Windows 10 Likely To Go Freemium, Analysts Say - InformationWeek
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Windows 10 Likely To Go Freemium, Analysts Say

Microsoft needs new ways to generate revenue, and a subscription-based Windows 10 version is a likely approach. But consumers may get a basic version for free.

10 Windows Tablets, Laptops Under $200: Holiday Steals
10 Windows Tablets, Laptops Under $200: Holiday Steals
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Remember those rumors a few months back about "Windows as a Service," an alleged cloud-oriented, subscription-based version of Windows? They're starting to make more sense.

No, Windows isn't likely to shift to a full subscription model, at least not for most customers. But based on Microsoft COO Kevin Turner's recent comments, analysts agree Microsoft will make most versions of Windows 10 free but charge users subscription fees if they want to activate certain features and services.

Microsoft will likely simplify Windows 10 to base, cost-free versions that offer mainstream functionality, said Gartner VP Steve Kleynhans in an email interview. He predicted more expensive Windows editions that enterprises purchase will likely "shift toward a subscription mode, on top of the base product."

Windows licensing costs often hinder businesses and institutions from adopting the newest versions, Forrester analyst David Johnson told InformationWeek. "Walk around almost any hospital, school or any other cash-strapped organization and count the number of Windows XP machines still in use," he stated. "[Microsoft] has to remove every possible barrier to adopting new Windows releases, and the licensing model is one of the very few things entirely within Microsoft's control."

Gartner VP Michael Silver similarly said Microsoft needs PC users on its newest, most up-to-date technologies. Only around one-fifth of the Windows user base has adopted Windows 8 or 8.1, so if Microsoft wants to charge into a cloud-focused world, it needs more customers to move along.

"The only way to do that is to give away upgrades for free. There's definitely room for a freemium strategy, though," said Silver, who, with Kleynhans, authored a July report that argued Windows is destined for a subscription-oriented future. "

Turner sparked the new round of speculation last week when he said at the Credit Suisse Technology Conference that Microsoft plans to make money from Windows 10 but will need to shift to a model that focuses on services instead of upfront licensing revenue. Analysts polled by InformationWeek agree that this new strategy is a necessary but difficult response to changing user expectations and market conditions.

"Microsoft is the only company who still builds a significant business selling an operating system," Kleynhans noted, adding that though this model can work with enterprises, it's fallen out of step with consumers. "Today, consumers see the OS as part of the device and don't really distinguish it as a component to be paid for separately."

Kleynhans believes Windows 10 will be a free upgrade for most consumer versions of Windows Phone, Windows 8 and Windows 7, and that businesses will upgrade through paid support agreements. But it remains to be seen, he said, how aggressively Microsoft will pursue new tactics. "It will undoubtedly be more nuanced than just saying, 'Windows will be free' or 'Windows will be cheaper,'" he said.

Indeed, some analysts have argued enterprise Windows packages will actually grow more expensive. Microsoft makes most of its money from business customers but still needs consumers; in a BYOD world, after all, Office can't stay dominant at work if consumers start using Google Docs or Apple iWork at home. The company's recent decision to add more free functionality to Office for iPad, which previously required an Office 365 subscription for more than document review features, speaks to dynamic. But if Microsoft continues to sacrifice upfront revenue to snare more consumers, it has to compensate with enterprise revenue. Wes Miller, an analyst with Directions on Microsoft, told Computerworld that Microsoft will likely add new features and services to justify higher-priced enterprise subscription packages.

Microsoft has already been experimenting with new Windows revenue models. Turner pointed out that after Microsoft eliminated license costs for Windows smartphones and devices with screens smaller than nine inches, OEMs produced three dozen new devices designs. Many of these new Windows devices undercut Chrome and

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

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glenthenerd
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glenthenerd,
User Rank: Apprentice
4/1/2015 | 8:58:36 AM
Subscription model? Not for most of my clients
Although I can see why Microsoft would entertain such an idea, I don't see most of my clients 'jumping on the bandwagon'. The majority of my clients are small business owners and residential clients. I will not be encouraging all them to go to a subscription model for their operating system. Let's remember, Windows is not the only operating system out there. The public have choices they just need to be educated on what the choices are and the best way to use them so they can make an educated decision.
tjgkg
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tjgkg,
User Rank: Ninja
12/16/2014 | 11:49:18 AM
Re: I greatly prefer one-time fee
The problem is will the old machines be able to run Win 10? Would MS then offer a paid option to have the o/s be compatible with an old machine? It is really hard to tell these days. It should not be an issue either but MS is looking for additional income streams at a time when the market is really mature.
tjgkg
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tjgkg,
User Rank: Ninja
12/16/2014 | 11:45:28 AM
Re: The Greed never ends!
Totally agree with you. The operating system is the one part of the computer you should not have to worry about or fret over what additional features to pay for. Other products like Office i can see subscriptions, but not the os.
tjgkg
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tjgkg,
User Rank: Ninja
12/16/2014 | 11:42:10 AM
Re: As long as it is done right...but will it?
MS will be able to sunset older versions sooner only if the newer versions are useful and stable. In all the years since XP, only Windows 7 has proven to be useful and stable. Both Vista and Win 8.x were disasters.
tjgkg
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50%
tjgkg,
User Rank: Ninja
12/16/2014 | 11:36:57 AM
Re: The Greed never ends!
Printing is different than an operating system.  MS makes so much out of something that nobody should really give a second thought to.  It is sort of like the electricity in your house. It's there and you don't worry about it.
tjgkg
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tjgkg,
User Rank: Ninja
12/16/2014 | 11:32:53 AM
Re: How about the features going with the USER, not the machine?
But then if you login to your account on a different machine, that machine might not have the features already there. They would have to be downloaded which the owner might not want because of space or other considerations.
tjgkg
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tjgkg,
User Rank: Ninja
12/16/2014 | 11:30:27 AM
Re: in other words...
True but also many users have laptops just to access the internet. Hardware does not play such a big part at that point. In fact neither does software. Because the software takes years to catch up to the hardware, there is less need to change machines frequently.
tjgkg
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50%
tjgkg,
User Rank: Ninja
12/16/2014 | 11:24:01 AM
Re: in other words...
And if companies have to pay extra for these features to make their business' run, those costs will be passed to the consumers.
tjgkg
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tjgkg,
User Rank: Ninja
12/16/2014 | 11:21:11 AM
Is It Worth It?
When you think about it, at the end of the day this is just the operating system-nothing more. The fact that major businesses and important government deparments (like Defense) were using XP until recently shows you that the operating system has essentially reached maturity. The GUI might have changed since 2001 but the features are pretty much the same. And since MS was updating the operating system all those years, security issues and other bugs were addressed. Vista and Win8.x were pretty much disasters so what features is MS going to nickle and dime customers with in Win 10 that are worth the jump?
tjgkg
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50%
tjgkg,
User Rank: Ninja
12/16/2014 | 11:16:18 AM
Re: in other words...
Exactly. It sounds like those "free" apps you want to download until you see all the in-app features that you will eventually have to purchase in order to really use the software. Or the games that are free but you pay extra to go to higher levels after you get hooked. It is all a game.
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