Image from the Windows blog.

Windows blog

At its press event today, Microsoft announced that Windows 10 will be a free upgrade for Windows 7 and Windows 8 users during its first year of availability. There was some confusion, however, when Microsoft's Terry Myerson started talking about Windows 10 "as a service." Did that mean that after that first year of free availability, Windows 10 would cost an annual fee? I asked Myerson for clarification after the presentation, and he confirmed that there will be no additional fees attached to Windows 10, whenever you buy it.

Myerson clarified that Windows 10 users will still get free updates and support for the lifetime of the OS, exactly like past versions of Windows (like XP and Windows 7's Service Packs, for example). There's no subscription model for updates or support or continuing to use the OS. Myerson's reference to Windows "as a service" simply meant that Microsoft plans to update the OS with smaller, more regular updates rather than the big, chunky updates of past Service Packs.

A year after Windows 10 is first available, it will no longer be a free upgrade for Windows 7 and 8 users. Microsoft will then sell Windows 10 the same way it has sold past versions of Windows. MS hasn't set a specific price yet, but Myerson said the price will likely be comparable to past versions of Windows. Windows 8 costs $120 on Amazon, for instance.

Update: It seems there's still confusion. It is very clear from this post that for the first year it's available, you can upgrade to Windows 10 for free if you have Windows 7 or 8. You will not pay for it. After that year is up, nothing will happen to your Windows 10 license. If you do not upgrade within that year, however, you will have to pay for an upgrade. The offer expires after a year, not the upgrade.