Updated- Windows 10 for everyone and for everyone a new App Store!
Update: Since this article was published Microsoft has issued a few mixed messages via their marketing department.
Updated again: A Microsoft spokesperson sent Ars Technica a full statement about the situation. The wording is interesting: “With Windows 10, although non-Genuine PCs may be able to upgrade to Windows 10, the upgrade will not change the genuine state of the license… If a device was considered non-genuine or mislicensed [sic] prior to the upgrade, that device will continue to be considered non-genuine or mislicensed [sic] after the upgrade.”
via Ars – Updated again, again: We asked Microsoft for clarification on the material implications of having a “non-genuine” free upgrade to Windows 10, and got a “no comment” in response.
Note: The content of the article will remain unchanged, as it will serve as an interesting discussion point going forward. I believe Microsoft would be well served to adopt the “freemium” model for the reasons originally stated below. It will be interesting to watch this develop as more information comes forth from Microsoft. It may never have been their intention, but it almost feels like a bait-and-switch for purposes of getting the world to talk about Windows 10 if what they originally stated is not held true. Feel free to weigh in with your thoughts!
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Windows 10 is going to be a free upgrade for all Windows 7 and Windows 8 devices, and that means all of them; even those running pirated versions of the operating system.
Microsoft Windows has long been one of the most pirated pieces of software in the world. In 2011, according to Microsoft’s then-CEO Steve Ballmer, only one in ten Windows installs in China are legitimately licensed. When you make a non-trivial percentage of your income from OS sales that is a hard number to swallow.
It appears however that with the release of Windows 10 this summer, Microsoft is taking a new stance. Microsoft’s Executive VP of Operating Systems, Terry Myerson said in a statement to Reuters that “We are upgrading all qualified PCs, genuine and non-genuine, to Windows 10.”
This is a massive change of stance on the part of Microsoft, so what could be the reasoning behind it? Let’s take a look at a few of the reasons this makes economic sense for Microsoft.
Microsoft has been fighting a losing battle against piracy for the better part of 15 years now.
Since Windows XP first debuted, it’s been relatively simple to find and install a pirated version of Windows. Thanks to the internet and dedicated teams of knowledge sharing pirates, various methods have been employed from shared Volume License keys to abuses of the SLP and SLIC BIOS functions. (Essentially tricking Windows into thinking your machine is a Dell, Lenovo, Toshiba, or other OEM machine which doesn’t require activation)
With the advent of such knowledge sharing capability it has made piracy easier and easier. Why bother fighting the tide when you can mitigate or possibly even take advantage of it? But how?
It’s all about Apps and Services.
Microsoft’s Windows Store is something of a disaster at the moment, but that’s to be expected when Windows 8, the OS that was supposed open up the store to the populace, has been generally reviled. By releasing Windows 10 to any device that runs Windows 7 or 8 Microsoft expands the market reach of their App store by a staggering number.
Make no mistake, this is a play for the Chinese market, everyone else is just gravy. By allowing non-authentic Windows users the ability to become properly licensed via this upgrade they essentially are creating a potential market increase of over 900% for the Windows App Store. If Microsoft sees 100% sales increase from that market growth in their app store it would be a huge win. There is no loss if you’re selling to people you couldn’t sell to before. With every upgraded device Microsoft will be expanding their market and adding potential revenue sources.
If there’s one thing that we have seen from the last 5 years in the software market, there’s good money to be made on giving away the platform and selling “Apps”. Microsoft is essentially following in Apple’s footsteps here; they were the first commercial vendor to give away their OS for free as long as you had a valid App Store account with them. Once you have the OS you have the App Store and can be spending money within minutes.
Apple wasn’t the pioneer here though; they were just the first OS manufacturer to cash in on a classic sales concept, “creating the need”. It’s like getting a new printer with your PC for free and subsequently having to feed that free printer with ink cartridges that are cost $35 or so each. (See also: Rollercoaster Tycoon players charging $1 for drinks and $5 to use a bathroom at their parks and raking in the cash. You devious bastards.)
Additionally, with the advent of Windows 10 this is a chance to unify their OS across devices. Windows 10 will be available for desktops, laptops, tablets, and phones, so it only makes sense to get as many of those devices into the same ecosystem to drive integration between the devices and services, such as Microsoft Hello and Passport. [bctt tweet=”I envision Windows 10 to be Microsoft’s last shot at getting any sort of adoption in the mobile space.”] Mobile has never been a winning market segment for Microsoft, dating back to Windows CE. If Microsoft fails to gain traction with Windows 10 on mobile devices, it will be a major blow to Satya Nadella’s attempt to bring Microsoft to increased relevance in what he called “a mobile first, cloud first world”.
There is also the Office 365 angle to consider. As Microsoft has begun shifting to a subscription based model for Office, it makes sense to expand the possible market for that service as well.
A desperate play to maintain market share?
One could be forgiven for thinking that by essentially giving away its newest operating system Microsoft is attempting to stave off Linux or OS X adoption, but the fact of the matter is it’s all about the bottom line. With markets such as China, Russia, and India growing ever larger, it only makes sense to make customers out of them all, not locking them out of your store. They have nothing to lose by doing this, they already make nothing from the users of pirated older versions of Windows – this will give them the opportunity to make something from them in the future. To further expand on that it also enforces adoption rates, since someone still using Windows XP would be able to install a non-valid Windows 7 and then install the Windows 10 upgrade for free.
Finally it has begun, or “Please buy stuff from us!”
At the end of the day this is a calculated play by Microsoft to build a market for their app store and subscription services. Let’s hope the store selection, stability and interface quality improves as a result, since its current status is “weak, at best”. If Microsoft can make the Windows 10 app store a compelling enough sales engine they will come away from this decision with potentially far more revenue than they would have by sticking to their current revenue model.