Windows 10 Upgrade is Free, Not “Free”

Posted on July 17, 2015 by Paul Thurrott in Windows 10 with 0 Comments

Windows 10 Upgrade is Free, Not "Free"

There’s some misinformation floating around out on the Interwebs about Microsoft secretly planning to charge Windows 10 users for updates two to four years down the road, with the little dig that the free upgrade you’re about to get to Windows 10 isn’t really free. This simply isn’t true. The free Windows 10 upgrade is free, with no caveats.

This silliness started with a report by Computerworld’s normally reliable Gregg Keizer, who is using a publicly-posted Microsoft PowerPoint presentation aimed at investors as his source.

The slide deck explains Microsoft’s new revenue recognition model for Windows 10, which is necessitated by the new way that the firm is selling and updating the OS. In the past, Microsoft would typically defer upgrade revenue for a new Windows OS until the quarter in which the new version was released, but with Windows 10, (virtually) everyone is getting it for free so there are no pre-release upgrade revenues to defer.

So this time, everything is different. And Microsoft will instead defer some Windows 10 revenues starting after the OS launches. But the goal is the same: stagger revenue reporting so that there are fewer highs and lows. In this case, Windows 10 revenues will be spread over three years, with the first third of each dollar taken in recorded that fiscal year, the next third a year later, and the final third on the third year. You can see that here:

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So where does Keizer’s imaginary secret plan to charge people who upgraded to Windows 10 for free come from, you ask? From a footnote on one of only two actual content-based slides in this very short slide deck. It reads:

“Revenue allocated is deferred and recognized on a straight-line basis over the estimated period the software upgrades are expected to be provided by estimated device life, which can range from two to four years.”

This says that Microsoft expects Windows 10 devices to have an average life span of two to four years, which makes sense since most major versions of Windows have a three-year life span in the market. But Keizer is confusing things because this is about revenue on new Windows 10 devices: Microsoft is deferring that revenue for three years because that’s the average life span of the devices that generated the revenue. There are no revenues on free upgrades.

This slide says absolutely nothing about how long Microsoft plans to provide free updates to Windows 10. But since Microsoft was previously very clear about this, let’s just examine their original statement, which Keizer helpfully provides:

“We will continue to keep Windows 10 current for the supported lifetime of the device,” Microsoft said. “We think of Windows as a Service — continuous updates over time.”

So what’s the supported lifetime of the device? Ed Bott has found the answer in Microsoft’s newly-released Windows 10 lifecycle policy for Windows 10:

“A device needs to install the latest update to remain supported. Updates may include new features, fixes (security and/or non-security), or a combination of both. Not all features in an update will work on all devices. A device may not be able to receive updates if the device hardware is incompatible, lacking current drivers, or otherwise outside of the Original Equipment Manufacturer’s (“OEM”) support period. Update availability may vary, for example by country, region, network connectivity, mobile operator (e.g., for cellular-capable devices), or hardware capabilities (including, e.g., free disk space).”

As Ed writes, “There will be no charges for updates during the supported phase. There will be no Windows 10 subscription fees during the supported phase.”

And by the way. The supported lifecycle of Windows 10? It’s 10 years. Just like every other major Windows release.

Moving on.