Microsoft Fires Free Windows Phone at Google, but May Hit Apple

NEW YORK (TheStreet) -- Software giant Microsoft (MSFT) is taking off the gloves in a full frontal assault aimed at Google's (GOOG) Android marketshare in India with free Windows Phone operating system licenses according to Times of India. Microsoft may have Android in its crosshairs, albeit Apple (AAPL), and especially BlackBerry (BBRY) will feel more than a pinch.

Microsoft's Indian pricing shift isn't a small trial concept to test the waters. India is the most populous democracy and at 1.2 billion people will soon overtake China to become the most populous country in the world. Microsoft's success in India will undoubtedly shape its pricing strategy around the world.

MSFT Chart

Intuitively it may appear Microsoft is surrendering revenue in order to remain relevant as it struggles to increase marketshare above a distant third behind Android and iOS, but Microsoft can monetize software in other ways including sales of apps and ad revenue through search. Give the OS away free and make it up elsewhere is the same model that Google profitably employs. Android is on more than 80% of phones worldwide, and left few options for Microsoft to capture marketshare.

In a yin-yang relationship, mobile operating systems must maintain a critical mass of users in order to attract phone manufacturers and app developers which create user demand. Lose the critical mass and the OS dies. A free Windows Phone OS is a significant step in the right direction to steer clear of the OS death "event horizon".

Caught in the cross-fire is Apple. Apple now has a two-front war to wage. Apple's CEO Tim Cook has stated that the iPhone maker won't target the budget market.

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