More on Where Windows Needs to Go

Last month, I opined that if Microsoft wants to remain competitive it's going to need to give up on the idea of selling operating systems. That era is over. Well, they seem to be getting with the program in a minor sort of way:

Microsoft Corp. (MSFT) is cutting the price of Windows 8.1 by 70 percent for makers of low-cost computers and tablets as they try to fend off cheaper rivals like Google Inc. (GOOG)'s Chromebooks, people familiar with the program said.

Manufacturers will be charged $15 to license Windows 8.1 and preinstall it on devices that retail for less than $250, instead of the usual fee of $50, said the people, who asked not to be named because the details aren’t public.

It's definitely too little. Whether or not it's too late, only time will tell.

At first blush, this looks like a considerable discount. But at $15,  the price of Windows would still represent 6% or more of retail price on its face ... and in fact, considerably more.

Why?

Because Windows is a fat, bloated, slug of an operating system that requires a more expensive hardware build to run on than does ChromeOS or a reasonably light Linux distribution.

Windows needs more RAM. Windows requires a more robust CPU. Windows has to have more local storage for its OS files.

So if I'm building a laptop for the average user -- who browses the web, sends and receives email, streams some media and not much else -- Microsoft is asking me to spend $15 more on the OS than I need to and spend more building the device itself in order to offer that user stuff he or she will seldom if ever use and almost certainly won't consider a high priority when choosing a laptop.

Microsoft needs to rethink its OS. If they're smart, "Windows 9" will be called ExploreOS. It will consist of a re-modeled, de-crufted Internet Explorer browser, the files necessary to boot that browser and initiate an Internet connection ... and that's about it.

Yes, that means the revenue model will have to change. The OS itself is no longer going to be a profit center. The profit centers will be "enterprise-level" web apps, cloud storage and tech support, increased monetization of the Bing search engine (and possibly of the browser itself a la Firefox), etc.

The era of selling operating systems is over. Period. The sooner Microsoft realizes this, the less likely it is to go down as the next FW Woolworth.