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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.

Option C: Free upgrades to all consumers, and possibly free licenses to all consumer PC OEMs, too, while continuing to charge for enterprise-grade licenses, would be the most radical move.

The options could be combined, so that Microsoft, for example, selects B but also applies C, giving a free Windows 7-to-Windows 10 upgrade to consumers only.

Not surprisingly, these options come with trade-offs and long-term implications.

Under any of its free upgrade options, Microsoft will surrender varying amounts of revenue, with the smallest hit from A, much more from B and the largest, by far, from C. With between hundreds of millions and billions of dollars at stake, revenue drop-off certainly has to have been at the fore of the firm's deliberations.

Turner denied that Windows would be a "loss leader," implying that Microsoft would not make the OS free across the board. Even under the biggest break with the past, Option C, Microsoft would still charge some customers -- those in the enterprise -- for upgrades or new licenses. That leaves the company lots of maneuvering room.

Windows class warfare?
Creating customer classes -- consumer on one hand, commercial on the other -- by giving the former free upgrades but making the latter continue to pay, also could be risky: As with the OEM-customer pricing disparity, enterprises might balk, especially if they're asked to pay even more for their Software Assurance annuity plans, as some experts believe will happen.

On Microsoft's side, however, is the fact that businesses have little alternative to Windows for their PCs, and although they might grumble at paying for upgrades when consumers get them for free, they will have to bite the bullet and pony up.

If Microsoft does choose Option C, or one of the others but limit the free deal to consumers, it would probably proffer a less-capable version of Windows 10 as the upgrade, one that omitted domain joining and other enterprise-grade features found only in Windows' Enterprise, Pro and Professional editions. That would let it continue to charge Windows 10 customers who need those business tools, much like it now does for Office on the iPad.

Also on the decision scale are Microsoft's relationships with its OEMs. Traditionally, computer makers have used each new edition of Windows to shill systems, knowing that most customers do not upgrade, but instead buy a new PC after Microsoft rolls out a new OS. By giving away upgrades to Windows 10, especially if the eligible include Windows 7 users, Microsoft would essentially dump that sales tool.

OEMs would rightfully see any broad-based free upgrade as a threat, something doubly difficult for them to swallow during the current tough times for personal computers.


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