Thinking About Windows 8.1 with Bing Licensing

Posted on February 11, 2015 by Paul Thurrott in Windows 8.1 with 0 Comments

A curious report suggests that Microsoft will soon restrict the availability of Windows 8.1 with Bing on PCs with bigger screens as a way to “prop up slumping Windows licensing revenues.” But if that’s true, this change will do nothing of the kind: the only real growth in PC sales is already with very small devices. And Windows 8.1 with Bing is already free on those devices.

Here’s how I understand Microsoft’s 2014 Windows licensing changes:

Windows 8.1 with Bing is free (“zero dollars”) to PC/device makers that ship hardware with screens smaller than 9 inches. On PCs and devices with bigger screens, Windows 8.1 with Bing is discounted. This is borne out the information provided in my article, Windows 8.1 with Bing Pricing Explained, where you can see that the discounted price is about $15 per device.

We know from Microsoft’s recent quarterly earnings report that Windows licensing has, logically enough, suffered in this new age of lower cost (and free) licenses, with Windows revenue from PC makers declining 13 percent in the quarter (Pro and non-Pro). My assessment was that this was simply the new normal, and that Microsoft would look to earn revenues elsewhere while it continued to make Windows as atrractive as possible to both PC/device makers and consumers.

(Remember: This licensing does not impact businesses at all, and businesses account for about two-thirds of Microsoft’s revenues. So any change to Windows 8.1 with Bing licensing would indeed have little overall impact, I think.)

But according to The Register, which cites “senior sources at PC makers,” Microsoft is indeed altering Windows 8.1 with Bing licensing with that goal to “prop up slumping Windows licensing revenues.” And how will it do this? By restricting Windows 8.1 with Bing to devices with screens under 14 inches, and “with a slight price rise in the low percentage point range for the remaining licenses.”

What?

Today, you can buy 15-inch Windows laptops with Windows 8.1 with Bing. Indeed, the first time I experienced this rebranded version of Windows 8.1 “Core” was with a 15-inch Acer. But the majority of Windows 8.1 with Bing licenses that are flying off shelves and into consumer hands are doing so on very small devices like the HP Stream 7 tablet and HP Stream 11 and 13 laptops, not on these giant laptops. So neither of these changes will impact revenues much at all.

Think about it.

Microsoft will restrict Windows 8.1 with Bing to devices with screens under 14 inches … which is already most of the sales. So no change there.

And Microsoft will slightly raise the licensing price for the remaining licenses. Windows is already fee on most devices, so this slight increase can only impact devices with 10-13 inch screens. So perhaps a dollar or two more per license on a small subset of the overall market.

But this is not what the Register reports.

The Register claims that “the bulk of sales of Windows with Bing [laptops] were 15 inch, some 80 per cent to be exact, according to distributor data collated by Context.” (And those devices allegedly outsold Chromebook by 2 to 1, though I assume this data is all UK-based only.)

I just don’t believe that to be true.

Looking at Amazon’s list of best-selling laptops—admittedly a bit non-scientific—here’s what I see in the top 10 right now: Four of them have screens that are 14-inches or bigger, four are 11- or 12-inchers, and three are 11-inch devices. Six of the 10 run Windows, the other four are Chromebooks. (And the top 4 of the top 5 are all Windows PCs.)

So I don’t know. I don’t see Microsoft stepping back from “zero dollar” licensing. Nor do I think any small bump in licensing for bigger devices—real or imagined—will make much difference. And no, I can’t write a spiffy headline either, or use terms like “Microsoft ‘over-egged’ its Chromebook response.” Sorry. 🙂

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