Microsoft Corp (MSFT) Lowers Windows 8.1 License Fee to Combat Chromebooks


Microsoft Corporation (NASDAQ:MSFT) is planning to reduce the license fee for its Windows 8 operating system to help manufacturers of less expensive personal computers (PCs) and tablets compete better with Google Inc’s (NASDAQ:GOOG) Chromebooks and other competitors, according to Bloomberg based on information familiar with the matter.

People with knowledge about the plan said the software giant will only charge $15 license fee for to pre-install Windows 8.1 on devices that has a retail price of less than $250. Microsoft Corporation (NASDAQ:MSFT) normally charge $50 to pre-install the operating system.

The discount is applicable to all manufacturers that will meet the price limit for any computer or tablet. The software giant has no restriction regardless of the type or size of the device, according to the sources who requested Bloomberg to keep their identities anonymous because the plan is not yet public.

During the previous quarter, Microsoft Corporation (NASDAQ:MSFT) reported that the revenue of its devices and consumer licensing division, which include Microsoft software declined due to stronger competition from Apple Indc (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG).

Earlier this month, the software giant said it was able to sell 200 million Windows 8.1 operating system licenses since its market launching in October 2012. The adoption rate for the operating system is slower compared with the Windows 7 operating system. The company recently announced that it will end its mainstream support for Windows 7 Service Pack 1 on January 13, 2015, and stop extended support on January 14, 2024.

Microsoft Corporation (NASDAQ:MSFT) is hoping to increase revenue by offering discount to the manufacturers of low cost PCs. The software giant also aims to increase market share of Windows 8.1 in the $80 billion tablet market, which is expected to continue to grow globally. The company also wants to prevent the growth of Chrome operating system of Google Inc (NASDAQ:GOOG) that runs on Chomebooks.

According to International Data Corporation (IDC), the global PC shipment fell 10 percent last year. The market research firm projected that the decline in the PC market will continue as more consumers are shifting to mobile devices such as tablets. The operating systems of Apple Inc (NASDAQ:GOOG) and Google Inc (NASDAQ:GOOG) dominate the tablet market.