Windows 9 Needs to Be Free: 10 Reasons Why

by Don Reisinger

At the Consumer Electronics Show last week, Intel announced that in 2014, its processors will support both Windows and Android running on a single chip. A single push of a button will allow users to switch between the operating systems. If Intel’s Dual OS initiative takes off, Microsoft could be in for trouble. Intel has a massive footprint in the computing space, and Microsoft needs that company’s loyalty to be successful. Offering Windows for free will make it at least a bit more appealing to vendors who might question why they’re paying so much for an operating system when they can get their hands on Android for free and attract mobile customers.

Apple is offering its operating system at no charge from here on out. Of course, some say that Apple is really bundling the price of the operating system into its hardware, which is a valid point, but psychologically, consumers think they’re getting software for free. Apple’s decision to turn OS X free was a customer-friendly move, and it might be worth it to Microsoft to show it’s willing to make that move as well.

It’s hard to call Windows 8 anything other than a flop. According to research firm IHS, Windows 8 and Windows 8.1 have a combined market share of about 9 percent. To turn things around, making its operating system free might entice more folks to adopt the software. The move might also make vendors feel a little better about bundling a new Microsoft OS into their hardware products. After all, if the last platform they paid for didn’t work out, who’s to say the next one will? Making Windows 9 free might make it easier to take that risk.

When evaluating Microsoft’s financial performance, one comes to a single conclusion very quickly: Office is the most important business Microsoft has. Microsoft’s Office accounts for the bulk of the company’s revenue and profits and has been able to overcome dips in the market, in large part because of its necessity in the enterprise. The last thing Microsoft needs is to see Windows adoption slide and Office revenue fall off. The right move is to offer Windows for free to bolster market share and keep generating cash on Office.

Microsoft is trying to create an ecosystem of products that keep people locked into its services. That means the company wants folks to use Internet Explorer, invest in Office 365, find value in the Xbox Store and use Bing. The only way that will happen is if Microsoft can keep us running Windows. The operating system has always been, and always will be, the gateway to Microsoft’s many other services. Looking ahead, Microsoft’s business model might need to focus on monetizing those other services and using Windows as a vehicle to get folks to them. Making Windows free will make that easier.

Perhaps the best rationale for making Windows free came from outgoing Microsoft CEO Steve Ballmer. In an open letter to employees last summer, Ballmer wrote that “the form and delivery of our value will shift to devices and services versus packaged software.” Ballmer’s point was well-taken. In order for Microsoft to truly be successful in the future, selling software won’t be nearly as important as selling services and hardware. Maybe we should all listen to Ballmer.

There’s nothing wrong with going free. In fact, in many cases, offering software at no charge can improve adoption rates. Back in November, NetMarketShare revealed that Apple’s free operating system, OS X Mavericks, was already running on 11 percent of Macs. It took the operating system just 10 days to reach that level. In comparison, OS X Mountain Lion couldn’t get to that point for a month when it launched. In a world where budgets are still tight, offering products for free tends to improve adoption.

Chrome OS is quietly becoming a concern for Microsoft. Although Windows dwarfs the operating system’s overall market share, last year Google’s free OS was running on 10 percent of all computers and tablets sold in the U.S. Just a year prior, Chromebooks accounted for 0.2 percent of all sales. When just laptops are factored in, Chromebooks accounted for 21 percent of all notebook sales in 2013, according to research firm NPD. For PC vendors, the news couldn’t be better. Chrome OS is cheaper to deploy, the devices are just as nice as Windows counterparts, and margins in many cases are higher. It’s time for Microsoft to respond. And the best way for Microsoft to respond is to make Windows free to PC vendors.

Speaking of PC vendors, no discussion on turning Windows free would be complete without at least acknowledging that the companies aren’t exactly loyal. Acer, Samsung, Dell and others are all venturing into new software territories with Chrome OS and Android. And with Intel now making it easier for PC vendors, who are dealing with sluggish sales, to bundle Android, Microsoft might see Windows running in dual-boot environments far more than it would like. Making Windows free might prompt at least some PC vendors to remain loyal to Windows. After all, Windows is still far and away the most popular operating system in the world.

There’s no debating that if Microsoft distributed Windows 9 for free, the company would take a heavy financial hit. But what if Microsoft did it differently? What if Microsoft found a way to bundle “free” Windows updates into Office 365? The company could bump the price on Office 365, since it’s offering more value, and customers would be pleased to find they can get free Windows upgrades in addition to Office programs. As noted earlier, Apple is able to hide its OS pricing in its hardware margins. Why shouldn’t Microsoft do the same with subscription-based services like Office 365?