Microsoft takes extraordinary step, will give pirates free Windows 10 upgrade

Microsoft will offer a free upgrade to Windows 10 to users running pirated copies of earlier editions.

The company also narrowed the launch date of the upgrade to "this summer," although it did not get more specific than that. Previously, the firm has said it would release Windows 10 this fall, which most experts interpreted as October because of past debut dates.

Reuters first reported on Microsoft's plan to offer Windows 10 free of charge to pirates.

The company is going to upgrade "all qualified PCs, genuine and non-genuine, to Windows 10," Microsoft confirmed today, reiterating what Terry Myerson, the chief of Microsoft's operating systems group, told Reuters. "Non-genuine" is Microsoft-speak for illegal copies.

The move would be unprecedented for Microsoft, which has spent years, devoted significant resources and developed numerous technologies to battle piracy, notably in the enormous Chinese market, where an estimated three-fourths of all installed software is pirated.

"They've done 'get legal' programs before, but those have always come with some kind of cost," said Michael Silver, an analyst with Gartner, referring to various initiatives, including one in 2007 aimed at prompting users to buy legitimate licenses.

Microsoft elaborated in a statement. "Anyone with a qualified device can upgrade to Window 10, including those with pirated copies of Windows," a company spokesperson said. "We believe customers over time will realize the value of properly licensing Windows and we will make it easy for them to move to legitimate copies."

It was unclear what limitations, if any, Microsoft meant with the "qualified device" comment.

The free Windows 10 upgrade will be offered to devices running Windows 7 or Windows 8.1, but not those running older editions, including the now-retired Windows XP or its flop of a follow-up, Windows Vista.

The restrictions will leave a sizable minority of Chinese Windows-powered PCs out in the cold. According to Web analytics firm Net Applications, 38% of all personal computers in China ran Windows XP or Vista last month; a majority -- 52% -- ran Windows 7, while another 8% ran Windows 8 or 8.1.

"Microsoft is trying to build an ecosystem around Windows 10, and this would let them count the Windows devices running pirated copies," said Silver when asked to speculate about Microsoft's motivation for the move.

If Microsoft can entice hordes of consumers to upgrade to Windows 10, especially the huge numbers now running Windows 7, it will be able to build a bigger pool of potential customers for the services it shills as well as for apps from third-party developers. The lack of apps, caused in part by Windows 8's fiasco, has branded Windows as an also-ran OS in a world where mobile is king, queen and court. To recover, Microsoft has pulled out the stops on Windows 10 uptake.

The free-to-pirates decision also meshes with the Redmond, Wash. firm's revamped monetization strategy, which deemphasizes licensing revenue in favor of a "freemium" model where, for consumers at least, software and services are handed out free of charge with the expectation that money can be made on premium levels of functionality.

"This whole model is predicated, not on the notion that someone will pay you before they get to use your products, but on the complete opposite, that almost every one of your products ... will have a free tier," said Chris Capossela, Microsoft's head of marketing, in an hour-long presentation Monday at the firm's Convergence conference in Atlanta.

"The model is based on an increased market share for Windows 10," said Silver. "[The free upgrade for non-genuine licenses] means more monetizing of the platform."

While Microsoft has not said when it will officially release Windows 10, the new summer timetable could be a boon if the OS is available to OEMs (original equipment manufacturers) in time to fill the channel with new devices for the U.S. back-to-school season, the second-biggest sales period of the year. Typically, new Windows editions have missed back-to-school.

Also today, Myerson announced new partnerships with several Chinese companies to distribute Windows 10 upgrades, including computer maker Lenovo; China's biggest social network, Tencent; and Qihu 360, a Chinese security firm also known for its 360 Secure Browser.

Lenovo will provide upgrade services at its 2,500 service centers in China, while Tencent and Qihu 360 will each directly offer the Windows 10 upgrade to their users. Both Tencent and Qihu 360 have huge numbers of customers in the People's Republic: 800 million and over 500 million, respectively, Microsoft said.

Those partnerships with major Chinese technology firms, and the aimed-at-China Windows 10 upgrade offer, stood in contrast to recent troubles Microsoft has had in the country. Last year, antitrust regulators there targeted the U.S. company with incompatibility and bundling allegations.

And in the fourth quarter of 2014, revenue from China was surprisingly weak, Microsoft admitted. "Our results in China and Japan fell short of our expectations," said CFO Amy Hood in a January call with Wall Street.

The problem with China, added CEO Satya Nadella, was due to "a set of geopolitical issues that we are working through," an allusion to the antitrust investigation.


Gregg Keizer

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