Microsoft is in the midst of transitioning its business model from one where the company can charge for software to a new methodology that the company has yet to define. The company announced earlier this year that they would be making Windows on devices under 9 inches free and there are quite a few rumors out there that Windows 10 will be free as well.
But for Microsoft, offering Windows to all users for free is not a sustainable business model. So how is the company going to make money with Windows if Windows 10 will be free or inexpensive? While Microsoft is not ready to detail the specifics about how it will drive revenue with Windows 10 and beyond, there are new details from Kevin Turner, the company's COO, about how they will make the transition to this new business model.
Turner spoke at the Credit Suisse technology conference last week and the details of his speech represent the first comments from the company about how it will begin to monetize Windows going forward.
Turner stated the following:
And finding new ways to monetize the lifetime of that customer on those devices, again, I would tell you we’re learning, we’re growing, and we’re smarter and wiser every day. And we still have some more learning and growing to do in that space. But, stay tuned. The business model stuff will be out in the early — probably the early part of 2015.
Beyond that specific comment, Turner also stated that they will not be using the platform as a loss-leader. This means that the company plans to generate revenue from the platform and will not give it away to simply maintain market share.
Based on other whispers around the web, this could be the start of Microsoft making Windows 10 a compartmentalized OS where you pay for features, rather than the OS. The company could make the core OS free and if you want to add on active directory support or other high-end features, you would have to pay for those products separately.
While Turner does say that they will be talking about the business model in early 2015, we wouldn't expect that to be their first item on the Windows 10 agenda to be announced. In late January the company will unveil the new consumer features coming with the platform which should give us our first official look at Cortana too.