The core bit, in keeping to earlier reports, is that Windows with Bing will ship on low-cost devices — Paul Thurrott reported that devices under $250 will be eligible — bringing Windows 8.1’s cost profile better in line with dropping price points for touch-based hardware.
The gist is simple: If Windows kept its OEM fees static as hardware prices fell, the percentage of the cost of a device built on Microsoft costs increases. Windows with Bing appears to answer that concern by allowing cheap devices to forgo some part of normal Windows fees in exchange for pushing Microsoft services.
Microsoft makes money either way, of course. The only question is if pre-loading Bing can make up for the OEM fee delta. Microsoft, however, isn’t likely looking for complete parity. Why? The company is determined to grow its mobile market share. So, it is willing to forgo Windows OEM fees on devices smaller than 9 inches running either Windows Phone or regular Windows, for example. This product is an extension of that work, lowering the cost of Windows-based devices not based on their screen size, but on the size of their price tag.
One day, Microsoft will stop charging consumers for Windows altogether. That day is a long time coming. These are steps in that direction.
In its blog post, Microsoft comments on the potential inclusion of Office 365 in devices that run Windows with Bing:
This new edition will be only be available preloaded on devices from our hardware partners. Some of these devices, in particular tablets, will also come with Office or a one-year subscription to Office 365.
The end result is that more people—across consumer and commercial—will have access to an even broader selection of new devices with all the awesomeness that Windows 8.1 provides, and get Office too, all at a really affordable price. Additionally, as reach expands, the opportunity for developers and their apps also increases.
I have a call into the company to get more clarity on the situation.
For now if I had to guess, Microsoft is willing to sacrifice up-front Windows OEM fees to push not just Bing, but a sheaf of its services. The cost of Office 365 for regular consumers is either larger, or roughly commensurate to the fee it would juice from Dell for a new image of Windows, after all. Give it away for a year, something that won’t impact its earnings, let’s be clear, and then get them on-board after the ‘trial’ year ends.