Microsoft’s Licensing Dispute with OnLive Could Help Line its Coffers

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After the launch of Windows 8 Consumer Preview last month, Microsoft (NASDAQ:MSFT) was in news this week primarily because of a licensing dispute with OnLive, a company which offers hosted Office and Windows remote instances on the iPad and Android tablets. [1] OnLive Desktop enables users to run hosted Windows and Office software on their tablets directly, even if they haven’t purchased the software licenses from Microsoft. Windows and Office compete with products like Mac OS X, iOS, Android, iWork and Docs by the likes of Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG).

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OnLive Desktop is a very popular app especially on the iPad, and is currently offered free and as a paid app with additional features. Microsoft’s current terms dictate that customers should buy separate licenses to use Windows or Office in a virtual environment remotely. OnLive may be required to purchase separate Windows and Office licenses for each user in order to offer the service.

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If Microsoft were to enforce this, it could generate some additional revenue from OnLive based on the number of users using the app. It’s more likely that OnLive may have to stop offering its OnLive Desktop app given the relatively high cost of Windows and Office licenses.

This could steer users toward Microsoft’s own Office apps, which are rumored to be launched on the iPad soon, or even boost the sales of Windows 8 tablets as users who prefer to use Windows and Office buy them instead of iPads. Though we expect the impact to be marginal, this move could be very beneficial for Microsoft.

Windows accounts for nearly 27%, while Office accounts for around 37% of Microsoft’s $37 Trefis price estimate, which stands near 15% above the current market price.

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  1. Microsoft in dispute with OnLive over Windows desktop-on-iPad licensing, ZDNet []