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 Microsoft's move, announced at its annual developers conference in
San Francisco, is an attempt to broaden the small user base of
mobile versions of Windows, in the hope that more customers will end
up using Microsoft's money-making, cloud-based services such as
Skype and Office.
Up to now, Microsoft has charged phone and tablet makers between $5
and $15 per device to use its Windows system, as it has done
successfully at higher prices for many years with Windows on
personal computers. Hardware makers factor the cost of that into the
sale price of each device.
That model has been obliterated in the past few years by the fast
adoption of Google's Android system for phones and tablets, which
hardware makers quickly embraced and now accounts for more than 75
percent of all smartphones sold last year. Apple Inc's iPhone and
iPad account for most of the rest of the mobile computing market.
By contrast, Windows-powered phones held only 3 percent of the
global smartphone market last year. Windows tablets have only about
2 percent of the tablet market, according to tech research firm
Gartner.
FREE MONEY
Microsoft's move to make Windows free for some consumer devices
bucks a central tenet of Bill Gates' original philosophy, that
software should be paid for, which led to Microsoft's massive
financial success over the last four decades. But analysts said it
is a realistic reaction to the runaway success of free Android.
"Microsoft is facing challenges on the mobile and tablet fronts and
need to change their strategy to move the growth needle, this is a
good and logical first step," said Daniel Ives, an analyst at FBR
Capital Markets.
Windows will be free for companies making phones and tablets with
screen sizes under nine inches for the consumer market. A license
fee will still apply for business devices.
It comes a week after new Microsoft Chief Executive Satya Nadella
unveiled new versions of Word, PowerPoint and Excel applications for
Apple Inc's iPad. A year's free subscription to Microsoft's
cloud-based Office 365 service will be offered on the new devices
running the free Windows, Microsoft said.
Both moves show that Microsoft is now more interested in gaining
market share for its cloud-based services such as Office on any
platform or device, rather than its traditional approach of putting
Windows at the center of everything it does and extending its
influence from there.
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In the new era of mobile computing, Nadella acknowledged Microsoft's
underdog status.
"We are going to innovate with a challenger mindset," said Nadella
in a question and answer session at the developer conference. "We
are not coming at this as some incumbent trying to do the next
version of Windows, we are going to come at this by innovating in
every dimension."
Nadella did not have a snappy answer to the question of what
Microsoft's overarching mission now was, after it had achieved its
original goal of putting a computer on every desk and in every home.
Instead he elaborated on remarks he made last week about the
importance of mobile devices as everything we do becomes digitized
and connected to the internet.
"Our vision, simply put, is to thrive in this world of mobile first,
cloud first," said Nadella. "Our goal is to really build platforms,
create the best end-user experiences, the best developer
opportunities and IT infrastructure for this ubiquitous computing
world."
SIRI RIVAL
Also at the gathering, Microsoft formally announced it has developed
a voice activated phone assistant feature called Cortana, a direct
rival to Apple's Siri.
The feature has been rumored for some months and a test version was
demonstrated at the event by Joe Belfiore, a Windows Phone
executive.
The Cortana service, which can take verbal instructions to search
the Web, set alarms, make calls and a host of other actions, is
still in beta testing but will soon be a standard feature on Windows
phones, said Belfiore.
He announced that the latest version of Microsoft's smartphone
software, called Windows Phone 8.1, will be rolled out to consumers
as a downloadable upgrade in the next few months, and new phones
running the software will be in stores by late April or early May.
(Reporting by Bill Rigby; editing by David Gregorio and Andrew Hay)
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