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Microsoft Could Cut Licensing Costs To Stay Competitive

Microsoft might slash Windows 8.1 licensing prices for manufacturers by 70 percent in a bid to stay more competitive in the PC market.
Posted at 10:56 AM, Feb 22, 2014

Microsoft could start charging qualifying manufacturers lower licensing fees in a bid to stay more competitive in the personal computing marketplace.

Bloomberg cites anonymous Microsoft insiders who say the company is planning to cut the price it charges for Windows 8.1 on devices that retail for less than $250. Instead of $50 per license, manufacturers will pay $15.

It's intended to boost sales of hardware like netbooks and tablets, but Electronista says it's no magic bullet.

"The loss of Windows licensing income, one of the leading profit centers for the company, would hurt Microsoft in a big way with investors unless the company can make up for the discounts through additional sales in a flood of cheap devices."

This deal would cover Microsoft's desktop OS, not the version that runs on its tablets — so it's not clear if this move would let Microsoft catch the runaway mobile market.

Numbers from Strategy Analytics show tablet vendors, led by Apple and its iPad, continued their success with 20 percent growth in 2013.

To be fair, Microsoft had a tablet in the fight, too. But it performed so poorly it cost the company nearly a billion dollars.

"Microsoft falls nearly 11 percent after revealing it is taking a $900 million writedown on the Surface tablets. Combine that with slumping pc market and Microsoft's troubles are getting worse." (Via Bloomberg)

"Slumping" might have been a generous way of putting it in July of 2013. In January of this year it came out: the PC market had just capped seven straight quarters of decline. Gartner said the nearly seven percent drop in 2013 was its worst annual performance ever. (Via The Next Web, ZDNet)

Microsoft hasn’t commented on its rumored licensing deal, so it’s not clear if this will start a turnaround. It’s worth noting retail copies of Windows 8.1 will still be going for full price.