The Verge is reporting that sources close to Microsoft have indicated the company is seriously considering making Windows Phone and Windows RT available to device manufacturers free of charge. Microsoft would most likely move to a free licensing model with the upcoming “Threshold” update, the next major Windows update rumoured to bring back the Start menu.
The majority of Windows revenue currently comes from licensing Windows 8 and Windows RT to OEMs. However, Microsoft’s recent acquisition of Nokia’s handset division virtually eliminated any significant Windows Phone licensing revenue, as the Finnish manufacturer was responsible for 80% of all Windows Phone shipments.
To be honest, Microsoft needs the networked benefits of a popular operating system more than it needs the licensing fee revenue. A free OS is likely to attract more OEMs to the platform, which will lead to greater consumer choice and (hopefully) a larger share of the smartphone marketing. This larger installed base is crucial for attracting AAA app developers to Windows Phone.
If Microsoft is serious about becoming a viable 3rd mobile computing platform, it will follow Android’s path to success and drop the Windows Phone and Windows RT licensing fees. The potential benefits outweigh the risks, and the company is already making $2 billion a year in Android patent fees anyway.