At the tail end of their keynote today, long after they announced details about the Windows 8.1 update, Microsoft announced a new pricing policy for smartphones and tablets. Any mobile device with a screen that is smaller than 9" will have its license fee waived.
It turns out the past rumors about discounted Windows licenses for cheap devices were only half true. Rather than the 85% discount mentioned in the rumors, Microsoft has decided to go for a 100% discount.
While this won't help Microsoft's revenues much, it will do wonders for their market share. The latest data suggests that MS (or Windows, to be more exact) is a distant third in both the global tablet and smartphones markets. The license fee probably didn't affect their position as much as the fact that Android and iOS each offer more apps and (in the case of Android) a broader selection of devices, but removing the license fee will probably attract more device makers.
Part of the Windows 8.1 Update announced today also included support for medium to low end devices with 1GB RAM and 16GB internal storage. That doesn't quite reach the bottom of the barrel in terms of budget Android devices on the market, but it does get down as far as tablets with specs comparable to the $139 Kindle Fire HD.
If Windows really does run well on a tablet that cheap then it will be a seriously tempting alternative.