Microsoft Windows 10 subscription strategy "somewhat risky": Telsyte

SaaS strategy offer opportunities and threats for Australian channel

Comments

View all images

Telsyte analyst, Rodney Gedda, has described Microsoft's shift to a subscription strategy for Windows 10 as "risky" following its launch in Redmond, Seattle.

Microsoft has unveiled what it calls a new generation of Windows, which will be offered free for customers running Windows 7, Windows 8.1 and Windows Phone 8.1, who upgrade in the first year.

It will also be delivered as-a-service, "to offer a safer innovative and updated experience for the supported lifetime of the device", according to a company statement.

Mobility has also been marked as a key aspect of the new software, which has been hyped as being seamless across all devices.

Microsoft chief executive, Satya Nadella, said the release marked the beginning of the more personal computing era in the mobile-first, cloud-first world.

“Our ambition is for the 1.5 billion people who are using Windows today to fall in love with Windows 10 and for billions more to decide to make Windows home.”

Gedda said one of the major aspects of the announcement was its move from a software-as-a-product model to software-as-a service.

"It's somewhat risky because Microsoft has a large business in selling product and there's also a large channel business in implementation," he said.

"While I expect that to continue it may have a tougher task convincing people to be a Windows subscriber that ordinarily wouldn't be."

He said the company had moved a lot of its products (Azure, Office365) to a subscription model and that Windows was the last bastion that hadn't fallen under the software-as-a service umbrella.

"But now Microsoft is going to be giving away Windows 10 free for the first year and I expect to see Windows 10 subscription licenses being offered alongside Office and Skype and other personal cloud services like OneDrive," he said.

"It fits well with the model, but the only problem Microsoft might have is plenty of people view it as a perpetually licensed product, which is slightly different to Office."

Gedda said a lot of people expected to pay a premium price for Office, as the premium productivity suite, and that Windows might have more of a stumbling block of getting through the mindset that you have to pay a regular fee for it.

"What makes it even tougher is that large consumer facing competitors like Android, iOS and Mac are generally offered as a free upgrade," he said.

"In the case of Apple, it will support it device for a couple of years and then it will sunset, so there's a window of upgrade and how is that going to affect the mindset of the Microsoft user base when they are using iOS and they are getting upgrades free.

"It's a mindset they have to overcome. I'm not saying it won't work. It's in stark contrast to what other competitors are doing in that space with their operating systems."

For channel players, Gedda believes the move to SaaS was quite expected and played into vendors hands.

But that doesn't mean there is not a viable channel model around it.

"There's probably just as many opportunities as there are threats," he said.

So if you in the business of Windows desktop support and you sell business licenses, you could continue that business model around offering support as well as value added services.

"There might also be an opportunity for Microsoft resellers to earn margins on the service aspect of the product.

"So there's still the traditional channel margin business in Cloud and in SaaS, so all it not lost.

"I wouldn't panic if I was a reseller, but obviously you have to position your business to be agile to take into account these sort of changes.

Gedda also questioned whether the company would offer the product free for the first year for mobile devices as well as on desktops.

"The intention is to give Windows 10 for free on the desktop operating system for the first year and then charge for it thereafter," he said.

"But it's a consistent platform across all devices, so where's Microsoft gong to delineate between people paying for desktop and people expecting to have free upgrade on their phone.

He said there was a bit of a backlash when it released Windows Phone 7 and they couldn't be upgraded.

"That could cause a bit of disillusionment if they are releasing phone and tablet devices that can't be upgraded to successive versions of Windows in a reasonable timeline.

Overall, he said the strategy was sound.

"It will have more consistent look and feel across all devices, but it's hard to pivot the titanic, so it's hard for Microsoft to take one business model and turn it on its head, but the company is certainly determined to do that."