Foley on Microsoft

Will Windows 10 Become a Subscription Model?

• By Mary Jo Foley
• 03/23/2015

It must be too good to be true that Windows 10 will be a free upgrade for all Windows 7, Windows 8.1, and Windows Phone 8.1 consumer and small business customers, right? Microsoft isn't suddenly moving from a for-profit entity to a kinder and gentler overlord because it wants to be the new "don't be evil" company. There must be some costly Windows 365 subscription plan lurking, the wags are wagging.

While Microsoft has revealed only a glimpse of its evolving Windows 10 pricing plans, we do know, as Chief Operating Officer Kevin Turner said a year ago, Microsoft isn't looking at Windows -- or any of its current revenue-rich product lines -- as loss leaders.

We also know that there are as many possible subscription plans and models as there are Microsoft products. The Office 365 model, which Microsoft charges customers a monthly/yearly fee to "rent" its Office client and server software (with a few cloud-connected benefits thrown in for good measure) is just one of them.

Microsoft also has been experimenting with various software and service bundles -- such as the Enterprise Mobility Suite the Work & Play Bundle of consumer and productivity offerings released last Christmas.

It's worth repeating, Microsoft isn't giving Windows away for free to everyone forever starting with Windows 10. The one-year free upgrade promotion is limited to consumers and small business users. Windows 10 and its subsequent updates will be free only for "the life of the device" on which the OS is running.

"Servicing" is the key word here. Microsoft has outlined three servicing options for Windows 10. There will be an "active branch" of users who get both security and feature updates right away. There will be a "current branch" for those who want security updates right away and new feature updates after some unspecified period of time. And there will be a "long-term servicing branch" that receives only security updates (and no feature updates) for some unspecified, but likely fairly lengthy, period of time.

Microsoft execs haven't yet spelled out what the tradeoffs are for each of these branches. But if I were a betting woman, I'd say the Windows 10 Core and Home customers will only have the option of being part of the active branch, meaning they must agree to take all security and feature updates as soon as Microsoft pushes them out. Those running Windows 10 Pro and above will have the option to be on the active branch or the current branch, which means they will be obliged to take all security updates as soon as they're ready, and all feature updates at some point (with some delay period allowed for current branch users).

The only group that'll have the option of refusing new feature updates to Windows 10 and postponing for a substantial amount of time (for testing and so on) will be Windows 10 Enterprise users, and they'll have to pay for that right. Only businesses that are volume licensees with Software Assurance will be able to select the long-term servicing branch. There's the gotcha.

Why is Microsoft so intent on getting users on its subscription-servicing treadmill?

The ‘Softies believe subscriptions are superior to one-time software sales because they foster ongoing relationships with customers. People who buy Office or Windows may or may not buy upgrades or complementary Microsoft products. But those who pay for subscriptions to these products have new (and hopefully improved) features and fixes delivered regularly, which, at least in theory, will make them more secure and up-to-date. More secure, up-to-date customers are happier (and likely more locked-in) customers, so the thinking goes.

Though Microsoft recently trademarked "Windows 365," possibly for defensive purposes, there's still no evidence the company plans to go the Office 365 subscription route with Windows. And maybe it doesn't have to, especially if its evolving servicing strategy pays off.