than standalone software licenses. Moreover, even if users are interested in cloud-based subscriptions, Microsoft isn't the only game in town, with Google, Apple, Dropbox, and many others occupying the same spaces.
Microsoft's move to subscriptions will pose big challenges in coming years, especially as the subscription model inevitably creeps into some parts of Windows. But the company has responded to increased competition and user skepticism with shrewd, aggressive moves: throwing unlimited OneDrive cloud storage into Office 365 packages, bundling free subscriptions with many new Windows devices, expanding Office for iPad's free functionality, etc. These are measured, long-term moves, designed to ease users into changes, and to sacrifice upfront revenue if it means Office remains the productivity standard over the long run.
8. Microsoft met developers where they stand.
A year ago, Microsoft was throwing incentives at developers to build touch apps for its platforms. Today, rather than trying to pull developers into its ecosystem, Microsoft is meeting them where they stand. Moves range from the opening-sourcing of .NET to repositioning Bing as not only a search engine but also a development platform that can build apps for both Windows and third-party OSs. Microsoft still wants developers to build Windows apps and will have to prove that Windows 10's app model, which is supposed to let developers easily build apps for a range of devices, is worthwhile. But under Nadella, Microsoft has become more collaborative and more willing to help developers build apps for non-Windows platforms.
9. Microsoft eliminated Windows licenses for most consumer devices.
Last spring, Microsoft announced that Windows would be free to manufacturers building smartphones and other devices with screens smaller than nine inches. Thanks to this and similar efforts, such as Windows 8.1 with Bing, OEMs have flooded the market with cheap Windows devices, some of which are less than $100. While Windows Phone and Windows 8.1 are far from popular, Microsoft and its partners appear to have reached a sweet spot between cost and functionality; after small month-over-month increases for most of the year, Windows 8.1 market share has begun to climb since the budget devices became available.
Microsoft isn't making money from these new device sales, but it hopes to cash in over the long run; as mentioned earlier, many of these low-cost tablets and laptops come with free Office 365 subscriptions, at least some of which will become recurring renewals. Lack of immediate profit aside, the cheap devices also help Microsoft block Chromebooks from eating into the low-end computing market segment. Windows remains a work in progress, but compared to where it sat a year ago, Microsoft is in much better shape.
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