A trusted source close to Microsoft has provided me with some Windows 8.1 pricing information that helps to explain why PC makers have so thoroughly embraced smaller tablets: As you know, the OS is effectively free on those devices. But it’s also free when they provide a free year’s worth of Office 365 Personal too, making them a particularly good value to consumers.
Last year, Microsoft announced “zero dollar” Windows licensing, providing PC makers with a free copy of Windows—that we now know to be Windows 8.1 with Bing—on tablet and PCs with screens that are 9-inches in size or smaller. (Windows Phone OS is likewise free and, for now at least, it of course only ships on devices with small screens.)
But the pricing sheet I was shown—you can see it above—indicates how much PC makers pay for other configurations of Windows 8.1 with Bing. And it breaks down like so.
Windows 8.1 with Bing on small tablets (9-inches or smaller): Free, though the list royalty pricing is actually $10 with a $10 “configuration discount” which helps us get to “zero dollars.”
Windows 8.1 with Bing on tablets (10.1-inches or smaller): $15. Here, again, the list royalty pricing is $25, so the final price is $15 after that “configuration discount.”
Windows 8.1 with Bing and Office 365 Personal on small tablets (9-inches or smaller): Free, though the list royalty pricing is again $10 with a $10 “configuration discount,” or “zero dollars.”
Windows 8.1 with Bing and Office 365 Personal on tablets (10.1-inches or smaller): $15. Again, the list royalty pricing is $25, so the final price is $15 after that “configuration discount.”
The “configuration” in “configuration discount” appears to mean either “Windows 8.1 with Bing” or “Windows 8.1 with Bing and Office 365 Personal.” I’m intrigued that in both cases, the effective price is free, so it’s no wonder PC makers give away Office 365 Personal on so many small devices. And for Microsoft’s part, this helps drive some volume numbers to Office 365, of course.
A few other notes:
Intel only. All of these configurations are for Intel x86 devices only, so no ARM devices.
Tablet only. These configurations are likewise for tablets only, though that includes detachable devices.
Windows 8.1 with Bing requirements. The PC maker must ship the devices with Bing as the default search engine and MSN as the default home page in Internet Explorer. The user can change these as desired.