But how will Microsoft sell the latest iteration of its flagship software once all its bells and whistles are polished? Gregg Moskowitz, software analyst with Cowen, offers his best guesses in a research note this morning.
No subscription model yet. A big area of debate as Microsoft readies Windows 10 for release: Will Microsoft sell the operating system on a subscription basis, the way it does with Office 365? Not yet, Moskowitz says. Its easy enough to sign up for a multi-year subscription for Office, knowing you can access the software on any device. But it may be tougher to persuade businesses and individuals to buy a subscription for an operating system for a PC or tablet with an uncertain utility and lifespan.
Meanwhile, subscription models typically wind up charging users more over time than an upfront sale. If Microsoft went full subscription with Windows 10, Moskowitz reasons, the embedded price hikes could both push users to Chromebooks or Macs and even invite government scrutiny.
Free upgrades. Microsoft will probably offer free upgrades to Windows 8 and 8.1. Windows 8 was panned by reviewers and consumers confused by the jarring transition from traditional Windows desktop to touchscreen-optimized interface. Charging consumers for the upgrade designed to repair the damage “would seem penny-pinching at best,” Moskowitz says.
Free version for tablets. Microsoft, still badly lagging Google’s Android and Apple’s iOS in mobile and tablet market share, will likely stick with offering free Windows licenses on devices smaller than 9 inches in a bid to spur device makers to use the software.
But not for Windows 7. Windows licensing revenue accounts for about 20% of Microsoft’s sales. Windows 7, at 60% of the operating system’s customer base, represents huge chunk of that. Microsoft probably doesn’t want to think about the financial hit offering Windows 7 users big discounts would require.