Microsoft plots to undercut Android by dropping Windows Phone license fees

Microsoft is reportedly considering a dramatic shift in its mobile strategy, copying Google and giving away its Windows Phone and Windows RT software to device makers for free. The plan has yet to be confirmed, but if Redmond follows through it could result in a flood of new Windows Phone devices from brands like Samsung, Sony and HTC, helping the platform to emerge as a serious rival to Android.

Okay so that’s a pretty bold claim to make – Android is streets ahead of Windows Phone at the moment, but key to this is one of costs. If Microsoft goes ahead and makes its software free, it genuinely would be 100% free for OEMs. And that can’t really be said with Android – while Google also gives its software away for free, Microsoft has dozens of patent licensing deals with just about every Android device maker in existence, and these have to pay fees to the company on a per-handset basis.

To make up for the loss of its licensing revenues, Microsoft will also attempt to take advantage of subscription services and advertising, reports The Verge. Service revenues would likely come from things like Office, SkyDrive and Skype, while ads can be placed in Windows 8 apps.

Microsoft has been edging towards this strategy for some time now, and it’s all part of the company’s shift towards devices and services, such as Office 365, SkyDrive and Xbox. So far, Microsoft has given away Office RT for free since it launched its operating system for ARM-based devices, and more recently its begun giving away freebie versions of Office Home and Student for tablets that run Windows 8.1.

That Microsoft is willing to give Office, one of its major cash cows, away for free is a clear sign that it’s looking to embrace the no-cost licensing model for all of its products. After all, by giving away Android for free, Google came from nowhere to totally dominate the mobile scene in just a couple of years – and there’s no reason why Windows couldn’t do the same, especially if it is cheaper for OEMs.

At the end of the day, by getting more Windows devices into the hands of consumers, Microsoft can make money from other means, by getting folks to pay for services like SkyDrive, Office 365 and Xbox. It can also ramp up its advertising efforts, and perhaps even push social services like Socl to further help with revenues.

Even so, there’s a small hint of hypocrisy on Microsoft’s part. It wasn’t long ago that the Redmond firm teamed up with Oracle, Nokia and others to file an anti-trust complaint over Google’s “predatory” free distribution of Android, complaining that this just wasn’t “fair”.

Presumably that effort hasn’t gone anywhere, and now Microsoft’s adhering to the old philosophy of “if you can’t beat them, join them”.

About Mike Wheatley

Mike loves to talk about Big Data, the Internet of Things, Hacktivists and hacking, but he also hates Google and can never resist having a quick dig at them should the opportunity arise :) Got a REAL news story or tip? Email Mike@SiliconANGLE.com.