Why Microsoft won't charge for Windows 'Blue' ... this time

Analysts believe Microsoft won't dare charge for this year's update to Windows 8, but one is certain it will for future annual releases

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But Windows Blue will be neither fish or fowl, neither service pack nor feature pack, at least by nomenclature and probably by content. Microsoft has certainly made it sound like Blue will be a big deal, far more than a series of bug fixes or a few new features.

"It will deliver the latest new innovations across an increasingly broad array of form factors of all sizes, display, battery life and performance, while creating new opportunities for our ecosystem," Reller said in a Q&A posted to a company blog. "It will provide more options for businesses, and give consumers more options for work and play."

The expected contents of Blue, but more importantly, the switch to a faster release tempo, have given rise to thinking that Microsoft could charge for these annual updates. The company must certainly have considered monetizing Blue.

Windows revenue has been threatened by a long-running and severe slump in PC sales -- IDC estimated computer shipments were down 14% in the first quarter compared to the same period the year before -- caused by a shift in consumer dollars once spent on PCs to tablets and smartphones, a lengthening refresh cycle and lackluster reaction to Windows 8.

A regular update cadence, and income from those updates, would make up for some of the revenue shortfall. It would also allow Microsoft to trumpet those updates to enterprises that pay for Software Assurance (SA), an annuity-like program that provides, among other benefits, rights to free upgrades to future versions of Windows in return for additional payments.

But updates would only be a benefit for SA subscribers, and thus a carrot for new and existing customers, if those same updates came at a cost to everyone else.

Several of the experts compared Windows Blue -- the annual update strategy -- to Apple's also-annual upgrades to OS X. If Apple can charge for those incremental upgrades -- $20 the last two years -- Microsoft should be able to charge for Blue and its successors, they reasoned.

But customers will get a free pass this time, the analysts said, citing several reasons.

Daryl Ullman, co-founder and managing director of the Emerset Consulting Group, which specializes in helping companies negotiate software licensing deals, knocked down the idea of Microsoft charging for Blue in order to pitch it as a benefit to companies that pay for SA on Windows.

"Under SA, companies would be eligible for Blue, just like any other upgrade," said Ullman. "But there's no value in that to them now. Of our clients with SA, none of them has done anything with Windows 8. And even if they had, they're not going to touch the desktop just months after [migrating to Windows 8]. Organizations just do not like to touch the desktop. Once every three to five years is enough, because it's a major happening."

Others echoed Cherry, noting that Microsoft would likely get an earful if it charged for Blue. "I do agree that any form of monetization is likely to see some pushback in the industry," said Al Gillen of IDC.

But while optimistic that Microsoft will skip the charge this time, Cherry was also sure that Microsoft would eventually put a price on the annual updates.

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