Device makers would reportedly no longer pay a licensing fee for either operating system, a move designed to combat Android, says The Verge.
Microsoft may try to compete with Android by offering Windows Phone and Windows RT for free.
Citing "sources familiar with Microsoft's plans," The Verge reported Wednesday that both operating systems would be free of charge to device makers as part of Microsoft's future overhaul of Windows. The decision to offer them as freebies hasn't yet been reached but is under serious consideration by Microsoft OS VP Terry Myerson.
Microsoft earns a healthy chunk of money by licensing its operating systems to PC, phone, and tablet vendors. In the case of Windows Phone, most of the revenue was coming from Nokia. But since Microsoft purchased the handset business from the Finnish phone maker, that source has dried up.
To compensate for the money lost on OS licenses, Microsoft would look to increase revenue elsewhere, the sources told The Verge. Specifically, Microsoft would test ads in Windows 8 apps -- ads are already part of the Bing search results in Windows 8. The company also would try to convince more people to subscribe to SkyDrive, Office, and Skype.
The move would be part of Microsoft's strategy to compete with Google, which offers Android for free to phone and tablet makers. Assuming the report is true, Microsoft would likely introduce the free operating systems around the same time that the recently rumored Threshold initiative would roll out in 2015. That project is designed to unify Xbox One, Windows, and Windows Phone so that they can better share apps and other content.
No mention was made of Windows 8, so presumably Microsoft would still charge PC and tablet vendors to install the full operating system.
A Microsoft spokeswoman told CNET that the company has nothing to share at this time concerning rumors about the free versions.
Update, 8:35 a.m. PT with response from Microsoft.