Report: Microsoft ponders free versions of Windows Phone, RT to counter Android

Microsoft (NASDAQ:MSFT) is thinking of making its Windows Phone and Windows RT software available free of charge to hardware vendors, according to a report from The Verge, which cited unnamed sources.

The report said that the plans are not final but are being seriously considered by Microsoft Executive Vice President Terry Myerson, the head of Microsoft's converged operating system division. The report added that the free versions of the software likely wouldn't debut until Microsoft launches its so-called "Threshold" update to Windows, which likely will not happen until the spring of 2015.

The thinking is that by making the software free, Microsoft will be able to more ably compete with Google's (NASDAQ:GOOG) dominant Android platform, which is open source and free for OEMs to use.

A Microsoft spokeswoman declined to comment.

Microsoft's current Windows strategy stretches across Windows Phone 8 for smartphones, Windows 8 for new Intel-based PCs and tablets, and Windows RT for ARM-based PCs and tablets (the RT version is similar to Windows 8 but has been criticized for lacking support for many Windows 8 apps, and a number of OEMs have abandoned RT devices).

The software giant licenses its Windows operating systems out to device makers and generates revenue from the licenses, with the majority of its Windows revenue coming from companies making devices based on Windows 8 and Windows RT. Once Microsoft formally acquires Nokia's (NYSE:NOK) devices business early next year, it will lose a chunk of licensing revenue, since Nokia makes around 80 percent of all Windows Phone devices sold today.

The report added that the decision to drop license fees for Windows Phone and Windows RT would be coupled with a drive to generate revenue from Microsoft's apps and services. Microsoft has been experimenting with ads in Windows 8 apps, the report said, and any revenue from those apps and the company's Bing search results would help offset the lack of license fees. Additionally, the report said Microsoft might push consumers to subscribe to services like SkyDrive, Office and Skype for additional revenue.

In October, Bloomberg reported that Myerson and Microsoft petitioned handset maker HTC to support Windows Phone as a second option on devices already powered by Android. That report, which also cited unnamed sources, said Myerson discussed reducing or even eliminating Windows Phone licensing fees to make the pitch more attractive to HTC executives.

For more:
- see this The Verge article

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