Microsoft prays for service revenue with free Windows 8.1 with Bing for tablets

Pushes OEMs to lower tablet prices and throws in Office, all to drive larger sales share

Microsoft today confirmed that it will be giving a new version of its OS, "Windows 8.1 with Bing," to tablet makers free of charge as it tries to boost the market and sales shares of its flagship OS.

As the name implied, the edition will default to Microsoft's own Bing search service.

The version had been talked up earlier this year as a possible experiment by Microsoft with a free, consumer-grade edition of Windows. At the time, those rumors centered around Windows 8.1 with Bing as a free or very-low-priced upgrade from Windows 7, and were seen as yet another attempt to "go low" to give its OEM (original equipment manufacturer) partners a way to compete in the low price bands dominated by Android tablets.

Today, Microsoft clarified Windows 8.1 with Bing's positioning.

"As we move forward, many of these lower cost devices will come with a new edition of Windows called Windows 8.1 with Bing," said Microsoft spokesman Brandon LeBlanc on a company blog.

The low-priced devices LeBlanc mentioned will be announced by a number of partners in the run-up to Computex, the huge computer trade show held in Taipei, Taiwan. Computex runs June 3-4.

Windows 8.1 with Bing will be free to OEMs, a result of the deal Microsoft announced in early April at its Build developers conference. There the company said it would waive the licensing fee for Windows Phone and Windows to smartphone makers and OEMs crafting tablets with screens 9-in. or smaller.

LeBlanc also said that many of those devices will also come bundled with Office 2013 or a one-year's subscription to Office 365, Microsoft's rent-not-buy software plan.

"This new edition [Windows 8.1 with Bing] will only be available preloaded on devices from our hardware partners," LeBlanc said, making clear it would not be available through retail channels. "Some of these devices, in particular tablets, will also come with Office or a one-year subscription to Office 365."

The Office deals had been revealed earlier in online reports, but this was the first time Microsoft confirmed them publicly.

Windows 8.1 has also been tweaked so that it can be installed on the cheapest devices, those with just 1GB of system memory and 16GB of flash-based storage space. The technology Microsoft will use, dubbed "WIM" for "Windows Imaging," is a file-based, heavily-compressed disk image format introduced in Windows Vista.

Most analysts believe that these moves were all part of a strategy to get Windows on as many devices as possible so it can try to generate revenue from services -- including Bing (advertising), OneDrive and Skype (premium charges), and Office 365 (subscription fees) -- to replace money lost from licensing.

Windows 8.1 with Bing will not lock users into Microsoft's search engine, LeBlanc promised. "Customers will be able to change that setting through the Internet Explorer menu, providing them with control over search engine settings," he said.

Microsoft has failed thus far to generate much interest in tablets powered by Windows. According to researcher IDC, Windows tablets accounted for just 3.4% of all tablets shipped in 2013, a far cry from the 35% of Apple's iOS and the 61% of Google's Android.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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