Friday 6 June 2014

Microsoft is giving away Windows 8.1 for free!

Yes - that's right free! There were rumours that the price was going to drop significantly.

According to this article and recent reports in the Press, Microsoft will be giving device manufacturers 'Windows 8.1 with Bing' for free (sorry - not free for the general public!). I am guessing this will mostly apply to small device manufacturers producing tablets and phablets ('Windows Phones and tablets smaller than 9-inches in screen size'). I am also assuming that the OS will still be locked to the device by a Product Key embedded in the device's non-volatile RAM (usually an EEROM) and so will be pretty much identical to the normal Windows 8.1 core version.

So has Microsoft gone mad? Is android/iOS/ARM such a threat to it? My take is 'No - they haven't gone mad' and 'Yes - android/iOS is a threat'. See here for current usage (and compare with Desktop OS's).

There is a clue to the real reason (I think) in the link I provided above, namely:

'Additionally, as reach expands, the opportunity for developers and their apps also increases.'

This can be interpreted as 'Windows apps and the App Store just hasn't taken off - now maybe it will!'

The problem is one of momentum - if you were an mobile app developer, what platform would you choose to produce your first and seconds versions of  your new app? Not Windows, I am guessing! The reason is that there just aren't enough devices out there. Well, if Microsoft's gamble pays off, now there could be!


But with MS it's all about money - so how are they going to make money? The answer is hidden in that sentence about developers and apps.

MS make money on every app sold. They also want to make money from selling Office 365 subscriptions (and Office). The more people that have a Windows device, the more 'opportunity' there is to sell apps and Office. Once Windows 8.1 gains a foothold, they can always start charging OEMs for Windows 9!


But why should an OEM (device manufacturer) choose Windows 8? Well, there are a few reasons:
  1. It is now cost free
  2. The OEM will get a cut from any apps that they choose to pre-install on each device (and possibly from any future apps bought by the end user via the App Store?)
  3. The product may attract new business customers who value Windows\Office compatibility
But there are some downsides too:
  1. For any current non-Windows OEM, the 'factory systems infrastructure' required to install Windows 8 and have it ready to be activated by the end user may be a cost barrier (the Product Key presumably needs to be embedded in the device which implies BIOS modifications and factory programming on an individual device level which presents a barrier for easy mass-production).
  2. There is still a minimum specification for memory, storage, CPU speed/type and CPU power requirements which may prove challenging for a low-cost device manufacturer.
  3. Would a 'Windows' customer really choose to buy a sub-£100 device with limited memory and storage?
  4. Smaller variety and lower-quality Apps on Windows platform (MS hope this will change!)

Will it work?

If the 'free' offer applies to a wide range of devices, not only low-cost ones but all 'portable' devices, then I think it will work - but maybe not as much as MS hope. In the short term this may also harm MS's profits because their current OEMs that are already producing Windows devices will be switching to the new 'Windows 8.1 with Bing' OS pretty quickly and saving themselves a few $ in the process.

An increase in sales of Windows devices will eventually prompt the other non-Windows device manufacturers to compete and also offer Windows devices. It also means, if you are looking for a Windows device at the moment - I should wait a few months - prices should come down when the 'new' models start to hit the shelves with free Win 8.1. Non-Windows device manufacturers will need to compete with this and so they too should reduce their prices.

Note that before the new 'Windows 8 with Bing' Models start to appear, prices of the current 'Windows 8' stock will be reduced to clear before the new models start to come in. It is up to you whether to be tempted by the reduced price of these models or hold out for the new models (which should have an even lower price).

This move by MS should therefore lead to an increase in sales of x86-compatible CPUs (I am ignoring the RT version here as I think this new 'free' OS will pretty much kill it, if it wasn't already slowly dying) - so maybe time for me to invest in a few Intel shares (currently at time of writing this blog June 2014 - Intel shares = $26)?

Note: Dec 2014 - Intel shares = $36!

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