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Microsoft's big decision: Who gets a free upgrade to Windows 10?

Gregg Keizer | Jan. 6, 2015
'Single greatest test' for 2015 is whether it can charge consumers for its OS, says analyst.

Windows 10
Credit: Microsoft

One of Microsoft's biggest decisions this year will be whom to charge for Windows 10, and the dollar figure on the price sticker.

Hints of that decision could come as early as Jan. 21, when Microsoft executives will not only unveil the next iteration in Windows 10's string of previews, but also further explain Windows' part in the company's overall strategy. CEO Satya Nadella has alternately portrayed that strategy as "cloud-first, mobile first" and "productivity and platforms."

In December, Microsoft COO Kevin Turner said that the firm would reveal its Windows business model plans in early 2015. Details of that model have not been disclosed, but would certainly include how Microsoft figures to make money off Windows after it's begun giving away licenses to makers of phones, smaller-sized tablets and inexpensive personal computers.

As part of an explanation of monetization -- which Turner acknowledged requires "creative ways" -- Microsoft might also use the January event to discuss Windows 10's upgrade pricing.

Or not.

Wes Miller, an analyst with Directions on Microsoft, was skeptical in a recent interview. "[Upgrade pricing] isn't the most important thing right now," he said, pointing out that Microsoft typically discloses that information just a few months before shipping, or early-to-mid summer when it releases a new operating system in the fall.

Make or break time for Microsoft
Instead, Miller believed that Microsoft would discuss Windows in more general terms in January, perhaps focus on its creation, or as he put it, "Talk about how the sausage gets made."

Still, Windows 10 will be "the real make-or-break" test for whether Microsoft can reinvigorate the consumer part of its PC customer base, Miller said. But he was painting in broader strokes, not focusing on upgrade pricing only.

Jan Dawson, principal analyst at Jackdaw Research, saw it differently. Although he had no predictions for what Microsoft would reveal in two weeks, he has called the upgrade pricing question one of the most important facing the company this year. "The single greatest test may be whether Microsoft can successfully charge large amounts of money for a new operating system to consumers and still see significant uptake," said Dawson in a piece published last month on Tech.pinions.

There is increasing evidence that Microsoft believes it will not be able to pass Dawson's test with Windows 10, and so will, through necessity, choose a strategy very different from decades-long pricing practices.

Strategy options
First on the witness list is Microsoft's stunning decision earlier this year to give away Windows licenses to OEMs (original equipment manufacturers) building devices with screens 9-in. or smaller -- in other words, smartphones and larger tablets. That was quickly followed by a free or nearly-free (it depends on whom you ask) version of Windows for traditional PCs, dubbed "Windows 8.1 with Bing", that now powers a line of ultra-inexpensive notebooks. Those are best exemplified by HP's Stream, which compete on price with the many flavors of Chromebook, the Chrome OS-based laptops that put a fright into Redmond.


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