This is a wholesale shredding of the company’s traditional playbook, which dictated that all Microsoft software come with a licensing fee of some sort, and it suggests the danger that Google Android and Apple’s iOS pose to Windows’ traditional dominance of the operating-system space. To wit: a few years ago, the PC sat at the center of everybody’s computing lives—and Windows handily dominated the PC, at least with regard to market-share. But the rise of smartphones and tablets shifted everybody’s attention to mobile devices, an ecosystem ruled by Android and iOS, and the game changed: When mobile operating systems by Google and Apple are thrown into the broader operating-system mix, Windows’ share plunges.
Microsoft has failed to make much of a dent in the smartphone market, despite the push behind its Windows Phone OS. It likewise hasn’t achieved much in tablets, even after embracing the format with Windows 8’s touch-centric interface. Whereas Microsoft’s “fast follower” strategy worked so well last century, it’s far less suited to the mobile- and cloud-centric environment of today, which awards innovators who can capitalize on early success. And certainly charging a licensing fee for Windows on smaller devices didn’t help: Why would any manufacturer pay for Windows Phone when they could obtain the popular Android for the low, low price of free?
Microsoft realized that dropping the licensing fee was a possible solution to its ills. But is this radical move a question of too little, too late? Given the duopoly of Google and Apple, many pundits would certainly argue “yes.” But Microsoft, despite its weakened state in the consumer realm, still boasts a sizable audience and billions of dollars in revenue; it has the resources and the market muscle to negotiate with manufacturers over the production of Windows Phone lines.
Right now, Nokia (soon to become a Microsoft subsidiary) produces the majority of Windows-based mobile devices. By slashing its licensing fees, Microsoft could perhaps persuade a few other firms to jump onboard, and if that happens, we could see a flood of cheap Windows Phone devices on the market within the next few years. Will that present an existential threat to Android? Probably not, but it might reinvigorate Microsoft’s hopes for actually making an impact in mobile.
If Microsoft’s decision to drop licensing fees does translate into greater market-share, it could drive developers and app builders to give Windows Phone (and Windows on tablets) another look: To that end, Microsoft offers a Windows Phone Development Center, complete with tool downloads, sample code, guides, and the ability to submit apps. Cash- and time-strapped developers, however, might adopt a wait-and-see attitude before deciding to spend resources building for Windows mobile.
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