At this week’s Build Conference, Microsoft is saying loudly that it really wants more market share when it comes to small mobile devices. Consequently the software giant is giving away what some see as the keys to the kingdom by planning to offer Windows for free for small mobile devices. Specifically, smartphones running Windows Phone will have a zero cost for the operating system. Tablet makers who can deliver Tablets with 9 inch screens or less can use Windows for free as well. Given that Microsoft has made its money by licensing its operating systems and Office software this move is a big one. Think about that for a second. Windows Phone makers no longer have to pay a license fee to Microsoft.
On the one hand the strategy speaks to the lower cost segment of the market. On the other it might look like desperation. Will we see bushels of low cost Windows smartphones and small Tablets appearing out of the Far East? Possibly. Microsoft is certainly hoping so. If it can’t gain any traction in the lower end of the market by giving away the operating system it would speak volumes about how much the market desires devices running Windows. The new pricing will go into effect immediately for Windows Phone, Windows RT, and Windows 8. When Windows for the Internet of Things is available it will also be licensed for free.
In addition to giving away the operating system, Microsoft will also allow smartphone makers to build lower end devices with only 1GB of RAM and 16GB of storage.
Is this a smart move on Microsoft’s part? Given that the sales of Windows Phone have been sluggish it is certainly one way to try and gain some sort of market share. And without huge sales numbers Microsoft wasn’t seeing any real cash coming back anyway. Keep in mind that Microsoft gets a royalty on most Android phones that are sold, so we might be looking at market where Microsoft is making more from its competitor’s offerings, even though Android can also be had for free.
But also keep in mind that while Google’s Android is available for free and flooding the market with devices priced from the low end to the high end, Google has also created an environment that can lead to consumer confusion if price is the prime purchase decision point.
Microsoft says that the OS on smartphones and smaller Tablets will be full featured, and there is no definitive word yet as to what services and Applications Microsoft might require or might not make available to makers to install as a part of the deal. Google’s free Android OS doesn’t include some of Google’s key Apps and services.
While waiting for the Nokia acquisition to take place, Microsoft has been slowly adding partners to create mobile devices. We’ll begin to see the impact of these decisions in the ramp up to this year’s holiday season. About next year this time we’ll start to have a better handle on how this new strategy will play out. It’s a risky bet. But when you don’t have much to lose, that might just be the time to go all in.
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