HiGame

When Microsoft announced Windows 10, it said devices running Windows 7 and Windows 8/8.1 would receive a free upgrade for one year after the OS shipped. Devices upgraded in this fashion wouldn’t just get a one-time update code — Microsoft committed to keeping any upgraded device current “for the supported lifetime of the device.” Exactly what those words meant has never been clear. But new statements out of Redmond may have shed some light on that topic.
Last week Microsoft announced that it would no longer recognize revenue from Windows 10 consumer licenses when those devices were purchased, as Computerworld reports. Instead, it will defer some of the revenue over several quarters, depending on the estimated supported lifetime of the device.



Deferred revenue is nothing new to Microsoft, as the company already recognizes revenue from its enterprise Software Assurance licenses in this fashion. Office 365 revenue is similarly recognized over all four quarters, rather than when a subscriber signs up. The big question consumers have been asking is whether Windows 10’s “free upgrade” is going to contain some sort of gotcha clause that ropes people into paying a lump sum later, or being marooned on an unsupported OS.

Windows 10’s free upgrade: An unlikely stick

Here’s the good news: Microsoft is incredibly unlikely to try and turn Windows 10’s free upgrade into a perpetual stick. For one thing, any attempt to stick consumers with a gotcha price at the end of the first 12 months would result in the mother of all class-action suits, and Microsoft is savvy enough to know this. Handing users a free product, only to stick them with unexpected continued-use costs 12 months later after businesses and consumers had already transitioned, would run afoul of consumer protection laws in both the US and the EU.

With that said, however, there’s a definite question regarding exactly how long the “expected lifetime of the device” actually is. Microsoft has historically provided support for operating systems long past what it considered their prime — Windows XP support lasted 13 years, while Windows 7 Extended Support will run through 2020.

Microsoft has fought for years to pull users off of old versions of Windows, and the “supported for the lifetime of the device” language is likely designed to allow the company to move to a different support model. That doesn’t mean Microsoft intends to charge outright for future versions of the operating system, however. More likely, Microsoft wants users to treat Windows upgrades the same way that Android, iOS, and browser updates are typically treated, with the majority of users jumping for new versions as soon as they’re available. Businesses or individuals that choose not to do this may have the option of purchasing extended phone or technical support, in much the same way that companies can now.

One thing I’m not concerned about is whether MS will continue to provide security updates. Regardless of how the company plans OS updates, Microsoft has offered security products even to pirates running illegal copies of its operating system. The chances that Redmond would roll back that critical feature are slim.



Microsoft’s previous advertising changes haven’t always been well-received.

Instead, it’s far more likely that Microsoft will make a play to embed post-purchase revenue streams as part of the Windows ecosystem. From Windows Store applications to Bing integration and in-OS advertising, Microsoft is moving away from deriving its income from the single point-of-purchase, and more towards an ecosystem where the initial OS revenue is just the beginning of monetization.

What this will mean for consumers is unclear. In theory, it could be as simple as ad-supported experiences, similar to what Microsoft has integrated with the Xbox One. Microsoft, however, doesn’t have the best track record when it comes to subtly integrating ad content. The company’s shift towards alternative revenue sources will need to be handled with a very light touch.

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