Report: Microsoft eyes Android's free model

Scott Martin | USA TODAY

SAN FRANCISCO — After years of drubbings by Google on Android, Microsoft may be finally updating its playbook to borrow a page from the search giant in mobile.

Redmond, Wash.-based Microsoft is considering offering free versions of its Windows Phone and Windows RT to device manufacturers, according to a report from The Verge, citing sources familiar with Microsoft's plans.

USA Today was unable confirm the report. Microsoft did not immediately respond to a request for comment.

Google's free Android software has stormed the world, taking a leading position while pushing Google's services and ads to rope in revenue. Microsoft, which charges device makers for its software, has remained a distant No. 3 on smartphones.

"While monetization through alternative means such as ads and app stores is an industry norm today, within Microsoft this thinking (is) outside the box," says IDC analyst Al Hilwa.

A switch by Microsoft to make its operating system software free to manufacturers would be a competitive pricing move that could help boost its market position.

Microsoft's operating system has 3.6% of the worldwide market compared with market-leading Android at 81.9% and Apple's iOS with 12.1%, according to Gartner. Microsoft in July took a $900 million write down against its lackluster Surface tablets.

Microsoft's option to go free is under consideration by operating system chief Terry Myerson and would involve a plan to transition to advertising and app revenue, according to the report.

"A move like this shows that they get the business changes taking place in the industry and the strategic threat they represent," says Hilwa.

Speculation has mounted for weeks that Microsoft is nearing a choice for its successor to CEO Steve Ballmer, who announced his retirement in August.