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Microsoft is sick of you not upgrading, and has a solution: Windows 10 will be the final “version” of Windows. Ever.

This is called Windows As A Service, and it’s a big deal. To understand what it means, think of Gmail or Facebook: longtime users know these services have changed over the years, but there aren’t “versions” of them. There’s no Facebook XP, or Gmail 7 – there’s just Facebook, and Gmail, both of which change over time.

Windows, apparently, is going to be like that. Microsoft’s Terry Myers explains:

And just like any Internet service, the idea of asking ‘What version are you on?’ will cease to make sense.

This is a big change from Redmond. Even more surprising: Windows 10 will be a free upgrade for current Windows 7 and 8 users Is Your Computer Compatible with Windows 10 & Can You Upgrade? Is Your Computer Compatible with Windows 10 & Can You Upgrade? Windows 10 is coming, possibly as soon as July. Are you eager to upgrade and will your system be eligible? In short, if your computer runs Windows 8, it should also run Windows 10. But... Read More . What’s Microsoft’s plan here? They want Windows 10 to be the dominant desktop operating system – bigger than Windows 7 – quickly, to speed up development and ensure Windows’ longterm dominance as a desktop operating system.

Will Windows Be a Subscription Service?

It’s worth noting that a free upgrade doesn’t necessarily mean Windows 10 won’t cost anything Windows 10 Upgrade - Free Doesn't Mean It Won't Cost Anything Windows 10 Upgrade - Free Doesn't Mean It Won't Cost Anything There's a catch to the free Windows 10 upgrade. Microsoft understands its audience all too well; they are more likely to pay for the freedom of control, rather than for extra features. Read More , but no subscription fee for OS upgrades is coming – at least, not one for home users. Instead, Microsoft is trying to simplify its ecosystem by creating a world where they – and developers – don’t need to keep track of various Windows versions anymore. A world where everyone can assume that the vast majority of Windows users have the most recent updates, with all recent features.

Two things force Microsoft’s hand here:

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  1. Windows users seem less inclined than ever to pay for OS upgrades.
  2. Apple and Google dominate mobile, and have trained people to expect OS upgrades for free.

The result is a world that Microsoft needs to keep up with, and Windows As A Service is their answer. Let’s look more closely at how things have changed, and what Microsoft might be planning.

The Old Model: Software as a Product

It’s hard to imagine now, but Windows 95 was arguably the iPhone of its day in terms of hype. Microsoft spent millions on advertising, convincing The Rolling Stones to sell out so Bill and Steve could dance at a release party.

This massive advertising budget was probably worth it. Windows 95 was a $210 operating system ($320 adjusted for inflation) that people not only paid for, but lined up outside of stores at midnight to get. Microsoft sold $30 million dollars worth of Windows 95 on day one – then the fastest selling software in history, by far.

And it wasn’t a rip off: Windows 95 improved on Windows 3.1 in almost every way, including stability, user interface, and speed. Considering that low-end computers sold for over $1,000 in 1995 ($1500 with inflation), it wasn’t completely insane to spend a couple hundred on an operating system.

Today the situation is completely different.

The Windows XP Problem

Put simply, in the 21st century most people don’t pay for operating system upgrades. Instead, they pay for new devices, then use whatever comes with the device until it dies. There’s not really a compelling reason for people to change that habit, because OS upgrades don’t offer the vast improvements seen between Windows 3.1 and 95.

Microsoft knows this. It’s been almost 15 years since Windows XP came out, yet by some measures almost as many people use XP today as Windows 8 and 8.1 combined. From Wikipedia:

operating-system-comparison

Security updates for Windows XP lasted a really long time Windows XP Lasted Longer Than World Wars I & II Combined Windows XP Lasted Longer Than World Wars I & II Combined Think Microsoft is letting Windows XP die too soon? You're not alone. Many think this is a cash grab. What if I told you Windows XP is the longest supported version of Windows ever? Read More , and Microsoft was paying engineers to write XP updates after the release of Vista, 7, and 8 – doing that isn’t cheap. Even today, a year after XP security updates stopped altogether, nearly 16% of computer users – millions of people – still use Windows XP. That means millions of computers running on Windows-branded software are now vulnerable to all sorts of exploits.

This also means anyone writing software for Windows needs to keep four very different versions of that OS in mind, and basically ignore features unique to new versions of Windows, to not alienate a significant portion of PC users. This fragmentation is a problem for Microsoft, who wants their ecosystem to be appealing for developers – and for their latest features to be taken advantage of.

Android, Apple and the Rise of the Free Upgrade

Meanwhile, on mobile, people tend to upgrade their devices quickly when possible – because upgrades are free.

Google famously gives Android away, hoping to earn money from advertising. Operating system upgrades for the iPhone have always been free – money is made from hardware sales. Apple briefly experimented with charging for iOS upgrades on the iPod Touch, but hasn’t done so since 2010.

At this point, mobile users expect operating system upgrades to be free. The same is true for some desktop users.

In 2000, Apple’s OS once wasn’t terribly different from Windows – at least in terms of pricing. Your computer came with an operating system, but if you wanted the new version a couple of years later you had to pay more than $100.

That ended in 2013, when Apple released Mavericks for free OS X Mavericks is Free: Here's How To Get It & Why You Want It OS X Mavericks is Free: Here's How To Get It & Why You Want It Apple really outdid itself this time. The words "software sells hardware" never rung more true, and now that OS X Mavericks is free to all, isn't it about time you got on-board? Read More . Today Mac users expect such free upgrades. Perhaps more importantly, Mac developers quickly implement new OS X features into their software, because they’re confident users will upgrade quickly.

These changes left Microsoft as the last company charging for operating system upgrades – and patching old versions of operating systems they no longer sell.

Why Home Users Won’t Pay for Updates

In Microsoft’s ideal world, millions of people would pay hundreds of dollars for operating system upgrades, and try to always stay up-to-date. That world doesn’t exist anymore.

Microsoft has accepted this, and will try to make their consumer Windows money almost entirely from selling Windows licenses to device manufacturers (which is where most of their money currently comes from anyway) and their own hardware sales (a growing segment of the company).

Meanwhile, they can stop supporting old versions of Windows – which is sure to help keep costs down. For this reason it’s clear that a subscription service for home users would be suicide, and reports from inside the company suggest that there won’t be one.

It seems clear that Microsoft will offer an ongoing “subscription” to big companies, in the form of volume licensing – IT managers will happily encourage management to pay for them in exchange for support and more control over how upgrades work. Home users, however, will see free, mandatory operating system upgrades for the life of any given computer.

A unified platform makes life easy for software developers – who Microsoft needs to keep happy to ensure the success of their operating system over the long term. You’ll keep using Windows if the best applications are Windows-only, or at least supported on Windows, so anything that makes that likely is helpful for Microsoft in the long term.

Conclusion: A Brave New World

If Windows XP’s stubborn persistence teaches us anything, it’s that millions of people are perfectly content to use an insecure operating system in exchange for not having to pay for an upgrade – and this bogs down everyone hoping to develop software for Windows. Meanwhile, Apple and Google have taught people to expect operating system upgrades free of charge, and their ecosystems are thriving.

To keep their platform compelling, Microsoft needed to change something. Windows As A Service, it seems, is Microsoft’s plan for adopting to today’s world. Let’s talk more about what this all means in the comments below.

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