The software-as-a-service (SaaS) model has expanded rapidly in the past few years, with many companies preferring it over the traditional licensing model. But Microsoft, the biggest software company of them all, has been somewhat slower to embrace the concept, and is only beginning to do so now that its traditional cash cows are feeling the pressure.

Last week, Microsoft CFO Amy Hood fleshed out the company’s Windows-as-a-Service strategy, which seeks to shift its reliance on licensing the OS to making revenue from services like search, games and apps.

Hood told analysts at a Wall Street meeting last week that the first step in transforming Windows into a service is to offer free upgrades to Windows 10 for users of Windows 7 and 8, in a bid to get them all on-board with the plan, reports Computerworld. Step two is to make the OS free for devices with screens smaller than 9 inches. With both moves, the prevailing logic is that by increasing the number of Windows 10 users, Microsoft will be able to build a much larger market for Bing search revenue, games and apps.

In her discussion with the analysts, Hood said the company had managed to offset its lost revenue from the rapidly declining consumer PC market with new revenues from Bing and apps.

“You can see when PC consumer shipments got weak, we adjusted our approach. We adjusted our approach in terms of SKU [stock-keeping unit] strategy, making sub 9-in. devices free,” Computerworld quotes Hood as saying. “We added new pricing strategy for opening price point devices. And we had programs to drive genuine Windows attach in high-piracy markets.”

“It clearly had an impact on our revenue per license, but also had an important impact in driving unit growth,” she continued.

That might be so, but Hood refused to elaborate on what many believe might be Microsoft’s ultimate plan – to move Windows to a subscription model of some sort. Such a move would make sense for Microsoft after all, as Windows-as-a-Service would reduce the pressure on the company to come up with a blockbuster product every few years, and instead give it time to evolve the OS naturally with regular updates over time, similar to how Android and iOS updates are rolled out.

At the meeting Hood pointed to add-on revenues as Microsoft’s master plan, but Kevin Turner, the firm’s chief operations officer, did hint at subscriptions being offered later on down the line.

“With Windows as a service, you can only dream about what the capability might be over the long term there as we develop that and it matures,” said Turner said, when talking about the shift of focus from licenses to a focus on “annuity conversion.”

But Microsoft still has convince existing Windows 7 and 8 users to actually install Windows 10 rather than persist with their older operating systems. Windows 10 might be ‘free’ for now, but there’s no guarantee it will always be. And with Windows 7’s 2020 end of life date still some distance away, it remains to be seen if its successor will be compelling enough to make people want to switch.