Free Windows?

By Peter Gothard
28 Jul 2014 View Comments
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Will Windows ever become free? It seems unlikely on the face of it. It may not be universally loved, but nearly everybody uses it, and many, many enterprises depend on it. And yet, with Microsoft these days nothing can be ruled out.

So, Computing asked analyst firm Gartner about these persistent “Windows going free” rumours, which gained added weight after Microsoft announced that mobile devices with screens under  nine inches would get the OS gratis at the Build developer conference earlier this year.

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“By 2017, Windows will be free for consumers, but likely there will still be a charge for enterprise users, and organisations will be faced with various bundles of extra features,” said Gartner research VP Michael Silver.

Silver said that Gartner believes Windows will be “free – period – for OEM, new machines and upgrades. But it’s just possible that Microsoft will decide to make Windows 9 [codenamed Threshold] a free upgrade for Windows 8 users.”

The current confusion as to whether Threshold is in fact just Windows 8.2 (or “8.1 Pro” as many are suggesting) makes trying to work out the company’s future strategy tricky. “Leaked” screenshots of Threshold are simply show variations on a new start menu that look remarkably like ones briefly shown at Build and billed as an upcoming Windows 8 upgrade.

Armed with Gartner’s audacious claims, Computing approached Microsoft, which gave its usual response to “rumour and speculation”: “We have nothing to share at this time.”

Luckily, CEO Satya Nadella had plenty to share only two days later, throwing an amusing curveball, tacked sneakily on to the end of Microsoft’s earnings call for fiscal year Q4.

“We will streamline the next version of Windows from three operating systems into one single converged operating system for screens of all sizes,” promised Nadella.

“We will unify our stores, commerce and developer platforms to drive a coherent user experience and a broader developer opportunity.”

A member of the press seized on this and asked how these plans – which clearly build on the universal apps announcement at Build, which involve shared API sets between platforms – may affect SKUs [stock-keeping units] in later versions of Windows.

“My statement had more to do with the engineering approach,” qualified Nadella, explaining that “the reality” of the current Windows situation was that Microsoft had “multiple Windows operating systems” for phones, tablets PCs and Xbox “and even one for embedded”.

He said he was talking purely about bringing “coherence” to an existing system, and that “our SKU strategy will remain by segment”.

“We will have multiple SKUs for enterprises, for OEM, for end users, and we will be disclosing our SKUs as we get further along.”

Notice Nadella did not actually elaborate on a single SKU here.

So how, exactly, could a “free” Windows work? After all, Microsoft essentially invented the concept of selling software for money. Hedging his bets on the intercompatibility of a proposed standard for home PCs, Bill Gates did that thing Steve Jobs never stopped chiding him for, and released an operating system that worked independently of its hardware.

Nobody else has done it since and made it workable, and now, in light of the growing popularity of Linux, iOS and Android, the idea that you should have to pay a fee just to be able to turn your device on seems increasingly ludicrous. In a recent poll, 55 per cent of Computing readers said they believed not only should Windows go free, but it should also be open sourced.

But with 92 per cent of the world’s PCs – that’s an estimated 1.5 billion machines – running Windows, the OS is still a major source of income for Microsoft. And with the software giant recently announcing 18,000 job cuts, mainly across its Xbox, smartphone and entertainment businesses, it can only be surmised that it intends to keep on making a fat wodge of cash out of Windows.

Silver believes, however, that Microsoft’s business strategy does have to change. It may be the only software company in the world “to make any significant money off an operating system”, but he says this can’t last.

“The handwriting had been on the wall for years that Windows revenue was going to decline,” he told Computing.

“But with Office 365, that is Microsoft’s attempt to keep Office relevant.”
Silver believes Windows will one day be available on a subscription model similar to Office 365 – not to mention the regular Office suite, which went to the cloud back in 2012.

“It’s all around subscription, and that goes beyond Windows,” he said.

It’s a view shared by Raju Vegesna, an evangelist for cloud enterprise apps firm Zoho, who told Computing: “This claim is not surprising. What is surprising is, it will have to wait till 2017. My guess is, it will end up happening sooner than that.”

Elaborating on the theme, Vegesna said: “The lower levels of the technology stack get commoditised first. Hardware is already largely commoditised – next is the OS layer. With Mac OS, iOS, Android and Linux being free, Microsoft [will be] forced to offer [Windows] for free. This is not a surprise.”

But Vegesna also believes Microsoft will have to look again at how it monitises some of its flagship software.

“They will be forced to dramatically cut the pricing for their Office suite – if not make it free – over the coming years,” said Vegesna. “If we look at the office suite market, Google and Apple offer web versions of the Office suite for free or very low cost. These vendors also offer smartphone and tablet versions of the Office suite for free as well. This forces Microsoft to match the price – or get close to it, which means significant reduction in prices. What will be surprising is if they don’t act on it. In that case, they will rapidly lose market share.”

Meanwhile, David Rigler, director of UK retail and manufacturing at software quality consultancy SQS, argued that desktop users are increasingly willing to look at alternatives to Windows.

“Our customers are increasingly looking at open source and flexible licensing options,” he said.
Google Apps, which costs less than £6 per month per user for all you can consume, automatically updated software and cloud secure storage, must look very appealing to a lot of organisations.

“Potentially we are seeing a paradigm shift in Microsoft’s overall strategy – Satya Nadella is reorganising to focus on a ‘mobile-first, cloud-first world’ and a new licensing model would make sense in this landscape and avoid unfavourable comparison with their competitors,” Rigler said.

But Nathan Johnston, sales manager at managed hosting firm Memset isn’t so sure. “When trying to assess what an individual or a company will do in the future you should first look at the behaviour they have exhibited in the past. In this regard, Microsoft has over the last two-to-three years certainly hiked the price across all Services Provider License Agreements and cut staff numbers globally as well.”

Johnston believes that the large revenue stream Microsoft still picks up is too big “for them to sacrifice”.

Free for consumers, open source, or free for all? It seems any number of options could actually work for Windows in the future. Whatever’s in the works, the new plan to standardise across platforms at least puts Microsoft in a firmer position to start making clearer decisions in a single ongoing direction.

@PeterGothard

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