Windows is Now Free for Phones and Mini-Tablets

The single biggest announcement in yesterday's Build keynote address hasn't gotten the attention it deserves: Microsoft will now license Windows and Windows Phone for free to hardware makers that make devices with screens smaller than 9 inches. That's all smart phones, of course, but it's also all mini-tablets, which is the volume part of that market.

This is all very exciting. But there are also a lot of questions. Questions that Microsoft, so far, isn't answering. So let's look at how this was announced. It came late in the keynote, over two hours in, and was part of a bit about a coming new Windows offering for very small devices that connect to the cloud Microsoft is calling it Windows for the Internet of Things, or Windows IoT.

"We really want to get this platform out there," Mr. Myerson said. "We want to remove all the friction between you [developers] and creating these devices, remove any hesitation you may have about applying that creativity to creating new Internet of Things devices. So I want to announce today that when we have this new Windows for the Internet of Things available, Windows will be available for zero dollars."

And then the hammer fell.

"But we're not stopping there," he continued. "Again, to drive adoption of your [developer] applications, to get your applications out there to more customers, on phones and tablets with screen sizes less than 9 inches, we are making Windows available now for zero dollars."

And that was literally it. Really just a couple of sentences and a single slide.

We can connect some dots, however.

First, rumors of a free version of Windows have been swirling for months. In February, I reported on these rumors and noted that Microsoft was in the middle of moving towards much less expensive Windows licensing terms for low-end devices. I believed then that this move included Windows on the desktop, tablet and on phones, and not just traditional Windows.

Also in February, Microsoft announced a bunch of new Windows Phone licensees. Noting at the time that the OS hadn't changed in the slightest, it was clear to me that this sudden explosion in hardware maker interest was due to a steeply reduced (if not removed) licensing fee for Windows Phone. We now know this to be true.

But it's clear that Microsoft's licensing frenzy isn't just about free versions of Windows for very small devices. It's also about very cheap licensing for smaller PC-type devices. First were the rumors. And then we see the actual offering in Windows 8.1 with Bing Revealed.

I think what we're left with is the following:

Windows Phone is free, period.

Windows is free on tablets with screen sizes of 9 inches or less. That is all mini-tablets, the volume part of the market.

Windows with Bing is available as a very low-cost offering for PC makers that wish to create PCs that cost less than $250.

And Windows is available for the normal licensing fees on more expensive tablets, Ultrabooks and other PCs.

At least that's how I see it, until Microsoft comes clean with its exact plans.