Last week, Microsoft Chief Operating Officer Kevin Turner delivered a presentation (opens in new tab) at the Credit Suisse technology investment conference in Phoenix, Arizona, where he revealed that the company is looking into a new business model for the Windows platform. The company has already slashed the royalty price for devices with screens 9 inches and smaller, but this new model sounds like the company may venture into the subscription space just as it has with Office.
We've heard this song and dance before. Previous sources indicated that the Windows platform will become more integrated with the cloud. Even more, the company supposedly plans to provide a subscription-based model starting with Windows 10. There's also talk that Microsoft will make the basic version of Windows 10 for free, and charge customers for "premium" features. Either way, this would be a first for Microsoft, which has used the same pricing model for decades.
During his presentation, Turner reminded the audience that Microsoft will turn 40 years old in 2015. He said that Microsoft had one of the best business models during its first 39 years but that it's now old-school business. Apparently, it's time for a change in a changing market.
"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," he said.
After the presentation, Turner fielded questions from the audience. When asked if Microsoft will start losing money with the Windows platform, Turner confirmed and added that additional information regarding monetizing Windows will be revealed in Spring or Summer 2015. That is also the same launch window for Windows 10.
"The thing about it is, though, we've got to monetize it differently," he said. "And there are services involved. There are additional opportunities for us to bring additional services to the product and do it in a creative way."
Microsoft is expected to reveal additional information about Windows 10 during a special press event in January 2015, followed by BUILD 2015 in April and the Ignite conference in June. Turner acknowledged that the "business stuff" may be revealed in the early part of 2015, as well.
During the Q&A session, Turner shared his excitement about the recent explosion of Windows-based devices that are taking advantage of the royalty-free operating system, including the HP Stream notebooks and tablets. Amazon currently lists the HP Stream 13 for $229.99 and the HP Stream 11 for $274.99. Both sport Windows 8.1 and a full year of Office 365 Personal.
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The only thing I hear him saying is that they want to use the new subscription model that software companies are trying to switch to (e.g. Adobe w/Creative Cloud) as a way to generate more revenue on a more-predictable pattern. The "old business model" was better for consumers; the "new business model" is a continuous blood-sucking process. Yay for new business! (/sarcasm)
When it becomes more than that, then you should fuss about it.
It's NOT "all about the money."
Oh, tsk. "Monetize" isn't a dirty word. It's just the term for how companies learn to make money on their products. So much in the tech world starts out as some amazing idea--YouTube, Twitter, Amazon, Facebook, and so on--and THEN they figure out how to try and make money. If they can't make money, they'll fold, and then no one will have that Cool Thing.
MS needs to figure out this Windows problem. No one wants to pay $90 for an OS. It doesn't make sense to lock users into one license for one machine. The company is moving everything to the cloud, and now it has to figure out how to earn money off of that model.