PC owners were just given a huge gift in the form of a free Windows 10 upgrade. However, will the cost to Microsoft in giving away millions of free upgrades hurt the company's bottom line?
The answer is simply, no. The primary reason is that the total revenue Microsoft received from purchases of upgrades was minimal relative to its gross sales. Only a minority of consumers purchase OS upgrades for their current PCs. Instead, most wait to purchase hardware in the form of a new computer to begin running the latest software.
So even though Microsoft is losing out on the revenue generated by the sales of upgrades to those who did in fact want to update their current device, that amount was basically negligible to the $93.5 billion dollar company.
Where Microsoft does earn a big cut of its profits is in licensing. As always, PC manufacturers will have to cough up licensing fees for each unit they sell with Microsoft software on board, and that's not changing. In addition, Microsoft is still charging its usual fee for the Enterprise and education versions of its new software.
Manufacturers are unlikely to be happy with the move because it eliminates the drive among many consumers to purchase a new piece of hardware when a new Windows OS is released. Instead, many Windows users are being treated to their first major OS upgrade ever, with many taking the understandable "It's free, why not" perspective towards pulling the trigger on the update. This may prolong the amount of time an average user stays with his or her current device, to the dismay of PC and tablet makers.
Features of Windows 10 may counteract that delay, however, by providing new inspiration to purchase devices through the support of next-level hardware features. Windows 10's extensive touch screen support features could inspire interested consumers to go out and purchase new PC's and tablets.
The free upgrade will also encourage earlier creation of third party apps to support the new OS, as developers move faster to catch up with the millions who have taken advantage of the free software update.