Sacrifice the egg to keep the golden goose

Mary Jo Foley just posted a big rumour about Windows 9, aka “Threshold.”  We prefer to avoid reacting to rumors, but Foley is usually reliable and the thought experiment is irresistable.

The rumor is that unsurpisingly, the primary interface in Windows 9 is expected to align with hardware.  If you’re using a tablet, it’s the start screen.  If you’re using a laptop, it’s the desktop plus a Modernized start menu.

The juicy bit is that Microsoft may make this update free for Windows 8 users and…get this, Windows 7 users too.

This would absolutely be the right move.  Microsoft must win back user interest in Modern apps and regain developer support.  The strategic benefits of offering free Windows upgrades for consumers far outweigh the financial cost, which won’t even be too large.  Appeasing Windows 8 users who feel envy that Windows 7 users get to upgrade free is a simple matter of exclusive bonuses.

Microsoft is on the precipice — the threshold — of being made obsolete, and now is not the time to reticent.  Microsoft must move aggressively if it wants to stay relevant long-term.

The Start menu will be making a comeback in Windows 9

Microsoft needs to win back mindshare

Developers today don’t think much about developing for Microsoft.  Instead, all the talent is going to Android and iOS.  Microsoft hoped to leverage its extensive Windows 7 installed base to regain momentum for Windows 8, but this didn’t work because desktop users — the majority of Windows users — didn’t actually use Modern apps; instead preferring to stay in desktop world (and not liking much of the experience in the process).

That is why being able to run Modern apps in desktop is so critical.  It’s not installed base that’s important, it’s downloads and actual usage.  Microsoft needs this change to regain user interest and win back developers.  But they’re going to go further than just hope — maximize the probability of a comeback by letting Windows 7 and 8 users upgrade to 9 for free.

This is a strategic play; not a financial one.

Windows is on the threshold

Change the OS update model

Some are speculating whether offering Windows 9 free to 7 and 8 users means Microsoft will always give updates away for free.  They absolutely should, and it wouldn’t even have that big of a financial impact.

It’s time to change the OS model.  Microsoft should follow Apple’s and Google’s footsteps and offer OS updates free, as long as a user’s hardware can support it.  Not only will this greatly improve customer satisfaction by ensuring the OS experience remains fresh, up-to-date and fully featured; it will also help developers target the latest libraries and APIs and create better programs.  It’s a virtuous cycle that Microsoft should be embarrassed to realize so late.

Microsoft’s main source of revenue for Windows remains: enterprise and OEM.  Computer manufacturers must pay to install Windows on PCs and laptops, while enterprise will pay for must-have features like Domain Join that aren’t relevant to consumer.

Revenue from Windows version updates are actually relatively small.  For example, in the previous quarter where Windows 8.1 updates were free to Windows 8 users, Windows revenue still increased 4% in a declining PC market.  Enterprise and OEM licensing far outweigh consumer update sales.

Microsoft will be wise to give up the egg to ensure the golden goose survives.

Windows 9 should look like this awesome concept from Eiskis

Won’t Windows 8 users feel upset?

Windows 7 users paid money to upgrade to Windows 8; won’t they feel robbed if current Windows 7 users get to upgrade to Windows 9 for free?

A small concern, easily addressed by including freebies exclusive to those upgrading from Windows 8.

For example, $40 worth of app store credit.

Another example, free one year subscription to Office 365.

How about 1 TB of storage on OneDrive?

Or a free copy of this or that Microsoft game?

I’d go with the app store credit — reintroduce users to the Windows store and Modern apps; make developers happy.  Win-win.  The end goal of reclaiming a critical mass of user and developer interest in Windows is far more important.

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