With Windows 10, Microsoft could move to a subscription-based model

Microsoft has indicated that Windows 10, which will be released next year, could move towards a subscription-based model. Instead of going the usual route and buying a perpetual Windows 10 license for $50 to $200, you would instead pay a few dollars per month — and then, as with most subscriptions, you’d get free upgrades when major new versions of Windows come along. Another option might be that you get a basic version of Windows 10 for free, but a subscription would unlock more advanced features — this is the scheme that Microsoft currently uses with its Office for iOS apps.

Speaking at a conference in Arizona, Microsoft’s COO Kevin Turner spoke quite frankly about the rapidly changing tides of the PC market, and how ultimately Microsoft has lost a big chunk of its money-making potential. “The first 39 years of our company, we had one of the greatest business models of all time built around … the Windows client operating system,” said Turner, and then spoke about how Microsoft is pivoting to become a cloud- and devices-oriented company.

Microsoft’s COO, Kevin Turner
Later, Turner was asked about whether Microsoft intends to use Windows 10 as a loss-leader to keep users within the Windows ecosystem, which prompted this very interesting response: We plan to “monetize the lifetime of that customer through services and different add-ons that we’re (going) to be able to incorporate with that solution.” That isn’t quite confirmation that Microsoft is moving Windows 10 to a subscription-based model — but it certainly sounds like subscriptions will play a key role in developing new revenue streams. (Turner said more details about Windows 10 pricing will be available next year.)

Read: Hands on with the Windows 10 Technical Preview

Microsoft is in a bit of a sticky predicament when it comes to Windows licensing. On the one hand, its business and enterprise efforts are fairly safe — those juicy Software Assurance/Volume Licensing subscriptions aren’t going away any time soon. Likewise, Windows Server, the Office suite, and many more firmly entrenched business-oriented tools, programs, and operating systems are all safe — these will all generate billions more dollars in revenue before they are (possibly) unseated by something else.

Microsoft's used car salesman approach to selling Windows 8On the consumer PC front, however, Microsoft’s cash printing apparatus is running out of ink — it’s still shifting lots of (cheap) OEM licenses for new PCs, but Android and iOS have forced it to give away free copies of Windows 8 and Windows Phone for small-screen tablets and smartphones. As personal computing shifts more towards mobile devices, this trend will only worsen until Microsoft is simply giving away Windows for free — which would be great for consumers, but untenable for Microsoft.

Subscriptions are the obvious way out: Give away Windows for free to hopefully gain some ground on Android and iOS (and to secure the desktop/laptop PC market) — and then generate revenue from value-added subscriptions. Microsoft already offers a lot of subscription-based services — OneDrive, Skype, Office 365, Xbox Music, Xbox Live Gold. It wouldn’t be too crazy to also move Windows to a similar system — Microsoft could even add Windows to its Work & Play bundle, say, for an additional $30 per year. If I could get every Microsoft service, including a full version of Windows 10 Professional and Office, for $180 per year… that would be a pretty sweet deal. Plus, I might even be tempted to buy an Xbox One, if I had a “free” Live Gold subscription just laying around…