In a recent conference keynote, Microsoft COO Kevin Turner said the following:
We’ve got to monetize [Windows] differently. And there are services involved. There are additional opportunities for us to bring additional services to the product and do it in a creative way. And through the course of the summer and spring we’ll be announcing what that business model looks like. At the same time it’s wonderful to see these nine-inch and below devices explode, because that was an area, candidly, I was blocked out and I had no share of what was getting built. So it’s a very fascinating transition for us. 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.
The key language is “finding new ways to monetize the lifetime of that customer,” which is another way of saying that they’re shifting from a product-centric view to a customer-centric one. It doesn’t have to be Windows per se necessarily.
Many have interpreted that to mean the base OS might be free, and that Microsoft will earn via subscription or freemium. While the Redmond company will likely continue to charge enterprises and computer manufacturers, Windows and all its updates should absolutely be free to consumers. It probably will.
Although it may not look like it, Microsoft has actually been dealing with monetization questions for a long time. Back when Windows was a monopoly, it was difficult for Microsoft to add features to Windows without incurring anti-monopoly wrath. Security was one such example – the likes of Norton and McAfee lobbied hard behind the scenes to keep built-in security out of Windows.