A Free Version of Windows Isn't as Ridiculous as it Sounds

This story originally written by Nancy Gohring at CITEworld. Sign up for our free newsletter here.

More rumors are popping up suggesting that Microsoft  (NASDAQ: MSFT  ) is preparing to offer a free or reduced-cost version of Windows. The idea sounds ridiculous at first, given that Windows has traditionally been a cash cow for Microsoft. But if the company is at least considering the idea, it shows it recognizes the huge shifts in the market and is laying the groundwork in order to shift along with it.

The reports, from The VergeZDNet and others, say that the product is known as "Windows 8.1 with Bing." There's not a lot of detail about what would make Windows 8.1 with Bing much different than the current commercial version of Windows 8, which has Bing integrated throughout. But maybe the idea is to offer a version of Windows 8 that does more to direct users to Bing and other Microsoft services and apps.

There are many Bing apps in the Windows store, like Bing News, Bing Health and Fitness, Bing Translator, Bing Finance, Bing Maps, Bing Images, Bing Travel, Bing Sports, Bing Food and Drink, and more. If Microsoft were able to figure out how to monetize those apps, through advertising for instance, and possibly convince users to pay for some Microsoft services, like more storage on OneDrive, it could begin to recoup revenue lost from giving Windows away. Especially given that the price of Windows on an OEM machine is spread out over a five to seven-year upgrade cycle -- in other words, one $50 Windows license is really only $8 to $10 per year. Moreover, some of that revenue is slipping away anyway as people buy iPads, Android tablets, or Chromebooks instead of Windows machines.

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The move would also reflect Microsoft's stated mission of being a devices and services company, rather than the company that primarily developed software products over the last 30 some years. As my colleague Simon Bisson puts it, we live in a world where people are loyal to services and choose their hardware accordingly. Acknowledging that, Microsoft has been working hard to put services at the heart of many of its moves.

It turns out that its efforts in that regard appear to be paying off. The blog Wind8Apps noticed that Microsoft casually mentioned this week that it's getting 4 million Windows store downloads per day. That means it may have more than 1.5 billion downloads this year. That's not just Microsoft apps, but as TechCrunch notes, downloads of that volume attract developers. That could result in better and more apps available to Windows users, offering a monetization opportunity for Microsoft one way or another.

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