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OS upgrades: Cheap is better than pricey, free is better than cheap

Gregg Keizer | March 5, 2014
Apple's shown the way with free OS X upgrades, but will Microsoft follow? The numbers say that would be smart if Redmond is after service revenue.

Windows 8.1 with Bing could be seen as another in a series of "go-low" moves that Microsoft has made, or was reported to have made, to compete in the lower-price bands now dominated by Android in smartphones and tablets. That's where Google's Chrome OS, which powers the Chromebooks sold by various vendors, has an edge over Windows because of the latter's licensing fee.

Those moves included a report that Microsoft has slashed the price of Windows 8.1 by 70% to OEMs building devices to be sold for $250 and under, a laptop price range now filled almost exclusively by Chromebooks; and Microsoft's announcements that its Windows Phone mobile OS would support cheaper chips, that the company had partnered with a new set of device makers known for building inexpensive smartphones for emerging markets, and that it would relax some of the OS's requirements so device manufacturers could cut corners.

Many, although not all, analysts believe that Microsoft has taken the go-low approach to get Windows onto more devices so it can try to generate revenue that traditionally came from licensing from services instead, including Bing (advertising), OneDrive and Skype (premium charges) and Office 365 (subscription fees).

Upgrade uptake, if fostered by less-expensive or even free software, would theoretically increase the chances of producing meaningful revenue from those services, which are tied to the newest versions of Microsoft's OS.

If free is good, and by the adoption rates, it is, then Microsoft would be smart to test the waters, if only for consumers.


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