A Welcome Emphasis on Consumers in New Windows Strategy (Premium)

After the sudden death of Windows 10 S, the most striking aspect to Microsoft's new strategy is its renewed emphasis on consumers.

As you may know, we've been scurrying to cover this breaking news all day. But my overview, Exclusive: Microsoft Plots a Transition Year for Windows 10(Premium), is probably the best place to start. Brad discussed the death of Windows 10 S, and I explained why that makes tons of sense. Brad also wrote about Microsoft's new consumer Windows roadmap.

And that last bit is interesting, isn't it?

For all the talk about Microsoft supposedly "abandoning" consumers, it is striking to me how much of this year's strategy shift involves re-engaging with that exact customer base. We're on the tail end of 6 straight years of falling PC sales, and Microsoft and its PC maker partners have found some success in gaming PCs and premium PCs. But for the market to rebound, for Windows to grow, Microsoft knows that it must see that same success in lower-end PCs too. It needs to reach the base.

There's a commercial and educational aspect to that strategy. But I find the consumer strategy far more interesting and unexpected. So let's take a deeper dive into what Microsoft is doing to improve Windows for consumers and for the PC makers that target this audience.

First, Microsoft has killed off Windows 10 S, as discussed, and has added an "S mode" to both Windows 10 Home and Windows 10 Pro. With Windows 10 Home in S mode, the upgrade to full Home is free; with Pro, you have to pay $49.

That's a big win, because the upgrade price, and the related timeline associated with that upgrade, were a big hurdle. Both for PC makers, which saw no consumer demand for Windows 10 S, and for consumers, who would have felt like Windows 10 S was a trick to get them to pay more when they realized it wouldn't work.

This raises an interesting point. In today's consumer market, one can purchase PCs with either Windows 10 Home or Pro in many cases. But Windows 10 Pro is seen as the more full-featured product, especially on premium PCs. Even though very few people would benefit from its unique features.

Going forward, that functional gap is changing, and I expect to see even more Windows 10 Home PCs in market. There are two reasons for that. One, the free S mode upgrade to full Home noted above. And two, that Microsoft is optimizing Home for workstation-class-PCs and high-end experiences like gaming and VR. Home will make more sense for individuals, even those that used to believe that Pro was the better choice.

Here's Microsoft's strategy for consumers in a nutshell: Shift away from focusing only on the premium segment and the Pro SKU and expand the focus to a broader range of segments that will be targeted by the Home SKU. Provide licensing pricing and functionality that will help its PC maker partners deliver the right PCs at the right prices. Offer better marketing that is focused on the core consumer customer base. And to attr...