Windows going free for phones and small tablets

Microsoft announced today that they are cutting prices of Windows for manufacturers to spur adoption. And by cutting prices I mean to $0 for Windows Phone and tablets under 9". Is this big news? I don't know. In the world of Microsoft it's definitely big news, because Microsoft's original business model was almost exclusively built around Windows OS licensing agreements. Microsoft aficionados may be rejoicing, but in the greater world of mobile my read on the situation isn't so optimistic.

I feel it's somewhat contradictory to Microsoft's recent actions -- increasing vertical integration with the Nokia purchase and the forward play into manufacturing their own Surface tablets. It felt like the strategy was shifting towards emulating Apple's model of controlling the end-to-end experience by owning the software and hardware, differentiated by a heavy dose of business/productivity functionality. Now they want to compete with Android by becoming an open platform? I'm confused.

Overall I think it's probably good for the industry, so that companies like Amazon, Samsung, Pebble, Fitbit, or other OEMs have more options than just homegrown or Android if they want to start a line of phones, tablets, or watches... but as an outsider the read between the lines here is that MSFT can't make the money they want by licensing Windows Phone/Windows RT (under 9"), so they are going to try and go the open route and see if they can build the ecosystem and make money off the app store like Android. The problem with that approach is that they are 3 years too late to that game too.