Not every day brings a new major version of Windows, but Microsoft is pitching today’s announcement of Windows 11 as just such an occasion. On the surface, it is more of an iterative update than any new version of Windows for a long time; it seems like, with Windows 10, Microsoft established a good foundation that does not require radical changes. At the time, Microsoft even went so far as to claim that Windows 10 would be the “last version of Windows”. Things change.
I’m probably never going to love any new version of Windows so long as it keeps feeling and acting and looking like Windows, but there are a couple of things announced today that are notable in relation to its role in the broader operating system market.
Aaron Tilley, Wall Street Journal:
Microsoft said it won’t require developers to use its payment system, drawing a contrast to Apple, which typically takes a 30% cut on sales made through its iPhone App Store. Microsoft has backed Epic Games Inc. in its legal battle with Apple over app-store fees. Apple has fiercely defended its app-store policy as providing customers greater security.
That’s true not only of iOS but of the app stores on each of its platforms. In Apple’s world, if someone got an application through the App Store, Apple usually owns that customer relationship, not the developer. There are exceptions; but, as a general rule, if an app comes from one of Apple’s app stores, Apple owns that financial relationship.
Microsoft has decided that it does not need to be a part of every transaction that occurs through its platform, even if that customer relationship began from the Microsoft Store. That seems wise. How much of that is driven by regulatory action that specifically targets very large, very valuable technology companies is up to you to decide — but it seems pretty obvious that none of this would be happening without intensifying legal scrutiny around the world.
Epic Games CEO Tim Sweeney on Thursday tweeted: “The 2021 version of Microsoft is the best version of Microsoft ever!”
App developers still need to pay Microsoft a 15% fee on sales if they want to use the software giant’s apps payment system. The charge is 12% for game developers.
I am not sure what Sweeney is cheering about on Twitter. PC games are still subject to a 12% commission, and it is my understanding that this does not apply to the Xbox where games are subject to a 30% commission. According to figures released during the Epic Games lawsuit against Apple, Xbox players represent the second-biggest source of Fortnite revenue, while PC gamers generate so little revenue for Epic that their share was not broken out.
The other thing that caught my eye was how Satya Nadella ended the presentation.
Dieter Bohn, the Verge:
Nadella’s speech was almost entirely about building a case that Windows would be a better platform for creators than either macOS or (especially) iOS. He argued that “there is no personal computing without personal agency,” insisting that users should be more in control of their computers.
Nadella called out the changes Microsoft is making to its app store rules, allowing more types of apps, Android apps, and — most importantly — allowing apps to use their own payment systems if they so choose. He said, “A platform can only serve society if its rules allow for this foundational innovation and category creation.” That rhetoric sounds vaguely nice and inspiring out of context, but in the specific context of the current debates, lawsuits, and legislation over app store rules, it’s a sharp and direct critique.
That quote about personal agency will, I think, resonate particularly with the kind of person who watches a forty-five minute presentation about a new operating system. It is probably something we can all appreciate, however, as something that bridges the extremes of the Free Software Foundation’s mantra and something like the console model.
It is also a reflection that the desktop platform model that has worked for Microsoft for decades will continue to work for the foreseeable future. This is not a new strategy — not really. About ten years ago, Microsoft tried chasing a console model with Windows RT, but it did not go well; four years ago, it tried again with Windows 10 S. Both platforms restricted users to apps from Microsoft’s own software marketplace, and both contained many software limitations akin to those of Apple’s operating systems.
[…] Just as Google and Apple build their companies around their business models, so does Microsoft. But Microsoft’s business model has nothing to do with selling Windows or even getting a cut of app sales anymore. It’s about Microsoft 365, Azure, and enterprise services.
This is not entirely true; Microsoft’s most recent quarterly earnings indicate that the category into which it categorizes Windows represents about a third of the company’s overall revenue. But it is remarkable that Windows — a product that used to be so synonymous with Microsoft that I often heard people calling the company “Windows” — ceased to be its flagship product in financial terms, even though it is the foundation on which most of Microsoft’s products are built — and, it should be pointed out, the environment where much of the world’s business and governance passes through.