Windows with Bing is has proven to be a popular SKU for OEMs due to it costing very little and even being free for devices with screen sizes under 9 inches. Windows with Bing is a full version of Windows with the only catch being that OEMs must set Bing as the default search engine and MSN.com as the homepage. Users who purchase these PCs can then change these settings if they prefer.
Earlier today, The Register reported that there were 115,000 notebooks running the Windows with Bing SKU sold in the UK in the fourth quarter of 2014. However, over 81% of these notebooks or 94,000 of them were running this Windows SKU on 15.6-inch devices. It is also reported that Chromebook sales were unimpressive in the UK, and that Microsoft overreacted to the threat by offering such fantastic promotions to PC OEMs with the Windows with Bing program.
“Microsoft realised it over-egged the response to Google and is limiting the licences,” said one source.
Therefore, Microsoft will be restricting the Windows with Bing SKU to devices with 14-inch displays or smaller including a minor price increase for the remaining licenses available starting next month.
Investors also didn’t respond too lightly over the drop in Windows revenue in Microsoft’s fourth quarter of 2014 earnings, and it seems like Microsoft is looking to bring more profit to the Windows division.
Windows 10 is still a little far out, but it’ll be very interesting to see how Microsoft prices their new flagship OS to PC OEMs. Especially, as it looks to recoup some of the immediate financial losses by giving away Windows 10 for free in the first year after its release to users running Windows 7 and Windows 8.1.
For those of you wondering just how much money Microsoft makes from each copy of Windows 8.1 with Bing, the information has been disclosed thanks to a document published on Microsoft’s OEM Partner Centre site. This chart reveals the pricing models for each type of Windows 8.1 SKU with Bing, and it shows that Microsoft is indeed giving away its OS for free on Intel tablets smaller than 9 inches.
This has been Microsoft’s plan to combat the Chromebook which has seen sales success due to its very low price-points and good looking hardware, despite it not being a full blown PC and requiring internet connectivity for its core services to function. Windows 8.1 with Bing is designed to have Bing as the default search engine for any browser, and MSN to be set as the homepage. Users can easily change the default search engine or homepage on their own afterwards, but OEMs are required to comply with these rules when selling the device.
When looking at the chart, it shows that “Windows with Bing” will cost OEMs $10, but looking at the line below it shows a $10 “configuration discount” – which when subtracted makes the OS free to OEMs building tablets smaller than 9 inches.
Windows 8.1 with Bing on tablets equal to or larger than 10.1 inches costs $25 per copy, but when subtracting the $10 configuration cost it ends up costing OEMs only $15. However, looking at the Windows 8.1 with Bing SKU’s offering with a one year Office 365 personal subscription in the bundle shows that the cost remains the same for OEMs. This is particularly interesting as this version of the OS is much more lucrative to OEMs – which means that Microsoft is effectively giving a one-year subscription of Office 365 Personal edition away for free on both SKU types.
Windows 10 will likely have a different pricing model, one that may be free in basic form but would cost OEMs or users more with attached services. Microsoft will have a big Windows 10 event this Wednesday, and although we doubt they will talk about which attached services will be at extra cost, we may get a rough idea on certain things with some consumer features like Xbox services.
Microsoft’s strategy of providing OEMs with a free Windows license for devices smaller than nine inches as well as certain notebooks running Windows with Bing services built in has so far been a very important move for the company. This significant change to licensing has gathered over 50 new OEMs which will build devices running Windows, whether it be phones, PCs or tablets.
Windows lead Terry Myerson stated that Microsoft expects to continue the trend of Windows licensing in the future – saying, “It’s going well. I expect we will continue it.”
These changes have brought devices to lower price points and have brought in influx of new low-cost machines to market, with many more on the way. This is a massive assault on Chromebooks and it’ll be interesting to see what effect this has on it in the future.
In addition to eliminating licensing fees in particular circumstances, Microsoft has gone to great lengths to reengineer Windows enabling it to run on lower cost devices that come with weaker chipsets but will provide a solid user experience. This perhaps is the single most important step that they have taken to ensure the strongest market share growth possible in both mobile and low cost notebooks.