Microsoft Will Monetise Windows Through Office 365

Windows used to be Microsoft's cash cow, quite literally its license to print money. Things have changed recently and customers used to free OS upgrades from Google and Apple have rejected the idea of paying for new versions of their desktop platform. So whilst Windows 10 was growing rapidly whilst Microsoft was giving it away, as soon as the free upgrade ended, so did growth.

Windows income is now restricted to OEM licence sales. With the PC market shrinking that isn't going to keep Microsoft's bottom line healthy.

Microsoft's future income will be centred around two products Office 365 and Azure. The latter will be an enterprise level income stream, based on customers moving their on-premise server infrastructure to the cloud.

Office 365 subscriptions have to drive the rest of the business' s revenue. That means finding more and more ways to get customers to start paying a subscription. With competing, free office suites making Office a limited driver - especially in the high value consumer market - Microsoft has to find another hook.

For Windows users this will almost certainly mean new features in Windows 10 updates becoming two tier. Some for everyone, but the really good stuff restricted to Office 365 subscribers.

For mobile users on Android and IOS, Microsoft isn't building out its software offering out of the goodness of its heart either. At some point in the future these apps will almost certainly become two tier offerings. Standard feature set for free, the good stuff for subscribers only.

It's a strong play for Microsoft, but one that is full of risk. If its products don't offer compelling reasons for upgrading to Office 365 customers will find plenty of alternative options without that restriction.

For those who already subscribe (and Office 365 is far and away Microsoft's most competitive offering) the additional features will be something of a bonus. Enough of a reason for non-subscribers to join? That's not so obvious, yet.


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