Microsoft fleshes out ‘Windows as a service’ revenue strategy

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by | May 7, 2015

Microsoft executives last week further fleshed out the firm’s “Windows as a service” strategy, an effort to shift money-making from the traditional practice of licensing the OS to one more reliant on revenue from search, games and apps.

“When we talk about why we’re upgrading the Windows 10 install base, why is that upgrade free?” Amy Hood, chief financial officer asked during a meeting with Wall Street analysts. “Why is it important to get to a modern environment? And why, when you look at the Windows interface this morning, did you see search built into the experience? You saw gaming built into the experience. You saw a unified store. These are all new monetization opportunities once a PC is sold.”

Hood then showed the analysts a chart that displayed revenues from the sale of Windows licenses for consumer devices — Microsoft dubs these “non-Pro” licenses to separate them from licenses from more advanced versions that are sold for business PCs — to illustrate the declining income.

Windows 8.1 is the non-Pro edition of that operating system, while Windows 8.1 Pro is the business version.

“You can see when PC consumer shipments got weak, we adjusted our approach. We adjusted our approach in terms of SKU [stock-keeping unit] strategy, making sub 9-in. devices free,” said Hood. “We added new pricing strategy for opening price point devices. And we had programs to drive genuine Windows attach in high-piracy markets.”



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