SEATTLE (Reuters) - Microsoft Corp will give away its upcoming Windows 10 operating system as a free upgrade to users of the most recent versions of Windows and Windows Phone, as the world's largest software company tries to retain customers in the mobile era.
The action is a marked change for the company, which has always charged for new versions of Windows, one of its main profit drivers.
The 'free' strategy is designed to put Windows in as many devices as possible. The company would then make up for any lost revenue by selling services such as Office over the Internet, or cloud.
"It's a necessary evil as CEO Satya Nadella and Microsoft have recognised the 'golden goose' and major revenue opportunities will happen after the upgrades have taken place," said Daniel Ives, an analyst at FBR Capital Markets.
"Microsoft needs to lay seeds for its cloud-centric strategy and Windows 10 is the epicentre of that strategy. It's all about making it attractive for the ecosystem to upgrade onto this next-generation platform."
Investors were not impressed. Microsoft shares fell 1.5 percent to $45.67 on Nasdaq at mid-afternoon.
Windows 10, expected on the market this autumn, will be available for one year as a free upgrade to users of Windows 7, Windows 8.1 and Windows Phone 8.1, Myerson said.
The move was "inevitable," Forrester analyst Frank Gillett noted.