During the Q&A session at Credit Suisse coference, Microsoft COO Kevin Turner was asked whether Windows 10 will go down the path of a loss leader as Microsoft is giving away Windows 10 devices of sizes less than 9-inches and more. Kevin revealed that Microsoft will reveal more about the business model around Windows 10 in early 2015. And they didn’t have any conversations on Windows 10 being a loss leader for them.
QUESTION: I want to get your thoughts on pricing relative to Windows 10. You already opened the door sort of zero-royalty rates on nine-inch devices. When you think about a unified platform does Windows 10 kind of go down this path of a loss leader in trying to keep people within your ecosystem and then up-sell everything else on top of that? How are you thinking about that as you go down this path?
KEVIN TURNER: We haven’t announced the Windows 10 pricing framework yet. The one thing I can tell you that we’ve not had any conversations on is Windows 10 being a loss leader for us.
PHIL WINSLOW: Are you going to start losing money on Windows?
KEVIN TURNER: Yes, let me — that’s not any conversations that we’ve had. The thing about it is, though, we’ve got to monetize it differently. And there are services involved. There are additional opportunities for us to bring additional services to the product and do it in a creative way. And through the course of the summer and spring we’ll be announcing what that business model looks like. At the same time it’s wonderful to see these nine-inch and below devices explode, because that was an area, candidly, I was blocked out and I had no share of what was getting built. So it’s a very fascinating transition for us.
And finding new ways to monetize the lifetime of that customer on those devices, again, I would tell you we’re learning, we’re growing, and we’re smarter and wiser every day. And we still have some more learning and growing to do in that space. But, stay tuned. The business model stuff will be out in the early — probably the early part of 2015.