After several decades of embracing and evangelising the concept of software as a product, Microsoft has embarked on its most ambitious project yet; turning its flagship product, Windows (and Windows 10), into a service.
The company published a PowerPoint presentation on Friday that prepares the financial sector (read: analysts and the investors) to that change.
One slide says "we will have a new revenue recognition model because Windows 10 will include software upgrades provided over time rather than at specifically priced software upgrade events, which will result in the deferral of revenue."
On the footsteps of Office 365
Microsoft was quick to point out that there is no change to the software licensing business with related deferrals and future recognitions recorded in the "Corporate and Other" segments of the company. What it allows Microsoft to do is adopt a multi-year view of revenue recognition.
It acknowledged the importance of deferring allocated revenue to match the changing nature of the operating system as it evolves from being a static, rarely evolving monolithic piece of code to one that undergoes frequent, often radical changes.
Windows 10, which launches in a month's time, will likely be Microsoft's last traditional operating system, moving to a hybrid approach (think Office 365) in the future.
- Coincidentally (obviously), we have just published an introductory guide to Windows as a Service.