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Many people may have forgotten that before the “Windows as a Service” strategy was introduced, users had to pay for upgrading from Windows 7, Vista and XP to Windows 8. And this tradition was not completely broken until Windows 10 was launched.
Many people may have forgotten that before the “Windows as a Service” strategy was introduced, users had to pay for upgrading from Windows 7, Vista and XP to Windows 8. And this tradition was not completely broken until Windows 10 was launched.
So why did Microsoft suddenly change its attitude and turn the upgrade that was originally charged into free?
Recently, Dave Plummer, a former senior engineer of Microsoft (who was involved in the development of MS-DOS and Windows 95), talked about the behind-the-scenes story of why Microsoft shifted from a “one-time deal” to “Windows as a Service” on his YouTube channel Dave’s Garage. His memories not only revealed the internal logic of that transformation period, but also gave us a clearer view of the turning points in the development path of Windows.
After all, up to now, there are still many people who are reluctant to part with Windows 7. Looking at those old devices that cannot be upgraded to Windows 11, perhaps a hint of melancholy still lingers in their hearts.
Original video: https://www.youtube.com/watch?v=9KNhHThIU84
The story begins in the early 2010s.
Microsoft’s Windows 7, launched in 2009, achieved great success. With its stable performance and excellent user experience, it received unanimous recognition from both individual users and enterprise users.
However, the situation with Windows 8 released by Microsoft in 2012 was not good. At that time, Microsoft made bold changes to the interface of this operating system, such as removing the “Start” menu and adopting a design more inclined towards touch control. This caused a lot of users to be dissatisfied. Although these changes were intended to promote the application of Windows on touch devices, the fact is that Windows Touch did not become popular at all.
As a result, many users simply ignored the existence of Windows 8 and continued to use their favorite Windows 7.
During that period, Microsoft’s situation was not optimistic. On one hand, the user base was divided, the company’s image was affected, and the financial performance was not satisfactory. On the other hand, the PC market as a whole began to decline. With the popularity of smart phones and tablets, people were less likely to change their computers, PC shipments decreased year by year, and the industry entered what was called the “long-term downturn” stage.
In the past, Microsoft mainly made money by collaborating with computer manufacturers to pre-install Windows on new machines, rather than by selling the system separately. However, the problem was that old users were reluctant to upgrade, and the new system was unable to effectively stimulate the sales of new computers. As a result, the entire ecosystem came to a standstill.
Meanwhile, competitors are quietly changing people’s perception of the value of operating systems. As early as 2013, Apple announced that Mac OS X Mavericks would receive permanent free updates. The then CFO of Apple even publicly stated: “You no longer have to spend money on upgrading Mac OS.” Apple was able to do this because it mainly makes money by selling hardware, and the free system was merely to make users more willing to continue using its products.
On the Linux side, the operating system has always been free. Versions like Ubuntu and Mint have long offered users the option to try out the new system without spending a penny.
In this context, each time Microsoft upgrades its system, it still charges users $100. This seems rather outdated. To cope with this change, Microsoft began to rethink its strategic direction.
In February 2014, Satya Nadella took over as CEO, bringing with him a new philosophy: no longer regarding Windows as the absolute core of the company, but shifting the focus to cloud services and continuous user interaction. Internally, the model gradually shifted to “Windows as a Service”, no longer being an end-to-end transaction where the sale of a system concludes the deal, but rather like providing a service, with continuous updates and long-term operation.
This directly led to the free upgrade policy for Windows 10. Microsoft announced that all genuine users of Windows 7, 8, or 8.1 could upgrade to Windows 10 for free within the first year after its release. This was a major move at that time – you know, previously upgrading from Windows 7 to 8 often cost anywhere from $100 to $200. Microsoft even promised that future updates for Windows 10 would also be permanently free, officially saying goodbye to the era of “paid upgrades”.
The purpose of this action is quite clear: to enable more people to use the latest version of Windows as soon as possible. Senior Microsoft officials have also publicly stated that they hope to have 1 billion devices worldwide running Windows 10 within a few years. A unified platform not only reduces system fragmentation and lowers support costs, but also enables the entire ecosystem to operate more smoothly. From a technical perspective, this free upgrade approach does indeed help promote the healthy development of the entire ecosystem.
This strategy is actually in line with Microsoft’s overall transformation direction – from “selling software” to “selling services”. Windows 10 is no longer just an operating system; rather, it is more like the gateway of Microsoft’s ecosystem. Through this entry, Microsoft can promote a series of paid services such as OneDrive, Skype, and Office 365 to users. It is no longer the kind of product that is sold once and then forgotten; instead, it has become a platform that can continuously retain users.
Meanwhile, enterprise users are gradually accepting the subscription model. Microsoft has launched versions such as Windows 10 Enterprise E3 and E5, which are bundled together as part of Microsoft 365 and sold at a discounted price. These packages include not only Windows but also Office 365 and a complete set of enterprise-level security tools. Although upgrades for ordinary consumers are free, this step also helped Microsoft promote the “continuous updates” concept in the market, paving the way for the subscription model for enterprise users.
There is another important reason why Microsoft does this: data. Windows 10 has incorporated a large amount of telemetry features from the very beginning, automatically transmitting some usage data, such as system performance, error information, usage habits, etc. These data can help Microsoft identify problems more quickly, optimize functions, and adjust designs. Previously, they had to rely on beta versions and user feedback; now, they make decisions based on actual usage, which is faster and more accurate in terms of direction.
However, this approach has also sparked a lot of controversy. Especially when Windows 10 was first launched, it would automatically collect a large amount of user data, including location information, browsing history, used applications, and even voice search content. Although Microsoft claimed that these data were anonymous and were used to optimize user experience, for many people, the seemingly “free” operating system seemed to come with considerable privacy costs. Thus, some people began to question: “If you didn’t pay for this product, then could you be the product yourself?”
Apart from data collection, Windows 10 also incorporates a lot of advertisements and promotional content. For instance, recommended applications in the Start menu, sudden prompts of Edge or OneDrive on the taskbar, and even full-screen pop-ups reminding you to subscribe to Office 365. This has made many users feel that Windows is turning into an “advertising operating system”, no longer being the simple tool it once was. After all, in previous versions of Windows, there were absolutely no such advertisements to disturb.
However, Microsoft has indeed found ways to make money from other sources, such as taking a percentage from app stores, earning advertising fees through Bing search, guiding users to subscribe to Microsoft 365, and so on. Moreover, the update frequency of Windows 10 has significantly increased. Initially, there were even two major updates per year, and all of this is inseparable from the continuous support of those vast amounts of telemetry data. This continuous iterative approach has gradually transformed Windows from a traditional software into a “continuous operation service”.
In fact, within the first year of its release, Windows 10 was installed on over 300 million devices, becoming the fastest-growing operating system in Microsoft’s history. Microsoft itself regards it as one of the world’s largest online services. All of this is based on that bold “free upgrade” initiative.
From a broader perspective, this is actually Microsoft’s response to the changes in the entire PC industry. After all, the PC market is no longer growing at the rapid rate it used to. Consumers no longer replace their computers just because of a new system. More and more people choose to install Windows 10 directly on their old machines instead of spending money on new devices. Even some reports indicate that the free upgrade of Windows 10 has further slowed down the growth of PC shipments.
Although this strategy will reduce the revenue from system sales in the short term and even slow down the growth of PC sales, what Microsoft cares more about is whether users will stay. After all, if users have to pay every time for an upgrade, many people might simply switch to using Mac or Chromebook. Microsoft wants to reduce the risk of user churn through “free upgrades” – even if it means earning less in terms of hardware sales, it still needs to hold onto the Windows ecosystem. For Microsoft, holding onto this ecosystem is much more important than a one-time upgrade revenue.
On the other hand, Microsoft is indeed facing considerable competitive pressure. Apple has long made system upgrades free and bundled productivity tools like iWork, making them seem particularly cost-effective. The Linux world is already known for its “free + open source” approach, and it is particularly attractive to technical users. To cope with this situation, Microsoft is simultaneously lowering the usage threshold of Windows and actively embracing open source, such as allowing users to run Ubuntu on Windows or run Linux in Azure cloud services – the aim is to bring back the technical community and developer groups.
Furthermore, Microsoft’s free upgrade initiative also has an underlying goal: combating piracy. In many emerging markets, Windows piracy was once very common. Microsoft attempted to incorporate some non-licensed users into the legal system in a “seemingly lenient” manner. As long as they upgraded to Windows 10, even if they didn’t pay, they might eventually spend money on apps, games, and subscription services, thereby recovering the losses from another perspective.
Overall, the free upgrade of Windows 10 was a crucial step for Microsoft to shift from “selling software” to “selling services”. Although it sacrificed some short-term revenue, it gained a vast user base and a more stable ecosystem. This was both a defensive move to hold onto its position and a strategic offensive towards the future.
Ultimately, Windows 10 became the fastest adopted system in Microsoft’s history, officially ushering in a new era.
This article is from the WeChat public account “CSDN”, translated by Su Mi. It is authorized for release by 36Kr.