I am not sure if you have seen a little icon appear on your Windows desktop next to your time on your taskbar, but last weekend I saw this little Windows icon and couldn’t believe what it was. A free upgrade to Windows 10 as soon as it is released. A free upgrade? From Microsoft? Has the world gone mad? Well no, but Microsoft may have or is there method in their madness?
For Microsoft the continuous battle from Apple, without any significant inroads into the mobile space, the concept of trying to persuade customers to upgrade to Windows 10 is a challenging one. With the duff Windows 8 turning people away from Microsoft, me included, Windows 10 needs to once more gain dominance on the desktop. That way Microsoft can at the very least hold onto their valuable MS Office income while also providing leverage to Xbox and mobile devices.
It is a bold move and one that I suspect will see Microsoft continue on its route to move into a rental income model. With the successful Office 365 converting customers to a direct relationship with Microsoft, partners, and importantly their margins, are being squeezed out enabling Microsoft to return further profits to the business. Maybe this is the start of the end for Microsoft charging customers upfront for software and future models will rely wholly on an opex model. That will devastate their revenues globally but probably increase profitability, so a move that investors can support.
I don’t believe for a second Microsoft will continue to offer Windows 10 for free, I believe the offer is only available to customers with a Windows 7 or 8 licence and for a limited time. I assume the majority of income still comes through the sale of new devices although that market has been devastated by the growth of tablets and smartphones. Maybe it is just a sign of Microsoft moving with the times.
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