Free Windows 10: Good for Microsoft, not great for its partners

One of the biggest news items coming out of Microsoft’s Windows 10 preview event is that the operating system will be made available for free to Windows computer owners running Windows 7 or higher. That’s great for Microsoft, consumers and enterprises for a number of reasons. But it’s not likely going to help the PC market which has faced sluggish sales for several quarters.

First, a little clarity on the “free upgrade,” which was communicated in a semi-confusing fashion at the event. [company]Microsoft[/company] Executive Vice President of Operating Systems, Terry Myerson said that computers running Windows 7, Windows 8 or Windows 8.1 — as well as Windows Phones — would be eligible for the software upgrade at no cost in the first year.

Terry Myerson Windows 10

But that doesn’t mean you’ll pay for Windows after you’ve used it for a year. Instead, you’ll continue to get use and will get software updates from Microsoft for the lifetime of your device as explained in Myerson’s follow-up post:

“We announced that a free upgrade for Windows 10 will be made available to customers running Windows 7, Windows 8.1, and Windows Phone 8.1 who upgrade in the first year after launch.*

This is more than a one-time upgrade: once a Windows device is upgraded to Windows 10, we will continue to keep it current for the supported lifetime of the device – at no additional charge. With Windows 10, the experience will evolve and get even better over time. We’ll deliver new features when they’re ready, not waiting for the next major release.”

The asterisk in Myerson’s post references some additional details, such as certain hardware and software requirements applying, some editions of Windows 10 are excluded and features could vary by device. And the one-year time frame actually applies to when you upgrade; you’ll have 12 months from the date of the official Windows 10 launch later this year to actually apply the upgrade. One year after the launch, Microsoft could decide to charge for the platform on new devices but it hasn’t said yet.

As I noted earlier this morning, this is a great move by Microsoft because it can get more people using the latest version of Windows sooner: A free upgrade will be taken advantage of by a larger audience than a paid option. And that will put more computers on the new Windows 10 platform and the services it will offer. This will also help developers because they can take advantage of the unified Windows software to write one app that can work across phones, tablets and computers. So it’s a win for Microsoft, its developers, and its users.

For its hardware partners though, it’s not very helpful, as noted by Creative Strategies analyst Ben Bajarin,

He makes a valid point as this free software upgrade won’t help chipmakers — namely [company]Intel[/company] — nor Microsoft’s partner device makers such as [company]Dell[/company], [company]HP[/company], [company]Lenovo[/company], and [company]Asus[/company] to name a few.

These partners are already struggling to boost computer sales in the face of growing phone and tablet adoption. Gartner estimates that 2014 worldwide PC shipments totaled 315.8 million units compared to the slightly higher 316.5 million in the prior year. The company hasn’t yet shared its guess at smartphone sales for all of last year but it says 301 million handsets shipped in the third quarter of 2014 alone. Add in the roughly 216 million tablets Gartner says shipped in 2014 and you can see even more pressure on the PC market.

A touch I.D. pad is seen on the new iPad Mini 3 during an Apple special event on October 16, 2014 in Cupertino, California. (Photo by Justin Sullivan/Getty Images) Now, Microsoft’s hardware partners will have to face a new situation: One where existing computers will gain a few more years of life thanks to Microsoft’s new software, assuming it generally runs well on older hardware.

Will Windows 10 create some new opportunities for these companies? Sure, thanks to the work Microsoft has done to make Windows 10 work better on tablets and 2-in-1 computers. But probably not enough to offset potential new sales of traditional computers because of that free upgrade for at least the first year of Windows 10 availability.