Microsoft combats Chromebooks by cutting Windows licensing fees by 70 percent

By Tom Warren on February 21, 2014 08:49 pm Email @tomwarren 109Comments

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Microsoft is reportedly cutting Windows 8.1 license costs by 70 percent for PC makers. Bloomberg News reports that the cuts are targeted at devices that retail for less than $250, in a move designed to combat rival low-cost tablets and Chromebooks. PC makers are usually charged $50 for a license of Windows 8.1, but Bloomberg News reports that manufacturers will be offered a license for just $15 on their low-cost devices.

Microsoft had been considering making Windows Phone and Windows RT available free of charge to device makers, and it appears the lowering of Windows 8.1 license fees for low-cost devices is the first step towards this possible plan. While Microsoft has sold more than 200 million licenses of Windows 8 since it was first released in October 2012, the growth rate is slower than its predecessor Windows 7. This is largely related to a PC market slowdown, and competition from rival low-cost tablets and devices.

Boot-to-desktop changes part of upcoming Windows 8.1 update

Sources familiar with Microsoft’s Windows plans have revealed to The Verge that the Windows 8.1 license fee cuts are part of key changes to agreements and rules that OEMs adhere to. We understand that PC makers recently received updated documentation highlighting several licensing changes for Windows 8.1. One significant change is linked to an upcoming update for Windows 8.1. Microsoft is planning to automatically boot Windows 8.1 non-touch PC users to the desktop interface by default, as long as they haven’t already changed the existing setting that allows you to bypass the tiled Start Screen. Microsoft has been testing this change as part of its Windows 8.1 Update 1 which is due to be released in April.

With a renewed focus on the desktop in Windows 8.1 Update 1, it’s clear Microsoft is aiming to address feedback from traditional mouse and keyboard PC users to appease the core set of Windows users. Windows 8 has had a mixed reception, and any licensing changes for OEMs are clearly designed to prevent additional PC makers opting for Chrome OS on their low-cost laptops. During the early days of netbooks, Microsoft saw the threat from low-cost Linux-based machines and moved to offer Windows XP to OEMs at discounted rates. The software giant also created a special Windows 7 "Starter Edition" aimed at developing markets row low-cost netbooks. These latest license cuts could lead to a similar low-cost version of Windows 8.1 for PC makers.