Even as it has cut the price of Windows—offering it for free on phones and small screen tablets, plus there's a Bing edition for everything else—Microsoft is still working on ways to monetize its platform. Chief Operating Officer Kevin Turner was speaking to investors last week, and GeekWire reported that profits are still the goal.

Asked if the plan was to make Windows a loss leader to draw people into the Microsoft ecosystem, Turner said that the company had "not had any conversations" on this. He reiterated this when asked if the company was going to start losing money on Windows, saying "that's not any conversations that we've had... we've got to monetize it differently."

What form might that different monetization take? Turner says that "there are services involved. There are additional opportunities for us to bring additional services to the product and do it in a creative way."

Turner didn't say what specifically Microsoft intended to do, revealing only that the plans will be revealed "through the course of summer and spring." However, he did give an indication of one thought that the company had: "finding new ways to monetize the lifetime of that customer on those [zero cost Windows license] devices."

The implication, then, is that Microsoft is looking at generating some kind of on-going revenue from Windows users to replace the initial purchase. Previous rumors have already pointed toward the creation of Windows subscriptions, and Turner's answer also points at some kind of subscription system.

The questions—and answers—allude to perhaps the biggest change facing Microsoft's business. The growth of the smartphone and the tablet may have changed the way we use computers, but arguably more significant for Microsoft is the change in how software is bought and sold. For three decades, Microsoft has sold operating system licenses to both end users and OEMs alike, and the company delivered paid upgrades for those operating systems every few years.

That was a model that originated when PCs cost thousands of dollars. The world today, however, has smartphones for $50 and tablets for $100; charging $50 to $200 for a Windows license on such hardware is untenable. The new Windows 8 licenses have, as Turner noted, enabled Windows to reach this hardware. He told investors that "it's wonderful to see these nine-inch and below devices explode, because that was an area, candidly, I was blocked out and I had no share of what was getting built."

Conversely, Microsoft isn't getting much money from these licenses today. There's some indirect income—Microsoft's commission from the app stores, advertising income from Bing and other Web properties—but nothing that compared to the guaranteed income the company was built on.

This shift probably represents less of a change for business users than for home ones. Business users have been paying for Windows subscriptions for many years through Software Assurance. The new no-cost Windows licenses lack certain key business features, so this income should be safeguarded for some years still. Want to stick your $100 Windows tablet on your enterprise domain? No problem—but it'll need a paid upgrade to an enterprise SKU.

On the consumer side, the company has, over the past few years, introduced a range of subscriptions. Both software, such as Office, and services, such as storage, are available. In its quarterly financial results, Microsoft suggests that at least some of these are doing well—millions of people are using the home-oriented Office 365 subscriptions, for example—but they're still small compared to the traditional Windows business.

So far, these subscriptions haven't applied to Windows itself. The closest they've got is OneDrive, which although integrated with Windows is strictly optional. We can imagine ways in which this might be extended to include more traditional parts of Windows—a time may well arrive, far in the future, where even the desktop itself becomes a paid feature, though we doubt the Windows software ecosystem is ready for that right now—but that's not the only option.

Alternatively, we may see a continuation of the kind of cross-promotional bundles like the bizarrely named "Work & Play" bundle. This $149 bundle offers one year of Office 365 Home (which includes OneDrive storage), Skype Unlimited World + Wi-Fi, Xbox Live Gold, and Xbox Music Pass. The name is an extraordinary thing, because Office 365 Home isn't actually licensed for work, so you're going to have to play games in Excel or something. Still, the idea is simple enough: combine enough value-added experiences and you'll have a bundle that people will pay for.

This kind of bundling would be unthinkable just a few years ago, not least thanks to Department of Justice oversight and antitrust concerns. But with such worries looking increasingly historic, we would expect Microsoft's future to contain a lot more of this kind of thing.

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