Microsoft (NASDAQ:MSFT) recently made headlines when it announced that it is finally launching its productivity suite on Apple's (NASDAQ:AAPL) iPad. Though the major announcement certainly has important implications for investors, another announcement made the following Wednesday is arguably just as important: Microsoft is going to stop charging fees for its Windows operating system on mobile devices.
An attempt to matter
While it's critical that Microsoft adopts a multiplatform strategy and brings its products and services to customers -- no matter what operating system or device they are using -- it's also important Microsoft doesn't give up entirely on Windows. In a fiercely competitive environment, control over user operating systems plays a crucial role in what companies are banking from native services like app sales, advertising, and search.
Apple's iOS, for instance, is not only benefiting from fast-growing App Store revenue growth (hitting $10 billion in 2013), but the company is also bolstering its mobile advertising platform in hopes to get more marketers on board. The more control a manufacturer has over the user experience, the more opportunities for monetization.
While Microsoft still sits on the throne when it comes to global desktop operating systems, the company's famously late arrival to mobile has severely handicapped its potential in smartphones and tablets. Windows Phone's global market share among smartphones is only about 4% -- a very small number in a Google Android and Apple iOS dominated market.
But despite its underdog position in the mobile market, Microsoft is still attempting to matter. Taking on a Google-like Android strategy, Microsoft announced on Friday that its Windows Phone operating system will be free for manufacturers to adopt on smartphones and tablets with screen sizes less than nine inches.
Microsoft says that building out its app ecosystem and attracting more developers is one of the major factors that drove its decision to make the operating system free.
"It's all about getting your apps out there," said Microsoft Windows Phone executive Terry Myerson during the Wednesday event.
Why free is better
Microsoft shareholders should welcome the company's move to make Windows Phone free. It provides a better chance for Microsoft to become a meaningful player in key, fast-growing emerging markets like China and India. For investors with a Foolishly long-term outlook, this could give Microsoft greater control (and thus more monetization opportunities) in some of the world's biggest markets.
Continuing to charge for Windows Phone, on the other hand, would mean risking losing even more control to Android and iOS in mobile. This could not only make Microsoft irrelevant in mobile, but it also could even threaten Microsoft's coveted desktop domination.