Apart from the Apple slice of the phone and tablet market, Google have been allowed to dominate the non-Apple devices apart from the few Windows CE devices that preceded Windows 8 and Microsoft have suffered a double blow as a result. You see, adoption of Android for phones and tablets hasn't only affected those devices but has also impacted on PC sales and allowed Google to muscle in with its Chromebooks. So market share has been lost in every market that Microsoft should have been aiming to be number one in.
It appears that Microsoft has reaped most of its mobile Windows license fees from Nokia up until recently, however the acquisition of the mobile manufacturer means that any license fees are at best an internal transfer of finances. To make any money out of the OS Microsoft may have to give it away.
The logic behind this is that to compete directly with Google then Microsoft has to equal or better Google's deal, and given that Google give Android away to all and sundry then Microsoft need to follow suit. In fact, given that independent device manufacturers have to incorporate Microsoft license fees in any devices they sell with Windows 8 installed it's a wonder any bothered so far. Allowing mobile phones and tablets to have free versions of Windows 8 starts the road to embedding the OS into the fabric and consciousness of future PC buyers. Given the interaction between devices running Windows 8 this should help drive adoption of the OS in laptops and PCs. The biggest challenge will be the cut-off point between tablets and laptops - as Microsoft's own Surface devices demonstrate. Where the free licensing stops and paid for licences starts could be the hardest decision needed.
Microsoft will need to reap revenue from tertiary elements such as Bing and the app store, as well as from in-app advertising. The Bing benefits should accrue naturally from more Windows 8 installations but the app store will need serious investment to catch up with the Android version. The Apple store, with over one million apps and growing, is going to be the toughest act to catch.
It remains to be seen if Microsoft are going to take the leap into giving their OS away for free, but if they don't then they stand to lose out in the mobile and tablet markets, which by inference could lead to the demise of their desktop and laptop base. That would leave a planet divided between Apple and Google which probably isn't a great prospect. Putting Microsoft between those two would keep the market keen, which is better for consumers.
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