Microsoft reportedly cutting Windows 8.1 licensing fee by 70% for cheaper devices

Microsoft recently has been on the offense against perceived competitors in the form of the Apple iPad and Chromebooks powered by Google's Chrome OS , and now they're taking the fight straight to their Windows licensees by slashing the cost they'll be required to pay by 70%. The reported cuts bring the cost per device for Windows 8.1 down to $15 for devices that will retail for less than $250. The standard licensing cost is $50, though it can be brought down closer to $30 when marketing incentive funds are factored in. Bloomberg's "people familiar with the program" said:

Microsoft is seeking to speed up development and introduction of new devices. It won’t require products that use the cheaper licensing to complete logo certification, a process that verifies hardware compatibility, one of the people said. Devices aren’t required to be touch-screen compatible, sources said.

Adoption of Windows 8 has steadily grown, though unlike with previous releases there was little difference in sell-through rates when the new OS was released. As of earlier this month, Microsoft reported that they had sold more than 200 million licenses for Windows 8.

Microsoft tried a similar strategy back in 2008, slashing the licensing cost for Windows XP for netbooks. That move may have backfired, for the proliferation of lower-priced netbooks ended up taking a $465 million bite out of Microsoft's revenue, forced them to lay off 5,000 employees, and saddled a generation of computer users with sub-par hardware.

But maybe it will work out better this time around. Certainly, the lower cost hardware of today is far more capable of running something like streamlined Windows RT 8.1 than the anemic netbooks of six years ago could handle an XP so bloated it had to be stripped down for their benefit. Right?

Source: Bloomberg