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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

November 14, 2014 at 7:00 AM

Microsoft’s free streak a cultural, not financial shift

The past couple of weeks have given plenty of ammunition to Microsoft watchers who sense a major shift in direction under chief executive Satya Nadella.

Microsoft is offering free mobile versions of its Office suite to individual customers with Apple- and Google-powered phones. The company Wednesday said it would release a more powerful set of free developer tools for its .NET programming framework.

Is Microsoft, kingdom of the sky-high profit margins, giving away the keys to the castle?

Probably not, analysts say.

Take Office. The vast majority of revenue for Word, Excel and their brethren comes from versions bought by businesses, not by individual consumers for their laptop or tablet. During Microsoft’s fiscal year ended in June, sales to businesses brought in about 90 percent of its revenue. Those businesses still have to pay for any version of Office, whether on laptops or smartphones.

It’s the same story with Microsoft’s move to free up more of its Visual Studio developer tools. Individuals can plug in. So can small-scale developers, though only on teams of up to five people. But any business with more than $1 million in revenue will still have to pay for the tools — which sell on Microsoft’s website for between $299 and $13,300 depending on the version and level of support included.

“If you read through all the licensing terms you realize this is not for businesses,” Rob Sanfilippo, an analyst with research firm Directions on Microsoft, said of the recent slate of tweaks to Microsoft’s offerings. “Business is where Microsoft makes most of its money.”

Fewer individual Office users or lone-wolf developers are likely to pay for Microsoft products today, sure. It’s a pretty safe bet that alone won’t crush Microsoft’s sales.

The goal seems to be that once plugged in to the free versions, technology consumers and developers alike end up paying for advanced Microsoft tools, and ask for them at work, too.

Comments | More in Microsoft | Topics: .net, developers, microsoft

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