A Small Concession
For any developer keen on creating the breakthrough software of the future, it should be abundantly clear that the closed nature of Windows 8's new ecosystem will be catastrophic for the platform. There's no question it should be opened. But developers aren't the people in charge of the policies for Windows 8.
So the more relevant question might be, can Microsoft afford to change course and allow Windows 8 apps to be distributed by anyone, not just the Windows Store?
Taking the long view, Microsoft can't afford not to change course. They are already behind in every consumer market category beyond the desktop, so there's no room for error. If a new software innovation comes around and, say, Android is its primary platform because it has open distribution, that could easily lead to another "lost decade" for Microsoft as they once again play catch up.
But corporations today don't usually take the long view. Short-term profits and shareholder opinions are pressing, immediate concerns, and Microsoft is a public company affected by numerous outside interests. So the question becomes, can Microsoft allow open distribution in Windows 8 without sacrificing revenue?
Surprisingly, the answer is that there will be little or no revenue sacrificed from allowing open distribution in Windows 8. That may sound absurd, but if you read Microsoft's publications carefully, you will find that it is true. Although Microsoft has closed the distribution system of the new Windows 8 ecosystem, they didn't close the payment system. From Microsoft's own developer agreement:
In-app Commerce. You may elect to support purchasing options from within your app. You are not required to use Microsoft's commerce engine to support those purchases. If you choose to use Microsoft's in-app purchase commerce engine, purchases will be subject to the terms of this Agreement, including without limitation the Store Fee and licensing and roaming requirements.
As strange as it may sound, if a developer offers a limited application for free in the Windows Store, they may then sell, directly in the app, an upgrade or unlock to the full version for which they can accept payment directly. They do not need to pay Microsoft 20-30 percent royalties as with a Windows Store purchase. Thus any developer who wants to use a non-Microsoft payment system is free to do so. The only thing they can't do is use a non-Microsoft distribution system, such as their own web page or store.
So it is almost impossible to conceive of a circumstance where Microsoft would lose significant revenue by opening the distribution system since it has already opened the payment system, and substantively all the revenue comes from the payment system. The only revenue Microsoft would still make from the store for an application that did not use their commerce engine would be the variable one-time application fee of less than $100 per app (not per purchase). The Windows Store would have to lose 10,000 to 20,000 apps to open distribution every day in order for this to amount to even 1 percent of Microsoft's revenue. For reference, the most popular app store in the world, Apple's, is estimated to receive a total of fewer than 500 per day.
Furthermore, the potential for migration of Windows Store customers from Microsoft to third party providers wouldn't be any greater under open distribution. Anyone using the Windows Store as currently specified will be able to create an account with a third-party payment processor as part of any in-app purchase that supports it. Once they decide to make such an account, they can trivially use that account to pay for any other in-app purchase in all apps that support the same payment processor. The inertia of purchasing through a third party is only present the first time the user needs to use it. Open distribution would be no different. The Windows Store would remain the default source for Windows 8 apps, and only once the user decided to install and create an account with a third-party distribution source would the Windows Store lose its inertial advantage.
Thus Microsoft has almost no financial incentive to disallow open distribution. Presumably, there must be other concerns underlying their decision to keep distribution closed. Is it to mitigate the threat of malware? Is it to prevent piracy? Is it to better manage their brand? Until Microsoft is explicit about its goals so its decision can be assessed against them, we can only speculate on the motives, and all the likely candidates have other straightforward solutions that don't involve draconian policies like forcing users to only install Microsoft-approved software.
Where We Go from Here
Experimentation on open platforms is one of the primary sources of innovation in the computer industry. There are no two ways about that. Open software ecosystems are what gave us most of what we use today, whether it's business software like the spreadsheet, entertainment software like the first-person shooter, or world-changing revolutionary paradigms like the World Wide Web. It will be a much better world for everyone if this kind of innovation continues.
Developers, consumers, and even Microsoft should want the next 20 years to look like the last 20: year after year of great new and previously unattainable things, brought to you by motivated, creative developers who were free to go wherever their vision took them, knowing full well that if they made something great, there was no barrier between them and disseminating it to the world.
With Windows 8, Microsoft is in a pivotal position to help make this future a reality. They could become one of the primary forces fighting to make tablet development as open as desktop development was under traditional Windows. They could take market share from the completely closed (and thoroughly dominant) iPad, and help restore to that space the freedom to innovate that developers lost when Apple imposed its restrictive policies.
Or, Microsoft can ship Windows RT, Windows 8, and Windows 8 Pro with their current policies in place, and be just another player in the touch device space, with their own set of ridiculous hurdles that severely constrain software possibilities and waste developer time with ill-conceived certification processes.
Why take this risk? Why not bend over backwards to give developers an open platform, so that each and every one of them will be not just supportive, but actually enthusiastic to help Windows make inroads into the tablet space?
The success of Windows 8 in the tablet and phone space is far, far from a sure thing. Does Microsoft really want to go into that battle without some of their biggest assets? Do they want the likes of Valve, controller of over 50 percent of all PC game sales, deciding to throw their weight behind Linux because the Windows 8 ecosystem completely prohibits third-party app stores like their flagship Steam? Do they really want the launch of Windows 8 plagued by story after story of notable developers coming out against the platform? And above all, are they willing to risk alienating developers to the point where they actively promote and foster competing operating systems as their flagship platforms because Windows no longer offers them the freedom to develop and distribute their software the way they choose?
Hopefully, for everyone's sake, they will realize the only sane answer to all of these questions is "no".