MS Increases Windows OEM Licensing Fees as PC Prices Continue to Rise

If you're already feeling the pinch from the steep price hikes of Windows 11 PCs, get ready for more. Reports indicate that MS is now charging OEMs higher fees for Windows licenses.

With the increasing costs of RAM, SSDs, and CPUs, OEMs are already under pressure to raise their prices, causing a slowdown in the PC market. MS's latest earnings report shows a notable drop in Windows OEM revenue. While the earlier end-of-support for Windows 10 temporarily boosted demand, that surge has since waned. Adding to MS's woes, Apple's MacBook Neo is gaining momentum in the budget laptop segment.

For users still holding onto a functioning Windows 10 PC, the decision to delay upgrading has become easier. Why pay more for a Windows 11 laptop when your current device can run on less RAM and offers another year of support from MS?

MS Quietly Hikes Windows 11 Licensing Costs for OEMs

MS has yet to officially confirm a price increase for Windows OEM licenses, but reports from Taiwan's Economic Daily News suggest PC manufacturers have been facing higher licensing fees since July 2026. Historically, OEM licensing fees have risen by single-digit percentages annually, but recent hikes range from 7% to 10%, according to industry insiders.

Moreover, the cost of Windows licenses appears to vary by CPU class. Devices powered by Intel Core i3, i5, and i7 processors are subject to different pricing tiers. Both ASUS and Acer have noted that PC prices in Taiwan could increase by about 5% during Q3 2026. ASUS even reported that some products have already become nearly 30% more expensive compared to late 2025.

Rising RAM and SSD Prices Drive Up PC Costs

The long-standing trend of declining memory prices has reversed. The growing demand for AI data centers has turned memory into a premium commodity, becoming a major factor behind the escalating PC prices in 2026.

According to IDC, the global memory shortage is expected to persist through the end of 2027. The research firm anticipates an 11.3% decline in global PC shipments for 2026, while average selling prices could rise by 18.3%.

AI servers require vast amounts of high-bandwidth memory and server DRAM. Leading manufacturers like Samsung, SK hynix, and Micron are focusing on higher-margin enterprise products, leaving a reduced supply for consumer DRAM and NAND. TrendForce reported similar findings in July 2026, noting that DRAM producers are prioritizing server production, further squeezing the consumer market.

For OEMs, the situation is grim. A laptop requires memory, storage, and a processor before Windows can even be installed. Rising production costs, driven by higher energy and oil prices, worsen the situation. Ultimately, these costs are passed on to consumers, who, as always, bear the financial burden.

MS Works to Optimize Windows 11 for More Affordable Hardware

Throughout 2026, MS has focused on enhancing Windows' quality, performance, and efficiency. CEO Satya Nadella assured investors in July that the company is investing in Windows to deliver "the best quality and fundamentals."

These efforts are overdue, as the cost of RAM has surged to $100 for the same capacity that once cost $30. Over the years, Windows 11 has become increasingly resource-heavy, with bulkier components, web-based interfaces, and additional background services. To address this, MS is optimizing Windows by transitioning parts of it to WinUI, reducing memory usage, and tackling performance issues like sluggish UI and File Explorer delays.

MS Revises Its RAM Requirements

MS has significantly adjusted its stance on RAM requirements. For years, the company recommended 16GB as the baseline for tasks, particularly for Copilot+ PCs. However, in June 2026, MS's updated Surface buying guide suggested that 8GB is sufficient for basic tasks such as browsing, streaming, schoolwork, and productivity apps.

This shift reflects rising memory costs and the growing demand for AI workloads. To help OEMs keep entry-level PCs affordable, MS is now working to make Windows 11 faster and lighter. This would allow manufacturers to allocate more of their limited budgets to improving build quality and other visible features.

Apple's MacBook Neo Intensifies Pricing Pressure on Windows PCs

Apple has further complicated matters for Windows OEMs with its $599 MacBook Neo, which debuted at $499 for students. This product immediately reshaped the narrative around affordable laptops, putting significant pressure on the Windows PC ecosystem.

IDC noted that the Neo's launch has forced vendors to respond with new silicon, more efficient Windows versions, and competitive pricing strategies. In response, companies like Intel, Qualcomm, and AMD have introduced cost-effective chips, such as the Wildcat Lake Core Series 3, Snapdragon C platform, and Kraken Point Ryzen processors. Additionally, MS is optimizing Windows to run efficiently on devices with as little as 8GB of RAM.

Although Apple later raised the Neo's price to $699, the comparison remains striking. A MacBook at a similar price to mainstream Windows laptops is no longer an outlier. Even MS's commissioned study by Signal65 revealed that while Windows laptops outperformed the Neo in some hardware specs, consumers in this price range prioritize overall user experience and build quality.

Windows 11 Struggles to Maintain Momentum

Recent earnings reports highlight that Windows 11's momentum is faltering. Windows OEM and Devices revenue dropped 7% in fiscal Q4 2026, with Windows OEM revenue alone down 5%. MS attributed these declines to reduced PC demand and tough year-over-year comparisons, as FY25 saw a surge in demand following Windows 10's end-of-support deadline.

For FY27, MS forecasts a further decline in Windows OEM and Devices revenue, with rising component costs, higher device prices, and elevated inventory levels weighing heavily on the business. While the end-of-support for Windows 10 initially drove PC sales, that effect is now fading.

Windows 10 Users See Little Incentive to Upgrade

In May 2026, HP reported that approximately 30% of its installed user base was still running Windows 10, with many users showing little interest in upgrading to Windows 11.

MS recently extended Windows 10 Extended Security Updates (ESU) for consumers until October 2027. It has also begun emailing users about this extension without aggressively promoting Windows 11. A Windows 10 device that meets user needs and now offers extended support becomes an even more attractive option, especially when new Windows 11 laptops are pricier and less efficient on older hardware.

Windows 11 Must Justify the Upgrade, Not Just Be an Added Cost

MS cannot indefinitely rely on Windows 10's end-of-support deadlines to drive PC sales. The company must ensure that Windows 11 provides compelling reasons to upgrade, such as improved performance, reduced memory usage, and fewer unnecessary background processes.

Comments from Satya Nadella and Windows Chief Pavan Davuluri suggest that MS recognizes these challenges. Updates planned for 2026 include lowering baseline RAM requirements, speeding up File Explorer, modernizing UI elements, and optimizing the Start menu with WinUI.

Such improvements are crucial for entry-level laptops in the $500-$600 range, where performance and efficiency matter far more than flashy new features.

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