Today, Microsoft formally announced the Windows 8.1 with Bing offering that I first revealed back in March. But I'm seeing some confusion out there on the pricing: Windows 8.1 with Bing will be free for PC makers on make devices that cost less than $250, but it will be low-cost for those that bundle it on more expensive PCs.

Also confusing, of course, is why Microsoft is evening offering this Windows version.

But let's start with licensing first.

What does it cost?

In Windows 8.1 with Bing Revealed, I wrote that this new Windows version was "nothing more than the low-cost version of Windows that Microsoft will offer to hardware makers that sell PCs for less than $250." What's changed since then, of course, is that Microsoft decided to make Windows free for use on small tablets and phones, as discussed in Windows is Now Free for Phones and Mini-Tablets. And now, these two changes are in fact commingled.

So we have this new Windows 8.1 with Bing offering. On small tablets (with screens less than 9 inches), Windows 8.1 with Bing will be free, and it's not clear yet if Microsoft will offer hardware makers other Windows versions at "zero dollars" (as the firm says) for these devices.

On PCs, Windows 8.1 with Bing will not be free. But it will be priced lower than Windows 8 "Core" ... to PC makers. What that price is, we don't know.

So what is it?

Windows 8.1 with Bing is a new low-end offering is based on Windows 8.1 "Core" (with the recently released Update 1, of course). It has exactly the same feature set as Windows 8.1 "Core," but will be configured in such a way that the hardware maker who sells you the PC or tablet will not be able to change the default browser search engine from Bing to some other offering. You as the user, however, will be able to make that change normally.

Windows 8.1 with Bing will be only be available preloaded on new PCs and devices, Microsoft says. And "some" of these devices, particularly tablets, will also come with some version of Office or a one-year subscription to Office 365. (My suspicion is that this is another secret licensing agreement between Microsoft and PC makers that we're not supposed to know about.)

Since you can change the web browser search engine as before, some are wondering why Microsoft is even offering this product. But the rationale is simple: Most people, especially those who will be buying these cheap new PCs, don't ever make configuration changes anyway. So by ensuring that these PCs and devices go out the door with Bing, Microsoft is ensuring that most of them will be using Bing (and not Google or whatever). It's a win-win.