Here’s Why Microsoft Is Giving Pirates the Next Windows for Free

3 minute read

Bill Gates was famously sanguine about the rampant theft of Microsoft’s intellectual property in China. “As long as they’re going to steal” software, he said during a 1998 town hall at the University of Washington, “we want them to steal ours.” He predicted that Microsoft would convert the free riders into paying customers within a decade.

Not quite. By 2011, Chinese software piracy had so thoroughly undermined Microsoft’s sales that former chief executive Steve Ballmer revealed that the Netherlands, population 17 million, was a greater source of revenue than China, population 1.3 billion, the Wall Street Journal reported at the time.

Ballmer has since stepped aside, and now it’s CEO Satya Nadella’s turn to take a whack at the piracy problem. His strategy is an offer bootleggers can’t refuse: The chance to upgrade from an unlicensed, outdated version of Windows to the latest version for free.

“We are upgrading all qualified PCs, genuine and non-genuine, to Windows 10,” Microsoft executive vice president Terry Myerson said in an interview with Reuters Wednesday. Windows 10 should be out this summer as a free download for anyone with Windows 7 or newer already installed on their computer.

Why the sudden freebie? In part, it’s because Microsoft is making a strategic play to get as many users hooked on the Windows 10 platform as possible. Once on board, users can be lured into paying for premium services, such as apps at the Windows Store or a subscription to Office 365, Microsoft’s productivity suite. The more users Microsoft gets now, the more services it can sell downstream — and it’s hoping even pirates can be flipped into paying customers.

It’s a gutsy play for a company that has historically relied on Windows licensing fees for roughly a quarter of its revenue, totaling $18 billion in 2014. Shareholders tend to get antsy at any sign that historic cash cow might be faltering. A 13% drop in Windows licensing sales last quarter prompted a panicked sell-off of Microsoft stocks. It’s hard to predict how patiently investors will wait for Microsoft to accumulate new users without collecting payment up front.

In any case, Microsoft will only gamble on this experiment in the short-run. The Windows 10 giveaway ends within one year of its release, and Microsoft has made clear that pirates who have upgraded to the new operating system will not be considered legitimate customers.

“If a device was considered non-genuine or mislicensed prior to the upgrade, that device will continue to be considered non-genuine or mislicensed after the upgrade,” a Microsoft spokesperson wrote in a statement to TIME.

In other words, pirates can take advantage of a temporary amnesty from licensing fees — but Microsoft will extract payment eventually.

Read more: Here’s What It’s Like to Use Microsoft’s Amazing New Holographic Headset

See The Incredibly Goofy Evolution of Virtual Reality Headsets

Andrew Mishkin wearing a 3-D virtual display helmet that is connected to a six-wheeled roving vehicle. The rover was meant to explore the surface of Mars and send back information.
1988 Andrew Mishkin wearing a 3-D virtual display helmet that is connected to a six-wheeled roving vehicle. The rover was meant to explore the surface of Mars and send back information.Roger Ressmeyer—Corbis
"Reality +" at the Virtual Reality Systems 93 show was described as a next generation, multi-player virtual reality entertainment system that gave a high sense of movement in a computer-generated world revealed in a head-mounted display.
1993 "Reality +" at the Virtual Reality Systems 93 show was described as a next generation, multi-player virtual reality entertainment system that gave a high sense of movement in a computer-generated world revealed in a head-mounted display. Alex Brandon—AP
The 3-player Budweiser virtual reality mask at the Food Marketing Institute's International Supermarket Industry Convention and Educational Expostion in Chicago.
1993 The 3-player Budweiser virtual reality mask at the Food Marketing Institute's International Supermarket Industry Convention and Educational Expostion in Chicago.Mike Fisher—AP
A Virtual Reality contraption at the Sci Fi Channel booth at The National Cable Television Association annual convention, in San Francisco.
1993 A Virtual Reality contraption at the Sci Fi Channel booth at The National Cable Television Association annual convention, in San Francisco.George Nikitin—AP
Soldier training using a virtual reality-simulated 3-D shootout at an Army facility.
1994 Soldier training using a virtual reality-simulated 3-D shootout at an Army facility. Ben Van Hook—The LIFE Images Collection/Getty Images
A visitor checking out a virtual reality head-set at the G7 Information Society Showcase taking place at the European Parliament. The head-set was linked to a camera elsewhere in the building which the visitor could control through head movements.
1995 A visitor checking out a virtual reality head-set at the G7 Information Society Showcase taking place at the European Parliament. The head-set was linked to a camera elsewhere in the building which the visitor could control through head movements. STR/Reuters
A researcher at Tokyo University's Intelligent Modeling Laboratory wearing 3-D glasses, extending his hands to touch carbon atoms in the microscopic world at the laboratory's virtual reality room.
1998 A researcher at Tokyo University's Intelligent Modeling Laboratory wearing 3-D glasses, extending his hands to touch carbon atoms in the microscopic world at the laboratory's virtual reality room. Yoshikazu Tsuno—AFP/Getty Images
Visitors enjoy virtual reality driving with 3-D goggles and driving simulators for the presentation of Japan's automaker Nissan at the Tokyo Motor Show in Tokyo.
1999 Visitors enjoy virtual reality driving with 3-D goggles and driving simulators for the presentation of Japan's automaker Nissan at the Tokyo Motor Show in Tokyo.Kazuhiro Nogi—AFP/Getty Images
A visitor to the " Ars Electronica in a dish installation " Humphrey II" , which allowed virtual free flight through a 3D reconstruction of the city of Linz.
2003 A visitor to the " Ars Electronica in a dish installation " Humphrey II" , which allowed virtual free flight through a 3D reconstruction of the city of Linz. Peter Zschunke—AP
A girl wore a full color head mounted display with a built-in camera as Japan's machinery maker Hitachi Zosen and Shimadzu unveiled a wearable computer, consisting of the HMD and a palm sized Windows XP PC with a pointing device at a virtual reality exhibition in Tokyo.
2005 A girl wore a full color head mounted display with a built-in camera as Japan's machinery maker Hitachi Zosen and Shimadzu unveiled a wearable computer, consisting of the HMD and a palm sized Windows XP PC with a pointing device at a virtual reality exhibition in Tokyo.Yoshikazu Tsuno—;AFP/Getty Images
Lt. David Shipley of the Adams County Sheriff's Department watched an interactive video that replicated the experiences of a schizophrenic patient having auditory and visual hallucinations while attempting to refill a prescription at a pharmacy.
2006 Lt. David Shipley of the Adams County Sheriff's Department watched an interactive video that replicated the experiences of a schizophrenic patient having auditory and visual hallucinations while attempting to refill a prescription at a pharmacy.Karl Gehring—The Denver Post/Getty Images
Valeria Petkova, right, and student Andrew Ketterer, left, of the Karolinska Institute in Stockholm, tested the 'body-swap' illusion, a method whereby people can experience the illusion that either a mannequin or another person's body is their own body.
2008 Valeria Petkova, right, and student Andrew Ketterer, left, of the Karolinska Institute in Stockholm, tested the 'body-swap' illusion, a method whereby people can experience the illusion that either a mannequin or another person's body is their own body.Niklas Larsson—AP
Raphael Pirker from Switzerland, founder of Team BlackSheep used virtual reality goggles to simulate the sensation of flight in the real world during a demonstration, flying from the perspective of a model aircraft, during a session of LeWeb'12 in Saint-Denis, near Paris.
2012 Raphael Pirker from Switzerland, founder of Team BlackSheep used virtual reality goggles to simulate the sensation of flight in the real world during a demonstration, flying from the perspective of a model aircraft, during a session of LeWeb'12 in Saint-Denis, near Paris.AFP/Getty Images
A man seeking a job was equipped with 3D spectacles with sensors as he trained in Clermont-Ferrand, central France with avatars (background) in a virtual reality cube, at business incubator Pascalis.
2012 A man seeking a job was equipped with 3D spectacles with sensors as he trained in Clermont-Ferrand, central France with avatars (background) in a virtual reality cube, at business incubator Pascalis.Thierry Zoccolan—AFP/Getty Images
Peter Kenny Jan Torpus, director of Lifeclipper project, tested the immersive augmented reality equipment in St Johanns Park in Basel, Switzerland.
2012 Peter Kenny Jan Torpus, director of Lifeclipper project, tested the immersive augmented reality equipment in St Johanns Park in Basel, Switzerland.Sebastien Bozon—AFP/Getty Images
Professor Karl Oldhafer, chief physician of general and visceral surgery at the Asklepios Hospital Hamburg-Barmbek, before liver surgery. Oldhafer used augmented reality, which allowed the liver to be filmed with an iPad and overlaid during the operation with virtual 3D models reconstructed from the real organ. This procedure helped locate critical structures such as tumors and vessels and was expected to improve the quality of transferring pre-operational resection plans into actual surgery.
2013 Professor Karl Oldhafer, chief physician of general and visceral surgery at the Asklepios Hospital Hamburg-Barmbek, before liver surgery. Oldhafer used augmented reality, which allowed the liver to be filmed with an iPad and overlaid during the operation with virtual 3D models reconstructed from the real organ. This procedure helped locate critical structures such as tumors and vessels and was expected to improve the quality of transferring pre-operational resection plans into actual surgery.Fabian Bimmer—Reuters
British television presenter Rachel Riley showed a virtual-reality headset called Gear VR during a Samsung event ahead of the consumer electronic fair IFA in Berlin.
2014 British television presenter Rachel Riley showed a virtual-reality headset called Gear VR during a Samsung event ahead of the consumer electronic fair IFA in Berlin.Markus Schreiber—AP
Tim Draper, Founder and Managing partner of 'Draper Fisher Jurvetson', tried out the latest in virtual reality technology the 2014 Kairos Global Summit at Ritz-Carlton Laguna Nigel in Dana Point, California.
2014 Tim Draper, Founder and Managing partner of 'Draper Fisher Jurvetson', tried out the latest in virtual reality technology the 2014 Kairos Global Summit at Ritz-Carlton Laguna Nigel in Dana Point, California.Jerod Harris—Getty Images for Kairos Soceity
A man played a game with the virtual reality head-mounted display 'Oculus Rift' at International Games Week in Berlin. The display transfers the eye movements to the game in real time.
2014 A man played a game with the virtual reality head-mounted display 'Oculus Rift' at International Games Week in Berlin. The display transfers the eye movements to the game in real time. Daniel Naupold—Daniel Naupold/picture-alliance/
Microsoft's Lorraine Bardeen demonstrates HoloLens headset during an event at the company's headquarters in Redmond, Wash. on Jan. 21, 2015.
Microsoft's Lorraine Bardeen demonstrates HoloLens headset during an event at the company's headquarters in Redmond, Wash. on Jan. 21, 2015.Elaine Thompson—AP

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