Microsoft Prepares To Kill One Of Its Biggest Cash Cows
This is a radical change in philosophy for Microsoft, but it doesn't really have much of an option. Google has forced Microsoft into this position.Microsoft became Microsoft by charging manufacturers for using its Windows operating system for desktop computers. It tried to do the same thing in mobile charging handset makers $10-$20 per handset.
With Android popular with consumers, and Windows a flop with consumers, handset makers have no incentive to pay Microsoft for Windows Phone.Microsoft is also rumored to be giving up on Windows Phone fees for HTC, Sony, and ZTE.
The smartphone market is incredibly competitive. The only two companies that are really making money are Apple and Samsung. For everyone else margins are razor thin. Therefore paying Microsoft for something they get for free from Google makes no sense.
As a result, Microsoft has no choice but to stop charging for Windows Phone.
This could turn into a slippery slope for Microsoft. If it stops charging for Windows Phone, will it stop charging for Windows for tablets? After all, Android is free for tablets, and it's taking over tablets. And if Microsoft stops charging for tablets, will it stop charging for Windows on the desktop? After all, Microsoft says a tablet is the same thing as a PC, just in a new form factor?What we're seeing here is likely the start of the end of the Windows business as we've known it. For years, people have predicted this would happen, but this time really feels different. This time Microsoft is actually going to kill its Windows cash cow.
But! It's not all bad.
This will force Microsoft to think of a new way to monetize its products. It will force Microsoft to approach the entire market from a different perspective, and that could lead to something bigger and better.New CEO Satya Nadella talked about this recently saying, "When you have a $70 billion business, something that's $1 million can feel irrelevant. But that $1 million business might be the most relevant thing we are doing."
(And, for what it's worth, Windows has been going sideways since 2011. Microsoft has still grown revenue thanks to its Servers and Tools group. It's a diverse company.)Via: The Verge
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