Windows 9: What It Must Accomplish For Microsoft

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The wait is almost over. In just 24 hours, Microsoft Corporation (NASDAQ:MSFT) will officially take the wraps off its Windows 9 Technical Preview at a special event in San Francisco. Ahead of its release, Microsoft Indonesia president Andreas Diantorom said that Windows 9 will be available to Windows 8 users as a free upgrade.

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Can Microsoft afford to make Windows 9 free to all?

The free upgrade could be Microsoft’s way to get more users to its new platform. The software giant adopted a similar strategy by making Windows OS free for devices with display size of 9-inch or less, whether it’s a smartphone or tablet. But it’s still unclear whether Microsoft will offer Windows 9 as a free upgrade only to Windows 8 users or it would extend the deal to older users such as Windows XP and Windows 7.

We believe the company cannot afford to make Windows 9 free to everyone, not at this point. Revenues from Windows Store, OneDrive and other new services should rise substantially to offer revenue flexibility. Windows 9 rollout is critical to the success of Microsoft CEO Satya Nadella’s master plan. His “Mobile First, Cloud First” mantra should reflect clearly in Windows 9. There are a lot of things Windows 9 must accomplish to refuel Microsoft’s growth.


Windows 9 would become like a SaaS service

Though cloud isn’t the biggest cash cow for Microsoft today, it is at the center of Nadella’s strategy. The Redmond-based company’s cloud business is growing at an exponential rate. During its fiscal Q4 earnings, Microsoft’s cloud unit grew at 147% YoY rate. Windows 9 has to retain the company’s installed base in its ecosystem, so that the company can generate more revenue through cloud-based subscription products such as Office 365 and Azure. The operating system will be key to a recurring revenue stream.

Larry Dignan of ZDNet says Windows 9 will likely be last of the big bang releases from Microsoft. Users have grown accustomed to free OS updates. Even Android, iOS and OS X cost nothing. Big bang releases are an old model. Dignan says Windows 9 should eventually become like a SaaS service where customers pay an annual fee for twice-a-year feature updates.

Windows 9 should spark enterprise interest

Windows remains the front-end identify of Microsoft among enterprise customers. Windows 8 tarnished the image of the Windows brand. Now Windows 9 must spark enterprise interest so that they remain Windows-based. The company generates billions of dollars from enterprise customers through offerings like Windows Server, Office and Azure. If Windows 9 gets a lackluster response from the enterprise community, the company’s other revenues make take a hit.

Finally, Windows 9 must further Microsoft’s mobile ambitions. The new OS will reportedly be a unified platform. Developers will be able to create apps that will work seamlessly on all form factors. It will give developers more screens for their apps, and users will get access to more apps.

Microsoft shares fell 0.20% to $46.32 at 11:26 AM EDT on Monday.

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