner unveiled a few new details on how the company plans to monetise Windows going forward.

Earlier this year, Microsoft started to transition its Windows business model. In a bid to advance in the market for low-end laptops and tablets, it announced that it will no longer charge royalties on devices with screens of 9-inches or less. This has already resulted in a slew of Windows laptops around the affordable $200 price range and tablets selling for as low as $99. Even though the long-term success of the strategy against Android tablets and Chromebooks remains to be seen, the new batch of low-end Windows-based tablets and PCs has made some excellent sales gains, we hear.

However, the company acknowledges that offering Windows to all users for free may be popular but is not necessarily a sustainable business model. COO Turner revealed that Microsoft is planning to make up at least some of the difference in revenue by exploring new ways to make money from Windows now that devices are getting so cheap.

"We've got to monetise it differently. And there are services involved," Turner said during his talk. "There are additional opportunities for us to bring additional services to the product and do it in a creative way. And through the course of the summer and spring we'll be announcing what that business model looks like."

He went on to inform attendees that the plan is to "monetize the lifetime of that customer through services and different add-ons that we're (going) to be able to incorporate with that solution," according to GeekWire. This seems to be teasing some form of subscription service for Windows as a way to make revenue instead of giving it away to simply maintain market share. Could it be more than just charging for non-essential service enhancements such as extra capacity in OneDrive, Skype calling plans and Office subscriptions?

Windows 10 won't be a 'loss leader'

"The one thing I can tell you that we've not had any conversations on is Windows 10 being a loss leader for us," Turner said when questioned about Microsoft's plans for its upcoming OS. With Windows 10 ever closer to being finalised, various rumours and reports have pointed towards the possibility of a new pricing structure for Windows, where the company may offer a basic level of Windows 10 as a free upgrade, or even free, though users would have to pay extra for certain features or components.

"The first 39 years of our company, we had one of the greatest business models of all time built around certainly the Windows client operating system, and the PC operating system, and catching that wave of innovation certainly was very good to the company. This was our past," Turner underlined. "If you look at our future, it's really about becoming a Cloud OS, a devices operating system, having first party hardware to light up those experiences, and really being the company that can uniquely provide for dual-users this idea of digital work and digital life experiences.”

Turner said that Microsoft will be talking in further detail about the new business model in early 2015. At that time the company is also set to unveil the new consumer features coming with Windows 10 along with the possible first official look at Cortana during an event in late January.



HEXUS Forums :: 49 Comments

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it's really about becoming a Cloud OS
Not for me it's not.
Corky34
Not for me it's not.

or me… I don't mind the option of cloud extras but on a business level I wouldn't trust my stuff being purely in the cloud, surely the recent hacking of apple/sony etc should make people more aware of it's major short coming.

As to MS monetising windows… I will NEVER pay a subscription for such a fundamental part of a computer as the OS, I'll move to linux or stay on an old version. I don't mind paying extra for more features, within reason, as long as they're one time fees. I hate the subscription model that everyone seems to be jumping on with a passion, whoever came up this stupid idea needs to be ‘metaphorically’ shot.

They don't want to bother putting more adverts in the OS either, we have enough of them when we browse the web (thank you adblock), when we watch tv and it's bad enough having ad in MS apps like the weather app. I have NEVER been influenced by an advert to buy the stuff they're trying to sell, a good product doesn't need an advert to sell well.
Corky34
Not for me it's not.
Amen to that.

This seems to be teasing some form of subscription service for Windows as a way to make revenue instead of giving it away to simply maintain market share. Could it be more than just charging for non-essential service enhancements such as extra capacity in OneDrive, Skype calling plans and Office subscriptions?
Well, I can nail my colours to the mast right here, right now.

I have NO interest in OneDrive, free or paid for. Not now, not ever. Nor, for that matter, Skype, even if free, and certainly not on a calling plan.

Nor will I EVER use either Windows, or Office, on a subscription basis. Period.

If that's how Windows, or Office, go, I leave Windows and/or Office. I will continue to use existing versions, offline and air-gapped, while I need to, and that aside, Ubuntu and Open-source software provide a perfectly acceptable alternative for me.

IF one-payment licences continue to be available, offering what I want at a price I accept, fine, I don't mind buying a perpetual licence. I am not, however, subscribing to either Windows or Office, now or ever, regardless of price. And that's that.
I suspect device-license Windows will remain: the quote “There are additional opportunities for us to bring additional services to the product and do it in a creative way.” certainly suggests that services will be additional to Windows, not embedded within. But it's possible we'll see Windows as an OS stripped down considerably, and initial licenses being cheaper - although not very cheap, if “The one thing I can tell you that we've not had any conversations on is Windows 10 being a loss leader for us” is anything to go by ;)

Of course, large-scale corporate clients will probably be a lot more open to large-scale could-based Windows: where I work a number of our services are already provided as cloud-hosted solutions by MS (and blend pretty much seamlessly with the traditional domain-based services hosted internally). To me the whole cloud OS/value-added services concept seems to target those large corporate clients directly (as I've mentioned previously in relation to ChromeOS and Google's cloud services) - they're already used to paying for the device OS on a subscription basis (through software assurance or similar programs); if that subscription can also include cloud storage, security, Office, back-office solutions etc. you're offering a wider range of services through a simpler (and familiar) procurement process, and you can make those services available anywhere with an internet connection. You're hitting all the right buttons for a large corp with a centralised IT service, there….
Windows is currently booting.

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