Growled, on 29 November 2012 - 01:56, said:
So how do they make any profit by giving away their OS?
Metro. Why do you think it's a closed ecosystem?
To ensure they get money from every piece of software anyone uses.
The potential revenue from getting 20-30% for every single software anyone buys, plus advertising built into the platform plus native tie-in's to all of Microsoft's other platforms (Music, Xbox etc etc. to help ensure people go there first for all of their games, music, videos etc.).
It's effectively subsidizing the operating system through the software. Not radically dissimilar to how smart phones are subsidized by the contracted plans.
As long as people use Metro you can ensure they have to go through you for anything they want to buy, and you have complete control over what anyone can do on the OS. No software runs you don't explicitly approve of. Radically decreased piracy.
The potential profit margins there will vastly exceed anything OS licensing has ever brought in the past.
Apple has succeeded doing the exact same thing for years.
The downside to this is users that use the desktop which remains an open uncontrolled platform with no service tie-ins, no advertising, purchases from anywhere. That'll kill profits, but as long as they can get a sufficiently large number of people to primarily use Metro it'll work out. Moving more traditional desktop functionality like explorer/file browser to Metro and off the desktop will help there.
Even if some people primarily use the desktop it's not crippling, Android is an open OS too but they survive quite giving the OS out free and subsidizing it via software through Google Play... because most people don't use the open aspects and don't get software from anyone except Google even if they can so the lost revenue from those few that don't partake in GooglePlay or Google's various other services are covered by the majority who do.
I suppose removing the desktop obviates this issue, but that's obviously not viable for the foreseeable future.
In any case, OS licensing is a pittance compared to other new revenue sources through the OS.
If higher windows costs prevents people from buying and using Windows 8, that means fewer people in Metro. And anything that prevents people from accessing Metro is costing them money, as the alternative is the desktop on Win7.... which benefits Microsoft not at all, there is no profit margins from people using the desktop. Or competing platforms, be it Linux, iOS/OSX, Android.
They NEED and smartly are ensuring that absolutely everyone can get onto Windows 8 and Metro. As long as they have that then they can work on converting people to using Metro itself rather then the desktop and driving revenue from the new revenue streams therein.