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Is Microsoft stiffing channel partners with free Windows 10?

30 Jan 15

Microsoft’s announcement earlier this week that it will be giving current Windows users a free upgrade to Windows 10 is good news for the company and consumers. However, it may not be such great news for its partners.

The news of the free upgrade is arguably the biggest news coming out of the Windows 10 preview event.

According to its 2013 numbers, around 27.8% of Microsoft’s revenue comes from its Windows division. How does Microsoft plan to fill its own revenue hole when it is giving away the operating system for free? How will it help its partners plug the gap of a product that once had a price tag?

“Today’s a big day. A big day for Windows. What it means to our customers, our partners and Microsoft,” Satya Nadella, Microsoft’s chief executive officer, announced at the event.

Computers running windows 7, 8 or 8.1 are eligible for the free upgrade. In a statement, Microsoft explained that the news was more than a one-time upgrade, a move that could effectively sideline its partners.  “We will continue to keep it current for the supported lifetime of the device, at no additional charge,“ the company says.

The move means more people will be using the latest version of Windows sooner. Users are more likely to upgrade for a free service than if they had to pay for it. The free offer is a clever move to win loyalty back from existing Windows users.

While benefits to consumers and enterprises are clear, and therefore Microsoft as well, Microsoft’s partners may not be seeing this as entirely great news.

What this means for Microsoft’s channel partners is a potential loss in revenue. However, a spokesperson at Microsoft NZ says the announcement is great news for resellers. Why it is great news, however, was not explained.

In reality, Microsoft is putting its partners on hold in the interests of long-term adoption of Windows 10.

The PC market is already struggling to shift units because of the rise of smartphones and tablets. Gartner says the 2014 worldwide PC shipments totalled 315.8m units, while 2013 saw 316.6m units. With more phone and tablet sales expected in 2016, the PC market is likely to decline further.

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