Microsoft tackles China piracy with free upgrade to Windows 10 | Hacker News Reader

Microsoft tackles China piracy with free upgrade to Windows 10

reuters.com

89 pointsiamben76 comments

"Microsoft tackles China piracy with free upgrade to Windows 10"

That's some impressive marketing spin there. To me this reads "Microsoft admits defeat to software pirates and gives Windows away for free." They may have some pretty legitimate reasons for wanting people to update to the latest OS, but giving it away for free is a massive shift for the company that lots of people call "M$"

There's probably a catch - a built-in app store where MS can earn via commission on applications, a subscription model for future updates or basic features, that kinda thing.

If they did some better marketing (like Google manages to), they could call it 'combating botnets' or something.

The app store isn't really a "catch," it's been in Windows since 8.0.

I see this as the first steps in planning to lock-down the Windows ecosystem completely (and then extract profits from the users). I wouldn't be surprised if this "free" OS becomes unable to install applications easily except from the built-in app store, has some paid features, phones home with usage statistics, may start being ad-supported, etc... basically making the OS "freemium" software.

I think it really comes down to MS not being able to backport their internet presence, and newer DirectX interfaces to older versions of windows. Software developers want to target modern browsers, and game developers want to target newer interfaces. They've doubled down on Office as a service/rental. They've doubled down on their Azure cloud services (which are pretty damned good now).

They're competing against very-near free ChromeOS and Android... they're also being encroached by Apple's OSX and iOS. They had to diversify their income strategy and get windows to a loss-leader position. It makes sense. Keeping developer mindshare and their office software in place, even across platforms is far more valuable in the near term. Their long term strategy isn't too different from where the likes of IBM and Oracle have gone before, but with a bit more focus on their developer and consumer interests.

As I'm using linux more frequently for a deployment target (even in Azure), and more inclined to reach for node.js (io.js) over C#.. it's nice to see MS open up software (.Net vNext) and platforms (windows) a bit more. I setup a docker container for a small C# microservice (migrating password schemes on login for accounts that were in an ASP.Net website) running .Net vNext, and it was pretty cool to be able to do.

Never mind that with Windows 8 they introduced (yet another) "app store". Between that and Office going service by way of Office 365, and they no longer need to sell Windows to bring in the money. May as well give it away and entice people to sign up for their services (Some Skydrive space for free, hotmail/live/outlook email, etc etc etc).

Thing is that MS has alwasy used the home market as leverage for their corporate sales. This via "total cost of ownership" claims. It boils down to the idea that home users are familiar with basic MS product use already, so the corporations don't have to spend as much time training employees if they buy MS software.

This move makes sense: better to have people running a legitimate copy of your latest OS than a pirated copy of a 15-year-old OS. All the better to try and convert them to paying customers of Microsoft services.

It looks like it is windows 7 and up, not XP and such.

They are making the free upgrade from Windows 7 and up globally, but this article seems to imply they are going to make an exception for China and make the upgrade free for all Windows users.

The title does seem to imply that. What the article in fact says is that the free upgrade is being offered globally, but the motivation behind it is to re-engage with Chinese Windows users who have an unlicensed OS.

AFAIK, upgrades are only supported from Windows 7 and up regardless whether the product is paid for.

That makes sense, given XP can install and run decently on a machine that would choke on Windows 7, if it would even install. Minimum system requirements are still a thing, and as light and efficient as Windows 10 is, it's not meant for 2001 era technology.

Bill himself said in the 90s - "About 3 million computers get sold every year in China, but people don't pay for the software. Someday they will, though. As long as they are going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade."

Interestingly, that quote is from almost 17 years ago and they don't quite seem to have figured out how to "collect" yet.

No rush, it's not like MS is running out of money :)

And they've prevented hundreds of millions of people from going with a different OS, thus eliminating potential threats.

Unfortunately. I think if the Chinese government forced/encouraged everyone to go Linux a long time ago, instead of having to pirate Windows, the Linux ecosystem of programs would be much richer, too. And OEMs wouldn't release 99% of their machines with Windows on them by default.

This way we would've had competition on the desktop and in the browser market way before Android and iOS started appearing on tablets.

Only if linux would work out of the box, no driver issues, no need to change files with root... more user friendly.. They decided to make linux for the tech people

Are you trolling?

No, for sure. I tried multiple times to like linux, but everytime makes me hate it. Yes, more than windows.

Well, this is partly true, in that "they" decided to make Linux for themselves, and they were tech people. But a lot of the out of the box problem with drivers are out of the control of the people making the kernel -- device manufacturers guard the design of their devices, and thus they're the only ones who can write the necessary drivers. And with Linux having a smaller share of the commodity PC market than Windows, Windows gets most of the resources devoted to writing drivers.

Either way, with linux I have to waste a lot of time to make it work, with windows, just works. At least this happens to me.

They tried and failed:

"Once the world's second-largest Linux distributor, Red Flag Software has shuttered reportedly due to mismanagement and after owing employees months in unpaid wages.

China's state-funded answer to global software giants like Microsoft, the Chinese company filed for liquidation over the weekend..." (2014)

http://www.zdnet.com/article/chinas-home-grown-linux-os-shut...

Oh they do indirectly. The continued ubiquity of Windows reduces the chance of something else stealing some momentum first there and then wider perhaps globally.

It isn't really "if they are going to steal it we want them to steal ours" as quoted directly, it is "if they will only accept free, the we'de rather they be part of our ecosystem for free instead of encouraging someone else's to grow".

They did very well. When you and everyone around you grow up using Microsoft's OS and office suite and then you start your own business, you will choose to run Windows and MS Office in your company - and since you want it to be a legitimate operation, you will buy the software.

And then there are various ways to pass the bill for your software further - e.g. to the taxpayer, if you're a government organization or a company funded by EU grant (I used to intern at Rutherford Appleton Laboratory; I'm pretty sure Microsoft makes a boatload of money on the licenses for all those thousands of Windows machines that run there).

It's a brilliant strategy. Adobe uses it too (Photoshop is so trivial to crack that it must be intentional).

I swear that MS only introduce the online serial code checks etc after the BSA threatened to expel them. Before that you could install Windows and Office as much as you wanted with just a serial code. No check back to a server, or any kind of hoopla over swapped motherboards on already registered copies.

Oh but they do. Regardless of target market, Chinese manufacturers build and test pretty much all their hardware with Windows; that means every other consumer also gets first-class support for Windows in their computers/devices/peripherals/gadgets, which means they keep buying Windows machines and paying the MS OEM tax.

I don't know if it is still true, but Chinese OEMs used to be a "pay what they will" business model for Windows licensing from Lenovo on down. There was simply no way to audit/enforce the OEM licensing agreements.

Think of the education market. So many schools in the US are full of Macs. You won't see that in China as Apple hardware is cost-prohibitive for them. Getting the mindshare and comfort with Windows pays dividends long term

Source (if anyone wants): http://news.cnet.com/2100-1023-212942.html

Absolutely. And the pirated versions keeps getting updates just like a fully paid version of Windows.

The subsequent versions of Windows are far more locked-down/limited with respect to user control and customisation than XP, which is likely why it lasted for so long.

How do you mean?

So, this effectively means that Windows 10 will be free(ware). This also means that Microsoft will have to make up for lost profits. Apple makes money from hardware, Micrsoft made money by selling their OS. Seems they are going the service/Google way as they will also be giving away roms for a Xiaomi phone[1].

[1] http://www.windowscentral.com/more-details-emerge-how-xiaomi...

> Microsoft made money by selling their OS

I think Microsoft cash cow is their Office Suite. To run that suite you still need a Microsoft OS and recently their Office 365 cloud version is also showing strong growth.

I imagine Microsoft still make a good bit of cash from OS sales but mostly from manufacturers buying in bulk for new PCs, not so much from individual upgrades. It's the individual upgrades they are giving for free. Dunno if it's China only or if we can get them elsewhere?

>to run that suite you still need a Microsoft OS

False. http://www.microsoft.com/mac/office-university

That works until you get into anything complicated. Recently, I had a spreadsheet that our finance team built that provided different calculated values (for a multi table aggregation, nothing simple for sure) on Excel Windows and Excel OS X. This is not an uncommon problem - I've seen it a handful of times. Excel for OS X is at about 90+% parity with Excel for Windows.

This only bites you occasionally, but when you are a spreadsheet driven org (e.g. Finance groups in a company) you often need the performance/top-end feature set of Excel for Windows.

If they can create an actual Windows App Store (not a mobile, but Windows), they could more than make up the cost in the long run with a 30% cut (thats what everyone is charging for stores these days after all).

Not to mention their Office 365, MSDN, etc lines that are mad profitable.

>>> Not to mention their Office 365, MSDN, etc lines that are mad profitable.

Combined with their Azure services, they've developed several other valuable streams of revenue. Probably enough where they can give away their OS for free in order to gateway these users onto their other products and services. This is a classic business move, the same thing Apple has done for years with its products.

Granted, they're not the biggest, but they are starting to put a dent in Amazon's market:

http://www.infoworld.com/article/2608726/cloud-computing/clo...

"Our commercial cloud revenue grew 147 percent this quarter, driven by both Office 365 and Azure. Our commercial cloud annual revenue run rate more than doubled this year and now exceeds $4.4 billion and with this rapidly growing scale we continue to expand our cloud gross margins."

>> thats what everyone is charging for stores these days after all But as soon as Microsoft starts doing it, everyone will bury them in negative reviews and criticism for being evil, greedy and the reason the industry sucks. The "everyone else is doing it" excuse doesn't work for Microsoft, people just want more reasons to hate it.

They also tried this with Windows RT.

Do you mean non-RT apps? Microsoft has two app stores already, one for phone and one for tablet/desktop.

The desktop Windows Store is so bad, it hardly counts as a real app store. You're more likely to install a scam than the app you want.

I think it's unlikely.

1) Apple makes a fraction of its revenue from the app store, about 8%. And they're considered one of the two, if not the most, successful app store on the planet.

2) PCs, as opposed to mobile platforms, are open systems with a radically different distribution culture. You visit a website, click a button to launch an installer, choose a directory and go. Yes, the customer would prefer an app store, but giving MS a 30% cut when you drive all the traffic and marketing and downloads on your websites anyway? Unlikely. On Mobile there's not much of a choice.

It's obvious that a windows store will generate revenues and would be a good move. Mac and Linux have em, and if well executed on the biggest PC/Laptop platform in the world, then it can be a big deal. Just look at Steam, somehow it drives so many eyeballs that publishers are willing to give a cut to Steam to do something they're already doing themselves on their own website easily: distribution.

But steam being the favorite by far, still makes between 1 and 2 billion dollars in revenue.

In short it's pretty unlikely to see MS really thrive on app store revenue. It'll be a decent product, but it's probably more for improving the customer experience (through a properly curated store) and get people to like Windows again than to make a ton of money. For MS it seems it's still all about selling licenses to vendors, office and enterprise/education. It's kind of funny how extremely non B2C it is, and how B2B focused it really is, for a company that builds products used by billions of people. I think these latest moves have kind of shown MS understands that and is trying to get closer to (dealing with) the customer: build their own hardware, make their software free.

Enterprise. Never forget enterprise.

Microsoft makes money through their enterprise lines that Apple and Google wish they could get their hands on.

We pay MS $3-5m/yr for desktop & server licenses to support a company wtih about 25,000 users/PCs. Their licensing model is extremely convoluted, and near impossible for a single person to fully understand. All the VARs have their own teams to work with enterprises on MS licensing & true-ups, and of course MS have their own org to help, too. It's not just counting usage, either, because so many products can be licensed in so many different ways.

For example, you can license Windows desktop OS by named user or by machine. If you do it by machine, it's cheaper, but if you do it by named user then that user can utilize the license on up to 5 (I think) devices (PCs, tablets, phones, whatever). Generally speaking, licenses by machine are called CALs (client access licenses), and the way you get to a number is by running a report in Microsoft's System Center Configuration Manager (MS SCCM), which is a server platform that helps you manage and distribute software to machines attached to your Active Directory domain(s). However, there is another option for desktop licensing: desktop virtualization using Microsoft Remote Desktop running on a server or VM. In this case, you have to pay for RDP CALs, which cost about 3x what a desktop "Core" CAL does. If you're running Terminal Server (for the RDP clients to access), you have to license that (the server OS + Terminal Server itself) ... however, you can reduce the Server OS license by also licensing Windows Server Datacenter Edition, which lets you pay once per Virtual Host and lets you spin up as many Windows Server VMs on that host as you want.

Anyway, counting all this and figuring out the contract amount is done using these SCCM reports, plus a bunch of manually counted stuff plugged into a complicated Excel workbook with many tabs, formulae and hidden VBA ... and then you start the person-to-person negotiations with Microsoft, because depending whether you're a category A, B, or C enterprise you get different pricing, and you can be in different categories for different products or product lines.

I'd say that each time we have to do a true-up it consumes about 1000 person hours.

m = 1000, or m = 1000000?

(Sorry, my definition of those suffixes has been forever muddled by working in finance :( )

1,000,000

I'm guessing he meant "M". "k" is usually described to count thousands. [1] I'm curious, in what country do you live that finance uses different prefixes?

[1]: https://en.wikipedia.org/wiki/International_System_of_Units#...

The US -- have worked at a couple of banks so far, and M for thousand and MM for million have been constants.

The iPhone alone is making more in a quarter than Microsoft makes in an entire year. I'm pretty sure Apple couldn't care less about Microsoft right now.

Let's not overstate things. Apple is roughly twice as large as Microsoft as far as the numbers go, with 30K fewer employees. Jobs' decision to own the entire tech stack paid off for them handsomely.

>Jobs' decision to own the entire tech stack paid off for them handsomely.

Sure. But to be fair, Microsoft's four decades of returning non stop profits is more remarkable than Apple's relatively recent success and it's chequered record overall. No technology company is likely to wield the kind of power that Microsoft had in the 90's. So the advantage in doing software or the entire stack is very time period sensitive.

They were never making money off the pirates anyway. This way they can get more people on their services, on a more secure OS that will be evergreen, potentially paying for extras, and at the very least helping their ML algos.

There are still OEMs who will have to pay for it. I think the number of people who actually upgrade their version of Windows rather than just buying a new device is relatively small.

Making hardware - Surface, Dongle PC: http://news.softpedia.com/news/Microsoft-Unveils-Windows-8-1...

They are also giving away visual studio now which is part of >1bn$ development business division

Most of those that qualify for the free version open-source, individual, and businesses under $1 million USD/year gross are a very small part of the money they made, and likely creates far more benefit to mindshare than the losses they're seeing.

As with any MS licensing press release it is necessary to read the fine print: this is only for upgrades, so first you need to install something and then upgrade it, and only upgrades from Windows 7 and up as opposed to the more easily acquired/pirated Windows XP that is prevalent in China.

There were a lot of people trying to read the fine print about the free Windows upgrades "for one year," spinning out wild conspiracy theories about how everyone would have to pay a yearly license that turned out to be based on a misreading of some journalist's summary of what Microsoft said. If we're going to read the fine print and look for loopholes, we should wait for something more substantial than a Reuters article.

Read on Ars Technica that ZDNet's Ed Bott received confirmation from a Microsoft spokesperson. ZDNet shows a chart.

Ars Technica: http://arstechnica.com/information-technology/2015/03/window...

ZDNet: http://www.zdnet.com/article/windows-10-to-launch-this-summe...

From the ZDNet article you linked:

> The additional detail about free upgrades for "non-genuine" (i.e., pirated) copies of Windows was a surprise, and it leaves multiple unanswered questions. Earlier, Microsoft said that consumer PCs running Windows 7 and Windows 8.1 would be entitled to free upgrades to Windows 10 for the first year after the product is released. A Microsoft spokesperson confirmed via email that the plan to allow free upgrades for non-genuine copies of Windows applies to all markets and is not limited to China.

So it's not limited to China. But there are other "unanswered questions." I think it's prudent to wait for those to be answered, rather than assuming based on early news reports. Windows 10 isn't out until some nebulous summer launch anyway.

Couldn't users just install Windows 7 without a license key? The trial period initially lasts 30 days and can be extended up to 120 days, I believe.

Oh that would be too funny if you could do it. Given how MS fired all their Windows org QA folks it wouldn't surprise me if something like that slipped through too.

Or they don't care if you do it. The number of people willing to do that is small, the amount of money they would pay for Windows if they couldn't do that is probably even smaller. They are literally willing to replace every pirated copy of Windows 7 in the world with Windows 10 just for the marketshare. They don't want another zombie OS like XP, they want people in the Windows Store and Xbox Music and Xbox Video, they want people using Project Spartan and Cortana. They are doing everything they possibly can to get Windows 10 into as many consumer hands as possible without totally gutting their OEM licensing fees (which they are willing to take a hit on to compete with Android and Chromebooks) or cutting into their enterprise fees. They are putting up JUST enough barriers to getting free Windows 10 to keep their actual Windows profit centers (OEM and enterprise) paying happily, while passing it out like candy at a parade to consumers, who have as a rule never paid for Windows directly anyway.

Well, if everyone is already using the pirated software in China, making it free means no loss in profit, but an increment in legitimate beta testing. I guess a free early release for China would make much more sense and might result in a higher quality general availability release... or do we also need to wait for Windows 10.1?

How would someone prove they are from China? It surely can not be just ip address or language setting based

Read the article. They don't care where you're from. If your copy isn't legit, you can upgrade to a legit copy of 10.

>"We are upgrading all qualified PCs, genuine and non-genuine, to Windows 10,"

My entreprise has migrated from XP to Win7 last year and is in no hurry to migrate again.

I think the strategy of microsoft is to accelerate the migration of users, even if it is for free in order to stimulate entreprises to migrate earlier and more often.

OK everybody, time to pirate Win7!

At that point why not make it free for everyone, even the Pro version, charge more for CALs if you wish.

You can more quickly retire older versions if the new one is free too, saves money.

Wasn't Vista supposed to have some revolutionary database like file system ?

Will we ever get to see it ?

EDIT: Wasn't being snarky, was just wondering if it's still in the works.

Long ago, when it was still called Longhorn, yes. But it ended up being cut.

IIRC, it got axed as a separate product but some features from it were carried over into NTFS. Similar to how Courier was killed, but they used what they learned from it to build the Surface platform.

So it will be free for everybody in summer right ?

I guess India will also fits into this strategy

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