Unnamed sources have informed The Verge that Microsoft's Terry Myerson is seriously considering offering future builds of Windows Phone and Windows RT to device makers free of charge. This move would be part of a broader set of changes that will supposedly take place in the "Threshold" rollout in Spring 2015.
A good portion of Microsoft revenue stems from licensing its operating systems to manufacturers of desktops, laptops, phones and tablets. However, on the phone front, that's about to change. Nokia was over 80 percent of Microsoft's Windows Phone sales, and once the acquisition gets the green light from all parties involved, that licensing revenue will be no more.
So how do you replace that lost revenue? How about throwing advertisements into Windows 8 apps for starters. Ads are already a part of the Bing search results in Windows 8, but all those free apps listed on Windows Store could be injected with ads as well. The company will also likely try to convince customers to subscribe to services like SkyDrive, Skype and Microsoft Office.
By taking the free route, Microsoft is obviously going after Google's share of the tablet and smartphone market. Google doesn't charge OEMs for using the Android platform, but instead makes its revenue from ads and media sales. Microsoft could do the same, and may even hurt Apple's market share in the process. Hey, you really can't compete with free.
Currently, Microsoft and Nokia are the only two device makers using the Windows RT platform. By eliminating the licensing fee, that scenario could change dramatically. Up until now, most PC makers have seemingly turned their backs on Windows RT, preferring to use Windows 8 Pro and Android instead. Microsoft is already reportedly talking with HTC in hopes of eliminating the licensing fee if the phone maker installs Windows Phone on Android devices.