Microsoft mulls cheap PCs supported by ads, subs

Want a low-cost machine? Agree to be bombarded and the Windows giant could have a solution for you

In a world where global sales of PCs are declining and more work is shifting to the cloud, what can the maker of the world's ubiquitous operating system do to keep money coming in?

For Microsoft, part of the answer might lie in low-cost, cloud-connected systems paid for through subscriptions and ads.

We know, we know. A lot of Reg readers must be very excited and want to be the first to grab a cheap Windows machine that is ad-supported. You'll have to calm down. They're just at least thinking about it at this stage.

A number of job postings – including this now-closed ad from late September for a principal software engineering manager – are looking for engineers and others to become part of the "newly formed Windows Incubation team" whose mission is to "build a new direction for Windows in a cloud first world."

The lofty goal is to "move Windows to a place that combines the benefits of the cloud and Microsoft 365 to offer more compute resources on demand and creates a hybrid app model that spans from on-premises to the cloud." According to the ad, it also includes "building a Web-based shell with direct integration with Windows 365."

Included in the possible models are low-cost PCs available via subscriptions, with advertising helping to offset some of the costs. (Also mentioned in the job are direct-to-cloud devices.)

This is something that CEO Satya Nadella alluded to during comments to financial analysts following Microsoft's October 25 release of its Q1 FY23 numbers.

Answering a question about Microsoft's three to five-year plan for advertising – Microsoft in July said its technology will power Netflix's first ad-based subscription model – Nadella said the goals include focusing on moving ads through its own offerings.

We're reminded that Windows 11 already has promoted apps and other marketing sprinkled in the Start menu and other places. And in March, ads in File Explorer showed up briefly as an "experiment."

Nadella pointed to the 20 percent growth of active Windows devices during the COVID-19 pandemic, adding that "one of the big opportunities it opens up is for us to take our own owned-and-operated inventory, right, whether it is Bing and Search, whether it's the feed... We are share takers in the browser. We are share takers in terms of the engagement of the feed."

Putting ads in front of Windows business users and consumers may be part of that engagement.

For Microsoft, there was a 15 percent year-over-year decline in Windows OEM revenue for the quarter. However, revenue for Windows commercial products and cloud services jumped 8 percent, helped by demand for Microsoft 365 E5 suite of cloud-based apps.

Eyeing more of a cloud-based future for Windows might makes sense to accountants in Redmond, enabling Microsoft to rely less on expensive PCs to sell the operating system and appealing to investors by adding another option in the cloud with Microsoft 365.

Windows 365 launched a year ago and is available to professionals and business users. It could be extended to consumers, who may then access the cloud applications through an internet connection and experience the pleasure of accompanying ads. Don't all rush. ®